Revival Of HSR A Potential Bonanza
Jem, LREIT’s largest asset which accounts for 59.3% of its portfolio valuation, will benefit from the revival of the HSR. The upcoming HSR, if agreed and constructed, would bring more vibrancy to Jurong Gateway as the second CBD in Singapore. Jem will benefit from an increase in shopper traffic due to patronage of employees working in office buildings nearby and tourists from across the ASEAN region. BUY for its attractive FY23 distribution yield of 6.2%. Target price: S$0.99.
WHAT’S NEW
• Warmer ties rekindle HSR. Prime Minister Ismail Sabri Yaakob has expressed Malaysia’s eagerness to revive the 350km Kuala Lumpur (KL)-Singapore High Speed Rail (HSR), which cuts travelling time between KL and Singapore to 90 minutes. If possible, the Malaysians would like to speed up the planning process as Malaysia also wants to establish a HSR between Kuala Lumpur and Bangkok. The HSR could connect Singapore all the way to Bangkok if all three ASEAN countries can reach an agreement.
• Prime Minister Lee Hsien Loong stated that Singapore would be receptive to fresh proposals on the HSR project during a joint press conference with Datuk Seri Ismail to launch the Vaccinated Travel Lane – Land in Dec 21. Since then, the ministries of transport of both Singapore and Malaysia have been in constant dialogue.
• Terminal station for HSR located near Jem. The terminal station for the HSR in Singapore would be situated at Jurong Lake District. The 12ha site is currently occupied by Jurong Country Club and is 600m from Jurong East MRT Station, which is served by the North South and East-West MRT lines. Connectivity will be enhanced when Jurong Region Line Phase 2 is completed in 2027.
STOCK IMPACT
• Prime beneficiary of the KL-Singapore HSR. LREIT’s newly acquired Jem is located adjacent to the Jurong East MRT Station, which is 600m away from the HSR’s terminal station. Jem has become LREIT’s largest asset, accounting for 59.3% of portfolio valuation (suburban retail: about 46%, office: about 13%) after LREIT completed the acquisition of the remaining 68.2% stake on 22 Apr 22.
• Jem will benefit from increased shopper traffic. The upcoming HSR, if agreed and constructed, would bring more vibrancy to Jurong Gateway as the second CBD in Singapore. Jem will benefit from an increase in shopper traffic brought about by the patronage of employees working in office buildings nearby and tourists from across the ASEAN region.
