June 6, 2019

The trade war has triggered China to issue an official warning on 3 Jun 19 to students hoping to study in US universities. This could benefit UK universities, which have attracted more Chinese students. Recent refinancing of a £205m term loan facility to a longer tenure demonstrates SPH’s commitment to long-term investment in UK PBSA, along with the divestment of Chinatown Point which enhances capital recycling.

UK universities have seen a marked increase in Chinese undergraduate students, with enrolment increasing by up to 9% in 2017/18, according to Higher Education Statistics Agency (HESA), in contrast to a decline seen by US universities, a reversal of the growth trend prior to the Trump administration. Applications for the new academic year show that the trend continues to favour UK universities, with Chinese applicants rising 33% yoy in Jan 19 to a record high, according to University and College Admissions Service (UCAS).

The UK Department of Education has also released an international education strategy, aiming to increase the number of international students by 30% from 460,000 currently to 600,000 by 2030. New measures include providing visa extensions for international students looking for post-study work. On the back of Brexit uncertainties, the strong show of support for the country’s robust university sector is a welcomed approach for student accommodations.

Tracking Singapore Press Holdings’ (SPH) purpose-built student accommodation (PBSA) assets ahead of the new academic year, booking rates seem to be in good shape for its recent additions. Portfolio acquisitions made in Apr 19 have already had a substantial amount of beds sold out for the school term. Compared to competition in the area, the asset’s customer ratings are also higher, with better reviews commenting on their more premium quality and service. We believe the assets in the Apr 19 acquisition are likely to be more sustainable in the long term, given on par or better popularity among competition in the vicinity. Maintain BUY and target price of S$2.86. –UOB KayHian

Singapore Press Holdings closed at: S$2.31