Month: July 2008
KREIT – Nomura
First look
K-REIT’s 2Q08 results were in line with our expectations, with the positive reversionary profile in Singapore over FY08-09F underpinning valuations. We continue to see inherent value in K-REIT, currently trading on an implied enterprise value of circa S$1,175/psf. Having de-leveraged to 0.28x, K-REIT remains well placed to capitalise on opportunistic acquisitions in the listed and unlisted markets. STRONG BUY call reaffirmed.
2Q08: expectations met
PLife – DBS
Stable earnings
Comment on Results
2Q and 1H FY08 results were within expectations. 2Q gross revenue was S$12.49m, exceeding its IPO forecast by 8.8%. Singapore hospitals contributed S$11.97m gross revenue, while its three Japanese assets that were acquired in May contributed S$0.5m. Total expenses was S$2.92m, 22% higher than forecast due to higher contribution expenses for management & sinking fund for Mt Elizabeth Hospital, and higher trust level expenses following the addition of the Japan properties. 2Q net property income (NPI) was S$11.7m. DPU for 2Q is 1.66 Scts. Ex-date is 31 Jul and payment is expected on 27 Aug.
1H gross revenue and NPI are make up 49.7% and 47.7% of our full year forecasts. We expect PREIT to meet our forecasts with full contribution from its three Japanese assets in 2H.
Recommendation
Portfolio valued at S$902.2m. This includes its three assets in Japan – a pharmaceutical products distributing and manufacturing facility and two nursing homes. Singapore accounts for 92% of total assets, and Japan the rest.
Low gearing of 10% offers room for more debt funded acquisitions – it can borrow up to S$570m before reaching its 45% target gearing level. We are expecting more acquisitions as management has indicated its ambition to grow asset base to S$1.6bn.
Maintain Buy, TP S$1.35 based on DCF (WACC: 6.3%, Terminal growth: 1%). With Jun CPI soaring to 7.5%, MAS recently raised 2008 CPI forecast to 6%–7%. We like PREIT in today’s inflationary environment because its Singapore hospital gross revenue is pegged to the higher of adjusted hospital revenue or 1%+CPI. We have assumed CPI of 6.4% for 2008 in our forecasts. At current price of S$1.12, PREIT offers attractive net dividend yield of 6.1% and 6.4% for FY08F and FY09F, respectively.
PST – UOBKH
2QFY08: DPU Should Continue Improving With New Vessels
2QFY08 DPU 12% higher than 1QFY08’s. Pacific Shipping Trust (PST) reported a net profit of US$8.3m for 2QFY08 (1QFY08: US$0.5m, 2QFY07: US$5.5m). Excluding gains/losses on interest rate swaps of US$3.8m, net profit would have been US$5.2m (1QFY08: US$4.5m, 2QFY07: US$3.2m). Net profit should continue to improve due to the impact of new ships. Distributable income for 2QFY08 was US$3.6m (1QFY08: S$3.3m, 2QFY07: US$3.6m). The increase in distributable income was due to a fullquarter contribution from Kota Nabil and the maiden contribution from Kota Naga which was delivered at end-May 08. Both vessels are chartered to PST’s sponsor Pacific International Lines. Two 4,250 TEU vessels, CSAV Laja and CSAV Lauca, will be delivered in 2HFY08.
Net profit forecasts revised up, but distributable income forecasts maintained. Our earnings forecasts do not take into account gains/losses on interest rate swap contracts. These gains/losses are non-cash items and fluctuate from quarter to quarter depending on interest rate movements. They have no impact on PST’s distributable profit and cash. However, we raise our net profit forecasts for FY08, FY09 and FY10 by 17-22% to US$16.4m, US$21.7m and US$23.3m respectively on lower-than-expected depreciation as PST’s ships are now depreciated over 30 years instead of 25 years. Our distributable income forecasts remain at US$15.7m, US$22.1m and US$23.1m for FY08, FY09 and FY10 respectively. PST has declared a DPU of 1.09 US cent for 2QFY08, 12% higher than 1QFY08’s 0.97 US cent.
Maintain BUY and target price. Delivery of the four new containerships in FY08 will expand PST’s portfolio of vessels by 50% to 12 from its initial fleet of eight ships. The four new vessels are expected to raise PST’s total contracted revenue p.a. by 79% to US$61.9m. We maintain our target price of US$0.50 for PST, based on a fair value FY09 net yield of 9.5%. PST offers an annual net yield of 11-12%. Maintain BUY.
K-Reit – BT
K-Reit Asia reported on Monday a distributable income of $14.2 million for Q2 2008.
Net property income for the quarter was $9.2 million, an increase of 26 per cent compared to a net property income of $7.8 million a year ago.
This is 173 per cent higher than the distributable income of $5.2 million a year ago.
Distribution Per Unit (DPU) for the period is 2.18 cents, up from 2.14 cents a year.
K-Reit said its portfolio attained 100 per cent committed occupancy as at end-June. Average gross rental rates for investment properties held directly rose to $5.66 psf in June as compared with $4.28 psf for the same period in 2007.
PLife – BT
Parkway Reit Q2 income beats forecast
PARKWAY Life Real Estate Investment Trust (P-Reit) yesterday announced a distributable income of $10.0 million for the second quarter ended June 30, 2008, beating its forecast of $9.4 million by 6.4 per cent.
Distribution per unit (DPU) for the three months was 1.66 cents, also 6.4 per cent higher than the forecast DPU of 1.56 cents.
Net property income for Q2 was $11.7 million, 8.1 per cent higher than the trust’s forecast of $10.8 million.
There is no comparable period for 2007 as P-Reit was only listed on the Singapore Exchange in August last year.
The trust benefited from higher gross rental revenue in Q208 as a result of better-than-expected revenue from its Singapore hospital assets, as well as additional income from three new Japanese assets.
Q2 gross rental revenue was $12.5 million. The bulk of it came from the trust’s Singapore hospitals, where total gross rental revenue was $12.0 million, a 4.3 per cent increase from the forecast figure of $11.5 million.
For the first six months of 2008, the trust’s distributable income was $19.8 million while the DPU was 3.29 cents – both 5.1 per cent higher than the forecast.
Justine Wingrove, chief executive of P-Reit’s management team, said that the private healthcare sector continues to remain robust even in the current volatile market conditions.
‘As a result, P-Reit will not only enjoy strong growth from its current portfolio, but will also benefit from attractive asset acquisition opportunities,’ she noted. Target markets for acquisitions include Australia, China, India, Japan, Malaysia, Singapore, Taiwan and Thailand, Ms Wingrove added.
The Reit’s total portfolio size now stands at $902.2 million, following acquisition of its latest assets earlier this year. In May 2008, P-Reit bought a pharmaceutical products distributing and manufacturing facility as well as two nursing homes in Japan for $70 million in all.
P-Reit lost three cents to close at $1.12 yesterday. The stock has shed 0.9 per cent since the start of the year.