Potential domino effect
- Downgrade to FULLY VALUED; lower TP to US$0.07, pegged to 0.11x P/NAV (assuming lower NAV)
- Following its peer taking a hard stance in a surprise move to suspend distributions despite its financial metrics falling within limits, there could be potential domino impact on PRIME
- As such, we are taking a pre-emptive stance prior to PRIME releasing its results given its weaker financial standing
- All eyes on valuation adjustments in the upcoming results
Downgrade to FULLY VALUED; lowered TP to US$0.07. We downgrade our rating to FULLY VALUED from HOLD previously and lower our TP to US$0.07 from US$0.18. We pegged our TP to 0.11x P/NAV assuming NAV could decline by another 15%. We are taking a pre-emptive stance, prior to PRIME releasing its results, on a potential domino impact from KORE’s recent actions to suspend distributions for better capital management. PRIME has weaker financials and faces the risk of its gearing spiking to above the 45% MAS limit should its asset value decline by more than for its peers. We continue to watch for re-rating catalysts, such as i) stronger signs of a recovery in the US office market, ii) the Fed pausing/cutting interest rates, and iii) an improvement in macroeconomic sentiment/outlook.
