Month: January 2012
KGT – BT
K-Green Trust’s H2 distribution up
K-GREEN Trust posted a net profit of $16 million for the year ended Dec 31, 2011, 17.3 per cent higher than its projection of $13.6 million.
Distribution per unit (DPU) for the second half- year of 2011 was 4.69 cents, 8.8 per cent higher than the 4.31 cents paid for the June 29 to Dec 31 period in 2010.
As the business trust was listed on June 29, 2010, full-year comparisons with 2010’s earnings are not meaningful.
Together with the DPU of 3.13 cents for the period from Jan 1 to June 30, 2011, total cash distribution for FY2011 was 7.82 cents, representing a distribution yield of 8.6 per cent based on K-Green’s unit closing price of 90.5 cents on Dec 31, 2011.
Said Thomas Pang, CEO of Keppel Infrastructure Fund Management Pte Ltd, trustee-manager of K- Green Trust: ‘K-Green Trust has achieved good performance in the year 2011. In 2012, we will focus on acquisitions in areas of waste management, water treatment, renewable energy and energy efficiency, including assets which were identified under the Rights of First Refusal, as well as asset enhancement opportunities in our existing portfolio.’
Revenue for the year was $90.6 million, 17.9 per cent higher than the projected figure of $76.8 million. This was mainly due to $10.1 million higher recognition of construction revenue, following a shift in the schedule of flue gas upgrading works for Senoko Plant from FY2010 to FY2011. This is in progress and is scheduled for completion by June this year.
K-Green said the underlying performance of the three assets in its portfolio – Senoko Waste-to-Energy Plant, Keppel Seghers Tuas Waste-to-Energy Plant, and Keppel Seghers Ulu Pandan NEWater Plant – is expected to remain stable.
The company said ‘all three assets have long-term concession agreements with Singapore statutory bodies’, namely the National Environment Agency and Public Utilities Board.
K-Green Trust closed 2 cents higher at 95.5 cents yesterday.
K-REIT – BT
K-Reit post-rights Q4 DPU falls
K-REIT Asia yesterday posted improved results for the fourth quarter ended Dec 31, 2011, on the back of higher contributions from associates and higher interest income. Property income for the office Reit was $22.6 million in Q4, up $1.3 million or 5.9 per cent from a year earlier.
This was mainly due to higher property income from its Australian properties, Bugis Junction Towers and contributions from Ocean Financial Centre (OFC). However, this was slightly offset by a $6 million loss in property income resulting from the sale of Keppel Towers and GE Tower. Net property income rose 1.4 per cent over the same period to $17.8 million.
Distributable income to unitholders for the period jumped 54 per cent year on year to $35.7 million from $23.2 million a year earlier. This translates to a distribution per unit (DPU) of 1.4 cents for Q4, based on an enlarged post-rights share base. DPU in Q4 2010 was 1.71 cents.
For the full year ended Dec 31, K-Reit’s net property income was $61.7 million, down 8.4 per cent from the previous year.
Share of results of associates, however, almost quadrupled to $37.4 million from $9.7 million a year ago. Distributable income also rose 32 per cent to $113 million, representing a DPU of 7.08 cents for the full year ended Dec 31, up 11.1 per cent year on year.
Based on K-Reit’s closing price of $0.83 as at Dec 30, the last trading day of 2011, the distribution yield for the year was 8.5 per cent.
The counter ended trading yesterday at $0.895, up 2.3 per cent or two cents.
K-Reit’s Singapore portfolio occupancy of 93.9 per cent outperformed that of the core central business district of 91.2 per cent.
The Reit has about 2.2 per cent of net lettable area due for rent review and renewal in 2012. However, it has given its assurance that that with a portfolio-weighted, average lease expiry of 6.7 years and healthy capital levels, it is in ‘good stead’ to weather the economic slowdown in 2012.
Commenting on the uptake of one of the Reit’s latest assets, OFC, Ng Hsueh Ling, the CEO of K-Reit Asia Management, said she hoped to achieve 100 per cent occupancy in the building by June next year. Currently, the asset’s committed occupancy is about 85 per cent.
K-Reit’s aggregate leverage at Dec 31 was 41.6 per cent based on borrowings of about $2.5 billion.
Looking ahead, Ms Ng said she would be ‘quite comfortable’ with gearing in the range of 40 to 41 per cent, including debt at the associate level.
HPH Trust – DBSV
Strong Dec11 throughput
Yantian throughput up 13.5% in Dec11. Buoyed by early restocking activity ahead of the Chinese New Year factory closures – CNY falls two weeks earlier than in 2011 -, December throughput at Yantian Port grew 13.5% YoY. This took 2011 volume up 1.3% to 10.26m TEUs, slightly better than our zero growth assumption. This also supports our hypothesis that a weaker-than-usual 3Q11 peak season would be followed by a stronger-than-usual 4Q11, which volume only fell 6% QoQ vs 15% drop in 4Q10. Hence, 2011 container volume was more evenly spread out as shippers moved to just-in-time shipments. At Hong Kong port, Dec11 volume grew 1.4%, while it grew 2.5% at Kwai Tsing terminals. And for full year 2011, Hong Kong port saw 3% throughput growth while Kwai Tsing terminals registered 2% growth. Hence, we estimate volume at HIT Terminals at Kwai Tsing grew 3-4% YoY in 2011, within our expectation.
