Brokers' take

Ascott Residence Trust (ART) > Hold Target price: S$1.12 Sept 21 close: S$1.09 CGS-CIMB, Sept 21

ART has acquired a prime greenfield site for S$62.4 million for its maiden development project. It will build the first co-living property in one-north, Nepal Hill. The property, branded as lyf one-north Singapore, is targeting to achieve Temporary Occupation Permit by 2020, and open in 2021. Developing a greenfield project will allow the trust to have a cheaper entry cost and enjoy higher yields. The expected net yield on a stabilised basis is 6 per cent versus 4 per cent for its existing properties in Singapore. The estimated cost of S$117 million will be funded by debt. Post-transaction gearing will be 37.2 per cent. The performance of Singapore serviced residence segment has been weak due to strong supply and weaker corporate demand. As opposed to existing properties which target working professionals, lyf one-north will target millennials, characterised by smaller units with larger communal facilities. We reduce our FY18-FY20F DPU forecasts by 3-6 per cent after removing our assumption that the trust will acquire an asset that is already generating revenue.

Keppel Corporation > Hold Target price: S$7.37 Sept 21 close: S$7.03 UOB Kay Hian, Sept 21