Author: tfwee
CMT – JPM
3Q09 results above expectation, AEI to restart
• CMT announced 3Q09 results, DPU of S$0.0235/unit, annualizing 5.4% yield. The trust retained 3.2% of its distributable income for 4Q09. Distributable income YTD hit S$213million, 4% ahead of our estimates and consensus estimates on the back of better than expected rental income. We have therefore raised our DPU estimates by 4 – 5% for 2009 – 2011. Stock will trade ex-3Q09 distribution on 28 Oct 09.
• Raffles City AEI announced. The trust re-started its AEI program after putting it on hold for a year. Management intends to create a new underground link at basement 2 of Raffles City and to reconfigure its basement 1. CMT planned to spend a total of S$33mil capex targeting 8% ROI for this AEI, and we estimate a 1% accretion to CMT’s FY11 DPU. In addition, the trust is in the process of planning for a complete refurbishment of Jurong Entertainment Centre (JEC), and we expect a detailed plan, including required capex, to be announced in 4Q09.
• Short term volatility expected. With CapitaLand undergoing its proposed restructuring of its shopping mall business, we believe CMT’s share price is likely to remain volatile in the short run, especially as investors make up their mind to the specific risk/return profile they are seeking. We believe, however, that CMT will remain as the liquid proxy for Singapore retail real estate, offering a stable return profile. In addition, with its portfolio size now at S$7bn, the trust has the capacity to take on small development projects, and we would watch out for the upcoming tender (10th Nov 09) for Clementi Mall, a semi-completed suburban mall at the Clementi Bus Interchange.
• We reiterate our OW rating, and raise our Dec-10 DDM based price target to S$2.00/unit. Key risks to our rating and price target include a worse than expected rental reversion and long term rent growth; or a
re-tightening of the credit market.
MLT – JPM
3Q09 results – flat-lining – ALERT
• Mapletree announced 3Q09 results, with DPU of S$0.0148/unit, flat Q/Q but higher than J.P. Morgan estimates on the back of tax savings as a result of government tax rebates in Malaysia and China. Gearing for the trust as of 30 Sep 09 is 38.1%, book value stood at S$0.88/unit. Stock will trade ex-3Q09 distribution on 28 Oct 09.
• Operations still under pressure: Net property income declined 3.5% Q/Q as a result of depreciation of the HK$ and Rmb, an increase in vacancy rates in Hong Kong and China assets, and a pre-termination of a lease in Singapore. The occupancy rate declined 1.2% Q/Q, with the average reversion rate flat compared to previous prevailing rentals due to the trust’s priority in retaining tenants. We expect 4Q09 results to flat-line at best.
• No change to trust’s strategy: Management reiterated its “yield +growth” strategy during the conference call and indicated that it was in an advance stage of evaluating accretive third-party acquisition opportunities in Singapore, Japan, and Hong Kong. Funding for potential acquisitions will still be through a mix of debt and equity. In addition, management highlighted that approximately S$300 million of the sponsor’s development pipeline has been completed or is nearing completion, and the trust will tap into the pipeline when appropriate.
• Management execution is the key to share price performance: The trust has this year moved to a “new strategy”, in which management will try to bundle acquisitions together with permanent/stable funding structure being put in place at the same time. While we believe this is the right shift in strategy for MLT, it is difficult in execution given the much smaller deal size for logistic assets. A demonstration of a good execution of equity fund raisings together with yield-accretive acquisitions would be necessary, in our view, before the stock could rerate. We therefore maintain our Neutral rating on the stock.
FirstREIT – BT
First Reit Q3 DPU falls to 1.90 cents
FIRST Real Estate Investment Trust (First Reit) reported third-quarter distributable income of $5.22 million, versus $5.26 million a year earlier, its manager Bowsprit Capital Corporation said yesterday.
Distribution per unit (DPU) for Q3 to Sept 30 was 1.90 cents, compared with 1.92 cents in the previous corresponding period.
Based on First Reit’s closing price of $0.715 on Oct 20, and annualised DPU of 7.62 cents, yield was healthy at 10.7 per cent for Q3, Bowsprit said.
The healthcare Reit’s gross revenue and net property income remained stable at $7.6 million and $7.5 million respectively.
Bowsprit chief executive Ronnie Tan said: ‘We have seen stronger occupancy at our three Indonesians hospitals, as more patients stayed back to seek medical care instead of travelling abroad.
