Monday, December 23, 2013

Cambridge Industrial Trust : One to watch(DBSV)

Cambridge Industrial Trust
HOLD S$0.68
STI : 3,067.57
Price Target: 12-Month S$0.74
One to watch

 AEIs and planned acquisitions to drive earnings
 Further hikes in distributions from interest savings
 HOLD maintained, TPS$0.74

AEIs and acquisitions to drive earnings. Cambridge REIT (CREIT) is expected to deliver a steady earnings growth profile over 2014-2015. The trust will be renewing close to 26.1% of its leases in 2014, of which a majority will be single-tenanted properties. The manager expects out of the eight expiring head leases; to renew one, divest three assets and to convert the remainder into multi-tenanted properties. During the course of the conversions/renewals, earnings should remain fairly stable. In addition, the completion of the acquisition of 30 Teban Gardens (by 4Q13) and the development projects at 3 Pioneer Sector 3 and 21B Senoko Loop (both to be completed in 4Q14) will underpin a steady growth profile in the coming years.

Interest savings from loan refinancing. In a recent filing, we note that CREIT has entered into various interest rates swaps, which effective from 2nd Jun’14, is expected to reap interest savings of c.30bps (or annual interest of up to c.S$0.75m,1.1% of FY14F distributable income), which is positive to unitholders’ distributions. We like the manager’s pro-active capital management strategies which have enabled the trust to achieve better financial efficiency and credit standing.

HOLD maintained, TP S$0.78. We like the CREIT for its steady earnings growth profile of 5% and high yield of c.8.0%. However, we believe its valuation has priced in these positives and we will be buyers only on dips.

Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 19/12/13

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Tan Teng Boo

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