The Scentre Group (ASX: SCG) share price has been a strong performer on Tuesday.
In morning trade the Westfield shopping centre operator’s shares are up almost 2.5% to $2.24.
Why is the Scentre share price pushing higher?
Investors have been buying Scentre shares this morning after the release of an update on its rental collections for the month of August.
According to the release, the company was able to collect a total of $183 million of gross rent in August. This represents 86% of monthly gross rental billings, which is another month on month improvement for Scentre.
For example, in June the company collected 80% of gross rental billings and then 82% in July.
This is a major improvement and putting it within sight of its pre-pandemic levels. In both January and February, Scentre was collecting 94% or $200 million of gross rental billings.
Is it safe to buy Scentre shares?
While the trends are certainly improving for Scentre, I’m not in a rush to invest just yet. Especially given speculation that the company could be considering a major equity raising in the near future to reduce its debt load.
However, one broker that remains positive on the company is Morgan Stanley. Even after factoring in the possibility of a $1.8 billion equity raising, the broker has held firm with its overweight rating and $2.70 price target.
This price target represents potential upside of 20% for its shares over the next 12 months. The broker has also pencilled in a 16.4 cents per share distribution in FY 2021, which equates to a very generous 7.3% dividend yield.
Though, not everyone is as positive. Last month Citi retained its sell rating and cut its price target to $1.98. This price target implies potential downside of almost 12% for its shares.
Finally, sitting in the middle is Ord Minnett. Its analysts currently have a hold rating and a $2.20 price target on Scentre’s shares.
Time will tell which broker has made the right call, but I would side with Ord Minnett right now.
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