‘Continuing growth in this sector will provide an upside potential for First Reit as our Indonesian assets enjoy a variable rental growth component in addition to annual escalation.’
In Singapore, demand for private nursing care continues to grow steadily as the population ages, Mr Tan said.
First Reit said that its balance sheet remains strong and its gearing of 15.6 per cent is significantly lower than the regulatory limit of 35 per cent.
The Reit has received approval from the authorities for asset enhancement works at its Adam Road Hospital, expected to start soon. Extension works are also proposed at Lentor Residence.
‘First Reit will continue its ongoing review of the financial attractiveness of various projects in the pipeline, such as the Tech-Link healthcare logistics and distribution centre in Singapore that received temporary occupation permit on Sept 2, 2009,’ Bowsprit said.
PST – BT
PST’s Q3 distributable income surges 60%
PACIFIC Shipping Trust (PST) achieved a 60 per cent surge in distributable income to US$6.9 million for the third quarter ended Sept 30, 2009, up from US$4.3 million a year ago.
This came on the back of a 39 per cent jump in gross revenue to US$15.6 million.
Distribution per unit (DPU) for the three months fell to 0.818 US cents from 1.0953 US cents due mainly to the implementation of PST’s revised distribution policy to encourage prudence amid the credit crunch, as well as an increase in the number of issued units. In absolute terms, the amount of US$4.8 million to be distributed is up 30 per cent year on year.
The jump in gross revenue was mainly contributed by charter hire from the vessels CSAV Laja and CSAV Lauca. In line with better revenue, net cash generated from operations grew 17 per cent to US$13.5 million.
Net profit more than doubled to US$7 million from US$3.2 million, partly as a result of the adoption of hedge accounting on Oct 1, 2008 and the repayment of loans from the proceeds of the preferential offering in Q3 FY2008.
‘With the improving global economic outlook, we envisage opportunities to enter into asset acquisitions. By increasing our cash balance through income retention, PST should be well-positioned to explore value-accretive expansion opportunities, while maintaining its prudent financial management strategy. This strategic growth plan will translate into sustainable rewards for our unitholders in the long term,’ said Alvin Cheng, CEO of PST trustee-manager PST Management (PSTM).
In the preceding quarter ended June 30, 2009, PSTM announced that it was revising distribution policy to strengthen its cash position in anticipation of favourable investment opportunities arising in the next 12 to 18 months, while indicating then that the distribution for this quarter would not be less than 70 per cent of PST’s available distributable income. Looking ahead, management will review its distribution policy depending on prevailing market conditions.
‘As a conservatively geared shipping trust with no immediate refinancing needs or pressing financial obligations, PST is building up its cash reserves to equip ourselves with the financial flexibility to seize value-accretive opportunities that we believe will emerge along with the gradual economic recovery,’ said Mr Cheng.
The books’ closure date is Oct 30 and payment will be made on Nov 26.
a-iTrust
a-iTrust posts 3% climb in Q2 distributable income
ASCENDAS India Trust (a-iTrust) yesterday reported distributable income of $14.1 million for the second quarter ended Sept 30, up 3 per cent from $13.8 million a year ago.
Distribution per unit (DPU) for the three months rose to 1.85 cents, from the previous corresponding quarter’s 1.82 cents.
The trust, which owns business space in India, said that total property income for the quarter rose 2 per cent to $30.4 million, ‘despite the difficult business environment globally’.
Income held up as the trust was able to sustained an average occupancy of 97 per cent, or 98 per cent including committed leases.
Total property expenses, on the other hand, fell 20 per cent to $11.2 million on the back of lower operating, maintenance and security charges as a result of cost management (such as repackaging and retendering of contracts); and lower utilities expenses as the price of oil remained lower than a year ago. As a result, second-quarter net property income rose 22 per cent year-on-year to $19.2 million.
Gearing was 13 per cent as at Sept 30, 2009, compared with 9 per cent as at March 31, 2009. The increase was due to the additional borrowings taken to fund development projects.
Looking ahead, a-iTrust said that its performance will continue to be influenced by the performance of its tenants as well as conditions in the local property market.
‘a-iTrust’s net property income continued to grow despite the global downturn, because of the resilient demand for its properties and cost management,’ it said in a filing.
‘While the economic recovery remains fragile and uncertain, we will focus on what we can control – enhancing the competitive edge of our properties, strengthening relationships with our tenants, maintaining cost discipline, and seeking opportunities to invest in future growth.’