Month: January 2010
FSL – BT
Q4 distribution per unit halves at First Ship Lease Trust
1.5 US cent payout unchanged from preceding quarter’s
FIRST Ship Lease Trust (FSLT) has declared a fourth-quarter distribution per unit (DPU) of 1.5 US cents, unchanged from that of the preceding quarter but down by half from 3.08 US cents a year ago. For the full year of 2009, DPU came to 7.9 US cents per unit, down nearly a third from the year before.
Q4’s distribution amount of US$9 million was 42 per cent lower while FY09 total distribution dropped by just over a quarter to US$42 million. The retained cash from the lower distribution payout was mainly used for voluntary debt prepayment as well as for scheduled loan amortisation following the credit facility amendment.
Net cash generated from operations grew 15 per cent to US$67.9 million for FY09 from US$59.1 million for FY08, due to the full-year impact of the acquisition of five vessels between April and October 2008. For Q4, net cash generated was flat at US$16.2 million.
‘2009 proved to be the most difficult year for the global shipping industry since the mid 1980s,’ said Philip Clausius, CEO of FSLT trustee-manager, FSL Trust Management.
‘2010, however, started on a significantly more positive note: major container liner companies, following various successful freight rate restoration efforts and capacity reductions, are at or close to cashflow breakeven levels; the tanker freight market is enjoying a mini-bull run with current rates at 12-month highs; the dry bulk market has come off somewhat but is still well above long-term historical averages,’ he added.
Lease revenue for Q409 fell 4.6 per cent from Q408 to US$24.5 million, mainly due to lower lease payments received from two vessels leased to Geden Lines. The Geden leases are pegged to the US dollar three-month Libor and reset on a quarterly basis and this has plunged compared to the previous year.
Looking ahead, FSLT expects its lease portfolio to continue to deliver predictable and stable cashflow. FSLTM has indicated that Q1FY10 DPU would remain at 1.5 US cents, representing an annualised yield of about 14 per cent based on yesterday’s closing price of 60 cents.
The distribution for Q4FY09 will be paid on March 1.
CMT – DBS
Refocusing on growth
• Results in line with estimates
• Pricing power returning, focus on delivering growth
• Maintain Buy, TP $2.03
Results meet market expectations. 4Q09 revenue of $140m was 4.2% higher yoy while NPI improved a higher 11.8% to $96m with cost savings from property and operating expenses. Distribution income rose a higher 25.5% to $76.5m with inclusion of $7m of profits and dividend from CRCT held back earlier. There was a small $26m of net revaluation deficit, largely coming from The Atrium, bringing full year writedown to $212.5m or book NAV of $1.54/unit.
Signs of stability emerging. The group renewed 971,191sf of NLA (c30% of total) in 2009 with rents at an average 2.3% higher than previous levels. However, more importantly, pricing power appears to be returning with lease reversion spreads in 2H09 higher than in 1H09. In addition, pedestrian footfalls have turned +ve in Dec 09 on a yoy basis while tenant gross turnover was 11.3% greater than in 3Q. We anticipate this uptrend to be sustained in 2010 on the back of economic recovery and greater tourist arrivals with the opening of the 2 IRs. Uplifting impact from completion of AEI in Raffles City and JEC should provide another earnings growth driver from 2011. CMT is well placed to tap accretive new acquisition/development opportunities as it remains one of the lowest geared retail Sreit with a leverage of 30.5%.
Maintain Buy, TP $2.03. The group is on track to deliver a 3-pronged growth strategy from both organic and inorganic means, particularly from FY11 onwards. Our estimates have not factored in any new acquisitions, which should provide further upside surprise when it materialises. The stock is trading at 5% FY10 and 5.1% FY11 yield. Maintain Buy with revised target price of $2.03.
a-iTrust – DBS
Reasons to stay invested
• Consistently strong performance
• Earnings spike to come in FY11 post completion of 2 of its new buildings
• Buy for growing yields, TP S$1.17
Stable operations. Gross revenues came in line with expectations at S$29.9m (+4% yoy, -2% yoy), contributed by higher rents, increase in energy billings from ITPB power plant, higher maintenance fees at ITPC and new contributions from a new multi-level car park in ITPB. Net property income (NPI) came in at S$19.3m (+13% yoy, +1% qoq), lifted by savings from successful cost management initiatives instituted in 2Q10. Distributable income came in at S$14.1m (-8% yoy, 0% qoq) translated to a DPU of 1.85 Scts.
