• Flat 0.3% y-o-y DPU growth.
• 9% of portfolio NLA expiring this year; portfolio occupancy at 99.1%.
• Downgrade from "Buy" to "Accumulate" rating, with slightly lower DDM valuation of S$1.310. (Previous: S$1.340)

What is the news?

Cache Logistics Trust ("Cache") announced its 1Q FY15 results on 22 April, after trading hours.

Analyst Briefing key takeaway

No Analyst Briefing, as Cache only holds them during 2Q and 4Q results.

How do we view this?

Sector-wise, expectations for rents to soften due to supply side, but occupancy to remain healthy. Singapore remains the Logistics Hub of the region, underpinned by consumer growth and e-commerce. While there is limited risk of oversupply as majority (>70%) of upcoming supply of warehouse space are pre-committed, but this is likely to put pressure on rents.

3 master-leases have already rolled-off to multi-tenanted in April, after the 1Q reporting period. Consequently, portfolio occupancy today is likely already lower than 99.1%, and could remain so going into 2Q FY15.

Investment Actions

Taking into consideration the occupancy risk ahead, we accordingly adjust our forecast for the full year onwards. We downgrade our rating on Cache from "Buy" to "Accumulate", with slightly lower DDM valuation of S$1.310. (Previous: S$1.340)

Source: Phillip Securities Research - 23 Apr 2015