UOBKayhian on 23 Jan 2014
FY13F PE (x): 18.1
FY14F PE (x): 17.3
Marginal yoy decine in 3QFY14 revenue. We estimate revenue from gateway services to rise 5.7% yoy on the back of a 6.6% yoy rise in unit services. However, revenue from food solutions is expected to fall 4.1% yoy on a 5.7% yoy decline in unit meals and potentially lower revenue from Japanese subsidiary TFK due to a weak yen and ongoing Sino-Japanese tensions. Maintain HOLD and target price of S$3.24. We value SATS on a DDM basis (required return: 7.0%, terminal growth 1.5%). At our fair value, the stock offers a dividend yield of 5.0%. Suggested entry price is S$3.10.
Thursday, 23 January 2014
Raffles Medical Group
UOBKayhian on 23 Jan 2014
FY13F PE (x): 26.7
FY14F PE (x): 22.8
Land for long-term growth. Raffles Medical Group (RMG) will acquire 1,978.1sqm of land adjacent to its Raffles Hospital from Singapore Land Authority (SLA) for S$105.2m.72% jump in gross floor area. This land has a plot ratio of 5.6x. Together with the approval from the Urban Redevelopment Authority (URA) on its existing hospital, the present gross floor area (GFA) for RMG’s flagship hospital will rise from 307,789sf to 529,578sf (+72%). Construction on the adjacent land is expected to commence in 2Q14.
Capacity for long-term growth. Maintain BUY with a lower DCF-based target price of S$3.69 (previously S$3.78). Despite the slight reduction in our target price, we view the land acquisition as a good long-term move that will drive growth
FY13F PE (x): 26.7
FY14F PE (x): 22.8
Land for long-term growth. Raffles Medical Group (RMG) will acquire 1,978.1sqm of land adjacent to its Raffles Hospital from Singapore Land Authority (SLA) for S$105.2m.72% jump in gross floor area. This land has a plot ratio of 5.6x. Together with the approval from the Urban Redevelopment Authority (URA) on its existing hospital, the present gross floor area (GFA) for RMG’s flagship hospital will rise from 307,789sf to 529,578sf (+72%). Construction on the adjacent land is expected to commence in 2Q14.
Capacity for long-term growth. Maintain BUY with a lower DCF-based target price of S$3.69 (previously S$3.78). Despite the slight reduction in our target price, we view the land acquisition as a good long-term move that will drive growth
Mapletree Industrial Trust
UOBKayhian on 23 Jan 2014
FY14F DPU Yld (%): 7.3
FY15F DPU Yld (%): 7.4
Results in line with expectations. Mapletree Industrial Trust (MIT) reported a 3QFY14 distributable income of S$42m (+12.0% yoy, +1.6% qoq) and a DPU of 2.51 cents (+8.2% yoy, +1.6% qoq). 9MFY14 DPU of 7.41 cents is in line with our expectations, accounting for 76.4% of our full-year estimate of 9.7 cents. Maintain BUY and target price of S$1.64, based on DDM (required rate of return: 7.1%, terminal growth: 1.8%).
FY14F DPU Yld (%): 7.3
FY15F DPU Yld (%): 7.4
Results in line with expectations. Mapletree Industrial Trust (MIT) reported a 3QFY14 distributable income of S$42m (+12.0% yoy, +1.6% qoq) and a DPU of 2.51 cents (+8.2% yoy, +1.6% qoq). 9MFY14 DPU of 7.41 cents is in line with our expectations, accounting for 76.4% of our full-year estimate of 9.7 cents. Maintain BUY and target price of S$1.64, based on DDM (required rate of return: 7.1%, terminal growth: 1.8%).
CapitaMall Trust
UOBKayhian on 23 Jan 2014
FY14F DPU Yld (%): 5.7
FY15F DPU Yld (%): 5.9
Results in line with expectations. CapitaMall Trust (CMT) reported 4Q13 distributable income of S$94m (+18% yoy, +6.3% qoq) and DPU of 2.72 cents (+15.3% yoy, 3% qoq). The 2013 DPU is in line with our expectation, accounting for 99.7% of our estimate of 10.30 cents. Included in 4Q13 distribution is the S$3.8m (0.11 cent) retained earlier in the year. Maintain HOLD and target price of S$2.14, based on DDM (required rate of return: 7.1%, terminal growth: 1.8%).
FY14F DPU Yld (%): 5.7
FY15F DPU Yld (%): 5.9
Results in line with expectations. CapitaMall Trust (CMT) reported 4Q13 distributable income of S$94m (+18% yoy, +6.3% qoq) and DPU of 2.72 cents (+15.3% yoy, 3% qoq). The 2013 DPU is in line with our expectation, accounting for 99.7% of our estimate of 10.30 cents. Included in 4Q13 distribution is the S$3.8m (0.11 cent) retained earlier in the year. Maintain HOLD and target price of S$2.14, based on DDM (required rate of return: 7.1%, terminal growth: 1.8%).
Keppel T&T
CIMB Research, Jan 21
FY2013 net profit of S$63.2 million was broadly in line with our expectation and formed 102 per cent of our full year estimate. We revise up our FY2014 to 2016 EPS by 2-3 per cent for the higher-than-expected margins, with a slightly higher sum of parts-based target price of S$1.94.
However, we downgrade the stock from "add" to "hold" as we believe that the positives have largely been priced in. The share price has rallied since Keppel T&T (KPTT) announced its intention to inject its data centres into a Reit in H1 2014, which we think has been overdone. While we are positive on the news, we believe it will take time for KPTT to reinvest the funds raised from the IPO to make a meaningful impact on its earnings.
HOLD
Ascendas Reit
DBS Group Research, Jan 21
A-REIT's Q3 2014 results were in line with our expectations. Topline and net property income grew 6.4 per cent and 3.7 per cent to S$154.4 million and S$108.5 million respectively. This was largely due to contributions from its properties, namely Nexus@one-north and A-Reit City@Jinqiao, supported by organic portfolio growth. Rental reversions remained robust and continued to see an uplift of about 9.7 per cent, owing to low passing rents.
Occupancy rates saw a slight dip to 89.7 per cent (83.6 per cent for multi-tenanted properties). Meanwhile, distributable income came in 4.9 per cent higher at S$85.1 million, but DPU dipped 3.54 Singapore cents owing to a larger share base and nil contribution from its China investments (half-year repatriations).
