First REIT: Safe haven amid macro volatility : OCBC Research First REIT’s (FREIT) 4Q14 results came in within our expectations. DPU of 2.04 S cents (ex-dividend on 22 Jan) represented a 3.6% YoY increase on the back of a 4.6% growth in gross revenue. Its balance sheet also remains healthy. Looking ahead, we believe Indonesia’s manageable fiscal deficits, efforts to carry out structural reforms by new president Joko Widodo and infrastructure spending boost would enhance the stability and economic viability of the nation, thus leading to lower risks for FREIT. We thus lower our discount rate on FREIT from 8.3% to 7.0%. Rolling forward our valuations, our fair value estimate is bumped up from S$1.18 to S$1.40. We believe FREIT’s solid defensive attributes and minimal exposure to both interest rates and FX volatility make it as a good investment proposition for investors amid the current macro uncertainties. Hence, we upgrade FREIT from Hold to BUY
Posted on: Mon, 19 Jan 2015 02:09:51 +0000