MARKET PULSE: A-REIT, CDLHT (07 Jun 2012)

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.22

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 2.04

MARKET PULSE: A-REIT, CDLHT

07 Jun 2012

KEY IDEA Ascendas REIT: Fortified financial position Summary: Ascendas REIT's (A-REIT) share price performance has clearly attested to its resilience, gaining 10.4% YTD as opposed to a 4.3% increase in the broader market. The strength, in our opinion, is mainly attributable to its diversified portfolio of 102 properties, healthy lease profile, strong sponsor and quality management. Outlook is also expected to remain sanguine, with recent acquisitions and developments likely to contribute positively to its performance. We also note that A-REIT's financial position had been fortified by the recent private placement and divestment of Goldin Logistics Hub. This is likely to provide it with greater financial ability to capitalize on growth opportunities, as well as secure borrowings at potentially more competitive terms to fund its committed investments. We maintain our BUY rating with an adjusted fair value of S$2.22 (S$2.31 previously) on A-REIT, after factoring in the developments. (Kevin Tan) MORE REPORTS CDL Hospitality Trusts: Singapore room rates can grow substantially Summary: On a worldwide basis, Singapore commands fairly high hotel room rates, but still has substantial room to grow in comparison to other quality destinations worldwide. Travelers from China, India, Australia, HK and the UK, which form half of the top ten places of origin for travelers to Singapore in 2011, are willing to pay 24-61% more for a hotel room in the most expensive destinations versus Singapore. Regional low-cost carriers will continue to further enhance the relative affordability of Singapore hotels and increase their ability to raise rates. We maintain a BUY rating on CDLHT and our fair value of S$2.04. (Sarah Ong)

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NEWS HEADLINES - US stocks rallied, with the Dow and S&P 500 gaining the most for 2012 (climbing 2.4% and 2.3% respectively), on speculation that the world's central bankers will move to stimulate growth. - Australia's economy surged with a 4.3% growth for the year through March, its fastest expansion in over four years since the financial crisis. A key driver was engineering construction, mainly in mining, which saw a 19.7% jump. - United Envirotech has won a RMB104m (S$21m) engineering procurement and construction project in Liaoning province, China. The contract, awarded by the municipal government, involves upgrading a municipal wastewater treatment plant. - Sembcorp Industries has signed a JV for an industrial wastewater treatment plant in China's Jiangsu province. The project gives Sembcorp exclusivity as provider of industrial wastewater treatment within an industrial park.