Month: December 2007
LMIR – SGX
Stabilising action by UBS,
- 6-Dec-07 : Cessation of Stabilising Action – To date purchased 96,820,000 units ; Over-allotment option will not be exercised
- 6-Dec-07 : 1,803,000 Units @ $0.73 to $0.735 per Unit
- 5-Dec-07 : 1,5000,000 Units @ $0.73 per Unit
- 4-Dec-07 : 44,000 Units @ $0.725 to $0.73 per Unit
- 3-Dec-07 : 4,704,000 Units @ $0.725 to $0.735 per Unit
- 30-Nov-07 : 500,000 Units @ $0.735 per Unit
- 29-Nov-07 : 1,234,000 Units @ S$0.730 to S$0.735 per Unit
- 28-Nov-07 : 500,000 Units @ S$0.71 per Unit
- 27-Nov-07 : 1,002,000 Units @ S$0.6825 per Unit
- 26-Nov-07 : 936,000 Units @ S$0.675 to S$0.68 per Unit
- 21-Nov-07 : 819,000 Units @ S$0.66 to S$0.665 per Unit
- 20-Nov-07 : 3,500,000 Units @ S$0.635 to S$0.665 per Unit
- 19 Nov 2007 : 80,278,000 Units @ S$0.675 to S$0.775 per Unit
Note : Total 96,820,000 Units available for Stabilising Action
Cambridge – Lehman
Stable Portfolio Yield
Investment Conclusion
We initiate coverage of Cambridge Industrial Trust (CIT) with a 1-Overweight investment rating and a 12-month sum-of-the-parts-based price target of S$0.80. Based on our projected FY08E distribution yield of 8.4%, which is 560bps above the Singapore government ten-year bond, we estimate CIT offers the potential for a total return of 26% at current levels. (This is an excerpt from our full initiation report – “Stable Portfolio Yield; Potential Suitors Could Come Knocking”)
Summary
K-REIT – Lehman
Organic Growth via Rental Revision
Investment Conclusion
We initiate coverage of K-REIT with a 1-Overweight investment rating on the shares and a
12-month dividend discount model–derived price target of S$3.42. Based on our FY08E distribution yield projection of 4%, 120bp above the Singapore Government 10-year bond, we estimate K-REIT offers potential return of 36% at the current price. (This is an excerpt from our full initiation report – “Robust Organic Growth via Rental Revision”.
Summary
CDLHTrust – UOBKH
Ride on the rising tourism in Singapore
CDL Hospitality Trusts (CDREIT) is a key beneficiary of rising tourism in Singapore, with 2,324 hotel rooms or 6.2% of total hotel room inventory. Its hotel portfolio is located strategically close to the CBD and Orchard Road area, which allows it to cater to both business and leisure travellers. The supply of hotel rooms in Singapore will increase only 3% and 4% in 2007 and 2008 respectively, compared with an estimated 6% annual increase in tourist arrival. We believe the hotel occupancy in Singapore will likely remain at a high 80% level, which could further spike up room rates in the next two years.
Room for growth via acquisitions. Since its listing in Jul 06, CDREIT has made two acquisitions valued at S$344m in total, increasing asset under management (AUM) by 35% to S$1.4b. With a low gearing (3Q07: 23%), the trust currently has a debt capacity of S$550m for asset acquisitions, assuming a 45% optimal gearing ratio. Given CDREIT’s acquisition track record and strong sponsor (Millennium & Copthorne Hotel plc), we are forecasting S$300m asset acquisition per year with an initial yield of 5.5% in FY08 and FY09.
Maintain BUY with target price raised to S$2.77, based on DCF (WACC: 6.1%; terminal growth rate: 1.5%). We expect DPU to grow at a CAGR of 16.7% from FY07 to FY09, underpinned by both acquisitions and organic growth. Acquisition growth contributes S$0.66/share or 24% of our fair value estimate. Following its recent share price correction, CDREIT now is trading at FY08 DPU yield of 4.8%. Yield accretive-acquisitions and RevPAR growth will be the key positive share price catalysts.
Key risks include an economic downturn, higher interest rates and slower-than expected
asset growth.
Cambridge – Phillip
We met up with management recently for an update on the investment portfolio as well as the plans going forward.
Investment portfolio. CIT’s portfolio has grown from 27 properties worth $531.0 million at the time of IPO to 40 properties with an asset value of $862.7 million currently. The properties are located in Singapore and are spread across a diversified range of sub-sectors. All the properties enjoy 100% occupancies with a WALE of 7.0 years based on FY07 gross revenue. As at 30 Oct 2007, CIT has signed $94.0 million worth of MOUs.
Equity fund raising (EFR). CIT completed its first EFR in October, succesfully raising $193.9 million. 277 million units were placed out to institutional investors. Gearing currently stands at 38%. CIT is able to gear up to 60% according to the property funds guideline. However most REITs tend to bring down their gearing once they hit the 45%-50% range.
Acquisitions. CIT remains focused on the local industrial market in the near term, and highlights that there are still approximately 96.0 million sqf of investment grade stock in the market. However management has hinted possible in-road into the Malaysian or Chinese markets. Although being independent in status and lacking a developer sponsor, CIT maintains a strategic partnership with CWT Limited and Mitsui & Co. through a joint investment in CITM, the Manager of CIT. Thus CIT will be able to leverage on its partners’ strength.
Valuation. We project FY08 DPU of 5.94 cents and based on the closing price of $0.685, this translates to a yield of 8.67%. Our projections are conservative and we have not factored in contributions from further acquisitions. Therefore we believe that accretive acquisitions carried out in the coming periods will drive the dividend payout even higher. The high yield alone is compelling enough to warrant our attention. Maintain BUY.