A-Reit continues to offer a steady growth profile over FY2014/15 due to: (i) uplift coming from 21.6 per cent of its income to be renewed in FY2015 which are 14 to 41 per cent below current market levels; (ii) an active pipeline of development and asset enhancement projects (AEI). As of December 2013, A-Reit had a pipeline of S$148 million (S$59 million yet to be funded) worth of ongoing asset enhancements and development projects.
The phased completion of its various development and AEI projects in the subsequent quarters will mean that its growth is likely to see a more significant increase come FY2015. In addition, we understand that A-Reit is likely to acquire the remaining stake in Aperia, a development project in Kallang, by the middle of 2014. We estimate the trust will have sufficient debt- funded capacity to fund these initiatives and should see gearing settle at 34 per cent, which is within management's optimal gearing level.
A-Reit proposed a reduction in its manager's fees, through: (i) a re-calculation of its determination of its base fee, and (ii) a new tiered performance fee structure that ensures payment only upon a DPU growth 2.5 per cent. This new structure aligns itself in favour with unitholders and is estimated to result in an 1.1 per cent uplift in our forward estimates. In addition, A-Reit will change its distribution frequency to semi-annual basis.
We continue to like A-Reit's steady earnings growth profile which is visible and achievable, while maintaining a conservative gearing profile of less than 35 per cent, in our view. Maintain "buy", with target price at S$2.44 based on discounted cash flow.
BUY
Mapletree Logistics Trust
Maybank Kim Eng Research, Jan 21
WITH gearing at 33.9 per cent, Mapletree Logistics Trust (MLT) has a debt headroom of S$450 million before hitting the 40 per cent leverage ratio. But it has not had much luck with acquiring assets from its sponsor, Mapletree Investments Pte Ltd (MIPL), in the past year despite MIPL having 13 sizeable logistics developments in Asia.
The weakening yen remains a concern because Japan is home to about 25 per cent of MLT's assets and accounted for 21 per cent of its revenue in Q3 FY2014. Moreover, its forex hedging has been concentrated mainly in FY2014 and management did not disclose the swap rates for future years.
MLT said it has converted two single-user assets (SUAs) into multi-tenanted buildings (MTBs) in FY2014, with another two to be converted by March 2014. It plans to progressively shift its SUA-to-MTB ratio from 59 per cent:41 per cent currently to 50 per cent:50 per cent. This would shorten its weighted average lease expiry periods in the coming years (Q3 FY2014: 4.8 years), as MTBs have shorter three-year leases against at least five years for SUAs and are better able to capture the upside of a growing rental market.
We forecast DPU to grow at an unexciting one per cent compounded annual growth rate over FY2014 to FY2016. MLT said active lease and asset management will remain a key management priority, especially in Singapore in view of the upcoming supply of 3.9 million sq ft of warehouse space in 2014. In terms of acquisition, we are still waiting to see if MLT will target sponsor injections such as Mapletree Shah Alam Logistics Park in Malaysia and Mapletree Zhengzhou International Logistics Park in China.
We cut our FY2014-16 DPU forecasts by 0.3-0.5 per cent in anticipation of lower growth prospects and higher borrowing costs. The stock has corrected by 6 per cent in the previous quarter. Maintain "sell" with a lower dividend discount model-derived target price of S$0.98.
SELL
Ascott Residence Trust
OCBC on 22 Jan 2014
ART announced 4Q13 results that were in-line with ours and the street’s expectations. Revenue climbed 11% YoY to S$83.9m, chiefly due to additional revenue of S$8.3m from the properties acquired in Nov 2012 and on 28 Jun 2013, and better performances from properties in Belgium and France. The group achieved a RevPAU of S$129 in 4Q13, a decrease of 7% YoY due to weaker performance from Philippines and Japan (depreciation of yen) and lower ADR from the newly acquired China properties. Gross profit rose 8% YoY to S$41.6m. Unitholders' distribution increased 15% YoY to S$26.3m. DPU fell 34% YoY to 1.33 S cents due to the Dec 2013 rights issue. Excluding the rights issue, the DPU would be at 1.96 S cents, down 2% YoY. We believe that a possible upcoming announcement of acquisitions, e.g. S$350m worth of Asia-based assets with a yield of ~5.5%, could serve as a positive price catalyst for ART. Management indicates that it is in advanced negotiations for acquisitions. We maintain our FV of S$1.33 and BUY rating on ART.
No surprises in 4Q13
ART announced 4Q13 results that were in-line with ours and the street’s expectations. Revenue climbed 11% YoY to S$83.9m, chiefly due to additional revenue of S$8.3m from the properties acquired in Nov 2012 and on 28 Jun 2013, and better performances from properties in Belgium and France. The increases were partially offset by lower contribution from properties in the Philippines and Japan (weak yen). Gross profit rose 8% YoY to S$41.6m. Unitholders' distribution increased 15% YoY to S$26.3m. DPU fell 34% YoY to 1.33 S cents due to the Dec 2013 rights issue. Excluding the rights issue, the DPU would be at 1.96 S cents, down 2% YoY.
Outlook for 2014
Management is of the view that on a same-store basis, Singapore SRs will do slightly better than last year, with good occupancies supporting possible ADR increases. However, management notes that the Singapore hospitality sector as a whole will be affected by the new hotel room supply due to come onboard in 2014 and 2015. ART’s properties in Indonesia and Australia which have recently finished renovations should see positive contributions going forward. The key area of concern is still Vietnam, although management believes that the performance of its Vietnam’s properties is bottoming out in local currency terms.
Acquisitions likely in 1H14
We believe that a possible upcoming announcement of acquisitions, e.g. the purchase of Asia-based assets, could serve as a positive price catalyst for ART. Management indicates that it is in advanced negotiations for acquisitions. We assume that around S$350m worth of property yielding ~5.5% will be acquired at the start of 2Q14; ART’s leverage will go back up to around 40%. ART has stated that it is looking for properties in the gateway cities of China, Japan, Malaysia, Australia and Europe. We believe that likely purchases would include Ascott Kuala Lumpur and properties in second-tier cities in China and Japan.
Maintain BUY
We maintain our FV of S$1.33 and BUY rating on ART.
