FSL – UOBKH

FSTL SP
Share price: S$1.10

FSL Trust has just announced that it has acquired two crude oil tankers from Turkey-based Geden Lines (“Geden”) for a total consideration of US$140 million. The acquired vessels have been concurrently leased back to the seller for a lease term of 10 years. The acquisition of the two crude oil tankers will be significantly and immediately accretive to FSL Trust’s distribution per unit (“DPU”) and will generate an additional DPU of US0.16¢ for 2Q FY2008 and an additional DPU of US0.28¢ for each full quarter thereafter. As a reference, the full quarter DPU of US0.28¢ represents an additional 11.6% compared to the DPU of US2.42 cents paid for 4Q FY2007. With the purchase of its first crude oil tankers, FSL Trust has successfully diversified its customer base further, and has achieved close to half of its acquisition target of US$300 million for FY2008.

We will provide more details after the analyst briefing on Thursday. Our call on the stock remains a BUY with a target price of S$1.72.