SINGAPORE (April 5): OCBC is maintaining its “hold” on CWT with an unchanged target price of $1.95 saying it makes sense for existing shareholders to continue holding to the shares for any potential upside from the strategic review.
It has been more than one and a half years since CWT announced that the shareholders of C&P Holdings are considering a strategic review of business and assets.
C&P subsequently entered into exclusive negotiations with HNA Group on May 16 2016, which may or may not lead to any transaction.
For now, this strategic review remains a key catalyst, although there are still no official details or further information.
Since May 16, 2016, CWT has been trading within the range of $1.88-$2.20.
On March 21, it was reported that HNA’s investment unit is planning to buy a stake of at least 35% in an Asia-focused REIT that will list in Singapore and will also take a 75% stake in the REIT’s management company formed with Singapore-based AEP Investment Management which owns commercial and industrial properties.
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Back in Nov 2016, Bloomberg News had reported that AEP was considering listing some of its assets through a Singapore IPO and may possibly include properties such as StarHub Green Business Park.
In a Wednesday report, OCBC lead analyst Eugene Chua says if this new REIT has the mandate to acquire industrial properties, there is the possibility for HNA to unlock potential synergy between the REIT and CWT as HNA will be able to recycle capital by divesting CWT’s logistics properties into the REIT.
“All said, without firm details, these transactions may or may not materialise,” says Chua.
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Meanwhile, the new mega logistics hub is still on track to complete in 1H17, but it will take time to ramp up occupancy, possibly pressuring margins in the near-term.
Shares of CWT are up 1 cent at $2.03.
