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Business Times
6 days ago
- Business
- Business Times
‘Attractive valuations:' DBS says it's time to buy these industrial S-Reits on easing trade tensions
[SINGAPORE] The tide could soon turn for underperforming industrial Singapore-listed real estate investment trusts (S-Reits) as the sector looks set for a comeback, with attractive opportunities for re-entry, according to a DBS Group Research report on Thursday (Jun 12). Industrial S-Reits have declined by 5 per cent on average in share price since the beginning of the year. But the research house said that progress in recent trade negotiations between Washington and Beijing has led to an improved near-term outlook for such S-reits, which have been affected by trade uncertainties, as well as interest rate and currency fluctuations. This opens an 'attractive opportunity not to be missed' for the sector, which has an average DPU yield of 5.8 per cent to 9.8 per cent, more than 1 per cent higher than retail S-Reits, it added. DBS also expects borrowing costs for large-cap industrial S-Reits to decrease amid falling interest rates, which have declined by 1.4 to 1.7 per cent year-to-date compared with 2024. Furthermore, the strengthening of the yen, euro and pound against the Singapore dollar could ease FX-related pressures on earnings for such S-Reits with exposure to these markets. Altogether, this will better enable large-cap industrial S-Reits to capitalise on acquisition opportunities to achieve further growth, it added. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'Industrial and retail SREITs, given their stable income profiles, are seen as defensive plays,' said DBS. But in recent years, industrial S-Reits have been especially affected by high interest rates and currency volatility. From FY2021 to 2024, DPUs for industrial S-Reits have suffered an average drop of 3.7 per cent, compared with 0.1 to 1.5 per cent growth for Singapore-focused retail Reits. For FY2025-2027, however, the research house projects industrial and retail S-Reits to experience growth of 0.3 to 1 per cent and 1.2 per cent, respectively, driven by positive reversions from growing rental, contribution from acquisition and lower interest costs. Top picks Capitaland Ascendas Reit, Mapletree Logistics Trust and ESR Reit are DBS' top picks for potential 'alpha opportunities'. These stocks have been supported by attractive valuations, with implied asset yields of 6 per cent (above book cap rates) at a five-year high, with further potential upside earnings on the back of declining interest rates. Amid trade uncertainties caused by the US tariffs, DBS' sector preferences remained unchanged. It favours the retail, industrial, office and hotel sectors, in that order, with a focus on defensive names. Retail S-Reits, on the other hand, have been resilient and stable in recent months, compared with the industrial S-Reit sector, said the research house. It does not anticipate any immediate effects on the retail S-Reit sector despite possible prolonged tariff conflict fuelling inflation and further uncertainty, and attributes the resilience of the sector to record-high occupancy rates.
Yahoo
05-06-2025
- Business
- Yahoo
Singapore's Government Bond Yield Curve Has Scope to Flatten, DBS Says
0239 GMT — Singapore's government bond yield curve has scope to flatten, DBS Group Research analysts say in a note. First, the recent price rally of short-dated government securities may have 'gone too far too fast,' the analysts say. Second, if local rates remain low and U.S. dollar stays persistently weak, there would likely be investor interest in extending duration.
Business Times
23-05-2025
- Business
- Business Times
The best is yet to be for Tengah property prices, say DBS analysts
[SINGAPORE] Property developers such as GuocoLand could benefit from a potential rise in home prices near popular primary schools, particularly in emerging areas like Tengah New Town. Still, DBS Group Research cautioned in a report, titled 'Primary school premium: Fact or Fiction?', that price appreciation also depends on factors such as transport access, tenure, and project attributes. DBS analysts Tabitha Foo and Derek Tan said in the report, published on Thursday (May 22), that some primary schools are more popular than others because of historical ties valued by parents who are alumni, or their specialised programmes, the school culture, or proximity to home. Under Singapore's school balloting system, children living nearer oversubscribed schools are given higher priority for admission, which has prompted some parents to buy homes nearby to boost their child's chances of a place, they added. 'This 'proximity advantage' could make nearby properties more attractive to parents seeking to maximise their admission priority,' they said. However, while properties within 1 or 2 km of such schools generally appreciate more in price than their district averages, the trend is not consistent across all locations, the analysts noted. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up For instance, the analysts said that a study of a sample of popular schools found that homes near Catholic High School and CHIJ St Nicholas Girls' School registered compound annual growth rates that were generally over 5 per cent – higher than their respective district averages. In contrast, properties near Singapore Chinese Girls' School and Rosyth School recorded more mixed results; some projects near these schools underperformed their surrounding districts. The analysts said that while moving closer to a popular school is 'one of the key factors driving potential price appreciation', it is also important to consider other factors. These include entry timing and price, proximity to MRT stations, lease tenure, the age of the project, the availability of multiple primary schools, and other development attributes. These considerations, they noted, may explain the variation in price trends across different school zones, despite similar proximity advantages. Looking ahead, the analysts said the upcoming Tengah New Town could be a development to watch, particularly with Anglo-Chinese School (Primary) School planning to relocate there by 2030. While the analysts said it is still early to quantify the impact the school's relocation will have on property prices in Tengah, they observed that the town is rapidly developing with numerous Build-To-Order launches, as well as the award of multiple Executive Condominium sites. DBS' report cited the awarding of a recent private condominium land parcel in Tengah to GuocoLand, Hong Leong Holdings and CSC Land Group in January under the Government Land Sales programme. The 25,458.4-square-metre site on Tengah Garden Avenue is zoned 'Residential with Commercial at 1st storey', and can potentially yield about 860 residential units. GuocoLand, which announced its results in February for its first half-year ended Dec 31, 2024, noted steady demand for its residential developments in Singapore. The property developer reported a net profit of S$74.6 million for H1, up 13 per cent from S$66.2 million in the year-ago period. The group attributed the improved performance to its main business engines: property investment and property development.
