S-REITs Bi-Weekly Updates (1-15 May 22)
Uncertainties prevail as the Russia-Ukraine War remains in a protracted stalemate while
COVID-19 disruptions are causing slower growth in China. Domestically, the
normalisation in consumption continues and more employees are now working from
their offices. Pent-up demand is seen from the surge in inbound leisure and business
travellers and outbound Singaporeans. BUY ART (Target: S$1.32), FCT (Target: S$2.96),
FEHT (Target: S$0.82) and LREIT (Target: S$1.01). Maintain OVERWEIGHT.
WHAT HAPPENED IN THE LAST TWO WEEKS
• FSTREI corrected 5.1% in the past two weeks. The Vaccinated Travel Framework was
launched on 1 Apr 22 and the requirement for pre-departure COVID-19 tests was
subsequently abolished on 26 Apr 22. The reopening led to visitor arrivals recovering by
43% mom to 294,304 in the month of April, reaching 19% of pre-pandemic levels. Hotels
welcomed the return of tourists and benefitted from an increase in bookings from business
guests, especially those from Europe and the US. Bookings for function rooms and
ballrooms have surged. Event organisers were placed on a waiting list as demand
outweighs supply of venues. The full impact of the reopening is expected in 2H22.
• Inflation remains elevated with US CPI at 8.3% in Apr 22. Yield for 10-year Singapore
government bonds increased by 24bp to 2.77% during the first two weeks of May. The
FSTREI corrected 5.1%, comparable to the decline of 4.9% for the FSSTI.
• Top outperformer: MAGIC’s unit price was stable, supported by MCT’s takeover offer at
S$1.1949. PREIT’s unit price lost only 1.9% due to its defensive and counter-cyclical
healthcare business. SASSR’s 1Q22 DPU grew 3.6% yoy but declined 2.4%. CICT’s unit
price dropped 2.6%, protected by its diversified businesses and funding.
• Top underperformer: CERT corrected 10.9% due to the perceived negative repercussion
from the Russia-Ukraine war. Logistics REITs MLT and FLT dropped 9.5% and 6.9%
respectively. Office REITs KREIT and SUN declined 8.2% and 6% respectively. FHT lost
6.2% as rumours on a potential privatisation have subsided