OCBC on 25 Jul 2013
Cache Logistics Trust (CACHE) turned in a firm set of 2Q13 results last evening. NPI grew 17.0% YoY to S$19.6m and distributable income increased 19.8% to S$16.6m. DPU for the quarter came in at 2.147 S cents, representing a rise of 8.4% YoY. This brings the 1H13 DPU to 4.381 S cents (+7.7% YoY), meeting 52.0%/50.9% of our/consensus FY13 DPU projections. As at 30 Jun, the overall portfolio occupancy was maintained at 100%, with a weighted average lease to expiry of 3.6 years. CACHE’s aggregate leverage also held steady at 29.2% compared to 1Q. This, we note, is the second lowest gearing level among the industrial REITs listed in Singapore. While CACHE has kept mum on any likely acquisition asset, we judge that its robust financial position will put it in good stead for any attractive opportunities. Management also reiterated that there is no debt refinancing needs in the next two years, as its term loans will mature only in 2015 and 2016. In addition, 70% of its debts is hedged, thereby giving CACHE considerable certainty over its financing costs. We maintain BUY with unchanged fair value of S$1.40 on CACHE.
2Q13 performance within view
Cache Logistics Trust (CACHE) turned in a firm set of 2Q13 results last evening. NPI grew 17.0% YoY to S$19.6m and distributable income increased 19.8% to S$16.6m. The better performance was chiefly driven by rental escalations from its existing portfolio assets and full-quarter contribution from Precise Two following the completion of acquisition on 1 Apr. DPU for the quarter came in at 2.147 S cents, representing a rise of 8.4% YoY. This brings the 1H13 DPU to 4.381 S cents (+7.7% YoY), meeting 52.0%/50.9% of our/consensus FY13 DPU projections. Based on the last closing price, annualised current yield stands at 7.1% – attractive in our view.
Portfolio maintained its resilience
As at 30 Jun, the overall portfolio occupancy was maintained at 100%, with a weighted average lease to expiry of 3.6 years. Notably, CACHE’s lease expiry in 2013 has already been fully addressed, while only 6% of total portfolio GFA is due for renewal in 2014. Hence, we believe that there should be limited leasing risk over the period, and that income stream would remain stable and predictable.
Strong financial standing
CACHE’s aggregate leverage also held steady at 29.2% compared to 1Q. This, we note, is the second lowest gearing level among the industrial REITs listed in Singapore. While CACHE has kept mum on any likely acquisition asset, we judge that its robust financial position will put it in good stead for any attractive opportunities. Average all-in financing cost in 2Q improved marginally from 3.52% in prior quarter to 3.48%. Management also reiterated that there is no debt refinancing needs in the next two years, as its term loans will mature only in 2015 and 2016. In addition, 70% of its debts is hedged, thereby giving CACHE considerable certainty over its financing costs. This is consistent with our view that the impact of rising interest rates on its DPU will likely be limited. We are keeping our forecasts unchanged as the results have panned out according to our expectations. Maintain BUY with unchanged fair value of S$1.40 on CACHE.
Cache Logistics Trust (CACHE) turned in a firm set of 2Q13 results last evening. NPI grew 17.0% YoY to S$19.6m and distributable income increased 19.8% to S$16.6m. The better performance was chiefly driven by rental escalations from its existing portfolio assets and full-quarter contribution from Precise Two following the completion of acquisition on 1 Apr. DPU for the quarter came in at 2.147 S cents, representing a rise of 8.4% YoY. This brings the 1H13 DPU to 4.381 S cents (+7.7% YoY), meeting 52.0%/50.9% of our/consensus FY13 DPU projections. Based on the last closing price, annualised current yield stands at 7.1% – attractive in our view.
Portfolio maintained its resilience
As at 30 Jun, the overall portfolio occupancy was maintained at 100%, with a weighted average lease to expiry of 3.6 years. Notably, CACHE’s lease expiry in 2013 has already been fully addressed, while only 6% of total portfolio GFA is due for renewal in 2014. Hence, we believe that there should be limited leasing risk over the period, and that income stream would remain stable and predictable.
Strong financial standing
CACHE’s aggregate leverage also held steady at 29.2% compared to 1Q. This, we note, is the second lowest gearing level among the industrial REITs listed in Singapore. While CACHE has kept mum on any likely acquisition asset, we judge that its robust financial position will put it in good stead for any attractive opportunities. Average all-in financing cost in 2Q improved marginally from 3.52% in prior quarter to 3.48%. Management also reiterated that there is no debt refinancing needs in the next two years, as its term loans will mature only in 2015 and 2016. In addition, 70% of its debts is hedged, thereby giving CACHE considerable certainty over its financing costs. This is consistent with our view that the impact of rising interest rates on its DPU will likely be limited. We are keeping our forecasts unchanged as the results have panned out according to our expectations. Maintain BUY with unchanged fair value of S$1.40 on CACHE.
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