Towards Financial Freedom
September's Regional Top Picks
CapitaCommercial Trust (CCT SP). Buy, SGD1.50 FV. Room For Growth Going Forward
- CapitaCommercial Trust (CCT) is an office REIT listed in Singapore with a portfolio of 10 high-quality Grade A office buildings in the prime areas of Singapore. It has a high occupancy rate of 96.2% together with a relatively low lease expiry profile (6.1%) for the rest of the year.
- 2Q12 DPU is in line with expectations. CCT reported 2Q12 DPU of 2.06S'' (+7.3% y-o-y). Together with 1Q12 DPU of 1.90S'', 1H12 results translated to 51.2% of our FY12 DPU estimate.
- Revenue and net property income for 2Q12 came in at SGD95.8m (+5.2% y-o-y) and SGD75.2m (7.8% y-o-y) respectively. Distributable income came in at SGD58.5m (+7.5% y-o-y).
- Going forward, we believe CCT will continue to grow on the back of additional contribution from Twenty Anson as well as high rental income from HSBC Building and Raffles City Singapore. In addition, Twenty Anson's current passing rent is an average of SGD6.20 psf/month vs the average of SGD8.00 psf/month in the vicinity. We expect to see a respectable positive income reversion from this building when about 50% of NLA is due for renewal in FY13.
- CCT trades at a 0.9x P/B against an average of 1.0x for the REITs sector. We reiterate our BUY call on this counter with a DDM-based TP of SGD1.50.
Source: OSK
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