020712 cache log trust - ocbc
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Addition of another quality asset
Cache Logistics Trust (CACHE) had received approval from unitholders
pertaining to the proposed acquisition of Pandan Logistics Hub and the
entry of a master lease agreement with CWT Limited. With theaddition of this prime logistics property, CACHE will have 12 quality
assets under management (eight with ramp-up features) and an
enlarged GFA of ~4.83m sq ft (+7.3%). As a note, Pandan Logistics
Hub is expected to contribute S$5.2m in rental income to the REIT in
the first year, translating to an initial NPI yield of 7.6%. This is likely
to add ~0.28 S cents to its DPU on an annualized basis, based on our
estimates.
Refinancing on more favourable terms
CACHE also embarked on a capital management exercise to increase
the amount and duration of its debt facility, consistent with our
expectations communicated in our 11 Jun report. According to the
May 2012 circular to unitholders, a new bank facility of S$375.0m will
be used to retire its existing bank facility of S$203.0m and repay its
S$40m unsecured loan, while an projected S$79.6m (including
S$11.0m refinancing costs) is expected to be used to finance the
Pandan Logistics Hub acquisition. Notably, the effective interest rate
for the new bank facility is 2.8% plus SOR, which is at 30bps below its
existing rate of 3.1% plus SOR. Hence, CACHE is likely to gain from
interest savings going forward.
Retain BUY with higher fair value of S$1.18
We continue to like CACHE for its resilient portfolio (100% occupied;
master lease arrangements), healthy financial position and attractive
FY12F DPU yield of 7.9%. We now incorporate the acquisition of
Pandan Logistics Hub into our model as the transaction is expected to
complete by 9 Jul. We also tweak our estimates to reflect a marginallylower cost of debt. Accordingly, our fair value is raised from S$1.11 to
S$1.18. Reiterate BUY on CACHE.
BEEFING UP MARKET POSITION Approval on proposed acquisition
Enhanced debt profile
Valuation remains attractive
2 Jul 2012Company Update
CACHE LOGISTICS TRUST |BUY
Asia Pacific Equity ResearchSingapore | REITs
BUY (maintain)Fair value S$1.18
add: 12m dividend forecast S$0.08
versus: Current price S$1.05
12m total return forecast 20%
Analysts
Kevin Tan (Lead) +65 6531 9810
Eli Lee +65 6531 9112
Key information
Market cap. (m) S$734.9 /
USD578.8
Avg daily turnover (m) S$1.0 /
USD0.8
Avg daily vol. (m) 1.0
52-wk range (S$) 0.915 - 1.06
Free float (%) 81.6
Shares o/s. (m) 699.9
Exchange SGX
BBRG ticker CACHE SP
Reuters ticker CALT.SI
ISIN code K2LU
GICS Sector FinancialsGICS Industry REITs
Top shareholder CWT - 10.1%
Relative total return 1m 3m 12m
Company (%) 2 5 19
STI-adjusted (%) 0 8 22
Price performance chart
0.68
0.81
0.95
1.08
1.22
1.35
Jul-11 Oct-11 Jan-12 Apr -12
2200
2660
3120
3580
4040
4500
Fair Value CACHE SP FSSTI
Shar e Pr i ce (S$) Index Level
`
Sources: Bloomberg, OIR estimates
Industry-relative metrics
0th 25th 50th 75th 100th
PB
PE
ROE
Beta
Mkt Cap
Company Indust r y Aver age
Percent i le
Note: Industry universe defined as companies under identical GICS classificationlisted on the same exchange.Sources: Bloomberg, OIR estimates
Key financial highlights
Year Ended 31 Dec (S$ m) FY10 FY11 FY12F FY13F
Gross revenue 42.4 64.6 72.1 77.1
Total property expenses -1.1 -2.7 -3.4 -3.3
Net property income 41.4 61.9 68.7 73.9
Income available for distribution 35.4 52.5 57.0 60.9
DPU per share (S cents) 5.6 8.2 8.3 8.6
