SINGAPORE (April 27): DBS is maintaining its “buy” call on Ascendas India Trust with a higher target price of $1.20 saying the REIT’s growth story has yet to gain recognition among investors at large even though it has rallied over 30% since DBS upgraded the stock to “buy” 12 months ago.
“With Singapore-focused REITs increasingly facing headwinds translating into slowing DPU growth with average DPU CAGR of 1%, we anticipate investors will gravitate to aiTrust given its healthy two-year DPU CAGR of 8%,” says lead analyst Mervin Song.
Over the past year, a-iTrust has announced several developments including the construction of The V, a new 408,000 sqft IT building, as well as acquisitions of CyberVale, aVance 3 & 4, and BlueRidge Phase 2. Coupled with the potential for healthy rental reversions of 15-20% in Chennai and up to 5% in Hyderabad and Bangalore, DBS has confidence over a-iTrust’s ability to deliver robust 9% DPU CAGR over the next two years.
Through its untapped land bank and sponsor pipeline, a-iTrust has access to about 5.3 million sqft of floor area. Combined with the potential expansion into the Indian modern warehouse space, the trust has a visible and sustainable source of growth over the long term. The ability to execute on these growth opportunities is also supported by its healthy balance sheet.
“After incorporating our new SGDINR exchange rate assumptions, we raised our DDM-based target price to $1.20 from $1.12,” concludes Song.
Units of Ascendas India Trust are down 2 cents at $2.58.
