a-iTrust – DBSV

Portfolio expansion in progress

• 4Q11 DPU of 1.5 Scts in line

• Visible development pipeline, growth likely to be backend loaded from 2H12

• Maintain BUY with TP revised to S$1.05

4Q11 DPU of 1.5 Scts in line. A strong S$ continues to “distort” actual performance of a-itrust 4Q11 again. Revenues in S$ terms grew 1% y-o-y S$31.1m (+10% in INR) while net property income fell by 3% to S$16.4m (+6% in INR). Operating expenses were higher due to an increase in portfolio size coupled with higher utilities expenses and cost of fuel. Distributable income of S$11.5m (DPU of 1.5Scts) was 16% lower y-o-y due to higher interests costs due to loans (previously capitalized) taken out to fund the construction of Zenith and Park Square. In 4Q11, a-itrust recorded a revaluation of S$1.2m, translating to an NAV of S$0.80.

Visible development pipeline, but earnings growth likely to be back-end loaded from 2H12 onwards. Portfolio occupancy levels remain stable at 97%, and portfolio rentals remain flattish with incremental earnings growth primarily driven by its development project completions and its recent acquisitions, which are expected to complete soon. Zenith and Park Square Mall added 1.2m sqft of NLA to the portfolio but have not contributed significantly to earnings in 4Q11 as it is still 42% and 61% precommitted but expected to inch up slowly in coming quarters. Moreover, tenants are currently in their rent-free periods as they are undergoing fit-outs. Commitment levels at another completing development project, Voyager (ITPB), is progressing well at 68% YTD and is expected to head towards 80% soon. This strong demand for space prompted a-itrust to begin the planning and designing of another development project within the SEZ zone in ITPB – a 540,000 sqft multi-tenanted building which is expected to complete in 2013.

BUY, TP revised to S$1.05. We adjust our DPU estimates slightly to account for delayed earnings contribution from development projects and a stronger S$-INR exchange. We believe earnings have hit a trough in 4Q11 and should see sequential growth with the completion of new buildings at Hitec City coupled with the continuous ramp up in operations at its 3 recently completed development projects