Cons. DPU (S cents) na na 8.2 8.6
PER (x) 10.7 9.6 14.4 13.4
P/NAV (x) 1.2 1.1 1.1 1.1
ROE (%) 21.6 11.9 8.1 8.5
Gearing (%) 23.0 29.1 32.0 32.5
Please refer to important disclosures at the back of this document. MICA (P) 035/06/2012
MARKET CAP: USD 578.8M AVG DAILY TURNOVER: USD 0.8M
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OCBC Investment Research
Singapore Equities
2
Exhibit 1: Details on proposed acquisition
Source: Company
Exhibit 2: Rationale for acquisition
Source: Company
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OCBC Investment Research
Singapore Equities
Company financial highlights
Company financial highlights
Income statement
Year Ended 31 Dec (S$ m) FY10 FY11 FY12F FY13F
Gross revenue 42.4 64.6 72.1 77.1
Total property expenses -1.1 -2.7 -3.4 -3.3
Net property income 41.4 61.9 68.7 73.9
Net financing costs -6.1 -8.9 -11.9 -12.8
Manager's management fees -3.3 -5.0 -6.1 -6.1
Trustee' Fees -0.7 -1.5 -1.2 -1.3
Net income 31.2 46.5 49.5 53.7
Total return after tax 62.0 69.8 50.3 55.6
Net effect of non-taxable items -26.6 -17.3 6.7 5.3
Income available for distribution 35.4 52.5 57.0 60.9
Balance sheet
As at 31 Dec (S$ m) FY10 FY11 FY12F FY13F
Investment properties 744.0 842.8 965.6 977.6
Properties under development 0.0 0.0 0.0 0.0
Cash 8.0 12.1 12.1 14.1
Total current assets 8.1 12.3 12.2 14.2
Total assets 752.2 855.2 978.1 992.1
Current liabilities ex debt 3.1 6.0 5.3 5.7
Debt 172.7 248.9 312.9 322.9
Total liabilities 177.1 261.1 324.7 335.3
Unitholders' funds 575.1 594.1 653.4 656.8
Total equity and liabilities 752.2 855.2 978.1 992.1
Cash flow statementYear Ended 31 Dec (S$ m) FY10 FY11 FY12F FY13F
Net income 31.2 46.5 49.5 53.7
Adjustments 8.6 12.7 16.4 17.3
Operating income before working cap chgs 39.8 59.2 65.9 70.9
Change in working capital 1.8 2.8 -0.6 0.4
Cash generated from operating activities 41.6 62.0 65.2 71.3
Cashflow from investing activities -713.3 -74.3 -122.0 -10.0
Cashflow from financing activities 679.7 16.4 56.8 -59.3
Change in cash 8.0 4.1 0.0 2.0
Cash at beginning of period 0.0 8.0 12.1 12.1
Cash at end of period 8.0 12.1 12.1 14.1
Key rates & ratios FY10 FY11 FY12F FY13F
DPU per share (S cents) 5.6 8.2 8.3 8.6
NAV per share (S cents) 90.6 93.0 92.9 92.8
PER (x) 10.7 9.6 14.4 13.4
P/NAV (x) 1.2 1.1 1.1 1.1
NPI margin (%) 97.4 95.8 95.3 95.7
Net income margin (%) 73.5 71.9 68.6 69.6
Gearing (%) 23.0 29.1 32.0 32.5
DPU yield (%) 5.3 7.8 7.9 8.2
ROE (%) 21.6 11.9 8.1 8.5
ROA (%) 16.5 8.7 5.5 5.6
Sources: Company, OIR forecasts
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Important disclosures
OCBC Investment ResearchSingapore Equities
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The analyst/analysts who wrote this report hold NIL shares in the above security.
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- OCBC Investment Researchs (OIR) technical comments and recommendations are short-term and trading oriented.
- OIRs fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment horizon.- As a guide, OIRs BUY rating indicates a total return in excess of 10% given the current price; a HOLD trading indicates totalreturns within +/-10% range; a SELL rating indicates total returns less than -10%.- For companies with less than S$150m market capitalization, OIRs BUY rating indicates a total return in excess of 30%; a HOLDtrading indicates total returns within a +/-30% range; a SELL rating indicates total returns less than -30%.
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