We believe that current price for A-REIT reflects a drastic 40% vacancy levels in its MTB(Multi-Tenanted Buildings) portfolio, which in our view is unlikely to occur. Earnings visibility is boosted by the fact that c43% of A-REIT’s income is locked-in over the next 7.6 years, based on our estimates. At current price levels, investors are getting an attractive FY10-11 yield of 11% for a blue –chip backed reit with strong financial flexibility, good access to credit and an experienced management team which will steer the reit to emerge stronger post the current recession. Maintain BUY, TP S$1.51 based on DCF.

Emerging stronger post recapitalization. With fresh capital of S$408m in its coffers post its recapitalization efforts, A-REIT has emerged as one of the financially stronger reits with a low gearing of 33%(rising to c37% post inclusion of new development properties). Interest cover is still expected to remain high at 4.2x over FY10-11.

Earnings resilience expected. Even with a 15% increase in vacancies assumed in its Multi-tenanted Buildings (MTB) portfolio, A-REIT is expected to sustain yields of 11% over FY10-11F, supported by its portfolio of Sales & Leaseback (SLB) properties (43% of revenues) backed by an average 7.6 yrs.

40% vacancy levels assumed in stock price. Based on our estimates, the current stock price assumes a relatively drastic scenario of a 40% drop in occupancy levels in its MTB portfolio. We view that the likelihood of such a scenario occurring is unlikely given pro-active efforts from the reit in engaging tenants and government initiatives to help SMEs reduce business costs.

Maintain BUY, TP S$1.51. We maintain BUY on A-REIT, TP $1.51 maintained based on DCF. Barring any unforeseen circumstances, we believe that A-REIT should deliver a relatively stable FY10-11 yield of 11%.

The Singapore property market has stirred slightly from its slumber since February. The Alexis @ Alexandra was sold out soon after launch, while the Caspian is more than 70% pre-sold. Over the past weekend, UOL also reportedly sold more than 80 of the 250 units released at Double Bay Residences during its private preview.

Based on recent launches, it appears that the main consideration is affordability (either smaller units of about 500 sq ft or lower ASP of about $600 psf). Hence, the market may not be ready to absorb Wing Tai’s (WT) projects, catered mainly to the mid-to-high end. The most affordable of WT’s projects is Ascentia Sky, with an expected ASP of about $900psf.

We estimate that at an ASP of $900 psf for Ascentia Sky, WT may have to book in an attributable pre-tax loss of $16.6m, even though construction costs may have come off and WT benefits from having United Engineers as one of the joint venture partners. Furthermore, we estimate a market value of $2,200 psf for its Ardmore Park projects, which may require WT to write-down its Anderson 18 stake by $26.8m.

Despite the potential need for provisions of nearly $50m for the projects mentioned earlier, WT’s other projects should remain profitable due to the low historical land costs. At the current shareprice, we estimate the implied GDV of WT’s attributable landbank is only $800 psf, grossly undervaluing its prime land parcels.

Despite our caution over the mid-to-high end segments, we believe that WT is trading at very attractive valuations. Its net gearing is a low of 0.4x and cashflows from past sales remain strong even if no new projects are launched before 2011. We maintain our BUY recommendation with a target price of $0.97, pegged to a 50% discount to RNAV.

We like Stamford Land's hotel properties in Australia and New Zealand for their prime location and branding. Recall that Stamford Land received an unsolicited offer of S$1.05b for its portfolio of 8 hotel properties a year ago. Although, we understand that the global economic condition has deteriorated substantially since then, but even at our current conservative valuation of S$674.8m (down about 36%), the hotels excess value over its book is still worth about S$0.20 per share.

Dividend payment could be maintained at normal level. Stamford Land has a track record of steady dividend payments. This is even despite the year (the only year since FY00) where it made losses in FY02. Our best estimate will be for management to scrap special dividend amid current economic turmoil and maintain normal payment, which will amount to 3.0 cents in total for FY09E considering the need to retain cash for current ongoing development projects.

We value Stamford Land base on RNAV of its hotel properties, as well as potential sales surplus from its residential properties. Our RNAV per share works out to be about S$0.75, implying that Stamford Land is trading at some 76% discount to RNAV per share. On account of illiquidity of Stamford Land's stock we factored a 50% discount to its RNAV per share in consensus with current market valuation. We fix our target price at S$0.37 and initiate coverage with a BUY.

Translation risk as Stamford Land derives revenue mainly from Australia and New Zealand. 9M09 saw Stamford Land greatly affected by depreciation of Aussie dollar against Singapore dollar

Worse than expected global economic outlook will negatively affect our basic assumption and adversely impact Stamford Land's profitability forecast