ASCENDAS INDIA TRUST
CY6U.SI
Ascendas India Trust - Fastest growing reit in town
- Solid quarter with a 8% growth in DPU
- Robust DPU CAGR of c.10% in FY17-18F driven by acquisitions and planned development projects
- Upside to acquisition capacity based on gearing of 45% vs 40% previously
Still a compelling BUY.
- We maintain our BUY call on Ascendas India Trust (a-iTrust), with revised TP of S$1.02.
- 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 10% DPU CAGR over the next two 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:
- Our TP is adjusted to S$1.02 after updating our FY16F estimates and unit base assumptions.
- The stock offers a total potential return of 15% which is attractive.
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
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Derek Tan
DBS Vickers
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http://www.dbsvickers.com/
2016-04-28
DBS Vickers
SGX Stock
Analyst Report
1.02
Down
1.03
