K-Green – CNA
SINGAPORE: K-Green Trust said its profit after tax achieved for the first quarter of 2011 was S$3.5 million – 5.4 per cent higher than its forecast.
No comparative figures were given as the business trust, managed by Keppel Infrastructure Fund Management, was listed on the Singapore Exchange on June 29, 2010.
The trust's earnings per unit for the three months ended March 31 was 0.56 Singapore cents.
The trust said its free cash flow for the quarter was S$9.5 million, while its net asset value per unit as at 31 March was S$1.12.
The trust owns waste treatment and NEWater facilities Senoko Plant, Tuas DBOO Plant and Ulu Pandan Plant.
K-Reit – BT
By ANGELA TAN
K-Reit Asia, a real estate investment trust, reported on Thursday that the distribution per unit for the first quarter ended March 31, 2011 rose 34.6 per cent to 1.79 cents compared to 1.33 cents a year ago.
Distribution to unitholders increased by 36.1 per cent to S$24.3 million during the quarter compared to S$17.8 million a year ago.
Property income for the first quarter was S$18.7 million, a marginal increase of S$0.5 million or 2.5 per cent over a year ago, due mainly to higher property income from the two Australian properties and Bugis Junction Towers.
Net property income increased by 7.6 per cent to S$14.9 million in the first quarter as a result of increase in assets under management and lower property expenses.
Its manager expects to achieve its DPU forecast of 6.68 cents for the financial year ending 31 December 2011.
K-Reit Asia is managed by K-Reit Asia Management Limited, a wholly-owned subsidiary of Keppel Land Limited.
HPH Trust – BT
Hutchison Port trust struggles to top IPO price
Amid weak market, stock price dips after bankers stop stabilisation action
HUTCHISON Port Holdings (HPH) Trust has not touched anything above its IPO price of US$1.01 per unit since its listing nearly a month ago.
Units of the business trust closed yesterday at 95.5 US cents apiece, down 2.55 per cent, with some 100 million units traded. This followed the close of price stabilisation by its bankers this week. On Tuesday, stabilising manager Deutsche Bank said it has ceased to stabilise the unit price, after buying a total of 540 million units – all units offered under the greenshoe option.
Amid a poor market showing – as investors grappled with the nuclear fallout from Japan’s massive earthquake – the stock went underwater on listing day. It touched US$1.01 between last Thursday and Monday, but gave up its gains afterward.
Market watchers say that concerns over the weakening greenback against the Singapore dollar still weigh on the stock. Distribution from the trust will be paid out in HK dollars, which is pegged to the faltering US dollar – which means forex losses if the Singapore dollar continues to strengthen as expected.
Foreign funds have been the main buyers of the stock, said UOB-Kay Hian executive director Chan Tuck Sing. ‘This could partly be due to its parentage,’ said Mr Chan, referring to HPH’s honcho Li Ka Shing. ‘Response from the local boys has not been that strong.’
The Singapore Exchange’s move to facilitate the quotation and trading of HPH Trust in both Singapore dollars as well as US dollars, can mitigate some concerns, Mr Chan said. ‘But with an issue of this size, local interest will barely make a dent.’ He added that the stock’s poor showing could be due to funds adjusting over-allotment from the IPO, which raised some US$5.45 billion.
A BT analysis earlier also noted that while HPH Trust offers fairly attractive yields – with a forecast seasonally annualised DPU for 2011 at 45.88 HK cent – the trust is not obligated to make minimum levels of payout as the real estate investment trusts (Reits) do.
Reits must pay out at least 90 per cent of their distributable income to unitholders to qualify for tax transparency on the amount they pay out.
The hefty IPO was widely seen as a coup for Singapore, which had established perimeters for the listing of business trusts ahead of long-time competitor, Hong Kong, where HPH’s business is based.
This has mounted pressure on Hong Kong regulators to review its listing rules to accommodate business trusts, with Hong Kong’s telecoms giant PCCW – led by Li Ka Shing’s son Richard Li – lobbying for changes in this area to try listing its trust there.
