Author: tfwee
ART – CIMB
Not much downside from here
• 1Q09 results in line, RevPAU down 15% yoy. 1Q09 distributable income of S$10.8m and DPU of 1.77cts were in line with Street and our expectations, forming 25% of our full-year estimates. Yoy, revenue contracted 8%; qoq, the contraction was worse, at -12%. This was blamed on falling RevPAU in the key markets of Singapore (-32.7%), Australia (-23.3%) and China (-18.7%). Japan was the only country with positive growth (5.9%). RevPAU for the group fell 15% yoy. The weak performance was partially due to the typical business-travel lull period in the first and fourth quarters of the year. Lunar New Year holidays in January this year also slowed down travel more than usual in China.
• Net property income (NPI) margins up 3.5% pts qoq. NPI of S$19.9m for 1Q09 was down 16% yoy. On a positive note, the rate of qoq decline slowed to -5%, underpinned by good cost-control. NPI margins improved 3.5% pts from the last quarter, reaching 47.3% in 1Q09. The most significant qoq progress came from Singapore (+20.3%) and Japan (+11%).
• Negotiations for debt refinancing in progress. ART has S$111.6m of debt due for refinancing this year: 86% of this (estimated S$96m) will be due in Dec 09. Management has started negotiations for the refinancing of this debt. Asset leverage at 38.7% remained comfortable.
• Upgrade to Neutral from Underperform; no change in estimates and target price of S$0.56. We are satisfied with our projection of up to a 20% decline in full year RevPAU vs. ART’s performance in 1Q09, which is a traditionally weak quarter. Our DDM-derived target price (discount 10.5%) stays at S$0.56. With our recently revised STI target of 2,160, potential upside to our target for ART is 22%, in line with our expectations for the market. Current P/BV of 0.32x with a prospective 15.6% forward yield looks attractive relative to the sector average of 0.4x. We believe RevPAU and distribution are not likely to deteriorate much from here. Upgrade to Neutral on valuation grounds.
FirstREIT – BT
First Reit Q1 DPU up 1.6%
First Real Estate Investment Trust (First Reit), Singapore’s first healthcare real estate investment trust, reported on Thursday further growth in distributable income for the three months ended March 31, 2009.
Distributable income rose 2.5 oer cent to $5.2 million (US$3.5 million) while distribution per unit (DPU) rose 1.6 per cent to 1.88 cents. Payout was 100 per cent of distributable income.
Based on its annualised DPU of 7.62 cents and the closing price of $0.56 on Tuesday, First Reit said it achieved a distribution yield of 13.6 per cent.
‘First Reit remains committed to maintain an annual 100 per cent distribution payout,’ it added.
FrasersCT – BT
FCT DPU up slightly to 1.86 cents
FRASERS Centrepoint Trust has posted a 1.7 per cent gain in its Q2 income currently available for distribution to $12.2 million.
For the three months ended March, distribution to unitholders went up 7.3 per cent to $11.6 million, as the trust manager has retained 5 per cent of its income currently available for distribution.
As a result, distribution per unit edged up to 1.86 cents, from 1.75 cents in the year-ago period.
PST – BT
PST’s Q1 distributable income surges
Revenue in Q1 boosted by four new vessels
AS the global economic slowdown and credit crunch continue to erode demand, freight rates for containerships and tankers are likely to remain depressed this year.
For instance, the Baltic (Dirty Tanker) Index has dropped 46 per cent since the start of this year despite the tanker sector being traditionally more resilient, says Pacific Shipping Trust (PST).
But PST – which leases vessels to charterers on long-term bare-boat or time charters – registered stable growth for Q1 ended March 31, as revenue was boosted by four new vessels.
Total distributable income surged 75 per cent year on year to US$6.5 million, from US$3.7 million. Minus the 10 per cent of income retained as part of PST’s policy of long-term strategic development, US$5.8 million will be distributed, translating to distribution per unit (DPU) of 0.98 US cents, compared with 0.97 US cents previously.
Net profit grew to US$6.6 million in Q1 2009, from US$466,000 in Q1 2008.
Gross revenue rose 72 per cent to US$15.2 million, on the back of full-quarter contributions from four new vessels delivered in 2008 – Kota Naga, Kota Nabil, CSAV Laja and CSAV Lauca.
‘PST’s current portfolio of 12 vessels is fully financed,’ said PST Management chief executive Alvin Cheng. ‘We continue to amortise our loans on a monthly basis to maintain a conservative debt-to-equity ratio. This will provide the headroom for financing should there be opportunities for new acquisitions in the future.’
Last week, PST gave an update on one of its charterers, Latin American line Compania Sud Americana de Vapores (CSAV), which is restructuring to strengthen its operating cash flow and consolidate its South American franchise.
CSAV, which is looking to boost its financial position by about US$750 million, chartered CSAV Laja and CSAV Lauca from PST on five-year time-charters from September and November 2008 respectively.
As part of its restructuring plan, CSAV has asked shipowners to assist by temporarily reducing charter hire payments about 30 per cent, part of which will be capitalised.
However, participation in the scheme is on a voluntary basis.
CSAV accounts for 30 per cent of PST’s top line but contributes less than 20 per cent of its operating cash flow. While loan repayments may not be an issue for PST, distributable income could be affected.
Mr Cheng has said previously that PST’s cash conservation strategy will allow it to meet its current financial obligations should an agreement be reached with CSAV.
‘Based on current information available, it has been determined that there will be no significant impact on the carrying amounts of the said vessels and it was determined that the recoverable amounts are above the carrying amounts of the vessels,’ PST said in a statement.
PST units closed half a cent higher at 16.5 US cents yesterday. Books close April 30 and DPU will be paid on May 29.
KREIT – Nomura
First look
KREIT reported its 1Q09 results after market close today – headline numbers were slightly ahead of the consensus full-year forecast but broadly in line with our fullyear estimates. Rents appear to be holding steady during the quarter, with a 5.9% sequential increase in the average portfolio gross rent to S$8.06psfpm. However, committed occupancy of the portfolio declined further to 95.8%, from 99.0% a quarter ago. BUY rating and price target of S$1.29 maintained.
Steady rents, sliding occupancy