Month: January 2010
CRCT – BT
CRCT posts 10% fall in Q4 DPU to 2.04 cents
But its FY09 income to be distributed climbs 10% on higher revenue from most of its malls
CapitaRetail China Trust (CRCT) yesterday reported a 10 per cent fall in income to be distributed in fourth quarter 2009 to $12.7 million from $14.1 million a year ago as rental revenue fell.
The trust, which gets its income from rents from eight retail properties in China, said that distribution per unit (DPU) likewise fell 10 per cent to 2.04 cents from 2.27 cents.
In Q4 2009, gross revenue was $29.7 million, down 5 per cent from a year ago due to frictional losses at Wangjing Mall when new tenants were introduced to improve mall positioning, as well as lower revenue from Saihan Mall.
The trust is upbeat on future prospects. Chief executive Wee Hui Kan said that the trust’s first-tier city malls are stable and greater contributions are also being seen from other malls.
‘I think we can certainly expect some growth (from CRCT in 2010) as China is growing,’ said Mr Wee. The trust will see organic growth on back of rising retail sales in China. In addition, it is looking for suitable acquisition opportunities, he added.
Mr Wee also said that the trust will continue to strengthen its business model to drive operational performance and improve results.
For the full 2009 financial year, CRCT reported a 10 per cent climb income to be distributed to $50.6 million, from $45.9 million in 2008, on improved revenue from most of its malls.
For FY2009, CRCT retained $0.55 million of the income available for distribution for working capital and capital expenditure.
DPU for the full year rose to 8.14 cents from 7.53 cents.
As at end-2009, CRCT’s total borrowing was $406.4 million while gearing stood at 33.6 per cent. The trust has successfully refinanced a $88 million loan facility which is maturing on Feb 5 this year. CRCT’s next major debt will mature in November and discussions with financial institutions have commenced. The trust is confident that it will refinance the debt when it matures, it said.
CRCT shares lost 4 cents or 3 per cent to close at $1.20 yesterday.
Cambridge – Phillip
Full Year 2009 Results
• Full year revenue of $74.4 million, net property income of $65.1 million, distributable income of $44.2 million.
• 4Q09 DPU of 1.38 cents, bringing full year DPU to 5.36 cents.
• Total asset value of $874.2 million.
• Maintain hold recommendation, fair value raised from $0.41 to $0.48
Results within expectations
CIT recorded full year revenue of $74.4 million (+3.0% y-y), net property income of $65.1 million (+3.7% y-y) and distributable income of $44.2 million (-7.7% y-y). Full year DPU was 5.36 cents (-10.9% y-y). CIT full year results came in within expectations. Revenue was +2.0% higher than our forecasts, net property income was +1.4% higher, distributable income was +11.6% higher and DPU was +10.9% higher. The higher DPU against our forecast was due to the amortization of transaction cost.
CIT divested some properties in 4Q09 for total sale proceeds of $6.6 million and recorded a gain of $0.3 million. Total property asset value as at 31 Dec 2009 was $874.2 million. CIT has reclassified $78.6 million worth of properties as current assets held for divestment and management has mentioned that these properties would be divested in the course of the year.
Quarterly results review
CIT has registered stable revenue with slight growth over the quarters. This is expected as the leases are secured with an rent escalation component. Portfolio occupancy was also remarkable at almost full occupancy, above the Singapore industrial average of 91.9%. DPU has held steady in the past 3 quarters. Going forward, we may see a weakening in revenue as well as DPU, given that CIT has sold off some properties and had also earmarked properties meant for divestment.
Capital management
CIT has total of $390 million, which is due only in 2012. Gearing (debt/assets) is 42.6%. CIT was among the first REITs to secure refinance during the height of the credit crisis in 2009. For its ability to secure the refinancing, it was awarded the ‘Best Deal in Singapore 2009’ award at The Asset Magazine Triple A Asian Awards earlier this year.
Forecasts
We made some adjustments to our revenue forecast to account for the divestment of properties, however we have not factor in the sale of the earmarked properties as well as any contribution from asset enhancements and acquisitions. We forecast a revenue drop of 5.4% in FY10E and a DPU of 4.2 cents, which translate into a dividend yield of 9.0%. We roll forward our valuation to FY2010E and raise our fair value from $0.41 to $0.48 and maintain our hold recommendation.
StarHill Gbl – DBS
Earnings growth from David Jones
At a Glance
• DPU of 0.97 Scts for 4Q09
• Retail income to support weakening office revenue
• Maintain Buy, TP $0.66
Comment on Results
DPU of 0.97 Scts. Gross revenues and net property income grew by1.5% and 3.2% to S$34.3m and S$26.8m respectively. Growth was largely contributed from stronger retail revenues from its Singapore and China properties, offset by weaker performance at its office space. Distributable income came in at $19.1m, which is a 5.5% yoy increase, translating to a DPU of 0.97 Scts. The group also wrote their book up slightly by S$25m or 1.4% – NAV per unit stands at S$0.82.
Retail portfolio to offset weakening office space. SGReit’s office portfolio is expected to face downward pressure on rents from 2010 as negative rental reversions starts to kick in. The group expects to renew a total of total of 47.2% of its office NLA over 2010-11. Current rents are ranging between $7-9psf/mth compared to the expiring levels of c$10psf. The drag is likely to be offset by income from its retail portfolio and new contributions from the David Jones property in Australia. Retail rents are expected to be underpinned by the pick up in retail sales on the back of an improving economy, anticipated increase in tourist arrivals and absence of new supply (in view of the strong absorption of the new stock). Income from the acquisition of the David Jones asset should be felt from 1Q10 with the recent completion of transaction.
Recommendation
We maintain our Buy call with TP at $0.66. SGReit remains one of the major beneficiaries of the improved tourism outlook with the upcoming opening of the 2 IRs and is well-located malls in the heart of the Orchard Rd shopping belt. The stock is offering FY10- 11 DPU yield of 7.2-7.4% and 0.64x P/bk NAV.
CDL H-Trust – DBS
Adding 1,139 keys to portfolio
• Acquiring an Australian portfolio at a total cost of A$187.2m (or A$154k per key)
• Initial yield of 7.9% attractive vs implied 5% yield
• Reiterate BUY, TP adjusted to S$2.11, offering total return of 27%
Growing keys by 1,139. CDL Hospitality Trust (CDL HT) announces the acquisition of a portfolio of 5 freehold Australian hotels comprising 1,138 rooms for A$187.2m (S$154k per room). The portfolio will be operated by Accor SA for a period of 11.3 years on a base + variable rent structure, offering strong and steady incremental growth. The base rent is well protected by strong underlying cashflows – rent payable is 60% of the underlying EBITDA of the portfolio.
Accretive at 7.9%. The deal is accretive as the initial yield of the properties is 7.9% and compares favorably to the implied trading yield of 5%. When completed, CDL HT’s total portfolio value will increase by 15.7% to S$1.7bn. The deal is expected to be 100% funded by debt at an assumed all-in-cost of 4%. DPU is expected to spike up 6-9% to 11.4 Scts (FY10F) and 12.2 Scts (FY11F).
Maintain BUY, TP $2.11. We remain positive on this development given the strong accretion to earnings and high-income protection that the acquisition offers to the trust. Based on our estimates, the fixed income portion of the trust will increase to c4.0Scts per unit (assuming nil variable income), limiting downside to earnings. Maintain BUY