STOCKS NEWS SINGAPORE-OCBC prefers office to retail REITs

Tue Aug 21, 2012 4:57am BST

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With Singapore real-estate investment trusts (REIT) outperforming the broader market this year, OCBC Investment Research said investors should switch to office REITs instead of domestic retail ones.

The FT ST Real Estate Investment Trust Index has gained 23.4 percent so far this year, compared to the Straits Times Index's 15 percent gain.

OCBC upgraded office REITs to 'overweight' as they are likely to benefit from limited new supply in the pipeline and better-than-expected demand in the second quarter. The brokerage prefers CapitaCommercial Trust, on which it has a 'buy' rating and a target price of S$1.53.

However, OCBC downgraded local retail REITs to 'neutral', citing rich valuations as most positives have been priced it. It has a 'hold' on CapitaMall Trust and a target price of S$2.04.

OCBC also likes industrial REITs, due to firm growth drivers and financial positions, and Cache Logistics Trust is its top pick with a 'buy' rating and target price of S$1.18.

With forward distribution per unit yields at 7.7 percent, the sector offers one of the highest yields amongst REITs, the brokerage said.

1150 (0350 GMT)

(Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com)

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10:53 STOCKS NEWS SINGAPORE-CIMB cuts F&N target price

CIMB Research cut its target price for Singapore conglomerate Fraser and Neave to S$9.85 from S$10, and kept its 'outperform' rating, after taking into account a 15 percent discount to its property assets.

By 0242 GMT, F&N shares were down 0.2 percent at S$8.38, but have gained 35 percent so far this year, compared to the Straits Times Index's 15.9 percent gain.

F&N's board last week approved a sweetened $6.35 billion offer from Dutch brewer Heineken for Asia Pacific Breweries Ltd , the maker of Tiger Beer.

If the sale of F&N's beer affiliate APB is successful, property will account for more than 80 percent of F&N, CIMB estimated, thus it is now applying a 15 percent discount to F&N's property restated net asset value.

"This deal looks set to go through if Thai Bev and Kirin play ball. The potential for special dividends, reinvestment upside and more corporate actions are the expected catalysts for the stock," said CIMB in a note.

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1045 (0245 GMT)

(Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com)