Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Singapore industrial Reits: Why analysts recommend ‘buy’

Research teams are bullish on Singapore-listed real estate investment trusts (S-Reits) that are focused on industrial properties, suggesting investors to ‘accumulate’ on dips.

Source: Bloomberg
  • Ascendas Reit (SGX: A17U) share price rises 0.3% to S$2.96
  • Frasers Logistics & Commercial Trust (SGX: BUOU) declines to S$1.39 per share
  • Mapletree Logistics Trust (SGX: M44U) unit price climbs 1.6% to S$1.88
  • Industrial S-Reits’ potentially robust distributions are not priced into share prices yet, DBS says
  • OCBC recommends longer-term investors to buy on dips of high-quality names
  • Trade Singapore stocks with an IG account

Will industrial S-Reits’ distributions grow 7% in 2021?

DBS Group’s research team reckons it is now ‘time to accumulate’ holdings of large-cap industrial S-Reits, given that their stock prices have corrected by 18% from their recent peak, due to a spike in 10-year yields and rotational interest into the more cyclical retail and office subsectors.

That said, DBS sees value emerging, as the latest price slump mirrors closely the 21% peak-to-trough drop in 2013, but the fundamentals are stronger now.

The analysts are buying on the dips, as they expect distribution per unit (DPU) growth to accelerate to about 7% in FY2021.

DBS estimated large-cap industrial players will record DPU growth of 7% this year, fuelled by accretive deals amid ‘a virtuous cycle of acquisition growth’. It believes the industrial S-Reits’ ability to deliver robust pre-pandemic distributions has not been priced into the stock prices.

Meanwhile, OCBC analysts noted that the overall S-Reit sector’s shares have come under selling pressure in recent weeks, in response to the sudden spike in sovereign bond yields.

OCBC is thus more cautious in the near term and expects volatility in the months ahead. However, investors should also focus on the underlying drivers, such as a stronger economic outlook, which will support a recovery in S-Reits’ operational performance, OCBC suggested.

Which Reits are analysts’ favourites?

DBS’ picks are Ascendas Reit (A-Reit), Frasers Logistics & Commercial Trust (FLCT), and Mapletree Logistics Trust (MLT).

It noted that A-Reit and FLCT offer ‘good value with yield spread of around 4.1%, wider than pre-pandemic levels’. The research team also likes MLT for its Asia-Pacific footprint and pivot into the Indian logistics space.

DBS’ target prices on A-Reit, MLT, FLCT, and Mapletree Industrial Trust (MINT), are S$4, S$2.35, S$1.85, and S$3.25 respectively.

OCBC suggested investors with a longer-term horizon to buy on dips of high-quality S-Reits which are expected to benefit from secular growth trends with room for solid inorganic growth opportunities.

Top ‘buy’ ideas for OCBC are A-Reit with a S$3.89 fair value (FV), FLCT with a S$1.62 FV, Keppel DC Reit with a S$3.51 FV, MINT with a FV of S$3.51, and MLT with a S$2.17 FV.

On Sunday, Citi wrote that year-to-date, MINT has underperformed S-Reits, and its current valuations thus represent a ‘good buying opportunity’ with estimated yields of 4.7% for FY2021 and 5.2% for FY2022.

By Tuesday’s midday break, A-Reit was trading 0.3% higher at S$2.96, FLCT fell 0.7% to S$1.39, MLT climbed 1.6% to S$1.88, MINT advanced 1.5% to S$2.68, while Keppel DC Reit gained 1.9% to S$2.66.

Trade the most exciting stocks with IG - long or short today

Create an IG account or log in to your existing account to get started now.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.