ARA Asset kept at ‘buy’ with lower $1.57 target price by DBS
By PC Lee February 5, 2016
DBS Vickers is maintaining its “buy” call on ARA Asset Management with a lower target price of $1.57 as its weak share price performance is “unwarranted”.
In a Friday report, analyst Derek Tan says DBS sees 2016 as another “banner year” from the widely anticipated launch of Asia Dragon Fund 3 with an estimated assets under management (AUM) of more than $1 billion and earnings boost from the exit of Asia Dragon Fund 1, which is in the final stages of winding down.
According to Tan, ARA’s AUM continued to grow in 2015, by $3.1 billion to $29.8 billion. This was driven mainly from acquisitions from its REITs and new capital raised from its private funds.
“We remain excited on the group’s prospects given its ability to anchor meaningful relationships with third party capital partners through its various real estate fund products. This will aid in its push towards achieving an annual $2 billion AUM growth and medium term target of $40 billion in AUM,” adds Tan.
Armed with $150 million in capital from its recent rights issue, ARA is well positioned to capture opportunities that may arise in 2016. The group is hunting for deals in key markets of China, Australia, Korea and Japan.
Tan also understands that the group has invested close to $200 million as seed capital in its various funds, with an unrealised gain of US$21.7 million.