Brokers’ take
Compiled by Navin Sregantan
MAPLETREE INDUSTRIAL TRUST | BUY (MAINTAINED)
JULY 11 CLOSE: $2.32
TARGET PRICE: $2.50
DBS Equity Research, July 10
The latest redevelopment at Kolam Ayer 2 Cluster for $263 million, to be completed in late 2022, highlights the strong value offered by Mapletree Industrial Trust's largely centrally located portfolio.
Upon completion, the project is projected to deliver a return of investment of 8 per cent, which we estimate will more than quadruple the asset's current revenue contribution.
We are firm believers of the real estate investment trust's (Reit) inorganic growth strategy with a focus on developments in Singapore.
The manager's well-timed acquisitions and completions/ initiation of new development projects underpin a steady growth profile and more importantly, a constant upgrade and refresh of the portfolio that in our view, will be more resistant to business cycle fluctuations.
Mapletree Industrial Trust's resilience is a value trait in this market, which will keep valuations higher.
Key risks to our view include rising interest rates. An increase in refinancing rates will be negative to distributions.
ISOTEAM | BUY (MAINTAINED)
JULY 11 CLOSE: $0.245
TARGET PRICE: $0.30
UOB Kay Hian, July 11
According to the Singapore Commercial Credit Bureau, the construction sector saw an improvement in the proportion of slow payments in the second quarter of this year, which dipped 0.8 percentage points, quarter on quarter.
Contracts awarded in the public residential space also picked up in April, rising 5.3 per cent year on year, according to the Building and Construction Authority. Prospects have turned positive, as evidenced by more project wins and an orderbook high, setting ISOTeam off on a fresh growth chapter.
Among its renewed prospects is an upcycle of public upgrading projects, which have recovered from a slump in 2018 ahead of possible elections.
Second, ISOTeam's revenue has surged across all its business segments as project contributions increased significantly from a low in 2018.
Lastly, ISOTeam stands to benefit from industry tailwinds and the sale of its remaining properties in Kaki Bukit and Serangoon, which could also help unlock value with estimated gains of $3 million, allowing for potential accretive acquisitions.
Share price catalysts include accretive mergers and acquisitions, contract wins and margin improvement from moving to its new Changi headquarters in 2018.
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.
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