ART announced 4Q13 results that were in-line with ours and the street’s expectations. Revenue climbed 11% YoY to S$83.9m, chiefly due to additional revenue of S$8.3m from the properties acquired in Nov 2012 and on 28 Jun 2013, and better performances from properties in Belgium and France. The increases were partially offset by lower contribution from properties in the Philippines and Japan (weak yen). Gross profit rose 8% YoY to S$41.6m. Unitholders' distribution increased 15% YoY to S$26.3m. DPU fell 34% YoY to 1.33 S cents due to the Dec 2013 rights issue. Excluding the rights issue, the DPU would be at 1.96 S cents, down 2% YoY.
Outlook for 2014
Management is of the view that on a same-store basis, Singapore SRs will do slightly better than last year, with good occupancies supporting possible ADR increases. However, management notes that the Singapore hospitality sector as a whole will be affected by the new hotel room supply due to come onboard in 2014 and 2015. ART’s properties in Indonesia and Australia which have recently finished renovations should see positive contributions going forward. The key area of concern is still Vietnam, although management believes that the performance of its Vietnam’s properties is bottoming out in local currency terms.
Acquisitions likely in 1H14
We believe that a possible upcoming announcement of acquisitions, e.g. the purchase of Asia-based assets, could serve as a positive price catalyst for ART. Management indicates that it is in advanced negotiations for acquisitions. We assume that around S$350m worth of property yielding ~5.5% will be acquired at the start of 2Q14; ART’s leverage will go back up to around 40%. ART has stated that it is looking for properties in the gateway cities of China, Japan, Malaysia, Australia and Europe. We believe that likely purchases would include Ascott Kuala Lumpur and properties in second-tier cities in China and Japan.
Maintain BUY
We maintain our FV of S$1.33 and BUY rating on ART.
Frasers Centrepoint Trust
OCBC on 22 Jan 2014
Frasers Centrepoint Trust (FCT) reported 1QFY14 DPU of 2.50 S cents, up 4.2% YoY, in line with our expectations. Causeway Point (CWP) continued to shine in 1Q, turning in a robust 8.6% growth in NPI, while Northpoint registered a 1.4% growth. However, its portfolio performance was somewhat dampened by Bedok Point, which saw negative reversions and occupancy drop during the quarter. Going forward, FCT disclosed that it will continue to fine-tune the tenant mix at Bedok Point, and is willing to lower rents to keep incumbents and entice new tenants for sustainable performance. Hence, pressure on base rents and fluctuations in occupancies are expected going forward. Nevertheless, management maintains that CWP and Northpoint are likely to continue to deliver in FY14. With the completion of the A&A works at CWP, FCT is also looking to acquisitions to boost growth. We maintain BUY with unchanged fair value of S$2.02 on FCT.
1QFY14 performance within view
Frasers Centrepoint Trust (FCT) released its 1QFY14 results last evening, with no surprises on its performance. NPI grew by 4.4% YoY to S$28.3m, while distributable income rose by 4.0% to S$22.7m due to improvement in revenue from Causeway Point (CWP) upon completion of its addition and alteration (A&A) works. About S$2.1m or 0.25 S cents in cash was retained for the quarter, similar to that in 1QFY13. As such, DPU increased by 4.2% to 2.50 S cents. This formed 24.4%/25.0% of our/consensus full-year DPU projections, which we deem to be consistent with expectations.
Portfolio stable despite movements within assets
CWP continued to shine in 1Q, turning in a robust 8.6% growth in NPI to S$14.1m. Northpoint also registered a 1.4% growth to S$8.8m. In addition, both malls saw robust rental reversions of 7.3%-15.4%, while occupancy rates were kept at high levels of 98.5%-99.1%. As management has previously guided, occupancy rate at YewTee Point improved by 4.4ppt QoQ to 97.1% as new tenants started their leases during the quarter. However, its portfolio performance was somewhat dampened by Bedok Point, which saw negative reversions of 16.0% and occupancy dropped from 96.7% in the preceding quarter to 80.2% due to on-going fitting of incoming tenants and impending A&A works at the basement.
Maintain BUY
Going forward, FCT disclosed that it will continue to fine-tune the tenant mix at Bedok Point, and is willing to lower rents to keep incumbents and entice new tenants for sustainable performance. Hence, pressure on base rents and fluctuations in occupancies (possibly within 80%-95% range) are expected going forward. However, management maintains that CWP and Northpoint are likely to continue to deliver in FY14, as higher secured rentals are expected upon lease renewal. With the completion of the A&A works at CWP, FCT is also looking to acquisitions to boost growth. We understand that the strata title division of One@Changi City is on target for completion, and an acquisition of Changi City Point may happen in 2014. MaintainBUY with unchanged fair value of S$2.02.
Frasers Centrepoint Trust (FCT) released its 1QFY14 results last evening, with no surprises on its performance. NPI grew by 4.4% YoY to S$28.3m, while distributable income rose by 4.0% to S$22.7m due to improvement in revenue from Causeway Point (CWP) upon completion of its addition and alteration (A&A) works. About S$2.1m or 0.25 S cents in cash was retained for the quarter, similar to that in 1QFY13. As such, DPU increased by 4.2% to 2.50 S cents. This formed 24.4%/25.0% of our/consensus full-year DPU projections, which we deem to be consistent with expectations.
Portfolio stable despite movements within assets
CWP continued to shine in 1Q, turning in a robust 8.6% growth in NPI to S$14.1m. Northpoint also registered a 1.4% growth to S$8.8m. In addition, both malls saw robust rental reversions of 7.3%-15.4%, while occupancy rates were kept at high levels of 98.5%-99.1%. As management has previously guided, occupancy rate at YewTee Point improved by 4.4ppt QoQ to 97.1% as new tenants started their leases during the quarter. However, its portfolio performance was somewhat dampened by Bedok Point, which saw negative reversions of 16.0% and occupancy dropped from 96.7% in the preceding quarter to 80.2% due to on-going fitting of incoming tenants and impending A&A works at the basement.
Maintain BUY
Going forward, FCT disclosed that it will continue to fine-tune the tenant mix at Bedok Point, and is willing to lower rents to keep incumbents and entice new tenants for sustainable performance. Hence, pressure on base rents and fluctuations in occupancies (possibly within 80%-95% range) are expected going forward. However, management maintains that CWP and Northpoint are likely to continue to deliver in FY14, as higher secured rentals are expected upon lease renewal. With the completion of the A&A works at CWP, FCT is also looking to acquisitions to boost growth. We understand that the strata title division of One@Changi City is on target for completion, and an acquisition of Changi City Point may happen in 2014. MaintainBUY with unchanged fair value of S$2.02.
