Ascendas REIT

UOBKayhian on 24 Oct 2014

FY14F PE (x): 16.1
FY15F PE (x): 15.2
Results in line with expectations. Ascendas REIT (A-REIT) reported 2QFY15 DPU of
3.66 cents (+1.7% yoy, +0.3% qoq). The results are in line with our expectations, where
1HFY15 DPU represents 49.3% of our full-year forecast.
Pace of MTB conversions to slow down, with only 11.1% of SUA NLA due to expire over
the next 3.5 years. This contrasts with the higher 16.6% SUA expiry point which
occurred during the same period last year. Management attributed the occupancy
weakness mainly to the downtime associated with the conversion of SUA assets into
MTB assets. However, with the proportion of SUA leases due for expiry diminishing,
occupancy pressures will likely ease.
Maintain BUY with an unchanged target price of S$2.73, based on DDM (required rate
of return: 6.9%, terminal growth: 1.8%).