Broker: CGS International
Date of Report: July 27, 2026
Excerpt from CGS International report
Report Summary
Stock Focus: Suntec REIT (SUNT.SI / SUN SP)
Action: ADD (Buy)
Target Price: S$1.64 (current price: S$1.52; upside: 7.7%)
Key Points:
- 1H26 distributable profit (DP) was 26% higher year-on-year, mainly due to lower interest expense and taxes. DPU (Dividend per Unit) was 54% of full-year forecast and ahead of expectations.
- Singapore portfolio performance was strong with office rental reversion at +10.1% (guidance: +5% to +7%) and retail rental reversion at +10.7% (guidance: +10%). Occupancy rates at Suntec City Office and Mall are near full.
- Strategic review underway with new major shareholder (Tang family), focusing on potential asset disposals—especially Australian assets where buyer-seller price expectations have narrowed. ORQ (One Raffles Quay, worth S\$1.4bn for SUN’s 1/3 stake) could be sold and replaced with a possible 100% purchase of 9 Penang Road (est. S\$1.1bn), potentially leaving S\$300m cash for special DPU to unitholders.
- Leverage rose to 43% from 41.5% due to redemption of S\$150m perpetual securities funded by new debt.
- Financial outlook: FY26F distributable profit S\$218.2m, dividend yield projected to rise from 4.8% (2026F) to 5.1% (2028F). Price-to-book (P/BV) remains at a discount (0.75x).
- Risks: Higher interest rates, delays in asset disposals, or inconclusive strategic review.
Implication:
Suntec REIT offers a clear strategy for value enhancement through selective asset disposals, maintaining strong operational performance in Singapore, and the potential for special dividends. The stock remains an ADD with a S\$1.64 target price, supported by strong rental reversions, high occupancy, and the prospect of rewarding unitholders from portfolio rebalancing.
Above is an excerpt from a report by CGS International. Clients of CGS International can access the full research report from the broker’s website.
