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Stocks to watch: Reits, Yongnam, Tiger Air
1. SINGAPORE real estate investment trusts (Reits), after the Monetary Authority of Singapore (MAS) put forward proposals on Thursday to improve the corporate governance of Reits, and to ensure that fees paid to Reit managers are aligned with the interests of unit holders.
Commenting on the MAS announcement, an analyst said the proposals are a "positive boost" for the Reit/property sector: "We see the proposals as generally positive for the Reit sector which, when passed, will result in a reduction of fees and greater transparency and alignment between Reits and their unit holders. This should increase the attractiveness of Reits to investors. A strong and functioning Reit sector is also a long-term positive for sponsor/property developers who have another avenue for asset recycling efficiently. Our picks for the sector remain Frasers Centrepoint Trust, Mapletree Commercial Trust, Cache Logistics Trust, and Frasers Commercial Trust.
"These proposals, when passed, could potentially have a detrimental impact on ARA Asset Management, which is estimated to derive about 55-60 per cent of its revenues from fees derived from its managed Reits. A 10 per cent reduction in fees will have a 5-6 per cent impact on its earnings."
2. Yongnam Holdings, which has secured three sub-contracts worth a combined S$76.6 million for work relating to the Thomson-East Coast MRT Line and a project in Hong Kong. The deals include two in Singapore which the structural steel contractor and specialist civil engineering solutions provider won through wholly-owned Yongnam Engineering & Construction.
3. Tiger Airways, which is sub-leasing 12 aircraft to Indian carrier IndiGo as it seeks to rightsize its fleet amid overcapacity in the market. The move will see the carrier making a one-off accounting provision of some S$93 million. The loss-making budget airline - which is 40 per cent-owned by Singapore Airlines - said it is also considering various funding options, including the possibility of a rights issue.