Friday, February 7, 2014

CapitaCommercial Trust: Poised to benefit from CBD office recovery (OCBC)

CapitaCommercial Trust:
Fair value S$1.61
add: 12m dividend forecast S$0.08
versus: Current price S$1.45
Poised to benefit from CBD office recovery

4Q13 distributable income increased 3.3% YoY to S$60.2m. This cumulates to a distributable income of S$234.2m for FY13, which is up 2.5% YoY mainly due to higher revenue contributions across portfolio properties and a full-year contribution from Twenty Anson. FY13 distributable income constitutes 102.1% of our annual forecast and we deem this this performance to be within expectations. The group reported 4Q13 DPU at 2.09 S-cents, adding up to a total FY13 DPU of 8.14 S-cents – a 5.6% distribution yield based on the traded price of S$1.45 per unit. We continue to like CCT for its exposure to the relatively attractive CBD sub-market. With its low gearing of 29.3% and debt headroom of S$1.2b (to 40% gearing), there is significant dry powder for accretive acquisitions. Maintain BUY with an unchanged fair value estimate of S$1.61.


FY13 figures within expectations
4Q13 distributable income increased 3.3% YoY to S$60.2m. This cumulates to a distributable income of S$234.2m for FY13, which is up 2.5% YoY mainly due to higher revenue contributions across portfolio properties and a full-year contribution from Twenty Anson. FY13 distributable income constitutes 102.1% of our annual forecast and we deem this this performance to be within expectations. The group reported 4Q13 DPU at 2.09 S-cents, adding up to a total FY13 DPU of 8.14 S-cents – a 5.6% distribution yield based on the traded price of S$1.45 per unit.

Poised to benefit from recovering CBD office market
Portfolio occupancy came up to 98.7% as of end 4Q13 versus 97.2% a year ago. In particular, we highlight that management has successfully addressed the issue of weak occupancies in Capital Tower and One George Street over FY13, bringing the occupancy rate up from 90.6% and 94.4% as at end FY12 to current levels of 100% and 99.5%, respectively. As a result of continued rental reversions, CCT’s average committed office portfolio rentals increased over the year from S$7.64 (end FY12) to S$8.13 (end FY13). Finally, greenfield-asset CapitaGreen remains on track to attain TOP by end FY14; recall that this is the only asset completing in the core CDB sub-market over FY14-15. The group also completed its S$86m enhancement program at Six Battery Road, resulting in an estimated 8.6% ROI from incremental rentals and savings in operating expenses.

Significant dry powder – debt headroom of S$1.2b
We continue to like CCT for its exposure to the relatively attractive CBD sub-market. With its low gearing of 29.3% and debt headroom of S$1.2b (to 40% gearing), there is significant dry powder for accretive acquisitions. We believe this puts CCT in an advantageous position to capitalize on the sector, particularly if the recovery should surprise on the upside given its valuable call option to purchase the remaining 60% of CapitaGreen within three years after TOP. Maintain BUY with an unchanged fair value estimate of S$1.61.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 24/01/14

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