Analysts from DBS Group Research, Maybank Kim Eng and OCBC Investment Research have maintained their “buy” calls for Manulife US REIT (MUST) following its 1HFY2021 results announcement on August 12.
See: Manulife US REIT sees lower DPU of 2.7 US cents for 1H21
DBS analysts Rachel Tan and Derek Tan have lowered their target price from 90 US cents to 88 US cents in an August 13 research note.
MUST’s 1HFY2021 distribution per unit (DPU) of 2.7 US cents was below their estimates, primarily due to lower occupancy and lower portfolio carpark income.
To that end, they have lowered their occupancy assumptions in their forecasts, which underpin their lower target price. “We have not factored in any potential acquisitions in our estimates,” they add.
Nonetheless, they anticipate a stronger 2H driven by growing return-to-office momentum in the US and overall economic recovery. From MUST's results announcement, they note signs of leasing momentum improving and "encouraging" progress with the renewal of the US Treasury lease .
In addition, Rachel and Derek view that MUST is now placed on a better playing field post index inclusion in the FTSE EPRA Nareit Developed Asia Index, where it will likely herald a virtuous cycle of greater investor visibility.
“Following this, we have already seen higher trading liquidity and yield compression for MUST. Given its strong execution and acquisition track record, we believe MUST will continue to command a premium over its peers,” they note.
Maybank Kim Eng analyst Chua Su Tye found MUST’s 1HFY2021 DPU to be in line with his estimates.
Despite higher vacancies, rent abatements and lower carpark income, he notes that leasing momentum remains strong and anticipates a stronger 2H with tailwinds from improving fundamentals.
He has kept his forecasts unchanged, supporting his target price of US$1.
“DPU visibility is high, and well cushioned by its low FY2021-20222 lease expiries and quality tenancies,” he says.
“We see valuations undemanding at c.7% FY21 yield, with upside from acquisitions, which are expected to pick up pace,” he adds.
For OCBC analyst Chu Peng, MUST's 1HFY2021 DPU came in below his expectations.
Nonetheless, he also views that the REIT will have a stronger performance in the second half of the year. " As the vaccination program continues to gather pace, we believe MUST is poised to benefit from the gradual reopening and return to office in the US," he says.
His target price has increased margially from 82 US cents to 83 US cents, after adjustments and applying a slight ESG valuation premium.
Units in MUST closed 0.5 cents or 0.65% lower at 77 US cents on August 13.
Photo: MUST
