SINGAPORE (July 26): UOB KayHian is keeping a “hold” call on Suntec REIT with a target price of $1.90 based on its dividend discount model (DDM), pending more details after the analyst briefing.
This comes after the REIT manager posted marginally lower 2Q DPU of 2.493 cents which is in line with the research house’s expectations with 1H17 DPU representing 48.2% of its full-year forecast.
See: Suntec REIT posts marginally lower 2Q DPU of 2.493 cents on enlarged base
In a Wednesday flash note, analyst Vikrant Pandey notes that despite a lower overall office occupancy at 98.7%, down 0.2 percentage points compared to a year ago, retail occupancy was up by 1 percentage point to 99%, while tenant retention went up marginally by 0.4 ppt to 73%.
"On a y-o-y basis, retail and convention revenue declined by $1.6 million (-5.2% y-o-y) and $0.9 million (-6.2% y-o-y), respectively. Office revenue, however, increased by $10.9 million (+33.4% y-o-y), offsetting the losses of the former segments,” says Pandey.
“Marina Bay Financial Centre was an exception in the office segment, recording a decline of $1.07 million from Suntec REIT's JV stake. One Raffles Quay also declined y-o-y due to rental reversions, but income contribution from the property was higher in 1H17 y-o-y due to greater one-offs in 1Q17,” says Pandey.
As at 11.43am, units of Suntec REIT are trading flat at 43 cents.
