Cache Logistics Trust

UOBKayhian on 25 June 2014

FY14F PE (x): 15.8
FY15F PE (x): 15.5
Positive rental reversions to drive organic growth. We estimate positive reversions of 10-
15% for Cache Logistics Trust (Cache) for the master-leases coming due in 2015/16
(34%/ 32% of portfolio), based on current market rents. This provides an organic growth
catalyst as annual rents under the master-leases have been growing at an annual rate
of 1.5-2.0% p.a. over the four years from listing, while rents for logistic facilities have
risen 35-45% from three to four years ago.
Underlying tenancies remain strong with most master-leased properties underpinned by
multi-national logistics companies, including DB Schenker, Nippon Express and TNT
Express. Also, for CWT Commodity Hub, only 20% of the leased area is due for expiry
in 2015, while separate lease agreements have been entered with existing tenants to
extend their underlying leases.
Maintain BUY with a higher target price of S$1.35 (from S$1.31), based on DDM
(required rate of return: 6.9%, terminal growth: 1.5%).