Cache Logistics Trust
OCBC on 22 Jan 2014
Cache Logistics Trust (CACHE) announced FY13 DPU of 8.644 S cents, up 3.3%. This is in line with our full-year DPU forecast of 8.59 S cents. For 2014, only 3% of its GFA are due for renewal, thus giving CACHE strong earnings stability. Management also revealed that CACHE is currently in advanced negotiations with its Sponsor and end-users for the lease renewals coming in 2015, which we view positively in light of the upcoming supply of warehouse space. On the acquisition front, CACHE shared that Singapore, China and Malaysia continue to be its key markets. In addition, management reiterated that it will seek redevelopment opportunities and built-to-suit projects. We are keeping our forecasts largely intact pending any development. However, in view of impending Fed tapering, we reduce our fair value to S$1.20 from S$1.30 to reflect higher equity risk premium and risk free rate. But maintain BUY as upside remains compelling.
4Q13 results within expectations
Cache Logistics Trust (CACHE) announced its 4Q13 results last evening. Gross revenue rose by 8.2% YoY to S$20.7m, while NPI saw an increase of 7.1% to S$19.6m. The growth was due to contribution from acquisition of Precise Two and built-in rental escalation within the portfolio. Distributable income, on the other hand, registered a stronger 9.6% growth to S$16.6m on lower financing costs. However, DPU eased marginally by 0.8% to 2.137 S cents as a result of an enlarged unit base. Nonetheless, FY13 DPU still raked up a 3.3% growth to 8.644 S cents. This is in line with both our and consensus full-year DPU forecasts of 8.59 S cents and 8.7 S cents respectively.
Maintaining its strong form
CACHE continued to maintain a 100% occupancy rate for its portfolio and healthy weighted average lease to expiry of 3.1 years (3.4 years in 3Q). For 2014, only 3% of its GFA are due for renewal, thus giving CACHE strong earnings stability. Management also revealed that CACHE is currently in advanced negotiations with its Sponsor and end-users for the lease renewals coming in 2015 (34% of portfolio GFA), which we view positively in light of the upcoming supply of warehouse space. In the area of capital management, we understand that CACHE is still discussing with banks on the refinancing of its maturing debts in 2015. Aggregate leverage stood at 29.2%, unchanged from that seen in 3Q, while all-in financing costs improved to 3.48% in FY13 from 3.82% in FY12. In addition, 70% of CACHE’s interest exposure is hedged, thereby reducing the uncertainty over its funding costs.
Maintain BUY
On the acquisition front, CACHE shared that Singapore, China and Malaysia continue to be its key markets, but did not shed any details on the timeline or specific assets. Management also reiterated that it will seek redevelopment opportunities and built-to-suit projects. We are keeping our forecasts largely intact pending any development. However, in view of impending Fed tapering, we reduce our fair value to S$1.20 from S$1.30 to reflect higher equity risk premium and risk free rate. But maintainBUY as upside remains compelling.
Cache Logistics Trust (CACHE) announced its 4Q13 results last evening. Gross revenue rose by 8.2% YoY to S$20.7m, while NPI saw an increase of 7.1% to S$19.6m. The growth was due to contribution from acquisition of Precise Two and built-in rental escalation within the portfolio. Distributable income, on the other hand, registered a stronger 9.6% growth to S$16.6m on lower financing costs. However, DPU eased marginally by 0.8% to 2.137 S cents as a result of an enlarged unit base. Nonetheless, FY13 DPU still raked up a 3.3% growth to 8.644 S cents. This is in line with both our and consensus full-year DPU forecasts of 8.59 S cents and 8.7 S cents respectively.
Maintaining its strong form
CACHE continued to maintain a 100% occupancy rate for its portfolio and healthy weighted average lease to expiry of 3.1 years (3.4 years in 3Q). For 2014, only 3% of its GFA are due for renewal, thus giving CACHE strong earnings stability. Management also revealed that CACHE is currently in advanced negotiations with its Sponsor and end-users for the lease renewals coming in 2015 (34% of portfolio GFA), which we view positively in light of the upcoming supply of warehouse space. In the area of capital management, we understand that CACHE is still discussing with banks on the refinancing of its maturing debts in 2015. Aggregate leverage stood at 29.2%, unchanged from that seen in 3Q, while all-in financing costs improved to 3.48% in FY13 from 3.82% in FY12. In addition, 70% of CACHE’s interest exposure is hedged, thereby reducing the uncertainty over its funding costs.
Maintain BUY
On the acquisition front, CACHE shared that Singapore, China and Malaysia continue to be its key markets, but did not shed any details on the timeline or specific assets. Management also reiterated that it will seek redevelopment opportunities and built-to-suit projects. We are keeping our forecasts largely intact pending any development. However, in view of impending Fed tapering, we reduce our fair value to S$1.20 from S$1.30 to reflect higher equity risk premium and risk free rate. But maintainBUY as upside remains compelling.
Wednesday, 22 January 2014
Mapletree Logistics Trust
UOBKayhian on 22 Jan 2014
FY14F DPU Yld (%): 6.8
FY15F DPU Yld (%): 7.2
Results in line with expectations. Mapletree Logistics Trust (MLT) reported a 3QFY14
distributable income of S$45.0m (+7.5% yoy, +1.1% qoq) or a DPU of 1.84 S cents
(+7.0% yoy, +1.1% qoq). Excluding divestment gains of 0.02 S cents, adjusted DPU is
1.82 S cents (+5.5% yoy). 9MFY14 DPU of 5.46 S cents is in line with our expectations,
accounting for 76.9% of our full-year DPU estimate of 7.10 S cents.
Maintain BUY and target of S$1.29, based on DDM (required rate of return: 6.9%,
terminal growth: 1.5%).
FY14F DPU Yld (%): 6.8
FY15F DPU Yld (%): 7.2
Results in line with expectations. Mapletree Logistics Trust (MLT) reported a 3QFY14
distributable income of S$45.0m (+7.5% yoy, +1.1% qoq) or a DPU of 1.84 S cents
(+7.0% yoy, +1.1% qoq). Excluding divestment gains of 0.02 S cents, adjusted DPU is
1.82 S cents (+5.5% yoy). 9MFY14 DPU of 5.46 S cents is in line with our expectations,
accounting for 76.9% of our full-year DPU estimate of 7.10 S cents.
