Recent Reports

  • First REIT – A cautionary tale

    Tara Wong | Phillip Securities Research Pte Ltd | Jan 21, 2019
    • FY18 Revenue and NPI were in line with our forecast. DPU outperformed our estimates by c.5% due to a S$15mn income tax benefit arising from a write-back of provision for deferred tax on fair value loss on investment properties, as a result of a reduced tax rate.
    • 4.7% and 4.5% YoY boost in FY18 Gross Revenue and NPI, respectively, driven by two acquisitions made in 4Q17.
    • Cost of debt relatively stable at c.3.84% despite rising interest rates.
    • Receivables continue to mount, against backdrop of uncertainty over upcoming lease expires, though some S$8mn of rental payments has since been received on Jan 15, 2019.
    • Ceasing coverage due to reallocation of internal resources.


  • First REIT – Challenging times

    Tara Wong | Phillip Securities Research Pte Ltd | Jan 16, 2019
    • FIRT will be re-positioned to identify more strongly with the new co-Sponsor, OUELH.
    • No compromise on paying distributions to unitholders, against the backdrop of extended receivables days.
    • Price overhang as fund-raising is likely in the near-horizon in order to execute portfolio diversification strategy of acquiring from new co-Sponsor, OUELH.
    • De-rating catalyst: expiring leases likely to be re-negotiated with a lower quantum and/or on IDR-denominated terms (currently on SGD-denominated terms).
    • Maintain Neutral; new target price of $0.88 (previously $1.30).
  • CapitaLand Limited – Another behemoth step

    Tara Wong | Phillip Securities Research Pte Ltd | Jan 15, 2019
    • CapitaLand announced the proposed S$11bn acquisition of Ascendas-Singbridge (ASB).
    • The transaction will increase CapitaLand exposure to Industrial and Logistics assets and emerging markets such as India. It will also further boost CapitaLand recurring income.
    • Immediately accretive to EPS (+4%) and ROE (+9%), but slightly dilutive to NAV (-4%).
    • Maintain ACCUMULATE with TP of S$4.00.
  • 2019 U.S. Banking Sector Outlook – Market too pessimistic

    Edmund Xue | Phillip Securities Research Pte Ltd | Jan 3, 2019

    • We have an Overweight recommendation for the U.S. Banking Sector. Valuations are at 25-year lows.
    • Recent flattening of the yield curve is likely to have bottomed and will not herald a recession in the upcoming year
    • Funding costs will pick up pace but offset by faster loan repricing and sufficient supply of funds of banks
    • Asset quality remains benign, with small business commercial and industrial (C&I) loans driving loans growth

  • Phillip Macro – 5 key points from December FOMC Meeting

    Edmund Xue | Phillip Securities Research Pte Ltd | Dec 20, 2018
    • The Fed hiked the Fed Funds Rate to 2.5% for the first time since March 2008.
    • There will be two more rate hikes for next year and one more in 2020.
    • Fed upgraded its GDP forecast for 2018 to 3.1% from 3.0%.
    • The Fed has adopted a more dovish tone in the FOMC statement.
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