Singapore Pre-Market Tuesday: CapitaLand Commercial Trust, MINT, Ascendas REIT

A Singapore 10-dollar note Photo by Leslie Shaffer

This article was originally published at 8:38 A.M. SGT on Tuesday, April 24, 2018; it has since been updated.

Singapore shares will open trade on Tuesday with a weak lead from Wall Street, but a more positive one from regional markets.

The Nikkei 225 index was trading up 0.74 percent at 8:05 A.M. SGT on Tuesday.

In the U.S., the Dow Jones Industrial Average edged down 0.6 percent by the close on Monday, while the S&P 500 was flat and the Nasdaq slipped 0.25 percent. Futures for the three indexes were just a tad higher.

Stephen Innes, head of Asia Pacific trading at OANDA, said shares were being hit by rising U.S. Treasury yields, with the 10-year Treasury just shy of the “critical” 3 percent technical and psychological level.

“With higher oil prices in addition to tax reform bump factoring into the inflation calculus, rates could reprice higher to 3.25 percent (10-year U.S. Treasury) driven by the prospects of higher inflation above-potential growth and a worsening supply-demand dynamic,” he said. “If 3 percent is indeed a line in the sand for equity investors, we should expect increasing sector rotation out of equities into bond markets which should accelerate significantly on the 3 percent break.”

To be sure, not everyone was bearing on the market outlook.

“Our U.S. strategists expect this earnings season to be a  significant support for equities as companies deliver stronger-than-expected earnings growth and guidance on shareholder return from tax windfall,” JPMorgan said in a note on Friday. “Currently, 72 percent of S&P 500 companies are beating first-quarter revenue estimates (vs. 68 percent prior four earnings seasons) and 82 percent are beating earnings estimates (vs. 72 percent prior four earnings seasons).”

Google parent Alphabet reported first-quarter results on Monday, beating forecasts on strong ad sales and an accounting change, Reuters reported.

Markets in the U.S. may also have received support from a strong increase in U.S. home sales in March.

CapitaLand Commercial Trust

CapitaLand Commercial Trust posted net property income of S$77.21 million for the first quarter, up 10.5 percent on-year, and a distribution per unit (DPU) of 2.12 Singapore cents, down 11.7 percent on-year, management said in a filing to SGX on Tuesday. After adjusting for an enlarged total number of units, the DPU was up 7.6 percent on-year, the statement said.

“The positive results are due to higher income from CapitaGreen, Capital Tower and Six Battery Road, as well as a full quarter contribution from Asia Square Tower 2,” management said. “This was offset by lower contributions arising from the divestments of One George Street (50.0% interest), Golden Shoe Car Park and Wilkie Edge in 2017.”

The DPU came in below Daiwa’s forecast for DPU of 2.19 Singapore cents, but net property income beat its forecast for S$75.5 million.

CCT was upbeat on its prospects, noting Grade-A montly office market rent was S$9.70 a square foot in the first quarter, up 3.2 percent on-quarter.

“With higher committed occupancies in the newly completed office buildings and limited new supply in the CBD from 2018 to 2020, market rents are expected to continue to grow steadily over the next few years. In relation to CCT, the potential rise in market rents will narrow the gap between committed and expiring rents for its leases due for renewal in 2018,” the statement said.

Mapletree Industrial Trust

Mapletree Industrial Trust reported net property income rose 8.1 percent on-year in its fiscal fourth quarter to S$67.88 million, while its DPU was 2.95 Singapore cents, up 3.2 percent on-year, the manager said in a filing to SGX on Monday.

That was in line with Daiwa’s forecast for DPU of 2.95 Singapore cents and net property income of S$67.9 million.

The manager noted that average portfolio occupancy fell to 90.0 percent in the quarter, from 90.5 percent in the previous quarter, partly due to an increase in leasable area at its 30A Kallang Place property.

It was cautious on the outlook.

“The wider economy and business sentiments of the small and medium enterprises in Singapore have been improving. Despite the positive outlook, threats to free trade and geopolitical tensions continue to threaten the growth momentum,” it said. “In addition, the impending
large supply of competing industrial space will exert pressure on both occupancy and rental rates.”

Ascendas REIT

Ascendas REIT reported its fiscal full-year DPU rose 1.6 percent on-year to 15.988 Singapore cents, while for its fiscal fourth quarter, the DPU was 3.910 Singapore cents, up 1.5 percent on-year, the manager said in an SGX filing.

For the fiscal fourth quarter, net property income rose 2.5 percent on-year to S$157.87 million.

Net property income rose 3.0 percent on-year for the full year to S$629.4 million, which the manager attributed to full-year contributions from properties acquired in the previous financial year: 12, 14 and 16 Science Park Drive in Singapore and 197-201 Coward Street in Sydney, Australia.

That was below Daiwa’s forecast for a fiscal fourth quarter DPU of 4.03 Singapore cents and net property income of S$167.1 million.

Cromwell European REIT

Cromwell European REIT acquired an office building with three stories and a basement at 13 Via Jervis, Ivrea, Italy for 16.90 million euros, or around S$27.35 million, in line with an independent valuation by Colliers International Valuation U.K., the manager said in an SGX filing on Tuesday.