- FY3/15 DPU slightly below on lower than expected warehouse contributions. Reduce FY3/16 DPU by 2%.
- Occupancies for factories and warehouses dropped QoQ.
- Maintain SELL on soft occupancy and weaker rental reversions. DDM TP SGD2.27 unchanged (CoE 8.5%, LTG 2%).
FY3/15 revenue was SGD673.5m (+9.8% YoY) and NPI, SGD462.7m (+6.1% YoY), vs our respective SGD677.3m and SGD462.3m. Full year DPU was 14.6 SGD cts vs our 14.9 cts, slightly below. Occupancies for factories and warehouses (60% NPI) dropped QoQ – hi-spec 88.9% to 88.5%, light industrial 93% to 92.5%, and warehouses 86.5% to 85.8% - underscoring our concerns of oversupply/weak demand. Business parks (35% NPI) occupancy improved from 88% to 88.7%. Integrated development segment contributed strongly as Aperia ramped up occupancy from 54% to 80%. Portfolio rental reversions have trended lower third year running, from 14% to 10%, now 8.3%.
Challenging times
Factories and warehouses are likely to continue to see soft occupancies and weak rental reversions. Business parks had a solid quarter but as 2016 supply is largely uncommitted, this segment could waver. Integrated segment looks set to increase NPI contribution from 4.4% to 7.4% powered by Aperia’s high quality specs and good location.
Consensus could be disappointed; Maintain SELL
We do not expect business parks or the Aperia to be adequate buffers for factories and warehouses. Also, we expect NPI margin compression as A-reit’s proportion of multi-tenanted buildings has increased from 62% to 71%. We reduce our FY3/16 DPU from 15.1 SGD cts to 14.8, no change for our FY3/17-18 forecasts. Maintain SELL with a DDM TP SGD 2.27.
No comments:
Post a Comment