First REIT: Stability Amidst Currency Challenges

First REIT reported a Distribution Per Unit (DPU) of 0.58 Singapore cents for Q4 2024, unchanged from the preceding quarter. However, full-year DPU for FY2024 declined by 4.8% year-on-year to 2.36 Singapore cents. Despite the stable income generation from its healthcare and healthcare-related portfolio, currency depreciation of the Indonesian Rupiah and Japanese Yen against the Singapore Dollar posed significant headwinds.

In FY2024, Rental and Other Income fell by 5.9% year-on-year to S\$102.2 million, while Net Property and Other Income declined 6.5% to S\$98.5 million. Notably, Indonesian properties saw a 4.7% increase in local currency rental income, while Singapore properties experienced a 2.0% rise. Japan properties remained stable in local currency terms.

First REIT’s gearing ratio stood at 39.6%, with an interest coverage ratio of 3.8 times. The Trust has hedged 56.9% of its debt against interest rate volatility and has no refinancing requirements until May 2026. Additionally, the Trust is exploring a potential strategic review following a preliminary non-binding Letter of Intent (LOI) from Siloam to acquire its Indonesian hospital assets.

First REIT trades at 0.96x P/B with a dividend yield of 8.6%. Despite currency translation challenges, its core operations remain steady. A strategic asset disposal could enhance financial flexibility and support its transition to developed markets. Analysts recommend an “Accumulate on Weakness” stance, with a consensus target price of S\$0.29, representing a 3.6% upside.

GuocoLand: Resilient Growth Driven by Twin-Engine Strategy

GuocoLand delivered a robust performance for the first half of FY2025, with profit attributable to equity holders increasing by 13% year-on-year to S\$74.6 million. This growth was driven by construction progress in Singapore’s development projects and higher contributions from investment properties.

Despite a 5% decline in revenue to S\$1.01 billion due to timing issues in revenue recognition and lower sales in China, gross profit surged by 16% to S\$247.9 million, and operating profit grew by 35% to S\$214.5 million. Singapore contributed over 80% of total revenue, with assets in the city-state accounting for 75% of total assets as of December 31, 2024.

The Group’s debt-to-assets ratio remained stable at 0.4 times, with total loans and borrowings decreasing to S\$4.93 billion. Over S\$5 billion in green financing has been secured, including a S\$1.135 billion facility for Guoco Midtown.

GuocoLand’s Property Development segment remained a stable contributor, supported by robust demand for residential projects like Midtown Modern, which was fully sold. In the Lentor Hills estate, developments such as Lentor Modern and Lentor Hills Residences were substantially sold. Property investment revenue increased by 19% year-on-year to S\$130.6 million, driven by recurring rental revenue from Guoco Tower and Guoco Midtown, both of which achieved 100% occupancy.

GuocoLand trades at 0.4x P/B with a 4.1% yield. Analysts see a potential upside of 37.9% to the consensus target price of S\$2.00. With undemanding valuations and solid fundamentals, GuocoLand is also viewed as a potential privatization candidate. The stock is recommended with an “Accumulate” rating.

Market Trends and Key Highlights

• Top Institutional Net Buys: SGX (S\$68.8M), Singtel (S\$23.0M), and Wilmar International (S\$15.5M).
• Top Institutional Net Sells: DBS (-S\$51.6M), OCBC (-S\$29.1M), and Seatrium (-S\$25.2M).
• Top Retail Net Buys: DBS (S\$94.3M), OCBC (S\$46.3M), and Seatrium (S\$39.7M).
• Top Retail Net Sells: SGX (-S\$73.2M), ST Engineering (-S\$16.0M), and Wilmar International (-S\$15.8M).

Dividend Announcements

Key dividend highlights include:

• CapitaLand Ascendas REIT: 7.681 cents (Final), Ex-Dividend Date: February 13, 2025.
• SGX: 9 cents (Interim), Ex-Dividend Date: February 13, 2025.
• DBS Group Holdings Ltd: 60 cents (Final), Ex-Dividend Date: April 7, 2025.
• Keppel Ltd: 19 cents (Final), Ex-Dividend Date: April 28, 2025.

Conclusion

The February 2025 report from Lim & Tan Securities provides valuable insights into the performance and prospects of listed companies like First REIT and GuocoLand. While First REIT faces challenges due to currency depreciation, its operational stability and strategic review offer potential catalysts. GuocoLand’s robust growth and compelling valuation make it a strong candidate for investors seeking resilience and upside potential. Investors are encouraged to leverage these opportunities based on detailed recommendations provided in the report.