FY13 results in line with our and market expectations.
We see industrial REITs facing major downside risks from the impending hike in interest rates and possible recalibration of over-inflated property prices.
CACHE’s properties have been revalued upwards by at most 12-13% since its IPO, but the stock currently trades at 14% premium to book, which is still rich in our view. Maintain SELL with an unchanged DDM-derived TP of SGD1.05.
CACHE’s FY13 revenue grew 11.4% YoY to SGD81m, constituting 101% of our and consensus estimates. The increase was attributable to rental contribution from the acquisition of Precise Two in Apr 2013 as well as built-in rental escalation within the portfolio. Full-year DPU grew 3.3% to 8.64 SGD cts, achieving 100% of our and 101% of market forecasts. Weighted average lease term to expiry (WALE) of the portfolio is around 3.1 years, with 65% of the leases due to expire in 2015-2016. CACHE’s aggregate leverage was 29.1%, down slightly from 29.2% in the previous quarter due to revaluation gains of SGD6.7m.
We see industrial REITs facing major downside risks from the impending hike in interest rates and possible recalibration of over-inflated property prices – both of which can drag NAV down. Other challenges include a fragile global macroeconomic outlook and ample supply in the pipeline. Iskandar Malaysia will also pose competition in the medium term, especially for lower value-added industrial activities within Singapore. We note that CACHE’s properties have been revalued upwards by at most 12-13% since its IPO, but the stock currently trades at a 14% premium to book, which is still rich in our view. Maintain SELL with an unchanged DDM-derived TP of SGD1.05 (Discount rate of 7%).
Source: Maybank Research - 22 Jan 2014
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Created by kimeng | Dec 29, 2022
Created by kimeng | Dec 29, 2022