ASCENDAS INDIA TRUST
CY6U.SI
Ascendas India Trust - On the fast track
- 1Q17 DPU of 1.36 Scts in line with expectations.
- Contribution from the new Victor Building at ITPB and acquisition of BlueRidge Phase 2 yet to be fully realised.
- a-iTrust to commence construction of new 500,000 sqft building in early 2017 at The V in Hyberabad.
Still a compelling BUY.
- We maintain our BUY call on Ascendas India Trust (a-iTrust), with revised TP of S$1.06.
- While a-iTrust has rallied over 25% 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 2%), a-iTrust stands out with 2-year DPU CAGR of 7% and a still decent 5.8% 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 2.
- Coupled with continued growth in the trust’s existing portfolio, we believe these clear growth drivers should provide confidence in AIT delivering a healthy 7% 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 gearing is low at 29%, rising to a 36% with planned developments and acquisitions in the next couple of years).
Valuation:
- Our DDM based TP is raised to $1.06 from S$1.02 after lowering our Indian risk free rate to 7.6% from 8.25% previously.
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/
2016-07-25
DBS Vickers
SGX Stock
Analyst Report
1.06
Up
1.02
