SINGAPORE (May 3): DBS Group Research is maintaining its “buy” call on Ascendas India Trust (a-iTrust) given its expansion into modern warehouses
DBS says the expansion warrants a premium not only from the boost to a-iTrust’s near-term DPU outlook but more importantly, the ability to accelerate medium-term earnings growth.
“Compared to consensus, we have a higher target price of $1.40, pegged at a 10% premium to a-iTrust’s adjusted NAV per unit of $1.31,” says lead analyst Mervin Song.
Through its untapped landbank and sponsor pipeline, a-iTrust has access to over 5 million sf of floor area. Combined with the recent expansion into the Indian warehouse space which provides for a potential acquisition pipeline of 2.8 million sf, a-iTrust has a visible source of growth over the long term. a-iTrust’s ability to execute on these growth opportunities is also supported by its strong balance sheet.
“Our confidence in a-iTrust’s ability to execute on its warehouse expansion is due to its sponsor Ascendas-Singbridge’s strong track record in the Asian warehouse space,” says Song.
“After better than expected results and rolling forward to FY20, we raised our DDM-based target price to $1.40 from $1.25,” says Song.
Key risk to DBS’s bullish stance on a-iTrust’s is a significant depreciation of the INR, and a downturn in the Indian economy which will depress rents or delay the completion of announced acquisitions and development projects.
As at 2.16pm, units in a-iTrust are trading flat at $1.30.
