Stock Buy Call: Ascott Residence Trust target price of 1.50 by OCBC

Ascott Residence Trust (ART) may rise after OCBC Investment Research initiated coverage of the stock with a "buy" rating and a target price of 1.50 sgd because the real estate investment trust (REIT) for serviced residences is expected to benefit from the growth of economies in East Asia. In a note to clients, OCBC said it expects ART to buy more assets to drive growth. "We see ART to eventually achieve an asset size of 2 bln sgd in 2-3 years' time. In terms of valuation, we value ART at 1.50 sgd per unit, based on [its] expected target portfolio size of 2 bln sgd," OCBC said. "This in turn translates to a 2006 distribution per unit forecast yield of 4.1 pct and is consistent with comparables with higher risks like Mapletree Logistics Trust, which trades at 4.7 pct." Ascott ended down 0.01 sgd at 1.24 yesterday.