Excerpt from CGS International report.
Report Summary
- Stock: OUE REIT (OUEREIT SP)
- Action: Reiterate Add (Buy) rating
- Target Price: S\$0.44 (raised from S\$0.41)
- Current Price: S\$0.365 (implied upside: 20.5%)
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Key Highlights:
- 1Q26 revenue and NPI rose 6.7% and 8.4% y/y, in line with forecasts.
- Positive rental reversions and high occupancy across office and retail assets (office occupancy 99.2%, Mandarin Gallery 95.6%).
- Financing costs declined by ~18% y/y; distributable profit and DPU forecasts for FY26-28F raised by 4-6%.
- 1Q26 JV/associate income surged 57.2% y/y, with further uplift expected as Salesforce Tower stake starts contributing.
- Ongoing strategic review of One Raffles Place could unlock value; OUE REIT trades at a 21% discount to book value.
- Upcoming asset enhancement at OUE Bayfront (Level 17 conversion) expected to deliver >11% ROI, with no downtime.
- Dividend yield forecast: 6.7% (FY26F), increasing to 7.4% (FY28F).
- Re-rating catalysts: accretive divestments, capital deployment, completion of Bayfront AEI. Downside risks: interest cost hikes, travel disruptions.
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Implications:
- Investors should focus on the upside potential from the S\$0.44 target price, the robust yield profile, and the potential value unlocking from asset management initiatives and divestments.
above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website : https://www.cgs-cimb.com