Business Times
23-05-2025
- Business
- Business Times
School proximity may boost home prices – but not everywhere: DBS report
[SINGAPORE] Property developers such as GuocoLand could benefit from a potential rise in home prices near popular primary schools, particularly in emerging areas like Tengah New Town. Still, DBS Group Research cautioned in a report, titled 'Primary school premium: Fact or Fiction?', that price appreciation also depends on factors such as transport access, tenure, and project attributes. DBS analysts Tabitha Foo and Derek Tan said in the report, published Thursday (May 22), that some primary schools are more popular than others because of historical ties valued by parents who are alumni, or their specialised programmes, the school culture, or proximity to home. Under Singapore's school balloting system, children living nearer oversubscribed schools are given higher priority for admission, which has prompted some parents to buy homes nearby to boost their child's chances of a place, they added. 'This 'proximity advantage' could make nearby properties more attractive to parents seeking to maximise their admission priority,' they said. However, while properties within 1 or 2 km of such schools generally appreciate more in price than their district averages, the trend is not consistent across all locations, the analysts noted. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up For instance, the analysts said that a study of a sample of popular schools found that homes near Catholic High School and CHIJ St Nicholas Girls' School registered compound annual growth rates that were generally over 5 per cent – higher than their respective district averages. In contrast, properties near Singapore Chinese Girls' School and Rosyth School recorded more mixed results; some projects near these schools underperformed their surrounding districts. The analysts said that while moving closer to a popular school is 'one of the key factors driving potential price appreciation', it is also important to consider other factors. These include entry timing and price, proximity to MRT stations, lease tenure, the age of the project, the availability of multiple primary schools, and other development attributes. These considerations, they noted, may explain the variation in price trends across different school zones, despite similar proximity advantages. Looking ahead, the analysts said the upcoming Tengah New Town could be a development to watch, particularly Anglo-Chinese School (Primary) School planning to relocate there by 2030. While the analysts said it is still early to quantify the impact the school's relocation will have on property prices in Tengah, they observed that the town is rapidly developing with numerous Build-To-Order launches, as well as the award of multiple Executive Condominium sites. DBS' report cited the awarding of a recent private condominium land parcel in Tengah to GuocoLand, Hong Leong Holdings and CSC Land Group in January under the Government Land Sales programme. The 25,458.4 sq m site on Tengah Garden Avenue is zoned 'Residential with Commercial at 1st storey', and can potentially yield about 860 residential units. GuocoLand, which announced its results in February for its first half-year ended Dec 31, 2024, noted steady demand for its residential developments in Singapore. The property developer reported a net profit of S$74.6 million for H1, up 13 per cent from S$66.2 million in the year-ago period. The group attributed the improved performance to its main business engines: property investment and property development.
Business Times
16-05-2025
- Business
- Business Times
DBS Group Research upgrades SIA Engineering to a buy on ‘compelling growth,' raises target price
[SINGAPORE] DBS Group Research upgraded SIA Engineering's (SIAEC) stock to a 'buy' from a 'hold', citing limited exposure to tariff-related factors, growth ahead, among other factors. The group's price target was increased to S$2.80 from S$2.50. '(The upgrade reflects) SIA contract repricing upside, compelling growth narrative, and limited exposure to trade-related disruptions,' the research house said its note on Thursday (May 15). Given its parent company's strategy to maintain a young, technologically advanced fleet of airplanes, SIAEC is usually quick to gain expertise in maintaining new aircraft types and can win third-party business relating to these new age aircraft, DBS Group Research noted. It has the 'technology edge and strong captive business volumes owing to SIA parentage; (and is) well-positioned for long-term MRO (maintenance, repair and operations) demand growth, given its established partnerships with leading OEMs (original equipment manufacturers)', analyst Jason Sum wrote. The group's strategic partnerships with leading OEMs such as Safran and Rolls-Royce position it favourably for long-term growth in services, the note added. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up For the full financial year 2024/25, SIAEC's net profit grew 43.8 per cent to S$139.6 million. It said the increase was supported by stable growth in the demand for aircraft MRO. The group's total revenue for the year increased by 13.8 per cent to S$1.2 billion, from S$1.1 billion. While group expenditure also grew, it rose at a slower pace of 12.7 per cent, with the increase largely due to higher manpower costs and increased material consumption. SIAEC is poised to capitalise on burgeoning air travel demand in the region, said Sum. In addition to its own operations in Singapore, Japan and the Philippines, SIAEC's broader network of associates and joint ventures is primarily concentrated in Asia, positioning the group's earnings for growth alongside the normalisation of traffic in the region. Furthermore, the group's facilities are better suited to servicing widebody aircraft used for longer distance international flights. Over the next few years, SIAEC has multiple levers in place to drive growth, including developing new engine capabilities and base maintenance operations in Subang this year, according to the note. Additionally, the group was recently selected to be Air India's strategic MRO partner and is poised to capitalise on the promising long-term growth outlook of the Indian aviation market. 'This reflects our upward earnings revision and greater conviction in the group's trajectory toward stronger core operating performance,' said Sum. 'We also favour its relative insulation from tariff-related risks, which reinforces the quality of its earnings outlook,' he added. SIAEC shares were trading at S$2.44 at 4 pm on Friday, up 1.3 per cent or S$0.03.
