Cache Logistics Trust

OCBC on 26 Jul 2012

Cache Logistics Trust’s (CACHE) 1HFY12 results were generally consistent with our projections, with NPI and DPU forming 47.8% and 49.1% of our full-year forecasts respectively. For 2HFY12, we remain confident that CACHE will continue to deliver sustainable distributions, given its recent initiatives on growth plans and capital management. The acquisitions of Pan Asia Logistics Centre and Pandan Logistics Hub, we note, have to yet make their full-quarter contributions to CACHE’s income stream and are expected to boost the DPU going forward. CACHE also refinanced all its outstanding debts with a new S$375.0m bank facility, thereby extending its debt maturity and enlarging its pool of unsecured assets. Notably, all-in financing cost is expected to improve to 3.44% from 4.38% over the quarter. This is in line with our view that CACHE is likely to gain from interest savings going forward. We maintain our BUY rating and fair value of S$1.18 on CACHE.

2QFY12 performance within expectations
Cache Logistics Trust (CACHE) reported its 2QFY12 results after the market close yesterday. NPI grew by 8.1% YoY to S$16.7m, while distributable income rose 4.1% YoY to S$13.9m. The positive performance was mainly attributable to incremental income from upward rental adjustments and acquisitions made over the past year. DPU, on the other hand, eased 5.0% YoY to 1.981 S cents. However, this was expected as CACHE had issued 60m new units via a private placement in Mar. The results were generally consistent with our projections, with 1HFY12 NPI and DPU forming 47.8% and 49.1% of our full-year forecasts respectively.

Positive outlook remains
For 2HFY12, we remain confident that CACHE will continue to deliver sustainable distributions, given its recent initiatives on growth plans and capital management. The acquisitions of Pan Asia Logistics Centre and Pandan Logistics Hub (completed in Apr and Jul respectively), we note, have to yet make their full-quarter contributions to CACHE’s income stream and are expected to boost the DPU going forward. CACHE also refinanced all its outstanding debts with a new S$375.0m bank facility, thereby extending its debt maturity and enlarging its pool of unsecured assets. Notably, all-in financing cost is expected to improve to 3.44% from 4.38% over the quarter. This is in line with our view that CACHE is likely to gain from interest savings going forward.

Reiterate BUY on CACHE
CACHE has one of the most resilient portfolios in the industrial REIT space, in our opinion. The portfolio occupancy has remained 100% occupied since listing. The weighted average lease to expiry and aggregate leverage post acquisition of Pandan Logistics Hub were also strong at 4.4 years (less than 2% expiring in 2013) and 32.5% respectively. We maintain our BUY rating and fair value of S$1.18 on CACHE.