Maintain BUY and target of S$1.29, based on DDM (required rate of return: 6.9%,
terminal growth: 1.5%).
Cache Logistics Trust
Uobkayhian on 22 Jan 2014
FY14F DPU Yld (%): 7.5
FY15F DPU Yld (%): 8.0
Results in line with expectations. Cache Logistics Trust (Cache) reported 4Q13
distributable income of S$16.6m (+9.6% yoy, +0.6% qoq), or a DPU of 2.137 cents (-
0.8% yoy, +0.5% qoq). 2013 DPU of 8.644 cents is in line with our expectations,
accounting for 99.4% of our estimate.
Watch for double-digit rental reversions in 2015. About 34% of leases are due in 2015,
the majority of which were signed in 2010 during the IPO. While annual rents under the
master leases have been growing at an annual 1.5-2.0% p.a. over the four years since
listing, market rents for logistic facilities have risen 22% since 2Q10. We estimate the
IPO portfolio could see double-digit rental reversions of 10-12% in 2015, providing an
organic growth catalyst.
Upgrade to BUY with a lower target price of S$1.31 (from S$1.38), based on DDM
(required rate of return: 6.9%, terminal growth: 1.5%).
FY14F DPU Yld (%): 7.5
FY15F DPU Yld (%): 8.0
Results in line with expectations. Cache Logistics Trust (Cache) reported 4Q13
distributable income of S$16.6m (+9.6% yoy, +0.6% qoq), or a DPU of 2.137 cents (-
0.8% yoy, +0.5% qoq). 2013 DPU of 8.644 cents is in line with our expectations,
accounting for 99.4% of our estimate.
Watch for double-digit rental reversions in 2015. About 34% of leases are due in 2015,
the majority of which were signed in 2010 during the IPO. While annual rents under the
master leases have been growing at an annual 1.5-2.0% p.a. over the four years since
listing, market rents for logistic facilities have risen 22% since 2Q10. We estimate the
IPO portfolio could see double-digit rental reversions of 10-12% in 2015, providing an
organic growth catalyst.
Upgrade to BUY with a lower target price of S$1.31 (from S$1.38), based on DDM
(required rate of return: 6.9%, terminal growth: 1.5%).
Ascott Residence Trust
UOBKayhian on 22 Jan 2014
FY14F DPU Yld (%): 6.8
FY15F DPU Yld (%): 7.0
Results in line, no major surprises. Ascott Residence Trust (ART) reported 4Q13 DPU
(excluding rights impact) of 1.96 cents, bringing 2013 DPU (excluding rights impact) to
9.03 cents, in line with our and consensus estimates. RevPAU for 2013 remained
relatively steady at around S$143/day (2012: S$145) on same-store basis (excluding
divestments and acquisitions).
Maintain HOLD and target price of S$1.31. Key re-rating catalyst is potential near-term
yield-accretive acquisitions. Our valuation is based on a two-stage DDM model
(required rate of return: 8.2% and terminal growth rate: 2.0%). ART is currently trading
at 2014-15F yields of 6.8% and 7.1% respectively. Entry price is S$1.15.
FY14F DPU Yld (%): 6.8
FY15F DPU Yld (%): 7.0
Results in line, no major surprises. Ascott Residence Trust (ART) reported 4Q13 DPU
(excluding rights impact) of 1.96 cents, bringing 2013 DPU (excluding rights impact) to
9.03 cents, in line with our and consensus estimates. RevPAU for 2013 remained
relatively steady at around S$143/day (2012: S$145) on same-store basis (excluding
divestments and acquisitions).
Maintain HOLD and target price of S$1.31. Key re-rating catalyst is potential near-term
yield-accretive acquisitions. Our valuation is based on a two-stage DDM model
(required rate of return: 8.2% and terminal growth rate: 2.0%). ART is currently trading
at 2014-15F yields of 6.8% and 7.1% respectively. Entry price is S$1.15.
K-Green Trust
AmFraser Research, Jan 21
K-GREEN Trust's (KGT) FY2013 revenue was 12 per cent lower year on year, which was largely the result of the exclusion of construction revenue arising from the flue gas treatment upgrade. Revenue from operation and maintenance (O&M) was S$50 million for FY2013, which was S$0.3 million lower than FY2012, due to lower output from the waste-to-energy plants and NEWater plant. This was partially offset by annual adjustment of O&M and power tariffs.
KGT's distribution per unit (DPU) of 7.82 cents per unit translates into a yield of 7.4 per cent. We continue to urge investors to look beyond the advertised yield as it masks a partial return of capital from the gradual decline in service concession receivables. KGT's service concession receivables represent the right to receive fixed and determinable payments from the NEA and PUB.
To put things into perspective, KGT's NAV continues to be on the decline and currently stands at S$1 per unit. As at Dec 12, KGT's NAV stood at S$1.05 ...
With a true free cash flow yield of merely 2.4 per cent, KGT certainly does not warrant as a compelling yield investment, in our view. The trust's declining NAV, the short remaining concession lives of its assets as well as its low true free cashflow yield are our key concerns. We maintain our "sell" recommendation on KGT with a target price of S$0.72.
SELL
Cambridge Industrial Trust
DMG & Partners Research, Jan 20
OUTGOING chief executive officer Christopher Calvert has delivered strong shareholder returns over the last five years by re-modelling and resizing the portfolio he inherited into one of the best-performing industrial Reits in recent years. Cambridge Industrial Trust (C-Reit) has posted total shareholder returns (including distribution) of 300 per cent since the beginning of 2009, outperforming its peers and the wider STI market index.
We wish Calvert well as he moves on to the next phase of his professional career in Australia to be closer with his family. He has agreed to remain on board, pending regulatory clearance with regard to the incoming chief executive officer and subsequent disclosure. We have no doubt that the strong team which Calvert has nurtured will continue to manage the portfolio with a view to maximising asset returns with a reasonable risk profile.
Q4 2013 results were broadly in line with expectations. The group's revenue of S$23.3 million (-3.1 per cent y-o-y) brought its FY2013 gross revenue to S$96.5 million (8.4 per cent higher y-o-y), just below our S$98 million estimate. Net property income for the full year came in at S$80.4 million (+5.5 per cent y-o-y), 4 per cent below our expectation, but the overall FY2013 distribution per unit (DPU) of 4.976 cents (+4 per cent y-o-y) is in line with our forecast of five cents.