StarHill Global – OCBC
Second asset enhancement this year
Facelift for Starhill Gallery. Starhill Global REIT recently announced the asset redevelopment of another of its properties, Starhill Gallery in Kuala Lumpur, on the back of its Singapore Wisma Atria’s frontage enhancement made known on 28 Feb. Expected to complete by 2Q11, the asset redevelopment will create an additional NLA of approximately 8,100 sq ft. The rejuvenated Starhill Gallery will offer increased visibility of store fronts and an enhanced range of luxury merchandise, in particular the watch and jewelry brands. The new façade will give Starhill Gallery an iconic presence on Bintang Walk, emerging as a fresh and distinctive luxury shopping destination for high-end shoppers. The Starhill Gallery asset redevelopment is expected to incur a CAPEX of S$10.4m and generate an additional NPI of approximately S$0.7m per annum, representing a ROI of 6.7%. The cost of the asset redevelopment works will be funded from the remaining proceeds of the rights issue by Starhill Global REIT completed in 2009 and/or working capital.
Lease terms. The additional NLA will be leased to Katagreen Development Sdn Bhd, the current master tenant of Starhill Gallery and an indirect wholly-owned subsidiary of Starhill’s sponsor, YTL Corporation Berhad, under a new master tenancy agreement. The new master tenancy agreement will be for a period that is coterminous with the existing master tenancy agreement. The initial term of the new master tenancy agreement will be for the period ending 27 June 2013 with an automatic renewal for a second three year term. Katagreen has an option to extend the tenancy for a third three-year term upon the expiry of the second term. There is also an increase of approximately 7% in the master lease rent at the end of each of the first two terms, providing stability and growth in rental income to Starhill Global REIT. As with the existing master tenancy agreement, Katagreen’s payment obligations under the new master tenancy agreement will be guaranteed by YTL.
Valuation still compelling. With compressing capitalization rates, we understand that it is increasingly more difficult to acquire prime malls at attractive prices. We thus view Starhill’s asset enhancements initiatives positively. According to our estimates, Starhill’s existing NPI yield in FY10 was approximately 4.9%. With a ROI of 6.7%, this makes the Starhill Gallery redevelopment work yield-accretive. Starhill is currently trading at a PBR of 0.67x, which is lower than its historical PBR of 0.73x since listing. We continue to like Starhill’s prime assets positioning, strong sponsor and sound financials. Reiterate BUY with an increased fair value of S$0.70 (Prev: S$0.69).
CDL-HTrust – DBSV
Go with the leader
• Studio M Hotel will anchor trust’s position as leading hotelier in Singapore
• Strong tourism industry performance in Jan-Feb’11 bodes well for Singapore hospitality sector
• BUY Call, TP S$2.30 maintained
Studio M hotel will anchor CDL HT’s leading position in Singapore. CDL Hospitality Trust’s (“CDL HT”) proposed acquisition of 360-room Studio M hotel, at S$154m ($428k/key) is attractive in our view. The initial yield of 6.1% has more upside as channel checks revealed that Studio M’s rate has moved up c15% to S$200/night in recent months (from S$174/night in 2010) and we see further upside in 2011 given its strong occupancy levels. With 82% of earnings derived from its Singapore hotels, we forecast CDL HT to deliver a strong 13% organic earnings growth for FY11-12, more than S-REIT peers. The manager has called for an EGM to be held on the 29th April’11 and as this acquisition is an interested party transaction, the sponsor and related parties, will not be able to vote.
Industry’s sustained strong performance in first 2 months of 2011 bodes well for the trust. Singapore continues to see a record breaking 2m visitors in Jan-Feb’11. Looking ahead, arrival figures from Japan may weaken in March 2011 due to the Earthquake Disaster. As per our report titled “Winds of Change” issued on 29 Mar’11, we believe that emerging travel patterns post March 2011 could be in Singapore’s favor as Singapore is a viable alternative travel destination (with its 2 IRs) from visitors expected to delay visiting Japan over the coming months. Given the trust’s leading position as one of Singapore’s largest hotel owners, we believe it will stand to benefit from such a growing trend.
Maintain BUY and DDM-based TP of S$2.30. The group’s strong DPU growth profile is attractive plus low gearing of c26% post acquisition, which remains below management’s optimal level of c40%. Hence, the additional debt-funded acquisition headroom may be utilized for opportunistic ventures.