To The Moon

$CapLand IntCom T(C38U.SI)$

Yesterday, John Lee’s first policy address emphasized a lot on talent recruitment in response to the exodus of talents to Singapore and other rivals. With that, he introduced stamp duty cut for a non-resident first-time buyer in Hong Kong, from 30% to a max of 4.25%. The buyers will still have to pay the 30% stamp duty upfront, but it will be refunded when they become permanent residents.

Sir Bahamut thinks this is unlikely to attract a lot of MNCs and talent to Hong Kong.

Firstly, not everyone coming to work in Hong Kong would want to buy a property. Moreover, non-resident buyers will still have to pay the 30% upfront and not everyone can afford that. Most importantly, John Lee did not offer any timetable for lifting Covid curbs, which puts off investors.

Singapore’s commercial property market has slowed down, but its future fundamentals remained strong as it replaced Hong Kong as Asia’s number one financial hub. US and Chinese tech firms will likely be the next key drivers for demand for prime offices in the city-state, despite rising inflation and interest rates. In a Mingtiandi article, JLL expects Singapore’s overall office market to remain as an attractive investment destination due to its rental growth potential — which is expected to hit 10 percent this year.

Sir Bahamut has a bullish view of Singapore Office market in the short to medium term. Singapore has introduced an ambitious new visa program in August 2022 to attract MNCs and talents over to the city state. On 15 September, DPM Lawrence Wong mentioned that Singapore authorities will further strengthen financial talent development in the city-state with projections of up to 20,000 newly created jobs in the sector over five years. In August, Business Times reported Singapore family office scene has soared exponentially, driven by increasing global uncertainty and geopolitical risks, as well as the country’s reputation as a safe haven for wealth and attractive tax incentives. All these trends provide a tailwind for strong office demand where supply is still relatively low.

As such, Sir Bahamut is quite in favour of CICT. CICT share price has dived down a lot due to the rising interest rate, affecting all S-REITs valuation. Current based on its latest share price, CICT projected FY23 dividend yield is now 6.6%! This is extremely high for a blue-chip stock riding on structural growth.

One main catalyst that hasn’t played out is the acquisition of Mercatus portfolio of retail assets. It may team up with its sponsor, CapitaLand Investment, or other capital partners to acquire this portfolio to deliver a DPU-accretive proposition to unit holders. Given CICT’s link to Temasek, CICT is likely the most probable winner for this portfolio.

In view of rising interest rate and high uncertainty, its best to average down slowly for this counter.

As usual, above is just my own opinion and does not constitute as any trade advice.

@Daily_Discussion@TigerStars