DBS Group Research and CGS-CIMB Research analysts have maintained their positive view on ESR-LOGOS REIT (E-LOG) , following its 1QFY2023.
For the quarter ended March, E-LOG reported gross revenue of $97.7 million, up 63.9% y-o-y and net property income was up 78.2% y-o-y to $70.4 million.
In Singapore, E-LOG was able to renew leases at 7.3% higher over the preceding 4QFY2022.
For example, logistics firm Ceva, one of E-LOG's top 20 tenants, renewed its space for three years and will be paying a rate that's 20% higher.
"Management continues to be upbeat on the logistics segment within its portfolio, which it expects to continue to deliver positive reversions, given the robust sector demand and supply dynamics," write CGS-CIMB analysts Lock Mun Yee and Natalie Ong in their April 26 note.
They've kept their DPU estimates for the current FY2023 to FY2025 unchanged, along with their "add" call and 39 cents target price.
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Lock and Ong see potential catalysts from accretive acquisitions while downside risks might come from slower-than-anticipated acquisitions and higher-than-projected interest rate hikes.
Dale Lai and Derek Tan of DBS, on the other hand, are staying positive on E-LOG because of its longer-term prospects.
"While its peers find it increasingly challenging to make accretive acquisitions given the negative cap rate spreads in most major markets, E-LOG can look to its sponsor’s pipeline of around US$2 billion," state Lai and Tan in their April 27 note.
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The DBS analysts, who have a "buy" call and 40 cents target price, acknowledge that E-LOG faces near-term challenges with lofty interest rates, plus the dilution of its per unit caused by a recent $300 million equity fundraising.
"We see E-LOG’s ongoing asset enhancement initiatives and redevelopment projects as key drivers to earnings FY2024 onwards," they add.
E-LOG units, as at 3.15pm, changed hands at 33 cents, unchanged for the day.