No changes to our FY2014 earnings forecast and DPU estimate of 5.4 cents. This is in view of the ongoing asset-enhancement initiatives as well as full-year contribution of C-Reit's four acquisitions last year. Going into FY2014 and FY2015, the group's growth strategy appears to be well supported by its low gearing of 28.7 per cent with all-in interest expense of 3.6 per cent and 83 per cent fixed, and a further 31 per cent of its portfolio unencumbered (S$350 million). Maintain "buy" on C-Reit, with a target price of S$0.81.
BUY
M1
OCBC on 21 Jan 2014
M1 Ltd saw FY13 revenue fall 6.4% to S$1007.9m, and was 3.8% below our forecast, while net profit climbed 9.4% to S$160.2m, or 3.5% above our forecast. M1 declared a final dividend of S$0.071 per share and a special dividend of S$0.071, bringing the total full year dividend to S$0.21 per share. This translates into a payout ratio of 121% of its earnings, versus its official minimum payout ratio of 80%. Going forward, management believes that it can continue to achieve moderate earnings growth (within the single-digit range), where it remains largely positive about the mobile business; but slightly more guarded about the fixed services segment. Factoring in the latest developments, we opt to pare our FY14 revenue forecast by 8% but increase our earnings estimate by 2%. Our DCF-based fair value will also improve from S$3.17 to S$3.30 as we roll forward to FY14. As we are unlikely to see a repeat of such a hefty special dividend this year, we maintain our HOLD rating.
FY13 results still in-line; declares S$0.07 special dividend
M1 Ltd reported 4Q13 revenue of S$278.6m, down 14.9% YoY, affected by lower handset sales (down 46.3%); but EBITDA slipped by a smaller 2%, with service EBITDA margin holding relatively steady at 38.2% in 4Q13, versus 41.6% a year ago. Net profit climbed 6.9% to S$40.5m, mainly due to lower taxes (down 44.6%). FY13 revenue fell 6.4% to S$1007.9m, and was around 3.8% below our forecast, while net profit climbed 9.4% to S$160.2m, or 3.5% above our forecast. M1 declared a final dividend of S$0.071 per share and a special dividend of S$0.071 as well, bringing the total full year dividend to S$0.21 per share. This translates into a payout ratio of 121% of its earnings, versus its official minimum payout ratio of 80%.
Guiding for moderate earnings growth
Going forward, management believes that it can continue to achieve moderate earnings growth (within the single-digit range), driven by increased mobile data usage as customers upgrade their smartphone plans (already 49% are on tiered pricing, with 16% exceeding their data allocation) and also pre-paid customers adopting smartphone plans. While it continues to see growth in fixed services, it notes the ongoing price competition in that segment; but believes it should be “promotional” rather than structural. Nevertheless, it notes that a growing adopting of the mass market plan (200Mbps at S$39/month) could see further erosion in ARPU. It has also guided for slightly higher capex of S$130m
Maintain HOLD with higher S$3.30 fair value
Factoring in the latest developments, we opt to pare our FY14 revenue forecast by 8% but increase our earnings estimate by 2%. Our DCF-based fair value will also improve from S$3.17 to S$3.30 as we roll forward to FY14. As we are unlikely to see a repeat of such a hefty special dividend this year, we maintain our HOLD rating.
M1 Ltd reported 4Q13 revenue of S$278.6m, down 14.9% YoY, affected by lower handset sales (down 46.3%); but EBITDA slipped by a smaller 2%, with service EBITDA margin holding relatively steady at 38.2% in 4Q13, versus 41.6% a year ago. Net profit climbed 6.9% to S$40.5m, mainly due to lower taxes (down 44.6%). FY13 revenue fell 6.4% to S$1007.9m, and was around 3.8% below our forecast, while net profit climbed 9.4% to S$160.2m, or 3.5% above our forecast. M1 declared a final dividend of S$0.071 per share and a special dividend of S$0.071 as well, bringing the total full year dividend to S$0.21 per share. This translates into a payout ratio of 121% of its earnings, versus its official minimum payout ratio of 80%.
Guiding for moderate earnings growth
Going forward, management believes that it can continue to achieve moderate earnings growth (within the single-digit range), driven by increased mobile data usage as customers upgrade their smartphone plans (already 49% are on tiered pricing, with 16% exceeding their data allocation) and also pre-paid customers adopting smartphone plans. While it continues to see growth in fixed services, it notes the ongoing price competition in that segment; but believes it should be “promotional” rather than structural. Nevertheless, it notes that a growing adopting of the mass market plan (200Mbps at S$39/month) could see further erosion in ARPU. It has also guided for slightly higher capex of S$130m
Maintain HOLD with higher S$3.30 fair value
Factoring in the latest developments, we opt to pare our FY14 revenue forecast by 8% but increase our earnings estimate by 2%. Our DCF-based fair value will also improve from S$3.17 to S$3.30 as we roll forward to FY14. As we are unlikely to see a repeat of such a hefty special dividend this year, we maintain our HOLD rating.
Mapletree Logistics Trust
OCBC on 21 Jan 2014
Mapletree Logistics Trust (MLT) reported 3QFY14 DPU of 1.84 S cents, up 7.0% YoY. This brings the 9MFY14 DPU to 5.46 S cents, meeting 75.2%/76.9% of our/consensus full-year projections. Going forward, management reiterated that active lease and asset management will be a key priority in light of the supply of warehouse space in 2014 and impending conversion of more single-user assets into multi-tenancies (which may result in occupancy dip). MLT also confirmed our view that competition for acquisition of logistic assets is becoming increasingly intense. Nevertheless, given that MLT’s recent initiatives are like to contribute positively to MLT’s income, we believe MLT’s performance will remain robust in FY15. Maintain HOLD with unchanged fair value of S$1.06.
