Croesus Retail Trust - CIMB Research 2016-03-24: Completes S$52.5m private placement

Croesus Retail Trust - CIMB Research 2016-03-24: Completes S$52.5m private placement CROESUS RETAIL TRUST S6NU.SI 

Croesus Retail Trust - Completes S$52.5m private placement 

  • Completed private placement of S$52.5m. 
  • Exercise to provide more financial flexibility and increase stock liquidity. 
  • Placement proceeds are earmarked for new purchases. 
  • We are lowering FY16-18 DPU by 2.9-7.6%. No DPU accretion from potential acquisitions have been factored in yet. 
  • Maintain Add with a revised target price of S$0.88. 

Announces completion of S$52.5m private placement 

  • CRT has raised gross proceeds of S$52.5m (net proceeds of S$50.9m) through a private placement of 70m new units at an issue price of S$0.75/unit. The issue price is at the lower end of the guided price range of S$0.745-0.77/unit and at a 7.7% discount to the volume weighted average price (VWAP) of S$0.8128. 

More financial flexibility and increasing liquidity 

  • Post-placement, we project that gearing will decline from 46.3% at end-Dec 15 to 44.5%, giving CRT more debt headroom for new purchases. 
  • In addition, the new units could improve trading liquidity of the stock. 

Proceeds are likely earmarked for new purchases 

  • While this issuance is pre-emptive, we believe that the proceeds will be used to partially fund potential new acquisitions in Japan, as well as for working capital purposes. This is within our expectations, as one of the growth drivers for CRT is expansion of its portfolio. 

FY16-18 DPU adjusted -2.9% to -7.6%, no acquisitions factored in 

  • We have lowered our FY16-18 DPU estimates to take into account the dilution from the new units but we have not factored in any impact of potential accretion from new acquisitions. 
  • Given our blended cost of capital estimate of 5.0-5.6%, we reckon that any new purchases will be accretive to DPU. 

Maintain Add 

  • We have adjusted our DDM-based target price by 7.4% to S$0.88 to take into account the new units
  • Maintain Add, with total return of 15%. 



LOCK Mun Yee CIMB Securities | http://research.itradecimb.com/ 2016-03-24
CIMB Securities SGX Stock Analyst Report ADD Maintain ADD 0.88 Down 0.95


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