Brokers' take: DBS, Maybank raise target price on Suntec Reit; OCBC upgrades to 'hold'

BROKERS DBS Group Research and Maybank Kim Eng have upgraded their target prices on Suntec Reit to S$2.30 and S$1.94 respectively.

DBS has maintained its 'buy' call, while Maybank has maintained its 'hold'.

DBS noted that Suntec Reit's Q1 2018 distribution per unit (DPU) of 2.433 Singapore cents was in line with its forecast.

"We continue to like Suntec for the turnaround of Suntec Mall and leverage to the multi-year recovery in the Singapore office market. We believe as underlying earnings recovers and quality of its DPU improves, the market will reward Suntec with a higher share price over time," DBS noted.

Maybank said that while headline contributions from Suntec Reit's offices were soft due to transitory downtime, committed occupancy and signing rents remained healthy.

The broker noted that Suntec City's retail and convention centre businesses did well, with net property income rising by 5.9 per cent year-on-year and 69 per cent respectively.

It cited downsides of possible sharper-than-expected declines in office rents or occupancy, overpaying for acquisitions and cost overruns in Park Mall redevelopment.

Meanwhile, OCBC Investment Research has upgraded the stock to "hold" from its previous "sell" at a target price of S$1.84 from S$1.81 previously, citing an 11.6 per cent rise in the Reit's share price, and less demanding valuations than before.

"We expect office spot rents to continue its upward trajectory this year, which augurs well for Suntec Reit," the broker wrote.