Brokers' take
Singapore Property DBS Group Research, June 14
SINGAPORE Press Holdings and Kajima Development through their subsidiaries, Elara 1 Pte Ltd And Callisto 1 Pte Ltd, has emerged as the top bidder for a leasehold mixed development at Upper Serangoon Road, Woodleigh. According to the tender details, close to 825 residential units can be built on the site.
Assuming a valuation of S$3,000 psf (per sq ft) for the retail component (150,000 sq ft), we estimate that the break-even for the residential units will be close to S$1,500 psf and potential launch prices to be north of S$1,650 psf, assuming a 10 per cent margin, setting a new record for the sub-market.
The rare characteristic of a mixed-use development sitting on top of Woodleigh MRT station will spearhead the resurrection of the former cemetery site at Bidadari Estate. This mall, in our view, could represent the new "Junction 8" at Woodleigh MRT station.
We are positive on the potential of this development as it is located right smack at Bidadari Estate, which according to government's masterplan, is one of the new estates that will be built over time. It is estimated that close to 11,000 new public housing units are projected to be built over the medium term.
There is no impact to our current dividend per share (DPS) forecasts for SPH, and we maintain "hold" with a target price of S$3.39. SPH will continue to maintain its DPS but with a downward bias given the challenges confronting its print business.
With SPH putting capital commitments for this particular tender, we believe that the potential sale of Seletar Mall could be near. In our previous report, we envisioned that the purchase of Seletar Mall to be beneficial to SPH Reit ("buy", target price S$1.04) as it offers upside to rentals given that the mall is entering its first reversionary cycle.
Top picks for the week KGI Securities Research, June 14
VIVA Industrial Trust offers exposure to Singapore industrial assets and offers an attractive distribution yield of 8.6 per cent, above the average yield from Singapore Reits.
Industrial assets would turn out to be a favourable sector in the near term due to two key factors - positive manufacturing growth outlook leading to leasing demand picking up, and supply of new industrial assets approaching the tail-end in 2017. Strong growth from its two business parks should also support growth in distributions per unit, underpinned by a limited supply of quality business parks.
Another stock that would benefit from industrial sector trend would be Soilbuild Reit, offering a 7.9 per cent yield.
Frasers Centrepoint Trust continues to enjoy rental income growth, showing resilience amid challenging overall retail headwinds due to its quality suburban retail malls.
Compiled by Cai Haoxiang
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