Sustained occupancies, upside from development projects. Looking into FY11, a-itrust will be renewing c35% of its space, most of which are from the Vega and the Crest. Given that this is the first renewal cycle, we believe that tenants should remain at their existing locations. In addition, we look forward to a-itrust taking delivery of 2 out of 3 development projects in the later part of FY11, which will lead to positive earnings growth.
Adjusting INR assumptions. The strengthening of INR vs S$ exchange rates means that future hedges are likely to be in a-itrust favor. Therefore, we adjust our INR vs S$ estimates to INR 33.5 to S$1, in line with our DBS currency strategist’s outlook for INR in 2010 which is similar to the rate that the trust has hedged its next distribution payment.
BUY for growth, TP S$1.17. a-itrust’s DPU CAGR of 9% over FY11-12 remains a key attraction, prospective yield of 7.9-8.5%. Upside earnings surprise will hinge on potential acquisitions given a-itrust’s strong financial leverage position. Our target is adjusted to S$1.17 from higher earnings estimates and rolling forward our valuations.
PLife – Phillip
Full Year 2009 Results
• Full year revenue of $66.7 million, net property income of $61.9 million, distributable income of $46.7 million.
• 4Q09 DPU of 2.05 cents, bringing full year DPU to 7.74 cents.
• Property portfolio asset size increased 10%, backed by acquisition of 8 nursing homes in Japan
• Maintain buy recommendation with fair value of $1.56
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Results within expectations
Plife REIT reported full year revenue of $66.7 million (+23.7% y-y), net property income of $61.9 million (+23.1% y-y), distributable income of $46.7 million (+13.4% y-y). Full year DPU rose 13.3% to 7.74 cents. The results came in within our expectations (Gross revenue +2.8%, net property income +2.0%, distributable income +1.3%, DPU +1.3%). Revenue grew on the back of increased contribution from the inflation-linked rental from the Singapore hospitals as well as higher contribution from the Japan properties. Percentage revenue contribution from Singapore and Japan are 77% and 23% respectively, compared with 90% and 10% in 2008.
Portfolio asset value increased from $1,047.8 million in 2008 to $1,152.9 million in 2009. The portfolio consists of 3 Singapore hospitals and 18 Japan properties (17 nursing homes, 1 pharmaceutical products distribution facility) In the valuation as at 31st Dec 2009, the Singapore hospitals recorded 3.8% increase in valuations, while the Japan properties (excluding 8 nursing homes acquired in Nov 2009) recorded 6.5% decrease in valuations. For the full year, Plife recognized $28.9 million revaluation gain to its income statement.
CMT – CIMB
Zooming in on asset enhancement
• Results in line; upgrade to Neutral from Underperform. FY09 DPU met Street and our expectations (101% of our estimate). We change our assumptions to reflect moderately stronger income growth, and higher but delayed capex. Our FY10-11 DPU estimates rise by 3%. We also introduce FY12 estimates. Following our upgrade, our DDM-based target price rises to S$1.88 from S$1.82 (discount rate 8.1%). We upgrade the stock to Neutral from Underperform as we are more assured of an improving retail performance in 2010 and a possible later injection of Ion Orchard. We see stock catalysts from accretive acquisition announcements.
• Full-year DPU of 8.85cts (CIMB-GK 8.59cts). DPU declined 7% yoy following more units from a rights issuance in 2009. Net property income (NPI) of S$376.8m was up 10% yoy, a net effect of full-year contributions from Sembawang Shopping Centre (re-opened after asset enhancement works), and full contributions from Atrium@Orchard. Distributable income of S$282m grew stronger than NPI, by 18% yoy following: 1) the release of S$4.8m of retained distributable income from 1Q09; and (2) the release of S$2.2m distribution income from CRCT retained in 3Q09.
• Occupancy and rental reversions positive. Occupancy in CMT’s malls remained nearly full at 99.8%. Rental reversions stayed positive at 0.8% p..a. Management is confident of better growth in rental reversions in the new financial year. While portfolio gross turnover per sf declined 2.4% yoy, it improved 11.3% qoq, signifying a recovery in the businesses of CMT’s tenants.
• Asset enhancement of Jurong Entertainment Centre (JEC) and Raffles City basement link would be carried out this year. The work would be completed in 1Q12 and 4Q10 respectively. Total capital expenditure is estimated at S$214m with ROI of 8% for both assets. The asset enhancement would be funded with cash on hand and existing bank facilities.
• Changes in assumptions. We raise our assumptions for income growth of retail malls by up to 7% (from 3%) and increase our capex assumptions for JEC to S$200m (from S$150m) to reflect the new plans announced, and later commencement of work at Atrium@Orchard. Our DPU estimates rise by up to 3%
for FY10-11.