Month: July 2011
PST – BT
Pacific Shipping Trust DPU for Q2 up 2%
Trust’s distributable income also inched up 2% at US$4.8m
PACIFIC Shipping Trust (PST) declared a distribution per unit (DPU) of 0.809 US cent for its second quarter, a 2 per cent increase year on year.
The DPU translates to an annualised yield of 8.9 per cent for the quarter ended June 30, 2011, up from 8.8 per cent from the same period the year before.
The shipping trust’s distributable income also inched up 2 per cent, from US$4.7 million to US$4.8 million.
Gross revenue from its existing fleet of 12 container ships grew by one per cent, from US$15.1 million to US$15.4 million for the quarter. During the same period, net profit grew 2 per cent to US$6.8 million.
The trust’s first-quarter performance mirrored that of its second quarters. For the first half of 2011, distributable income rose 2 per cent to US$9.5 million on the back of gross revenue that was flat at US$30.5 million. Its DPU for the first two quarters of the year stood at 1.618 US cents, a 2 per cent increase year on year, with an annualised distribution yield of 8.9 per cent.
Net profit for the half-year gained 3 per cent to US$13.7 million.
PST’s trustee-manager, PST Management (PSTM), attributed the growth in revenue to fewer off-hire days in for its time-chartered vessels, CSAV Laja and CSAV Lauca.
It will also take delivery of two 180,000 deadweight tonne capesize bulk carriers in September, which it says will boost gross revenue and net profit.
The capesizes, which will be on a 10-year time charter to China’s Jiangsu Shagang Group Co Ltd, will bring in US$196 million, the trustee-manager said.
The trust also has five supramax bulk carriers scheduled for delivery from October 2012 to April 2013. Lim Sim Keat, the chief executive officer of PSTM, remained confident of the vessels’ charter prospects despite the downturn being experienced by the dry bulk sector, as time charters have already been lined up for the vessels.
‘Our five supramaxes will be on on eight-to-10-year charters with the logistics arm of Hyundai Motor Group,’ said Mr Lim.
Another two multipurpose vessels – one slated for delivery in September 2012 and the other in December 2012, will be on 10-year charters to Cosco Xiamen, he added.
FSL – BT
FSL Trust’s DPU for Q2 unchanged at 0.95 US cents
FIRST Ship Lease (FSL) Trust reported distribution per unit (DPU) of 0.95 US cents for its second quarter ended June 30, 2011 – unchanged from before.
Quarterly distribution was US$5.73 million, 0.8 per cent higher than US$5.69 million achieved a year ago. Net cash generated from operations was 21.8 per cent lower at US$13.5 million instead of US$17.3 million in Q2 FY10.
Revenue in Q2 was 0.6 per cent higher at US$28.7 million, from US$28.5 million last year. Contributing to better revenue was improved freight income for its two product tankers, FSL Hamburg and FSL Singapore, as well as the maiden contributions of two newly acquired vessels – with a price tag of US$92 million – leased to TORM.
FSL Trust managed to narrow net losses for the quarter by 92 per cent to US$491,000 from US$6.1 million in the year-ago period. If not for a financial provision of US$2.5 million, FSL Trust would have been in the black with US$2 million in profits.
The provision was due to an expected ‘call on banker’s guarantee’ which it posted in favour of Daxin Petroleum, when its bunker claims against Rovina Shipping Company were heard in the Chinese courts. The court’s judgment was for the sum of US$2.386 million, plus interest – less than Daxin’s full claim amount of US$2.8 million.
President and CEO of trustee-manager FSL Trust Management, Philip Clausius, said: ‘Steady earnings from our long-term bareboat charters, including the newly minted sale and leaseback deals with TORM, is testimony that the Trust is now back on course for growth.’ FSL Trust’s independent auditor KPMG issued a statement after reviewing the trust’s condensed consolidated interim financial statements. It drew attention to US$229.9 million worth of financing arrangements, maturing on April 2, 2012, that were classified under ‘current liabilities’.
FSL Trust Management said it was in ‘advanced discussions with the lending banks to refinance loans’ under its credit facility and details about the refinancing package should be finalised in the near term. KPMG said should the trust be unable to complete the refinancing plan for the US$229.9 million in arrangements, ‘these conditions indicate the existence of a material uncertainty that may affect the group’s ability to continue as a going concern’.
FSL Trust closed unchanged at 34.5 cents yesterday.
CMT – OCBC
2Q11 results in line
2Q11 DPU of 2.36 S-cents in line. CapitaMall Trust (CMT) reported 2Q11 distributable income of S$75.5m, or a DPU of 2.36 S-cents, which is up 3.1% versus 2Q10. Based on the last closing price of S$1.94, this represents an annualized yield of 4.9%. Results are in line with our expectations as 1H11 distributable income of S$148.7m constituted 50.6% of our FY11 forecast. Gross revenue for the quarter came in at S$159.6m, which is up 12.0% YoY on the back of Clarke Quay and Illuma’s contributions and positive performance across the portfolio.
