CACHE LOGISTICS TRUST (SGX:K2LU)
Cache Logistics Trust - Keep Looking Forward
- Q-o-q improvement in SG NPI.
- 8.2% FY18F yield as at 26 Oct close.
- Fair Value of S$0.78.
3Q18 DPU from operations down 3.3% y-o-y…
- Cache Logistics Trust’s (CACHE) 3Q18 results were within expectations.
- Revenue increased 14.8% y-o-y to S$31.5m, mainly due to the nine Australian warehouses which were acquired in Feb, higher revenue from Schenker’s new lease agreement, the top-up to market rental following the 51 Alps Avenue resolution, and higher revenue from CWT Commodity Hub.
- NPI increased 8.1% y-o-y to S$23.1m.
- 3Q18 DPU from operations dropped 3.3% y-o-y to 1.439 S cents, while DPU from capital dropped 32.1% y-o-y to 0.036 S cents. As a result, total DPU dropped 4.3% y-o-y to 1.475 S cents, making up 24.5% of our initial full-year forecast.
But up 4.2% q-o-q, on the back of 9.0% growth in SG NPI
- On a q-o-q basis, revenue increased 4.9% while NPI increased 6.6%. The q-o-q increase in NPI was driven by a 9.0% increase in Singapore portfolio NPI, mainly due to
- higher NPI from CWT Commodity Hub on the back of higher occupancy,
- slightly higher NPI from several Singapore properties, which more than offset
- the loss of income from the Hi-Speed Logistics Centre in May 2018.
- Contributions from Australia remained stable q-o-q.
- As a result, 3Q18 DPU from operations increased 4.2% q-o-q, while DPU from capital dropped 5.3% q-o-q. Total DPU increased 3.9% q-o-q.
Poised for industry recovery
- We believe that CACHE is reasonably positioned for the industrial sector recovery given its lease expiry profile and high-proportion of multi-tenanted properties. We expect rents within the portfolio to bottom at end-2018 or early 2019. We are cognizant of the potential impact of US-China trade tensions on business sentiment, but still expect to see operational improvement from CACHE with the improvement in the demand-supply balance.
- As it stands, only 2.0% of CACHE’s portfolio by gross rental income is up for renewal for 4Q18 while 28.2% is up for renewal in 2019.
- Meanwhile, portfolio rebalancing continues to be active. Earlier in Oct, CACHE announced the proposed divestment of Jinshan Chemical Warehouse in Shanghai for ~S$17.8m, a 22.5% premium over the original purchase price when it was acquired in Jun 2011. The divestment is expected to be completed by the end of the year.
- As at 30 September 2018, CACHE’s portfolio occupancy stood at 96.9%.
- After adjustments, our fair value falls from S$0.81 to S$0.78. As at 26 Oct’s close, CACHE is trading at 8.2% FY18F yield. Using Bloomberg consensus, CACHE is trading at a blended forward dividend yield of 8.6%, 0.6 standard deviations above its average since listing.
- Maintain BUY.
Deborah Ong
OCBC Investment Research
|
https://www.iocbc.com/
2018-10-29
SGX Stock
Analyst Report
0.78
DOWN
0.810