Towards Financial Freedom
Another Stable Set Of Results
AREIT's FY13 DPU of 13.74S¢ (+1.3% y-o-y) was in line with our estimate (-1.2% deviation). Revenue and net property income came in at SGD575.8m (+14.4% y-o-y) and SGD408.8m (+11.0% y-o-y) respectively. The increase in revenue was mainly due to additional contributions of rental income from completed development projects and newly-acquired properties during the year. We maintain our NEUTRAL view on AREIT with a DDM-based (COE: 7.3%, TGR: 1.0%) TP of SGD2.76.
- FY13 results in line with expectations. FY13 results were largely in line with our forecast, with a positive rental reversion averaging about 14.0%. The occupancy rates for both its portfolio and multi-tenanted buildings (MTB) shifted to 94.0% and 89.6% vs 94.3% and 89.5% respectively from a year ago. This was a result of the completion of several asset enhancement initiatives over the year, which resulted in an increase in total available net lettable area.
- Expect AREIT to continue to grow organically. Approximately 21.4% of AREIT's property income is due for renewal in FY13/FY14, of which 6.0% and 15.4% are from single-tenanted buildings and MTB respectively. With the passing rent for its various properties below the current market rate, we believe AREIT should be able to achieve a mid to high single-digit positive rental reversion in FY13/FY14.
- Seeking investment opportunities abroad. At the briefing, its management indicated that they will continue to seek acquisition/ development opportunities in Malaysia and China, as the Singaporean industrial market tightens against a cap rate which has increasingly been compressed since 2010.
- Retain NEUTRAL outlook. Although both AREIT's earnings and portfolio occupancy rate are expected to remain stable going forward, due to: i) the lack of new sizeable potential acquisition targets, ii) its nearterm dilution of c.7% as a result of the recent capital-raising exercise, coupled with iii) the high valuation it is currently trading at (1.40x P/B and FY14's forecasted dividend yield of 4.9%), we believe this counter is fairly priced at the moment.
Source: OSK
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
