• Cache Logistics Trust’s 2Q/1H18 DPU was broadly in line with expectations, at 27%/49% of our FY18F forecast.
• Cache actively leased 762k sq ft of space in 2Q18 with negative reversion of -4%.
• Increased Commodity Hub committed occupancy post conversion to a multi-tenanted building.
• Gearing at a healthy 35.3% at end-2Q18.
• Maintain HOLD, given limited near-term earnings growth. Our Target Price is lowered slightly to S$0.78.

2Q18 Results Highlights

Cache Logistics Trust’s 2Q18 revenue rose 7.7% y-o-y to S$30m largely due to the contribution from nine Australian properties acquired in Feb 2018. However, net property income (NPI) and distribution income fell 1.1%/6.3% y-o-y in 2Q18 due to lower margins from the conversion of CWT Commodity Hub into a multi-tenanted building and distribution to perpetual security holders.

2Q18 DPU of 1.42 Scts is 17.6% below that of 1Q17 due to an expansion in unit base. 2Q/1H18 DPU was broadly within our expectations, at 27%/49% of our full-year forecast.

Active Leasing Activities

Cache Logistics Trust leased/renewed 762k sq ft of space in 2Q18 (925.1k sq ft YTD) and has largely de-risked its lease expiries, with only 3.1% of rental income due to be re-contracted for the remainder of this year.

Portfolio committed occupancy stands at 96.8% as at end 2Q18, an increase from 92.8% at end 1Q18. The trust achieved negative reversions of -4% for 2Q18 (-4.8% YTD).

Source: CGS-CIMB Research - 31 Jul 2018