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.