Company Name: MAPLETREE GREATER CHINACOMM TR
| Research House: HSBC | Price Call: HOLD | Target Price: 1.10 |
HSBC initiates Mapletree Greater China Commercial Trust (RW0U.SG), or Magic, at Neutral with $1.10 target.
It calls Magic's portfolio "best in class," on the quality of tenants and size, offering a quality Greater China commercial-property exposure. It expects the portfolio to see steady rental growth on the two assets' relatively resilient nature, high occupancy levels and periodic rental step-up provisions.
"We believe Magic is well-positioned to enhance rental growth via asset enhancements and/or acquisitions, both of which should be supported by the track records of Magic's management and sponsor." It estimates FY14-15 DPU growth at 7.2% and 6.7% respectively, with the trust offering fiscal-FY14-15 dividend yields of around 5.2%-5.5% at the current share price.
But based on HSBC's target price, the stock only offers an 11% potential return including forecast dividend yield, which isn't high enough to clear the house's "hurdle rate" for a volatile Singapore stock, leading to the Neutral call. The stock is down 0.5% at $1.045.
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