Monday, July 29, 2013

AAREIT: Set To Grow (OSK)

AAREIT: Set To Grow
(BUY, SGD1.61, TP: SGD1.81)
AAREIT reported a DPU of 2.50 cents (flat y-o-y) for 1QFY14, in line with our FY13 forecast. 1QFY14 revenue jumped 17.1% y-o-y to SGD24.5m while net property income rose 5.7% y-o-y to SGD15.7m. In view of the exciting pipeline of upcoming projects in the next 17 months, we remain positive on the REIT’s outlook. Maintain BUY, with a higher SGD1.81 TP.

Stellar quarter but DPU diluted due to recent placement. AIMS AMP Capital (AAREIT) posted strong 1QFY14 results, mainly attributed to additional rental contribution from Phase One of 20 Gul Way as the property starting earning income from 29 Dec 2012. Other factors are higher rental rates (c.14.2% higher than the expired leases) and the recovery of 27 Penjuru Lane and 8 & 10 Pandan Crescent, which reverted to multi-tenancy properties. Although the quarter’s showing was commendable, AAREIT saw its distribution per unit (DPU) diluted as a result of the recent SGD110m it raised via a placement in April.

DPU boost in FY14/FY15 from completed projects. During the quarter under review, the REIT received its temporary occupation permit for Phase Two of 20 Gul Way, about seven months ahead of schedule and within budget. As a result of the early completion, we expect rental payments for FY14 to commence this month (c. SGD1.1m) and boost the next quarter’s earnings. In addition, with the expected completion of 103 Defu Lane and the extension of Phase 2 at 20 Gul Way by mid-2014, together with the scheduled completion of the property’s Phase 3 in 4QFY15, we expect to see robust DPU growth in FY14/FY15.

Maintain BUY, with higher TP of SGD1.81. In view of AAREIT’s: i) robust pipeline of projects due to be completed over the next 17 months, ii) low gearing of 25.4%, iii) available assets to be acquired from its sponsors in Australia, and iv) better-than-expected rental reversion, we believe the REIT is well-positioned to experience respectable growth over the next few years. Maintain BUY, with a slightly higher DDM-based (COE: 8.7%; TGR: 2.0%)TP of SGD1.81.

Source/Extract/Excerpts/来源/转贴/摘录: OSKResearch,
Publish date: 26/07/13

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