Are Lendlease shares worth trading?

• Lendlease Global Commercial REIT (SGX: JYEU) share price hit S$0.86 on Tuesday (23 August 2022)
• The real estate investment trust responded to queries from Singapore’s main market operator
• UOB’s equity research team lifted its price target to S$0.96
• Keen to trade LREIT shares? Open an account with us to start now.

Lendlease responds to bourse operator queries

Lendlease (LREIT) has responded to queries from Singapore Exchange Securities Trading Limited (SGX-ST) regarding its unaudited condensed interim financial statements and distribution announcement for the second half of 2022.

SGX-ST had asked why interest income amounted to only S$259,000 for the full year ended 30 June 2022 when LREIT has significant cash and bank balance amounting to S$49.23 million as at 30 June 2022.

The group replied on 22 August 2022 that its cash and bank balances of S$49.2 million included cash and bank balances denominated in Euro, which were non-interest bearing in nature.

‘During the year ended 30 June 2022, the group's bank balances were subject to varying levels from time to time and may generate little or no interest income. In order to manage the group’s capital efficiently, the manager had sought to place fixed deposits or repay outstanding loans where possible,’ it added.

SGX-ST also asked LREIT to explain the ‘significant’ trade and other payables of S$56.12 million, to which the group replied that the amount comprised of accrued operating expenses (S$21.8 million), tenant deposits (S$14.8 million), rents received in advance (S$8.9 million), accrued management fees to be paid through the future issuance of units (S$7.8 million), and accrued interest expenses (S$2.8 million).

LREIT stock price: what’s the latest forecast?

The large cap stock, which is down 4% year-to-date, rallied over 2% after the responses were issued.

In terms of stock outlook, LREIT shares have an average price target of S$0.97 and rating of ‘outperform’, based on the latest SGX StockFacts consensus data.

The price target equates to an upside potential of roughly 17% from the stock’s last traded price of S$0.83.

The latest investment thesis came from UOB analyst CIMB analyst Jonathan Koh on 10 August 2022. Koh reiterated a ‘buy’ call on the stock but raised price target from S$0.95 to S$0.96.

The analyst wrote that LREIT provides an attractive FY2023 distribution per unit (DPU) yield of 6.1%.

However, he also trimmed his existing FY2023 and FY2024 DPU forecast by 3.1% and 1.3% respectively, citing higher interest rates.

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