Daily Morning Note – 5 Aug 2020
Asian stocks looked set for modest declines Wednesday as investors mulled the progress of stimulus talks in Washington and reports of a plan to review the U.S.-China trade deal. Treasuries pushed higher.
Futures pointed lower in Japan, Australia and Hong Kong. S&P 500 contracts were little changed after the index wavered between small losses and gains throughout Tuesday before closing modestly higher. The dollar weakened against major peers. Gold rallied to above $2,000 an ounce. Ten-year Treasury yields fell to their lowest since March.
Capitaland Commercial Trust, CapitaLand Mall Trust and Ascott Residence Trust have emerged at the top of the latest Singapore Governance and Transparency Index (SGTI) ranking of real estate investment trusts (Reits) and trusts. The SGTI panel, which also has a ranking of Singapore-listed companies, had observed an improvement in the governance of Reits and trusts, going by scores published on Tuesday. This year, with 45 Reits and trusts assessed, saw a 6.2-point increase in mean scores over the previous year: from 78.6 to 84.8.
Frasers Logistics & Commercial Trust (FLCT) is looking to acquire two properties in Australia and the UK from its sponsor Frasers Property as well as sell its remaining half stake in a cold storage facility in Australia, said the trust’s manager, which has also released its latest business update indicating that the coronavirus pandemic has not had a material impact on FLCT’s portfolio. In a bourse filing late Monday night, the manager announced that FLCT has proposed to acquire a logistics property in the Australian state of Victoria as well as a business park in Thames Valley in the UK for a total of about S$89.9 million in cash, from Frasers Property.
The Singapore Exchange (SGX) is set to launch two international real estate investment trust (Reit) futures products, based on indices tracking Reits listed in Singapore, Hong Kong, Malaysia and Thailand. These products will be the first international Reit futures in Asia. On Aug 24, SGX will launch the SGX FTSE EPRA Nareit Asia ex-Japan Index Futures, as well as the SGX iEdge S-REIT Leaders Index Futures, the bourse said in a Tuesday press release after market close.
Yanlord (China) Investment Group, a unit of property developer Yanlord, has inked an investment agreement of up to seven billion yuan (S$1.4 billion) with an affiliate of Singapore’s sovereign wealth fund GIC, to co-invest in China residential projects. Yanlord will own 51 per cent of each of the project companies and joint venture companies to be co-invested in, while the GIC affiliate will own the remainder, the mainboard-listed company said in a bourse filing after the market close.
Property developer OUE posted a S$207.2 million net loss for the six months ended June, plunging the mainboard-listed company into the red from a S$61.9 million net profit a year ago. The steep loss was mainly due to a S$310 million fair value loss on the US Bank Tower, which an OUE unit sold for US$430 million on July 17. The fair value loss represents the discount of the sale price to the property’s book value as of end-2019.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Hang Seng Index
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Hang Seng Index had a sell-off just as we expected on 8th July. Based on the recent technicals, the Hang Seng Index will rally to form the last leg of the corrective wave E
Koufu Group Limited – Food as fuel for growth
Recommendation: BUY (Initiation), Last Done: S$0.670
Target Price: S$0.80, Analyst: Terence Chua
– New integrated facility operational in 3Q20 will consolidate and expand Group’s central kitchen capacity boosting overall operational efficiency.
– Potential special dividend from the sale of its existing central kitchen property when they move into their new integrated facility.
– We like Koufu for their strong cash flow generation, defensive balance sheet and high ROE of 20.6% and 22.3% for FY21e and FY22e respectively.
– Initiate coverage with BUY recommendation and target price of S$0.80. Valued at 18.5x FY21e PE, sector average.
HK Reports – Read up on our Hong Kong reports here
Webinar Of The Week
Date: 06 July 2020
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