ASCENDAS INDIA TRUST
CY6U.SI
Ascendas India Trust - On the fast track
- Acquires fourth aVance Business Hub property with total floor area of 390,000 sqft.
- Total purchase consideration is INR1.8bn (S$36.4m).
- DPU accretion c.1% p.a. in FY17-18F.
Still a compelling BUY.
- We maintain our BUY call on Ascendas India Trust (a-iTrust), with TP revised marginally to S$1.07.
- While a-iTrust has rallied over 25% since we upgraded the stock to BUY in late January, 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 its 2-year DPU CAGR of 8% and a still decent 5.8% yield.
Clear growth drivers.
- Over the past year, a-iTrust has announced several developments including the construction of The V, a new 408k-sqft IT building, as well as acquisitions of CyberVale, aVance 3 & 4 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 8% 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 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 its 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 $1.07 from S$1.06 after incorporating the last aVance 4 acquisition.
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/
2016-07-29
DBS Vickers
SGX Stock
Analyst Report
1.07
Up
1.06
