Ascendas India Trust - DBS Research 2016-03-21: Under-appreciated growth story

Ascendas India Trust - DBS Research 2016-03-21: Under-appreciated growth story ASCENDAS INDIA TRUST CY6U.SI 

Ascendas India Trust - Under-appreciated growth story 

  • Acquires additional building at CyberVale, Chennai 
  • Purchase consideration of S$13.2m to be paid in tranches as and when space is leased 
  • Incremental uplift to DPU from acquisition offset by higher assumed SGDINR rate 

Still a compelling BUY. 

  • We maintain our BUY call, with revised TP of S$1.03. 
  • While a-iTrust has rallied over 20% since we upgraded the stock to BUY in late January, we believe it remains an under-appreciated growth story. 
  • With Singapore-focused REITs facing headwinds translating into slowing DPU growth (average DPU CAGR of 3%), a-iTrust stands out with 3-year DPU CAGR of 11% and a still attractive 6.6% yield. 

Clear growth drivers. 

  • Over the past year, a-iTrust announced several developments including the construction of The V, a new 408k-sqft IT building, as well as the acquisitions of CyberVale, aVance3 and BlueRidge Phase II. 
  • Coupled with continued growth in the trust’s existing portfolio, we believe these clear growth drivers should provide confidence in AIT delivering a healthy 11% DPU CAGR over the next three years. 

Untapped land bank and acquisition pipeline. 

  • Through its untapped land bank and sponsor pipeline, a-iTrust has access to potential c.5.9m sqft of floor area. This provides the trust with a visible and sustainable source of growth over the long term. 
  • The ability to execute on these growth opportunities is supported by a healthy balance sheet (current low gearing of 28% rising to an estimated 35% with planned developments/acquisitions in the next couple of years). 

Valuation: 

  • After incorporating the acquisition at Cybervale but also incorporating higher SGDINR rates, we trimmed our FY17-18F DPU by 2%. 
  • Nevertheless, after rolling forward our DDM valuation to FY17, we raised our TP to S$1.03 from S$0.91. 

Key Risks to Our View: 

  • The key risk to our bullish stance is a significant depreciation of the INR and/or downturn in the Indian economy which will depress rents.



Mervin Song CFA DBS Vickers | Derek Tan DBS Vickers | http://www.dbsvickers.com/ 2016-03-21
DBS Vickers SGX Stock Analyst Report BUY MAINTAIN BUY 1.03 Up 0.91


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