Ascendas Reit

Ascendas Reit | Accumulate

Oct 4 close: S$2.57

Target price: S$2.82

Phillip Securities Research, Oct 4

Ascendas Reit (A-Reit) had an active quarter of acquisitions and fund raising, including an aggregate of S$425.8 million of acquisitions in Australia and Britain. The outlook is stable.

Post-acquisition weighted average lease expiry of 4

1/2 years offers income visibility. The tenancy risk profile has 8.8 per cent of leases by gross rental income expiring in the remainder of FY2018/19.

The leases are substantially in Singapore, and the asset types that are most exposed to renewal risk are logistics and distribution centres, business and science parks, and high-specification industrial and data centres.

With the exception of logistics and distribution centres, rental reversions are expected to be positive for the other two asset types.

We expect the yield of roughly 6 per cent to remain stable and our target price gives an implied 1.32 times FY2018/19E forward price-to-net asset value multiple.

Our lower target price is mainly due to changes in our cost estimates. Maintain "accumulate" with a new target price of S$2.82, from S$2.96 previously.

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