Month: April 2011
PST – DBSV
Steady as she goes!
At a Glance
• 1Q11 distribution remained steady at 0.81 UScts per unit or ~71% of distributable cash flow
• Financing for all newbuild vessels arranged
• Expect DPU growth from 4Q11 onwards
• Maintain BUY at unchanged TP of US$0.40
Comment on Results
Good start to the year. Revenue and operating profit came in virtually unchanged on a y-o-y basis, but net profit improved 4% to US$6.9m owing to the lower interest costs as PST continued to pay down its debt steadily. Subsequently, net distributable cash (after loan amortisation) for 1Q11 came in slightly higher at US$6.7m vs. US$6.5m in 1Q10. The 70% payout ratio was maintained, and the Trust paid out US$4.8m or 0.81UScts per unit in 1Q11, a 2% increase y-o-y.
Outlook & Recommendation
Debt financing for all new vessels has been secured. To recap, PST has announced 3 separate acquisition deals in FY10 to drive growth and diversification of the fleet – two new Capesize bulk carriers for delivery in Sep 2011, 2 Multi Purpose vessels for delivery in Sep/Dec 2012 and 5 Supramax bulk carriers for delivery in Nov 2012 – Apr 2013. While the total capital commitments for the 3 deals amount to about US$333m over the next 2 years, the Trust has already secured a total of US$282m in bilateral financing commitments from six banks to finance the deals, which implies a high debt-to-value ratio of close to 85% and signals the faith of lenders in PST’s capital management and business strategy.
Growth expected from 4Q11. We remain positive on these yield accretive acquisitions and expect DPU growth at near 12% CAGR over FY10-12, even after accounting for a potential equity issue of US$40-50m in FY12. Maintain BUY with an unchanged TP of US$0.40. PST remains our top pick in the shipping trust sector.
MCT – BT
Mapletree Commercial Trust launches $983m IPO
It’ll sell up to 1.12b units at 88 cents apiece; trading likely to begin on April27
Mapletree Commercial Trust (MCT) will raise up to $983 million from its initial public offering (IPO) in Singapore after pricing the shares at 88 cents each – above the mid-point of the marketed range of 84 cents to 91 cents.
MCT, a unit of Temasek Holdings’ property arm Mapletree Investments, also said yesterday that the 548.1 million units set aside for placement to institutional investors were nine times subscribed.
At the offer price, MCT’s projected yield for the year ending March 31, 2012 is 5.7 per cent; while that for the year after is 6.2 per cent.
MCT expects to raise total gross proceeds of around $893 million. But the amount will climb to up to $983 million if an over-allotment option is exercised in full.
The trust had planned to lodge its prospectus in March, but had to delay the IPO process due to volatile markets caused by the March 11 earthquake and tsunami in Japan. MCT’s IPO is the second biggest in Singapore so far this year.
The trust will sell up to 1.12 billion units (including the over-allotment option) at 88 cents per unit. In addition to the shares that will be placed out to investors, cornerstone investors – including insurance company AIA Group – have committed to take up another 302.2 million units.
Another 164.8 million units will be sold to the public in Singapore. The public offer opens today at 9am and will close on April 25 at 9am. Units are expected to start trading on the Singapore Exchange on April 27.
MCT will initially hold three assets worth $2.8 billion in all – Singapore’s largest mall VivoCity, and the Bank of America Merrill Lynch HarbourFront and PSA Building office buildings.
‘MCT is the first commercial Singapore Reit to be listed on the Singapore Exchange since 2007,’ said Amy Ng, chief executive of the trust’s manager. ‘Investors now have an opportunity to own a piece of VivoCity, Singapore’s largest mall, and other quality Mapletree office buildings.’
JP Morgan analyst Christopher Gee noted that the assets were all ‘high profile’. VivoCity, in particular, should be familiar to the public in Singapore, he added.
But in a recent report, Credit Suisse analysts pointed out that while MCT is mainly a retail Reit now, it is likely to become an office Reit in future as the pipeline from sponsor Mapletree Investments comprises mostly office assets.
Mapletree Investments has granted MCT the right of first refusal to acquire 10 properties including HarbourFront Centre and Mapletree Business City.
But the trust, which will have a gearing of 39 per cent after the IPO, is not likely to make any acquisitions in the first 12 months after listing, said Shane Hagan, chief financial officer of MCT’s manager.
Sponsor Mapletree Investments will hold a 40 per cent stake in MCT after its listing, assuming the over-allotment option is exercised. Including the sponsor’s stake, there will be a total of 1.86 billion units.
The property group’s third Reit, Mapletree Industrial Trust, also raised close to $1 billion when it was listed in October 2010.
As at end-December 2010, Mapletree Investments and its subsidiaries own and manage more than $14.4 billion of office, logistics, industrial, residential and retail properties with an extensive network of offices in Singapore, China, Hong Kong, India, Japan, Malaysia, South Korea and Vietnam.
A-REIT – BT
A-Reit’s Q4 DPU jumps 19.8%
Net property income up 9.5% on completion of new projects
IMPROVED results for the fourth quarter capped a strong financial year for Ascendas Real Estate Investment Trust (A-Reit).
The industrial Reit, which has been actively snapping up properties or enhancing existing ones in the past financial year, expects to invest more this year if all goes well.
Gross revenue for the quarter ended March 31 grew 8.7 per cent year-on-year to $112.9 million as new projects were completed. This pulled net property income up 9.5 per cent to $84 million.
Total amount available for distribution jumped 20 per cent to $61.3 million. As a result, distribution per unit (DPU) was 3.27 cents, up 19.8 per cent.
