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