Brokers' take

CapitaLand Retail China Trust > Hold (upgraded) OCBC Investment Research, June 14 June 14 close: S$1.51 Fair value: S$1.38

SINCE our downgrade on June 11 to Thursday's closing, CRCT has posted negative returns of 3.9 per cent against the FTSE Straits Times Reit Index's 1.1 per cent gain and the Straits Times Index's one per cent rise. The real estate investment trust (Reit) is currently trading at more reasonable valuations.

With regard to the proposed acquisition of three more malls in Harbin and Changsha, while we still see a potential rights issue as a short-term risk, we highlight that there are other equity fundraising options available to CRCT (besides a rights issue) that would likely be more favourable for distribution per unit (DPU) accretion.