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Investors’ Corner (CACHE, FrasersCT, SingPost, Capitaland)
Investors' Corner | 22 June 2012
Related stocks:
S08
C31
By: Simeon Ang
Articles (125) Profile

Cache Logistics Trust
Price – $1.045
Target – $1.11

Cache Logistics Trust (CLT) boasts being one of the more resilient portfolios in the industrial REIT space. In its 1Q12 financial report, CLT reported 100% occupancy rate across its properties with a combination of triple-net master leases which have locked-in annual rental escalation of 1.5-2% as well as multi-tenanted lease structures. In addition, CLT said its weighted average lease expiry was strong at 4.4 years. In 2012, management said that there will be no lease renewal. This revelation will provide investors with significant earnings visibility as well as stability. We note that a recent private placement of 60m new units will provide the REIT with ample debt headroom for possible investment opportunities. We estimate that FY12F DPU yield will come in at around 8%, above the S-REIT average yield of around 7%. Recommend BUY.
– OCBC Investment (20 June)

Frasers Centrepoint Trust
Price – $1.66
Target – $1.80

We are keen to note that the suburban retail portfolio of Frasers Centrepoint Trust (FCT) is defensive and resilient in the face of any potential slowdown, being supported by F&B outlets and necessity spending at supermarkets. FCT also continues to benefit from positive rental reversions at Causeway Point which is the largest asset in FCT’s portfolio (48% of portfolio valuation). The asset enhancement initiative there is expected to be completed by end-12. Separately, we view Changi City Point as a near-term acquisition target especially with the upcoming Downtown Line 3 which will enhance connectivity there. In addition, FCT is likely to participate in Hektar REIT’s upcoming rights issue and we expect the additional shares to be accretive to FCT’s portfolio. We maintain BUY and note that positive newsflow on rising retail rentals; yield accretive acquisitions; redevelopment or asset enhancement opportunities are likely to be share price catalysts.
– UOB-Kay Hian (19 June)

Singapore Post
Price – $1.025
Target – $1.10

Singapore Post (SingPost), a provider of mail, logistics and retail solutions in Singapore and the Asia-Pacific region has, in our opinion, been making all the right moves in combating the negative impact from sustained declines in global physical mail volume. Newly-installed CEO Dr Wolfgang Baier has introduced a “5 pillars” concept which encapsulates over 20 initiatives in his bid to move SingPost to a new business model. We opine that the parcel business has potential of taking off first as the investments in Quantium and vPOST are starting to pay off. In addition, we view the cash hoard of $617m with anticipation of some large scale acquisitions which could potentially surprise the market. We feel that investors will stand to benefit in the long term from its transformation while at the same time be protected in the short-to-medium term by its stable dividend payout. We thus reiterate our BUY call.
– Maybank Kim Eng (18 June)

CapitaLand
Price – $2.68
Target – $2.93

Since our last update in May, CapitaLand has fallen 9% and is currently trading at a deep discount of 22% over its last reported NTA of $3.41. According to Bank of America-Merrill Lynch, we note that CapitaLand’s China exposure accounts for roughly 37% of revaluated net asset value. Of this, only 27% is exposed to the residential market while the remaining 73% is exposed to retail malls, services residences, integrated projects and other commercial projects. We want to point out that the company does not have significant unsold inventory in China and that the China business is still in a net cash position. The company also has around 4 years worth of residential land bank in China. Moving forward, management highlighted that it intends to focus on Beijing, Shanghai, Chengdu and Chongqing. Given the latest policy loosening as well as rate cuts in China, we thus feel that the company’s “China discount” might start to lighten up a tad over the coming quarters. In view of this and the above mitigating factors, we upgrade CapitaLand to BUY.
– ABN Amro (15 June)

Simeon, an LSE graduate, is currently the editor of Aspire. He specialises on topics surrounding trading psychology, politics and macroeconomics.

Please click here for more information about this author.

Cache Logistics Trust  0.725 -- --   
Business: Principally invest in income-producing real estate used for logistics purposes in Asia-Pacific, as well as real estate-related assets.

Insight: Jan-19,FY18 gross revenue and NPI rose 8.6% and 4.... Read More
Frasers Centrepoint Trust  2.700 +0.01 +0.37%   
Business: Co is a developer-sponsored retail real estate investment trust.

Insight: Apr-19, 1H19 NPI rose 3.6% to $71.8m, as gross rev... Read More
Singapore Post  0.930 -0.005 -0.53%   
Business: [FY19 Turnover] Post and Parcel (47.8%), logistics (31%), eCommerce (15.5%), property (5.7%).

Insight: May-19, FY19 revenue rose 2.9% to $1.6b largely du... Read More
CapitaLand  3.510 -0.03 -0.85%   
Business: Co develops, owns, and manages real estate properties. [FY18 Geographical] China (41.2%), S'pore (38.5%), Europe & others (18.6%), Vietnam & Others (1.7%).

Insight: Apr-19, 1Q19 revenue fell 23.8% while net profit d... Read More


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