Compiled by Cai Haoxiang
KEPPEL REIT | BUY
TARGET PRICE: $1.23
DBS Group Research, June 30
Keppel Reit announced that it has entered into an agreement to purchase a 50 per cent interest in a premium office tower that will be developed at 311 Spencer Street, Melbourne, Australia.
We understand the vendor is Australia Post.
We are positive on the expected distribution per unit (DPU) accretion in the medium term and the good cashflow visibility provided by the property given the 30-year lease and in-built rental escalations.
However, this is balanced against some near-term dilution to DPU. With gearing expected to rise back to 40 per cent, we also anticipate some pushback from investors.
Nevertheless, we believe this should not be a major concern, given capital values in Singapore should remain steady on the back of recent market transactions and strong interest from investors looking to buy office buildings in Singapore.
We maintain our "buy" call with target price of $1.23 for now, pending Keppel Reit's upcoming Q2 2017 results when we will incorporate this acquisition into our forecast.
We continue to like the Reit for its attractive valuations (0.8 time price to book) and exposure to the recovery in the Singapore office market.
THAI BEVERAGE | BUY
TARGET PRICE: $1.01
OCBC Investment Research, June 30
One of the key factors we have been keeping an eye on for Thai Beverage is the pending change in excise taxes for alcoholic beverages.
In addition, as part of the broader amended excise tax act, the government will introduce a new excise tax structure for non-alcoholic beverage as well, such that beverages with higher sugar levels would incur a higher tax burden.
We also wait for progress on the upcoming corporate restructuring that we believe has been lending some support to the group's share price. We maintain "buy" and fair value estimate of $1.01 given the positive growth story beyond this year.
Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.