3QFY14 results met expectations
Mapletree Logistics Trust (MLT) reported a consistent set of 3QFY14 results last evening. NPI saw a marginal drop of 0.2% YoY to S$67.4m, dragged down by weaker JPY. Excluding the forex impact, NPI would have grown by 3.6% on the back of higher renewal rents in Singapore and Hong Kong, and new income streams from Mapletree Wuxi Logistics Park and The Box Centre. Impact of depreciating JPY on bottomline, however, was mitigated as contributions from Japan are substantially hedged. Together with a 22.9% decrease in borrowing costs and divestment gain of S$0.6m, amount distributable to unitholders rose by 7.7% to S$45.0m. As such, DPU similarly grew by 7.0% to 1.84 S cents. This brings the 9MFY14 DPU to 5.46 S cents, meeting 75.2%/76.9% of our/consensus full-year projections.
Portfolio metrics remained sturdy
Portfolio occupancy stood at 98.4%, representing a slight QoQ drop of 0.3ppt. This, we note, was due to the conversion of two single-user assets into multi-tenanted buildings in Singapore. That aside, operational performance remained sturdy, as evidenced by robust rental reversions of 23% and healthy leasing activities (84% of FY14 leases renewed to-date vs. 62% a quarter ago) achieved at its portfolio. Management reiterated that active lease and asset management will be a key priority going forward in light of the supply of warehouse space in 2014 and impending conversion of more single-user assets into multi-tenancies (which may result in occupancy dip).
Maintain HOLD
MLT also confirmed our view that competition for acquisition of logistic assets is becoming increasingly intense. Nevertheless, given that MLT’s recent initiatives, such as 1) completion of redevelopment of Mapletree Benoi Logistics Hub and Phase 1 solar panel installation at its Japan assets, 2) upcoming redevelopment of 5B Toh Guan Road East and Phase 2 solar panel installation, and 3) proposed acquisition of warehouse in Iskandar Malaysia, are like to contribute positively to MLT’s income, we believe MLT’s performance will remain robust in FY15. Maintain HOLD with unchanged fair value of S$1.06.
Mapletree Logistics Trust (MLT) reported a consistent set of 3QFY14 results last evening. NPI saw a marginal drop of 0.2% YoY to S$67.4m, dragged down by weaker JPY. Excluding the forex impact, NPI would have grown by 3.6% on the back of higher renewal rents in Singapore and Hong Kong, and new income streams from Mapletree Wuxi Logistics Park and The Box Centre. Impact of depreciating JPY on bottomline, however, was mitigated as contributions from Japan are substantially hedged. Together with a 22.9% decrease in borrowing costs and divestment gain of S$0.6m, amount distributable to unitholders rose by 7.7% to S$45.0m. As such, DPU similarly grew by 7.0% to 1.84 S cents. This brings the 9MFY14 DPU to 5.46 S cents, meeting 75.2%/76.9% of our/consensus full-year projections.
Portfolio metrics remained sturdy
Portfolio occupancy stood at 98.4%, representing a slight QoQ drop of 0.3ppt. This, we note, was due to the conversion of two single-user assets into multi-tenanted buildings in Singapore. That aside, operational performance remained sturdy, as evidenced by robust rental reversions of 23% and healthy leasing activities (84% of FY14 leases renewed to-date vs. 62% a quarter ago) achieved at its portfolio. Management reiterated that active lease and asset management will be a key priority going forward in light of the supply of warehouse space in 2014 and impending conversion of more single-user assets into multi-tenancies (which may result in occupancy dip).
Maintain HOLD
MLT also confirmed our view that competition for acquisition of logistic assets is becoming increasingly intense. Nevertheless, given that MLT’s recent initiatives, such as 1) completion of redevelopment of Mapletree Benoi Logistics Hub and Phase 1 solar panel installation at its Japan assets, 2) upcoming redevelopment of 5B Toh Guan Road East and Phase 2 solar panel installation, and 3) proposed acquisition of warehouse in Iskandar Malaysia, are like to contribute positively to MLT’s income, we believe MLT’s performance will remain robust in FY15. Maintain HOLD with unchanged fair value of S$1.06.
First REIT
OCBC on 21 Jan 2014
First REIT (FREIT) reported FY13 gross revenue and DPU growth of 44.5% and 14.3% (excluding exceptional gains distribution of 0.68 S cent in FY12) to S$83.3m and 7.52 S cents, and closely matched our revenue and DPU forecast of S$83.2m and 7.54 S cents, respectively. Looking ahead, we believe FREIT’s key priority in any lease terms negotiation for new acquisitions would be to maintain its base rental denomination in SGD to minimise its FX risk. We trim our FY14 and FY15 DPU forecasts marginally by 1.5%, on lower revenue and higher finance costs assumptions. But as we roll forward our valuations, our DDM-derived fair value estimate inches up from S$1.18 to S$1.19. Maintain BUY on FREIT as FY14F distribution yield remains attractive at 7.9%.
FY13 results in-line with our expectations
First REIT (FREIT) reported a 48.2% YoY increase in gross revenue to S$22.8m and a 14.5% growth in DPU to 1.97 S cents in 4Q13. This culminated in FY13 gross revenue and DPU growth of 44.5% and 14.3% (excluding exceptional gains distribution of 0.68 S cent in FY12) to S$83.3m and 7.52 S cents, and closely matched our revenue and DPU forecast of S$83.2m and 7.54 S cents, respectively. This growth was driven by contribution from new acquisitions (two hospitals acquired each in Nov 2012 and May 2013) and organic growth. On the flipside, FREIT’s Sarang Hospital in South Korea registered a net property loss of S$297k in FY13 due to rental provisions made. Nevertheless, we believe this situation has now been resolved as FREIT has agreed to a lower rental structure to ensure the sustainability of Sarang Hospital’s operations. In addition, this asset contributed only 2.4% of FREIT’s FY13 revenue and we do not expect this event to adversely impact its business.
Exchange rate stability will be key priority
According to FREIT, its sponsor Lippo Karawaci has a strong pipeline of 24 hospitals to which FREIT has a right-of-first-refusal. In our view, this provides FREIT with a stream of acquisition targets to tap on the growing demand of private healthcare services in Indonesia. Given the sharp volatility in the IDR exchange rate, we believe FREIT’s key priority in any lease terms negotiation would be to maintain its base rental denomination in SGD.
Maintain BUY with slightly higher S$1.19 fair value
FREIT’s debt-to-assets ratio stood at 31.9% as at end FY13. With little debt headroom available given FREIT’s 35% gearing limit, we believe any future acquisitions would have to be financed partly by equity. We trim our FY14 and FY15 DPU forecasts marginally by 1.5%, on lower revenue and higher finance costs assumptions. But as we roll forward our valuations, our DDM-derived fair value estimate inches up from S$1.18 to S$1.19. Maintain BUY on FREIT as FY14F distribution yield remains attractive at 7.9%.