Improved performance across portfolio. 1H11 gross revenue, on a same-store basis, increased 4.2% YoY. We saw increased contributions from all malls except the Atrium which is undergoing enhancement. Same-store operating expenses in 1H11, however, increased 8.8% YoY due to higher utility and labor costs. Shopper traffic and tenant sales in 1H11 grew 3.6% and 8.0% YoY, respectively. Tenant sales also increased broadly across trade categories in 1H11. 269 leases were renewed in 1H11 with 7.8% higher rentals rates, with 242 remaining leases expiring this year. Occupancy remained healthy at 98.1% as of end 2Q11.
JCube 80% pre-committed. JCube is 80% pre-committed to date before its scheduled opening in 1Q12. The asset enhancement at Atrium@Orchard is on track to complete in 4Q12 and management guided that occupancy at the Atrium could fall further to 35%-40% in mid-2012 as enhancement progress. Junction 8 will start its enhancement works in 3Q11.
Debt due 2011 refinanced. Management issued US$645m five-year secured floating rate notes and drew down on a S$200m five-year term loan facility to refinance the existing S$964m maturing in Sep 11. This lengthened the average term to maturity to 3.0 years currently versus 2.6 years as of 1Q11 end. Current gearing is at 38.2% and cash on the balance sheet stands at S$828.6m. There would be no debt maturing until the S$783m term loan under Silver Maple which is due in Oct 12.
Maintain HOLD at fair value of $2.06. We continue to view CMT positively due to improving performance across its portfolio and smooth execution of its strategy by the management team. In our view, however, most of these positives are already priced in. We revise our FY11 distribution forecast up by 1.2% and our fair value estimate to S$2.06 versus S$2.05 previously. Maintain HOLD. We will turn buyers around S$1.86.
Cambridge – DBSV
A better 2H11 expected
At a Glance
• Steady 2Q11 results
• New properties to underpin earnings growth in 3Q111
• Buy for high yields of 8.9-10.0%. TP of S$0.56 remains unchanged
Comment on Results
A steady 2Q11 results. Cambridge REIT (CREIT) reported a steady set of 2Q11 results with topline increasing 6.6% yoy to S$19.5m and a 4.9% increase in net property income to S$16.9m. The improved performance was largely due to contributions from acquired properties over the past 3 quarters, and rental escalation of certain properties. This more than offset the income vacuum from the divestment of certain assets. Portfolio occupancy remained high at 99% with low arrears of 0.5%. Operational performance on a qoq basis remained stable. While distribution income came in at S$12.3m (+14.0% yoy,+3.5%qoq), DPU of 1.036 Scts is 17% lower yoy owing to a larger unit base.
Portfolio divestment completed; new properties to contribute from 3Q11 onwards. The trust has completed divestment of the remaining 6 strata units at 48 Toh Guan Rd (Enterprise Hub) at 10.8% above valuation. In addition, the recent completion of 4&6 Clementi Loop and 60 Tuas South Street 1 will start to contribute meaningfully in the coming quarter.
Revaluation gains of S$47.8m at half-time. CREIT also reported revaluation gains of S$47.8m (on a like for like basis, after netting off its divestments and new properties acquired), bringing its total portfolio size to S$1.1bn. NAV inched up slightly to S$0.62. Gearing remained steady at 32.7%.
Recommendation
BUY for relatively higher yields of 8.9%-10.0% . CREIT remains attractive for its FY11-12F yield of over 8.9%, higher than S-REIT peers. Our FY11 DPU is adjusted slightly downwards due to later than expected completion of its acquisitions.
Cambridge – DMG
Completed acquisitions to boost 2H11
2Q11 DP U in-line with expectation. Cambridge Industrial Trust (CIT) reported a lower DPU of 1.036S¢ in 2Q11 (-16.3% YoY; +3.5% QoQ) due to enlargement of share base as a result of rights issue undertaken in Apr 2011. Net property income rose 4.9% YoY to S$16.9m (+2.0% QoQ) on the back of higher rental income partially offset by loss of income from divested strata units. Separately, CIT has concluded three acquisitions, which it has announced previously, in Jun- Jul 2011. Hence, we expect CIT’s DPU to pick up in 2H11. However, there remains an acquisition with purchase price of S$41m that is not completed. Given that it is unlikely the outstanding acquisition will be completed in 3Q11, we lowered our FY11DPU estimate by 1.5% to account for the expected completion of the acquisition only in early 4Q11. However, due to half-year rolling forward of our DDM valuation, we raised our TP marginally to S$0.595 (COE: 10.1%, TGR: 1.0%). Maintain BUY.
Newly completed acquisitions to begin contributions in 3Q11. During Jun-Jul 2011, CIT completed three acquisitions which it announced in Oct 2010 and Mar 2011, namely, 4 & 6 Clementi Loop, 60 Tuas South Street 1, and 5 & 7 Gul Street 1. We expect these newly acquired properties to contribute 0.2-0.4S¢ in DPU for FY11-12 respectively.
Currently trading at 6.5% spread to 10-year bond yield. CIT is currently trading at 6.5% spread to 10-year bond yield, which is 194bps above its pre-crisis mean spread of 4.6%, based on FY11 DPU. Key risk to the stock is the concentration of lease expiry in 2013/2014 at >50% of total rental income. Upon 1) smoothing out lease expiry profile, 2) illustrating consistency in securing higher rentals during renewals, and 3) acquiring more good quality, yield accretive assets, we believe CIT will then be able to trade at higher valuation.