Market View

Watch out for Omicron

  • Omicron, a new COVID-19 variant, was last week identified by WHO as a variant of concern
  • Concerns over Omicron’s threat sparked a selloff in the US markets on Friday, while many governments have already announced travel restrictions from South African countries
  • Still uncertain over how the situation could develop but if Omicron triggers a new wave of restrictions, this could push back recovery by 6-9 months
  • Expect short-term pressure on reopening names in travel and hospitality, office and retail while COVID-19 beneficiaries such as those in healthcare, medical supplies and logistics should be more resilient
  • STI support at 3100, strong support at 3040, pending results on the efficacy rates of currently available vaccines against Omicron, which should be announced before end-December

Stocks to Watch

Thai Beverage

Last chance to buy the dip?

  • FY21 financials in line, net profit up c.6% y-o-y on lower promotion expense
  • Sales volumes to recover as vaccination rates in Thailand and Vietnam rise
  • Advertising spend likely to normalise but remains lower than pre-COVID level
  • Maintain BUY with TP of S$0.92

IREIT Global

Secured new tenant for Münster Campus

  • IREIT Global has successfully secured a new lease with a German federal government body to take up all five floors of office space at Münster Campus once its existing key tenant, GMG, vacates when its lease expires in March 2022
  • The new tenant is a municipal association of 27 cities and districts from the region “Westfalen-Lippe” and is one of Germany’s largest associations offering aid to people with disabilities
  • Under the lease agreement, the new tenant will take up one upper floor at Münster North and four upper floors at Münster South 
  • The rental rate secured is similar to GMG’s lease and will expire on 31 December 2027 and has two prolongation options of five years each
  • With the new lease agreement, the office space at Münster Campus will be 100% occupied from September 2022
  • This is a positive development that is in line with our expectations and forecast