CACHE LOGISTICS TRUST
K2LU.SI
Cache Logistics Trust - ONE MAJOR LEASE OVERHANG LIFTED
- 2Q16 DPU fell 7.1% YoY
- Slight improvement in occupancy
- Keeping our FV and BUY rating
2Q16 results within our expectations
- Cache Logistics Trust (CACHE) reported its 2Q16 results which met our expectations.
- Gross revenue spiked up 30.3% YoY to S$28.1m, driven by incremental revenue from its Australian acquisitions last year and contribution from DHL Supply Chain Advanced Regional Centre (DSC ARC).
- However, DPU fell 7.1% YoY to 1.989 S cents as a result of a larger unit base and capital distribution of S$1.5m in 2Q15 arising from the sales proceeds of an asset disposal. Excluding this item, CACHE’s adjusted DPU rose 1.7% YoY.
- For 1H16, CACHE’s gross revenue jumped 31.5% to S$56.0m but its DPU slipped 6.0% to 4.028 S cents. These formed 52.6% and 49.4% of our FY16 forecasts, respectively.
More clarity on 40 ALPS Avenue property
- CACHE shared some positive developments on its 40 ALPS Avenue property (also known as Hi-Speed Logistics Centre). The master lease for this asset was due to expire in Oct this year. Although the property will be converted from master lease to multi-tenancy, occupancy would remain practically full, as ~210,000 sq ft of lettable area is currently under lease documentation (key commercial terms agreed), with the remainder of space already pre- committed by another major 3PL provider. Hence, CACHE’s portfolio lease expiry profile for 2H16 would be reduced from 9.6% (by NLA) to 6.6%.
- As for the other major upcoming lease expiry at Schenker Megahub, there were no further updates provided by management since its 31 May announcement highlighting the disagreement between Schenker Singapore (end-user occupying the property) and the master lessee C&P Land Pte Ltd, with regards to the anchor lease agreement.
- On an overall portfolio basis, CACHE’s occupancy improved slightly from 94.2% (as at 31 Mar 2016) to 95.8%, as management secured new leases at DSC ARC, Cache Cold Centre and Pandan Logistics Hub.
Maintain BUY
- We trim our FY16 and FY17 DPU forecasts slightly by 0.2% and 1.1%, respectively, as we factor in a lower NPI margin at 40 ALPS Avenue property following the upcoming conversion to a multi-tenanted building.
- However, as we also adopt a lower risk-free rate assumption of 2.4% (previously 3.0%) in our model, our fair value estimate remains unchanged at S$0.95.
- Maintain BUY.
Wong Teck Ching Andy CFA
OCBC Securities
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http://www.ocbcresearch.com/
2016-07-21
OCBC Securities
SGX Stock
Analyst Report
0.95
Same
0.95
