Singapore REIT Fundamental Analysis Comparison Table – 5 Nov 2018

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FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased slightly from 802.97 to 761.61 (-5.15%) as compared to last post on Singapore REIT Fundamental Comparison Table on Oct 1, 2018.  The REIT index broke down from a Symmetrical Triangle, a consolidated pattern, to continue the bearish down trend with minimum index target of 740.

Currently the index is trading in a very bearish mode with all 3 moving averages are trending down. More down side is expected although the FTSE ST REIT Index has dropped close to 13% from the peak. Based on the chart pattern and trend analysis, Short, Medium and Long Term trend for Singapore REIT direction is DOWN!

Fundamental Analysis

  • Price/NAV decreases from 0.99 to 0.93 (Singapore Overall REIT sector is under value now).
  • Distribution Yield increases from 6.77% to 7.16% (take note that this is lagging number). About 46% of Singapore REITs (18 out of 39) have Distribution Yield > 7%.
  • Gearing Ratio reduces slightly from 34.6% to 34.5%.  20 out of 39 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy.
  • Most overvalue REIT is Parkway Life (Price/NAV = 1.53), followed by Keppel DC REIT (Price/NAV = 1.31), Ascendas REIT (Price/NAV = 1.23) and Mapletree Industrial Trust (Price/NAV = 1.26).
  • Most undervalue (base on NAV) is OUE Comm REIT (Price/NAV = 0.51), followed by Fortune REIT (Price/NAV = 0.58), Keppel KBS US REIT (Price/NAV=0.64),  Starhill Global REIT (Price/NAV = 0.76), Far East Hospitality Trust (Price/NAV = 0.72),  and EC World REIT (Price/NAV = 0.74).
  • Highest Distribution Yield (TTM) is Lippo Mall Indonesia Retail Trust (12.13%), followed by Keppel KBS US REIT  (10.67%), OUE Comm REIT (9.61%), Sasseur REIT (9.02%), SoilBuild  BizREIT (8.99%), Cromwell European REIT (8.59%), EC World REIT (8.73%) and Cache Logistic Trust (8.82%).
  • Highest Gearing Ratio are Far East HTrust (40.3%) and OUE Comm REIT (40.3%).
  • Note: VIVA Industrial Trust is removed as the trust is merged into ESR REIT.

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Seminar here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation.

  • 1 month increases from 1.51200% to 1.51592%
  • 3 month increases from 1.63740% to 1.64286%
  • 6 month increases from 1.75300% to 1.75705%
  • 12 month increases from 1.96141% to 1.96875%

The FTSE ST REIT index is selling down in anticipating the coming Dec rate hike to 2.5%.   The current probability of interest rate hike to 2.5% is 68.8%, dropped from 74.4% compared to previous month.

 

Summary

Fundamentally the whole Singapore REITs is under value now.  Overall yield for Singapore REIT is getting attractive (average yield of 7.16%). The last time we have seen Price/NAV = 0.93 and Distribution Yield of more than 7% is back to Dec 2015. Compared to the Singapore REIT Fundamental Comparison Table in Dec 2015 to see the similarity and you should be able to identify some attractive opportunities.

 

Yield spread (reference to 10 year Singapore government bond) has widened from 4.238%  to 4.654%.  DPU yield for a number of small and mid cap REITs are very attractive  (>8%) at the moment.  Some big cap REITs are also getting attractive in terms of valuation and yield.

 

Technically, the REIT index is trading on the down trend and there is no sight of bottoming yet. It is expected more down side for big cap REIT as the FTSE ST REIT index is heavily weighted on the big cap REIT. However,  the risk premium is very attractive for small and medium cap REITs now. Investors can do some selective shopping when the down trend stop for those REITs.

If you can find any REITs which are under value, high distribution yield with consistent growth in DPU, limited down side based on the chart, what are you waiting for? Get your shopping list ready for early Christmas present!

 

Happy Investing!

 

See all other relevant  Singapore REITs blog posts here.

If you need an independent professional review on your current REIT portfolio and need any recommendation, you may engage me in the REIT portfolio Advisory. REITs Portfolio Advisory.  http://mystocksinvesting.com/course/private-portfolio-review/

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