First REIT (FREIT) reported a 48.2% YoY increase in gross revenue to S$22.8m and a 14.5% growth in DPU to 1.97 S cents in 4Q13. This culminated in FY13 gross revenue and DPU growth of 44.5% and 14.3% (excluding exceptional gains distribution of 0.68 S cent in FY12) to S$83.3m and 7.52 S cents, and closely matched our revenue and DPU forecast of S$83.2m and 7.54 S cents, respectively. This growth was driven by contribution from new acquisitions (two hospitals acquired each in Nov 2012 and May 2013) and organic growth. On the flipside, FREIT’s Sarang Hospital in South Korea registered a net property loss of S$297k in FY13 due to rental provisions made. Nevertheless, we believe this situation has now been resolved as FREIT has agreed to a lower rental structure to ensure the sustainability of Sarang Hospital’s operations. In addition, this asset contributed only 2.4% of FREIT’s FY13 revenue and we do not expect this event to adversely impact its business.
Exchange rate stability will be key priority
According to FREIT, its sponsor Lippo Karawaci has a strong pipeline of 24 hospitals to which FREIT has a right-of-first-refusal. In our view, this provides FREIT with a stream of acquisition targets to tap on the growing demand of private healthcare services in Indonesia. Given the sharp volatility in the IDR exchange rate, we believe FREIT’s key priority in any lease terms negotiation would be to maintain its base rental denomination in SGD.
Maintain BUY with slightly higher S$1.19 fair value
FREIT’s debt-to-assets ratio stood at 31.9% as at end FY13. With little debt headroom available given FREIT’s 35% gearing limit, we believe any future acquisitions would have to be financed partly by equity. We trim our FY14 and FY15 DPU forecasts marginally by 1.5%, on lower revenue and higher finance costs assumptions. But as we roll forward our valuations, our DDM-derived fair value estimate inches up from S$1.18 to S$1.19. Maintain BUY on FREIT as FY14F distribution yield remains attractive at 7.9%.
Tuesday, 21 January 2014
Keppel REIT
UOBKayhian on 21 Jan 2014
FY14F DPU Yld (%): 6.9
FY15F DPU Yld (%): 6.3
Results in line with expectations. Keppel REIT (KREIT) reported a DPU of 1.97 cents/share (unchanged yoy and qoq) on full occupancy, completion of acquisitions and developments, and lower finance costs. This was partially offset by dilution from the placements of 40m shares in 1Q13 and 95m shares in 3Q13. Results were in line with expectations, with 2013 DPU representing 99.7% of our forecast.
Expected acquisition of MBFC in 2014, to be supported by asset sales to reduce the amount of equity fund raising required. With aggregate leverage at 42%, the acquisition of Keppel Land's one-third stake in Marina Bay Financial Centre (MBFC) Tower 3 will likely be completed with the divestment of two or more buildings (eg Prudential Tower, Bugis Junction and/or 77 King Street in Australia), and may be paired with equity fund raising of S$250m- 300m. Equity fund raising could be minimised if the buildings are sold at higher premiums to current valuations.
Maintain BUY and target price of S$1.46, based on DDM (required rate of return: 7.1%, terminal growth: 2.2%).
FY14F DPU Yld (%): 6.9
FY15F DPU Yld (%): 6.3
Results in line with expectations. Keppel REIT (KREIT) reported a DPU of 1.97 cents/share (unchanged yoy and qoq) on full occupancy, completion of acquisitions and developments, and lower finance costs. This was partially offset by dilution from the placements of 40m shares in 1Q13 and 95m shares in 3Q13. Results were in line with expectations, with 2013 DPU representing 99.7% of our forecast.
Expected acquisition of MBFC in 2014, to be supported by asset sales to reduce the amount of equity fund raising required. With aggregate leverage at 42%, the acquisition of Keppel Land's one-third stake in Marina Bay Financial Centre (MBFC) Tower 3 will likely be completed with the divestment of two or more buildings (eg Prudential Tower, Bugis Junction and/or 77 King Street in Australia), and may be paired with equity fund raising of S$250m- 300m. Equity fund raising could be minimised if the buildings are sold at higher premiums to current valuations.
Maintain BUY and target price of S$1.46, based on DDM (required rate of return: 7.1%, terminal growth: 2.2%).
M1
UOBKayhian on 21 Jan 2014
FY14F PE (x): 18.9
FY15F PE (x): 17.1
M1 reported net profit of S$40.5m for 4Q13 (+7.1% yoy), in line with our expectations. Net profit increased 9.4% yoy to S$160.2m for 2013.Growth from mobile data. M1 added 5,000 post-paid subscribers and its post-paid subscriber base grew 3.2% yoy. The proportion of post-paid subscribers on tiered data plans has expanded from 32% in 3Q13 to 49% in 4Q13. About 16% of these subscribers exceeded their data bundle. Contribution from mobile data has expanded from 29.7% to 31% of service revenue. Thus, post-paid ARPU expanded 0.6% qoq to S$62.20.
Our target price is S$3.85, based on DCF (required rate of return: 6.7%, terminal growth: 1.0%). The increase in target price is due to: a) rolling forward our valuation into 2014, and b) factoring in the improvement in working capital. Receivables have improved from 61 days in 2012 to 52 days in 2013.
FY14F PE (x): 18.9
FY15F PE (x): 17.1
M1 reported net profit of S$40.5m for 4Q13 (+7.1% yoy), in line with our expectations. Net profit increased 9.4% yoy to S$160.2m for 2013.Growth from mobile data. M1 added 5,000 post-paid subscribers and its post-paid subscriber base grew 3.2% yoy. The proportion of post-paid subscribers on tiered data plans has expanded from 32% in 3Q13 to 49% in 4Q13. About 16% of these subscribers exceeded their data bundle. Contribution from mobile data has expanded from 29.7% to 31% of service revenue. Thus, post-paid ARPU expanded 0.6% qoq to S$62.20.
Our target price is S$3.85, based on DCF (required rate of return: 6.7%, terminal growth: 1.0%). The increase in target price is due to: a) rolling forward our valuation into 2014, and b) factoring in the improvement in working capital. Receivables have improved from 61 days in 2012 to 52 days in 2013.
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