Monday, November 18, 2013

DBS Vickers Report 19 Nov 13

Suntec REIT acquires North Sydney freehold land,
maintain Buy with TP $1.80
􀂃 Singapore 3Q GDP number releases this Thursday –
consensus +5.3% y-o-y
Suntec REIT has entered into an agreement to acquire a
100% stake in a freehold land in North Sydney CBD, which
will be developed into a 31-storey office building, to be
completed in 2016, with NLA of 424k sqft. The acquisition,
costing A$413m, will be fully funded by a 5-year unsecured
loan. We retain our Buy call for Suntec with TP of $1.80. We
think the deal is likely to refocus investors’ attention to the
stronger growth prospects of the REIT from the inbuilt rental
escalations as well as the earnings boost from the progressive
completion of the Suntec Mall AEI. At the current price, the
REIT is trading at 5.7-5.9% FY13-14 yields.
SingHaiyi Group has acquired the full equity stake of Vietnam
Town, a partially completed commercial condominium
development project in San Jose, California, for US$33.05mil.
According to SingHaiyi, the acquisition price - already settled
in full by the company - comprised US$29.8mil to repay an
outstanding secured debt and US$3.3mil for the freehold
project. The project has several parcels of land sitting on a
total site area of 853,502 square feet. Of the 256 planned
condominium units (each about 1,000 square feet), 115 have
been built and of which 64 have been sold. SingHaiyi intends
to sell the 51 unsold units in the next 1-2 years and use the
sale proceeds to construct and sell the remaining 141 units
within the next three to five years.
Non-oil domestic exports (NODX) expanded for the first time
since January, growing 2.8% y-o-y in October, which is much
better than the 1.1% contraction expected. With recent data
pointing to strong growth, economists now expect the
Singapore government to upgrade its 2013 GDP growth
forecast to as high as 4% when it announces the 3Q GDP
(+5.3% y-o-y) figure on Thursday. Our economist currently
sees 2013 GDP growth of 3.8%.
US markets eased off after the Dow Jones crossed the 16,000
mark for the first time as some investors started to lock in
recent gains. US stocks have been rising in recent weeks and
proceed into all-time highs after Janet Yellen signalled she
will continue stimulus efforts. Consensus expects the FED to
begin QE tapering only after the March 2014 FOMC meeting.

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