Stable outlook. The decent volume growth in 4Q11 should help the Trust to meet its DPU guidance for FY11; we expect 3.0 US cts for 2H11. DBS economist forecasts 2.3% GDP growth for the US and zero growth for Eurozone in 2012. Hence, HPH Trust’s volumes in Hong Kong and Yantian should show modest growth this year. Given strong operating margins and cash flows, we assume the Trust would pay c.6.0 UScts DPU next year, similar to 2011 distribution. Our estimate is about 10% lower than initial guidance as we imputed weaker throughput growth and smaller potential tariff hike.
Attractive yields, maintain BUY. Despite the recent share price rally, HPH Trust is still offering attractive 8.5-9.0% prospective yields. Our US$0.85 TP is based on DCF metric (7.8% WACC) and translates into 7% target yield. HPH Trust is among the top yielding stocks in Singapore (excluding special dividends). With US data picking up and retail inventory-to-sales ratios still at historic lows, restocking activity should pick up and lead to stronger growth as early as 1H12, which could drive up the share price. We might see HPH Trust quoted in S$ on the SGX in the near term, which would broaden its investor base.
Cambridge – OSK/DMG
After meeting with the management of Cambridge Industrial Trust (CIT) recently, we believe FY12 would be one of the most exciting years for CIT since listing in FY06. With the acquisitions of 4 properties, DPU is expected to grow by c.12% in FY12. Although consensus expects a slowdown in Singapore’s economy in FY12, we believe the rental rate of industry property will remain resilient, following our sensitivity study of industrial rental rate vs Singapore’s PMI. Maintain BUY as CIT is currently trading at an undemanding spread of 8.2% vs pre-crisis spread of 4.6%.
Forecasted FY12 DPU to increase by c.12% amid hard times. During Jun-Jul 2011, CIT completed three acquisitions, namely, 4 & 6 Clementi Loop, 60 Tuas South Street 1, and 5 & 7 Gul Street 1. As indicated by management, the acquisition of the 4th property at 25 Pioneer Crescent will be completed by 1Q12. These acquisitions are expected to contribute 0.2-0.3 S¢ in DPU for FY11-FY12 respectively. Concurrently, the completion of a BTS project at Tuas by early 3Q12 is expected to bring in a high NPI yield of c.15%. while the property at 25 Pioneer Crescent is expected to bring an additional gross yield of 8% to the group.
Industry rental rate resilient despite slowdown in economy. Although Singapore’s economy is expected to soften in FY12, our sensitivity study of industrial rental rates vs Singapore’s PMI demonstrated that the industrial rental rate will most likely remain flattish (assuming the global economy will not fall into another economic crisis as the one that took place in FY08) during this period.
Maintain BUY with TP of S$0.595. Although CIT’s FY11 DPU is expected to fall by c.13% YoY; due to the enlargement of share base as a result of April rights issue, the contribution from abovementioned projects should allow CIT’s DPU to pick up in FY12. We maintain our BUY call with TP of S$0.595 (COE: 10.1%, TGR: 1.0%) posting an potential upside of 22.7%.
CDL H-Trust – DBSV
More than meets the eye
• “Debunk” street’s view that CDL H’s portfolio RevPAR has been lagging industry peers in recent quarters
• Positive data points; we remain cautiously optimistic on prospects in 2012
• Maintain BUY and DDM-based TP of S$1.85
Not as bad as what street thinks. The recent stellar hotel performances from the two integrated resorts in 2Q/3Q 2011 have been eye catching. Contributing close to 9.8% of Singapore’s inventory, we believe these numbers could have skewed recently reported tourism statistics. Stripping out contributions from the two IRs, it is clear that CDL HT’s hotels operational data (in terms of occupancy levels, RevPAR) continue to remain above its industry peers rather than underperforming as thought previously by most on the street.
Corporate updates have been positive to-date. While the 2 IRs continue to attract occupancies of over 90%, even at above than industry’s room rates, we could potentially see hoteliers turn more confident about holding rates firm rather than drop rates going forward. With the potential spillover demand from the recent holiday season and an expected strong line-up of conferences and events, we estimate total visitors to continue growing at a rate of 4-7% y-o-y. Unlike an expected flattish industry performance, CDL HT is projected to deliver 0-5% y-o-y growth in RevPAR, leveraging on the recently completed refurbishment program (Orchard Hotel and Novotel Clarke Quay) and full year contribution from Studio M hotel.
Maintain BUY and DDM-based TP of S$1.85. We maintain our Buy rating in anticipation of potential earnings surprise, hinging on faster than expected recovery in the global economic environment. In addition, given its relatively low gearing of 26% and an implied yield of close to 5.7%, CDL HT stands ready to acquire hotel assets opportunistically which we believe will be accretive to unitholder distributions.