FW: SG: Ascendas REIT - Decent start
Ye Tian (James)
22 Jul 2016
ASCENDAS REIT | BUY
DECENT START
- 1QFY17 DPU grew 4.0% YoY
- Positive rental reversions of 4.1% in Singapore
- BUY with higher S$2.66 FV
Ascendas REIT (A-REIT) reported its 1QFY17 results which met our expectations. Gross revenue and DPU increased 15.0% and 4.0% YoY to S$207.6m and 3.996 S cents, respectively.
Although the operating environment remains challenging, management still achieved positive rental reversions of 4.1% for its Singapore properties for leases renewed in 1QFY17, although this was a moderation from the previous quarter. Overall portfolio occupancy
stood at 88.2% (+0.6 ppt QoQ), as at 30 Jun 2016, with improvements seen in Singapore and China. We ease our FY17 and FY18 DPU forecasts marginally by 0.4% and 0.3%, respectively, as we factor in A-REIT’s divestment of Jiashan Logistics Centre in our model.
However, as we also lower our cost of equity assumption from 7.8% to 7.5%, our fair value estimate increases from S$2.56 to S$2.66. Maintain
BUY.
(Please see attached file: A-REIT-160722-OIR.pdf)
Andy Wong Teck Ching, CFA
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