HAS THE SLEW of trust listings stoked wider and renewed investors’ interest in this sector? Brokers are now taking orders for the Religare Healthcare Trust, sponsored by Fortis Healthcare, which is being bandied around at between 88 to 97 cents. This IPO, which is seeking to raise between $500 to $550 million, is being pitched to offer, depending on the final price, a first-year yield of between 8.46 and 9.1% and a second-year yield of between 8.66 and 9.29%. The counter is scheduled to start trading on Oct 19.
Prior to Religare, the most recently-listed trust was Far East Hospitality Trust (FEHT), which owns certain hotel assets hived off by property giant Far East Organization. Since its listing on Aug 27, it has gained nearly 14% from its IPO price of 93 cents.
To date, four brokers have initiated coverage on this counter, according to Bloomberg data. Both HSBC and Goldman Sachs have given FEHT a target price of $1.02. OCBC Investment Research is more upbeat, with analyst Sarah Ong calling for $1.08.
DBS Vickers’ Derek Tan and Lock Mun Yee are the most bullish, calling for $1.10. They are optimistic on this counter based on, among other reasons, the potential for the trust to increase its asset base by seven additional properties from its sponsor, which then increase the number of “keys” (hospitality industry’s measurement of rooms) by more than 49%.
Meanwhile, Ascendas Hospitality Trust, which owns a slew of properties across the region, has not done too badly either. Even though this counter fell on its trading debut on July 26, it has since gained 3 cents to close on Oct 5 at 91 cents. The five brokerages covering this stock are either “overweight” or “neutral”, with target prices ranging between 95 cents to $1.03.
Even CitySpring Infrastructure Trust, which was the first of its kind to list here, has seen stirring of interest over the past few weeks. Even without active analyst’s coverage for more than a year, it is now trading at its 52-week high, closing on Oct 5 at 44.5 cents. This stock sank to as low as 31 cents last December.
In the trust’s last reported results back in Aug 2, its revenue for the quarter was up 19.8% y-o-y to $132.6 million. Cash earnings, the indicator used by this trust for its profitability, reached $22.3 million, up $18.7 million from $3.6 million in the year earlier period. Distribution per unit was 0.82 cents. Tong Yew Heng, CEO of the trust’s manager, attributes the gain in that quarter to higher selling prices for its town gas business.
Hutchison Port Holdings Trust (HPHT), which owns the container port assets divested by Hong Kong tycoon Li Ka-Shing, is arguably the most widely followed trust in the Singapore stock market.
To date, according to Bloomberg data, there are 21 brokerages covering this stock. Besides the usual local names, HPHT has also attracted coverage from some international brokers like Jefferies, EVA Dimensions and Clarkson Capital Markets. As of Oct 5, there are 16 “buy” calls, six “holds” and two “sells”, with price targets ranging between 73 and 95 US cents.
Most recently, on Oct 4, Maybank-KimEng joined in the fray. Analyst Bernard Chin initiated coverage of HPHT, calling it a “fallen angel” and pegging a price target of 92.5 US cents. The stock closed on Oct 5 at 79 US cents, up 3 cents for the day.
Investors in this counter since its IPO at US$1.01 last March would still be smarting from their losses of more than 20% to date. “A mispriced IPO and, more recently, concerns about economic growth in China and Hong Kong, were said to have been contributing factors. However, we think that current pricing levels, which imply yields of 8.4-9.1%, are attractive vis-a-vis its regional peers, REITs and other business trusts, adding to its compelling investment case,” writes Chin.
He notes that the trust, regardless of the market conditions, is still one of the largest container port assets which investors can depend on for yield. “Its current depressed price provides a rare opportunity to own a resilient business which would also be a beneficiary of a global economic recovery,” states Chin.
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