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a-iTrust – DBSV

2 May 2012
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New buildings filling up

4Q12 DPU of 1.46 Scts in line

New buildings ramping up; S$ continues to moderate true earnings potential

BUY with revised S$0.91 TP; Yields of c.8% attractive

Highlights

DPU of 1.46 Scts. Total property income and net property income were 10% and 18% higher y-o-y at S$34.3m and S$19.4m respectively. The better performance was mainly driven from portfolio expansion where the trust saw maiden rental income contribution from newly completed acquisition of aVance Business hub (not full month contribution) while (Zenith, Park Square ad Voyager) continue to ramp up. Distributable income however shrank by 2% to S$11.2m, from a stronger S$, higher interest costs from financing of its development activities and taxes, translating to a DPU of 1.46 Scts (-3%). There was a revaluation gain of close to S$8m, but NAV declined to S$0.71 (-11%) due to unfavorable translation rates.

Our View

Strong S$ vs INR exchange rate moderated earnings; underlying performance robust. The strong S$-INR, which has appreciated 10% since a year ago, moderated the operational performance in INR terms, with topline/net property income growing by 22%/30% y-o-y to INR 1,352m/INR764.7m. On a q-o-q basis, a-itrust rental income and net property income increased by 10% and 6% respectively.

Occupancy levels are high and improving. Average portfolio occupancy was stable at 97%, excluding the new buildings which are at 98% (Zenith), 80%(Park Square) and 82% (Voyager) occupied respectively, with the balance actively marketed and we believe will soon be filled up. In addition, we note that a-itrust has added an additional 10% space to the planned 540k sqft multi-tenanted building at ITPB, implying the strong demand for quality space at that location. This building is expected to complete in Dec’13 and should start contributing to earnings from FY15 onwards.

Recommendation

Maintain BUY, TP revised to S$0.91. Our earnings estimates are adjusted slightly to account for higher interest costs and phased out contribution from new buildings. Stock continues to offer an attractive prospective FY13-14F yield of c. 8%.

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