ARA LOGOS LOGISTICS TRUST (SGX:K2LU)
ARA LOGOS Logistics Trust - Better Positioned For Accretive Acquisitions
- ARA LOGOS Logistics Trust (SGX:K2LU)'s 1H21 DPU of S$0.0257 (+10.6% y-o-y) was in line at 50% of our FY21F.
- Positive rental reversions, high occupancy and cap rate compression indicate strong demand for the sector.
- Reiterate ADD with a higher target price of S$0.96.
ALOG's stronger 1H21 results mainly driven by acquisition
- ARA LOGOS Logistics Trust’s 1H21 revenue (Singapore 67%; Australia 33%) increased 15.2% to S$66.6m and NPI rose 17.1% y-o-y to S$51.4m. The stronger y-o-y results were mainly driven by incremental revenue from the Australian portfolio acquisition (completed in Apr 2021), stronger performance across the portfolio and appreciation of AU$.
- ARA LOGOS Logistics Trust's 1H21 DPU increased 10.6% y-o-y to S$0.0257, partly driven by the income from fund investments, in line at 50.3% of our full-year forecast. Including the S$2m retained distributable income in 1H20 and excluding the capital distribution of S$0.6m, 1H21 DPU increased 0.7% to S$0.02524.
Strong operating metrics
- ARA LOGOS Logistics Trust continued to deliver positive understand that vacant space will soon be filled.
- Going forward, management expects occupancy rate to remain high while rental reversion to be flat to slight positive, supported by robust demand.
- ARA LOGOS Logistics Trust’s NAV increased from S$0.57 in Dec 20 to S$0.67 in Jun 21 due to the addition of the new Australian portfolio and compression of cap rate, led by assets in Australia (from 6.3% in Dec 20 to 5.1% in Jun 20) followed by Singapore (6.3% to 5.9%), resulting in a valuation uplift of S$104m.
Better positioned for accretive acquisitions
- ARA LOGOS Logistics Trust’s gearing stood at 39.5% sponsor for potential pipeline for acquisitions. While its sponsor, LOGOS has presence in many countries, ARA LOGOS Logistics Trust sees more opportunities in Australia, China and Singapore.
Reiterate ADD with a higher DDM-based target price of S$0.96
- We reduce our FY21-23F DPU forecasts of ARA LOGOS Logistics Trust by 1-3% after remodeling its acquisitions based on circular and take premium given potential inclusion into FTSE EPRA Nareit Index in Sep review and better positioning for accretive acquisitions.
- See
- ARA LOGOS Logistics Trust is well positioned to ride on the strong demand for logistics warehousing.
- Key potential re-rating catalyst: Nareit inclusion.
- Downside risks include weaker rentals.
EING Kar Mei CFA
CGS-CIMB Research
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LOCK Mun Yee
CGS-CIMB Research
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https://www.cgs-cimb.com
2021-07-22
SGX Stock
Analyst Report
0.961
UP
0.814
