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Brokers' Take: OCBC reiterates 'buy' call on Mapletree Greater China Commercial Trust
OCBC Investment Research reiterated its "Buy" call on Mapletree Greater China Commercial Trust (MGCCT) with a fair-value estimate of S$1 on Wednesday, after its management gave the assurance that the pro-democracy protests in Hong Kong is unlikely to affect Festival Walk, its shopping mall in the former British colony.
The management pointed out that, as the mall was not located in the affected areas, it did not expect its performance to be adversely affected by the demonstrations. In fact, some of the F&B tenants have taken more reservations, with consumers switching to locations outside the affected areas.
OCBC noted that MGCCT's latest financial results ended Sept 30 also came in within expectations, with its distribution per unit (DPU) of 1.606 Singapore cents representing a year-on-year growth of 10.4 per cent; this was 11.6 per cent ahead of its forecast.
In the first six months of fiscal 2015, overall tenants' sales at Festival Walk grew 3.6 per cent to HK$2.5 billion, although footfall dipped slightly by 1.7 per cent to 19.2 million.
OCBC Investment Research said that MGCCT's operating metrics "exhibit resilience and comfort", supported by a healthy portfolio occupancy of 99.2 per cent and positive rental uplift.
Since the broker initiated the "Buy" call on Oct 3, MGCCT's share price has risen 6.1 per cent, outperforming the FTSE ST Reit Index's 1.1 per cent rise and STI's 0.5 per cent decline over the same period.
At 11.24am, MGCCT units put on 0.5 per cent in morning trading to reach 96 cents.