CACHE LOGISTICS TRUST
K2LU.SI
Cache Logistics Trust: Boost from capital distribution
3Q15 DPU flat YoY at 2.14 S cents
Occupancy rate fell to 95.2%
Increasing presence in Australia
3Q15 results ahead due to capital distribution from divestment
- Cache Logistics Trust (CACHE) reported flat DPU of 2.14 S cents in 3Q15, beating our expectations due to a capital distribution of S$1.5m which came from a portion of the sales proceeds from its disposal of Kim Heng warehouse.
- Gross revenue jumped 11.3% YoY to S$23.1m, underpinned by contribution from acquisitions, but NPI dipped 3.6% to S$18.8m due to higher property expenses arising from the conversion of several properties from master lease to multi-tenancy.
- Additional property expenses were also incurred at DHL Supply Chain Advanced Regional Centre, which received its TOP in Jul 2015 but rental income would only come in Jan next year.
- For 9M15, CACHE’s gross revenue rose 5.5% to S$65.7m, while DPU of 6.43 S cents was similar to 9M14. The latter formed 78.2% of our FY15 forecast, but if we exclude the capital distributions made in 2Q15 and 3Q15, CACHE’s adjusted DPU would have constituted 73.6% of our original full-year projection.
Lower occupancy; seeking inorganic growth opportunities
- Given the conversions of some master-leased properties to multi-tenanted properties as highlighted earlier, CACHE’s portfolio occupancy slipped from 98.3% to 95.2%, as at 30 Sep 2015. The subdued macroeconomic conditions and industry oversupply concerns would make it challenging for management to backfill its vacancies, in our view, although CACHE has only 1% of its NLA due for renewal for the remainder of FY15.
- Attention would be turned to FY16’s lease expiries, which form 15% of CACHE’s NLA.
- To mitigate the headwinds facing Singapore’s industrial market, CACHE proposed earlier this month to acquire a warehouse in Queensland, Australia, for a purchase consideration of A$27.0m (~S$27.1m). This works out to a net property yield of 7%.
Maintain HOLD
- We incorporate this acquisition into our model, but as we also lower our NPI margin forecast, our fair value estimate is kept unchanged at S$1.00.
- We expect management to pay out another S$1.5m of capital distributions from the Kim Heng warehouse sales proceeds in 4Q15.
- Maintain HOLD.
Wong Teck Ching Andy
OCBC Securities
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http://www.ocbcresearch.com/
2015-10-22
OCBC Securities
SGX Stock
Analyst Report
1.00
Same
1.00
