KEY IDEA
Cache Logistics Trust: Looking beyond 2014
Cache Logistics Trust (CACHE) delivered 1Q14 DPU of 2.14 S cents,
representing a YoY decline of 4.2%. However, this is within expectations
as the unit base has risen due to the private placement in Mar 2013.
CACHE’s portfolio continued to exhibit strength, with occupancy holding
steady at 100% and weighted average lease to expiry healthy at 2.9
years. During the quarter, CACHE also renewed its master lease at Kim
Heng warehouse for another two years. Only 2% of portfolio GFA is now
left for renewal in 2014. As announced last week, CACHE has secured an
agreement to develop and lease a build-to-suit (BTS) ramp-up warehouse.
In our view, the contract will not only provide CACHE with quality
recurring income, enhance its lease expiry profile, but also strengthen
its market position in modern ramp-up warehouse in Singapore. We
maintain BUY with unchanged fair value of S$1.25 on CACHE. (Kevin Tan)
MORE REPORTS
CapitaMall Trust: Sustained growth momentum
CapitaMall Trust (CMT) reported 1Q14 DPU of 2.57 S cents, 4.5% higher
than that achieved in 1Q13. This met 23.4% of both ours and consensus
full-year DPU projections. The better performance was driven mainly by
higher occupancy at Plaza Singapura and Atrium@Orchard, and completion
of Phase 1 asset enhancement initiative (AEI) at IMM Building. Looking
ahead, CMT will continue to focus on executing its AEIs at Bugis
Junction and Tampines Mall. In addition, it will also embark on Phase 2
AEI at IMM Building and reconfigure Level 2 of JCube to increase the
retail offerings and enhance the shoppers’ experience. We are making
minor adjustments to our forecasts except incorporating the FRS111 Joint
Arrangements accounting principle into our model. Maintain BUY with
unchanged S$2.20 fair value on CMT. (Kevin Tan)
Frasers Commercial Trust: Sound underlying performance
Frasers Commercial Trust (FCOT) reported 2QFY14 DPU of 2.05 S cents
(+3.0% YoY), in line with our expectations. China Square Central (CSC)
continued to bolster FCOT’s performance, and helped to mitigate the
softer showing at its Australia properties. Looking ahead, we remain
positive on FCOT’s Singapore portfolio, as CSC is expected to continue
to benefit from its asset enhancement works and better connectivity with
the opening of Telok Ayer MRT station, while Alexandra Technopark is
likely to see meaningful rental uplift upon the master lease expiry in
Aug. For its Australian assets, we believe the income may continue to
suffer from weaker AUD. As such, we are making minor adjustments to our
forecasts to factor in the potential weakness; but there is no change to
our fair value of S$1.45. Maintain BUY. (Kevin Tan)
Singapore Exchange: 3QFY14 results within expectations
Singapore Exchange (SGX) reported 3QFY14 results which came in within
our expectations. Operating revenue fell 13.1% YoY but inched up 0.6%
QoQ to S$165.6m, while net earnings dipped 22.4% YoY but rose 1.1% QoQ
to S$75.8m. The YoY decline was driven largely by lacklustre Securities
revenue (-32.1% to S$52.3m) as the daily average traded value slumped
37% to S$1.1b. Although SGX’s Derivatives revenue slipped slightly by
1.5% YoY to S$52.3m, there was an encouraging 10% growth in contract
volumes if we exclude Nikkei 225 futures and options, which had a very
strong 3QFY13. Another key highlight during 3QFY14 was SGX’s
announcement of a series of initiatives to improve the quality and
liquidity of the securities market. For 9MFY14, operating revenue was
almost flat at S$514.2m (+0.3%), forming 71.5% of our full-year
forecast. Net earnings of S$243.0m represented a decline of 2.1% and
constituted 72.3% of our FY14 projection. We are expecting a better 4Q
ahead. An interim dividend of 4 S cents/share was declared, similar to
3QFY13, and brings 9MFY14 declared dividends to 12 S cents/share.
Looking ahead, SGX expects its FY14 operating expenses to come in around
S$310-315m, an improvement from its previous S$320-330m guidance. It
also intends to expand its distribution network and product offerings,
which includes introducing RMB futures in 1QFY15 (subject to regulatory
approvals). For now, we maintain our HOLDrating and S$7.22 fair value
estimate on SGX. (Carmen Lee and Research Team)
CapitaRetail China Trust: Positive start to FY14
CapitaRetail China Trust (CRCT) reported 1Q14 NPI of S$32.3m and
distributable income of S$19.6m, representing a 25.0% and 13.2% YoY
growth, respectively. DPU was up 3.9% to 2.40 S cents. This makes up
25.1% of our FY14 DPU forecast, which is in line with expectations. The
improved performance was due to contribution from newly acquired
CapitaMall Grand Canyon and strong rental reversions of 23.0% from its
existing assets. Management disclosed that the asset enhancement works
for CapitaMall Minzhongleyuan is near completion, and that ~90.0% of the
mall’s total NLA has been secured or in advanced negotiations for
leasing commitments. With the mall’s scheduled reopening in 2Q14, we
expect it to provide additional rental uplift to CRCT’s earnings. We
keep our BUY rating on CRCT, but now place our S$1.54 fair value under
review as we incorporate the results into our model. (Kevin Tan)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- The US stock market ended Wed’s choppy session lower, as investors
paused for breath after six-straight days of gains on the S&P 500
and Nasdaq Composite.
- Higher domestic costs - particularly rising wages - are now pushing
prices up, and are expected to continue to do so over the rest of this
year.
- Mapletree Commercial Trust yesterday reported a DPU of 1.953 S cents for its 4QFY14, up 12.4% from 1.737 S cents a year ago.
- The board of directors of AIMS AMP Capital Industrial REIT Management
Limited said yesterday that Standard & Poor's had reaffirmed its
BBB- credit rating for the trust.
- United Industrial Corp has obtained enough acceptances to raise its
shareholding in Singapore Land to 90.15%, allowing the parent developer
to privatise its subsidiary.
- Sunpower Group plans to sell up to 65.8m new shares, or one-fifth of
its existing share capital, at 14 S cents apiece through a private
placement to raise S$9.2m.
- Global Logistic Properties has signed five new lease agreements totalling 155,000 sqm in China.
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