Brokers' take

Soilbuild Business Space Reit | Buy Fair value: S$0.71 April 18 close: S$0.655 OCBC Investment Research, April 18

Soilbuild Reit's Q1 2018 results were within expectations. Gross revenue dropped 11.5 per cent year-on-year to S$19.4 million or 24.4 per cent of our initial full-year forecast, mainly due to lower contributions from 72 Loyang Way, West Park BizCentral, Eightrium, as well as KTL Offshore which was divested in February 2018. Q1 2018 distribution per unit dropped 11.1 per cent to 1.324 Singapore cents or 25.9 per cent of our initial full-year forecast.

After adjustments, our fair value increases slightly from S$0.70 to S$0.71. We continue to expect the operating environment in the industrial space to remain challenging for much of this year. Yet, while bearing in mind this backdrop, we see upside to our fair value as of April 17's close. We see the Reit as being in a stronger position after the KTL Offshore disposal as well as the latest update on the NK Ingredients issue. The Reit manager had confirmed at the end of March the receipt of the amounts billed to NK Ingredients between January 11, 2018 and March 26, 2018 as well as the receipt of a top-up of security deposit. As of April 17's close of S$0.66, Soilbuild Reit is trading at a 7.7 per cent FY18 yield.