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CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Ascendas Reit shares rise to new peak: Where next?

Why did Ascendas Reit, Singapore’s most valuable REIT, rally to a new share price high this week?

Ascendas A Reit share price dividend per forecast prediction ratings outlook 2020 earnings results investors Source: Bloomberg

Ascendas Reit share price: What’s the latest?

Shares of Ascendas Real Estate Investment Trust (Ascendas Reit) (SGX: A17U) are up 2% at the start of the week, after reporting higher first-half distributable income for fiscal 2020.

Ascendas Reit shares are trading at S$3.54 each – a new all-time high – as at 11:55 SGT on Monday 27 July 2020. This surpasses the stock’s previous peak of S$3.48 achieved in March 2020.

IG's market analysis show that 'buy's form 52% of all trades on the A Reit counter so far this month.

Ascendas Reit's DPU (dividend) declines 10.8% in H1 2020

Ascendas Reit – Singapore’s largest REIT by market capitalisation at nearly S$13 billion – reported that gross revenue for the six months ended 30 June 2020 (H1 FY2020) rose by 14.6% year-on-year to S$521.2 million.

The group said the increase was mainly contributed by its US portfolio of 28 business park properties and two Singapore business park properties, which were acquired in December 2019.

However, it also noted that the stronger revenue was partially offset by the Covid-19 rent relief support provided to tenants, as well as the divestment of Wisma Gulab in January 2020 and lower occupancies of certain properties

Net property income for the first six months of 2020 rose 11.2% to S$388 million, on the back of lower property tax expenses in H1 2019 due to the retrospective downward revisions in the annual value of certain properties.

Consequently, total income available for distribution for H1 FY2020 rose 3.7% from H1 FY2019 to S$263.2 million.

Despite the higher distributable income, distribution per unit (DPU) – dividends in Reit terms – declined 10.8% year-on-year to S$0.0727, after taking into consideration an enlarged number of applicable units (+16.3%) in issue mainly due to December 2019’s rights issue.

Are you looking to trade Ascendas Reit shares? Start today by opening a live or demo IG account.

Where do analysts see the A Reit share price going next?

Following Ascendas Reit's latest earnings, top investment analysts have raised their share price targets on the stock.

Jefferies increased their 12-month price targets on Ascendas Reit to S$3.80 a share from S$3.50, DBS from S$3.45 to S$4 a share, while CIMB brokers revised it to S$3.12 a share from S$3 previously.

In its note, DBS gave the stock a ‘buy’ call, citing that the company’s business parks exposure could potentially ‘benefit from the future trend towards decentralised offices as more companies adopt flexible working arrangements’.

The analysts also forecasted that Ascendas Reit could acquire an estimated S$500 million in assets by the end of fiscal 2020, which they say could spur new growth momentum for the company.

‘We believe the next billion in deals will likely come from its Singapore business park properties in the one-north region, which its sponsor may be looking to divest and should be well received by investors,’ they added.

On the other hand, it is worth noting for investors that CIMB analysts downgraded the stock to a ‘hold’ rating from add’, as they see limited near-term upsides following its recent share price. Ascendas Reit’s share price has increased nearly 9% since mid-July 2020.

CIMB also lowered its dividend (DPU) estimates for the company by 2.2% for FY 2020 and 2.6% for FY 2022 in light of changes in its portfolio occupancy, as well as ‘near-term drags’ in the form of S$20 million of tenant rent reliefs.

As at 12:50 SGT on 27 July, IG data show that 68% of clients hold 'short' positions on the stock and expect A Reit's share price to decline.

How to trade Ascendas Reit with IG

Are you feeling bullish or bearish on Ascendas Reit and other Singapore real estate stocks? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  • Create a live or demo IG Trading Account, or log in to your existing account
  • Enter <Ascendas Real Estate Investment Trust> in the search bar and select the instrument
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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