Investors looking for capital gains should take a look at these three stocks that have recently received a lift in their target prices by the various research houses. Clearer signs of profitability ahead have boosted analysts’ confidence, and these stocks have become more attractive.
- CapitaLand Mall Trust
Taking into account its performance for the entire year, the gross revenue of CapitaLand Mall Trust (CMT) came down by 1.1 percent because of the closure of the Funan Mall in Mid-2016. On the other hand, distribution per unit (DPU) increased by 0.4 percent on a year-on-year basis as the CMT opted to increase their payout ratio to 95.8 percent as compared to 92.9 percent in FY16.
Moving forward, CMT is likely to go through more volatility in its income as management mentioned that they might carry out asset enhancement at malls like Lot One and Bukit Panjang Plaza where there are fair amount of rental renewals. Also, CMT is carrying out tenant remixing at Westgate and Bedok Mall which would also affect income stability for the time being. However, both of these measures are beneficial for the trust in the long run as their portfolio is strengthened through these enhancement projects that would positively reposition their malls.
The key factor that should be highlighted about CMT is that its share price has been lagging behind its competitors during this period where most S-REITs’ prices have appreciated. Considering that CMT DPU yield of 5.3 percent is similar to that of its peers, its current share price is not as demanding.
With the improvements to be carried out on its portfolio, CIMB analysts anticipate that the trust’s performance will be enhanced. CMT has seen an upgrade to ADD by CIMB research, with an increased target price to $2.25.
- Mapletree Logistics Trust
Meeting analysts’ expectations for its 3Q18, Mapletree Logistics Trust (MLT) saw an increase of 3.9 percent for its net profit to $83 million due to higher contributions from acquisitions. The completion of the acquisition of Mapletree Logistics Hub Tsing Yi (Hong Kong) is expected to boost revenue for the fourth quarter.
MLT has reported encouraging improvements in performance as it registered an average rental reversion of 2 percent, which is mainly driven by an increase in rent from Hong Kong and Vietnam. Also, occupancy rate has improved slightly to 96.2 percent as vacancies decreased in South Korea.
International Monetary Fund’s latest World Economic Outlook report also reported exciting global growth forecast which was raised to 3.9 percent for 2018 and 2019. In addition to that, world trade volume growth is expected to grow to 4.6 percent in 2018. Rising trade volume is likely to benefit to logistics property managers like MLT.
Further expecting MLT to continue to uphold its track record of enhancing the value of its acquisitions, growth rate at MLT is projected to reach 2.5 percent. Therefore, OCBC Investment has maintained its Buy call on the firm but has increased its fair value to $1.48 from $1.35.
- AEM Holdings
AEM Holdings reported exciting news as it revised its guidance of revenue for FY17 upwards to a range of $35 million to $37 million, as compared to its previous guidance of $32 million in November 2017. According to management, this is based on the current sales orders that the company has received after having successfully secured more contracts. The trend further signaled higher demand from major clients.
Investors should also be excited to find out that the company has announced that it is “considering issuing bonus shares to reward shareholders”, according to CIMB Research.
The improvements in expected revenue come from higher sales volume, an improved product mix, and higher operational efficiency. The firm’s sales volume has increased from a projected $76 million to $100 million worth of goods to be delivered by 1H18.
With the increase in projected earnings, CIMB Research raised its target price for the stock to $5.97 from $4.55.