For the full year, gross revenue climbed 8.2 per cent from the previous year to $447.6 million, and net property income increased 6.1 per cent to $339.4 million.
This contributed to a 5.6 per cent increase in total amount available for distribution to $248 million. DPU rose one per cent to 13.23 cents.
The DPU, seen against A-Reit’s closing price of $2.04 on March 30, translates to a distribution yield of about 6.5 per cent. The counter ended trading yesterday at $1.97, one cent down.
A-Reit had been busy with investments in FY10/11, committing $376.1 million to acquisitions, asset enhancement works and development projects. For instance, it recently bought Neuros and Immunos in Biopolis for $125.6 million.
The pipeline of deals this year is ‘generally more encouraging’ than last year’s, said Tan Ser Ping, CEO and executive director of A-Reit’s manager, at a briefing yesterday.
‘If everything pans out well, then I think we should do better than the last financial year,’ he said.
To support its purchases, A-Reit had raised net proceeds of around $393.3 million through a private placement last month.
Mr Tan told BT that the Reit is unlikely to need more equity fundraisings for ‘a good while’ as it will have a debt headroom of over $800 million after the placement, taking committed projects into account.
Another of A-Reit’s purchases was a business park building in Shanghai.
A-Reit will focus on both Singapore and China but in the next three years or so, its portfolio is expected to remain predominantly Singapore-based, with up to 20 per cent of assets potentially in China, Mr Tan said.
Rickmers – BT
Rickmers Q1 DPU up 5% at 0.60 US cent
Trust expects to continue generating steady cash flow
ON the back of a stable topline, Rickmers Maritime has declared a first-quarter distribution per unit (DPU) of 0.60 US cent, up 5 per cent from 0.57 US cent a year earlier.
The distribution was also equal to the preceding fourth-quarter’s DPU.
Net profit for the three months ended March 31, 2011, increased 72 per cent from US$5.43 million in Q1 2010 to US$9.33 million, helped by unrealised gains on cash flow hedges from four interest rate swaps and lower vessel operating expenses.
But cash flow available for distribution (before payment to debt capital providers) slipped from US$27.19 million to US$24.94 million due to movement in working capital and dry-dock reserves.
Rickmers Maritime’s charter revenue for the quarter dipped 3 per cent to S$35.86 million from US$37.16 million a year earlier. This was attributed to a smaller contribution from Kaethe C Rickmers, a 5,060 TEU container ship which earned a daily charter rate of US$8,288 up to March 24.
Since March 25, its daily charter rate has been increased to US$23,888, and the business trust expects stronger charter revenues in the upcoming quarters.
Rickmers Maritime has also upped its repayment of bank loans to US$12.66 million this quarter, from US$2.78 million in Q1 2010, and hopes to continue to improve its gearing. With a current debt/equity ratio of 2:1, its target is 1:1.
Rickmers Trust Management chief executive officer Thomas Preben Hansen said Rickmers Maritime has started the financial year positively.
He said: ‘Our financial position has strengthened significantly as we continue with deleveraging efforts.’
With its fleet of 16 vessels fully employed through 2011 and having a remaining committed revenue of about US$725 million in the coming eight years, Mr Hansen is confident about the container shipping market.
He expects better market conditions in the second half of the year and the trust to continue to generate steady cash flows.
PST – BT
PST’s DPU rises 2% to 0.809 US cent in Q1
Annualised yield at 8.7%; distributable income at US$4.8m
PACIFIC Shipping Trust’s (PST) first-quarter distribution per unit (DPU) inched up 2 per cent to 0.809 US cent from 0.793 US cent a year ago.
The DPU for the three months ended March 31, 2011, represents an annualised yield of 8.7 per cent, up from 8.6 per cent the year before.
Distributable income for the shipping trust rose 2 per cent year on year to US$4.8 million from US$4.7 million.
Gross revenue from PST’s fleet of 12 box-ships was flat at US$15.2 million. Net profit for the trust’s first quarter was US$6.9 million, up by 4 per cent from US$6.7 million the previous year.
PST’s trustee-manager, PST Management, said the slightly higher net profit was due to lower interest costs and no off-hire days for vessel repairs over the quarter.
While the numbers look dowdy, PST Management’s newly appointed CEO Lim Sim Keat said that in September 2011, income and profitability will get a fillip when two newbuild 180,000 deadweight ton capesize bulk carriers are delivered.
They will then start a 10-year time charter to Jiangsu Shagang Group, at a rate of US$27,000 per vessel per day.
In the past year, PST has made strides into diversifying its fleet from just purely container ships.
Since June 2010, PST has embarked on a diversification drive and bought two multi-purpose vessels and seven bulk carriers.
Bringing tidings of stronger ship financing, PST also announced it secured two loans – both high in loan-to-value ratios of above 80 per cent – to fund their purchases.
Its most recent was in March, for a US$132 million loan from Standard Chartered, OCBC Bank and ING to pay 86 per cent of the contracted price for five Supramax bulk carriers.
When asked if the company will pursue a debt-financed rather than equity-financed route, PST Management’s CFO Shaldine Wong said: ‘We are currently at a 1:1 debt-equity ratio with the ships currently in the construction phase and are all funded by debt. Moving forward, when the time is right, we will consider an equity raise which will average out this proportion.’
PST’s acquisition streak in the past year has also been entirely newbuilds, due to attractive asset prices relative to charter rates.
However, Mr Lim says that PST will not rule out acquiring second-hand vessels. He said: ‘If second-hand prices drop and if we are able to secure attractive charters, we will consider them. It will depend on the counterparty, and rates.’
PST’s shares closed half a US cent up at 37 US cents yesterday.