Professional Documents
Culture Documents
SINGAPORE
REIT
LONG TERM
Conviction| |
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Our policies will depend on this scenario coming true If it doesn't come true, we'll adjust our policies.
Suntec REIT
Trading at 0.7x P/BV, the lowest within the whole sector, we believe that the market has priced in potential negatives from rising borrowing costs, while according limited value to the AEI at Suntec City Mall.
We evaluate the impact of rising bond yields in this report. Maintain Neutral. We lower our DDM-based target prices after raising the cost of equity by 80bp across the board. We upgrade Suntec to Outperform from Neutral. Top picks are now AREIT, Suntec and FCT.
While predicting where bond yields could be difficult at this juncture, we dug into history for periods when bond yields were near 3% or rising for a sense of where REITs could end up. Pegging spreads to historical levels just before bond yields turned higher and normalised levels (2010-Mar 2011) post GFC, we believe that the sector could trade at spreads of 390-422bp. This would imply sector yields of 6.9-7.2% assuming that bond yields hit the historical average of 3%. At current levels (6.6% yield and near historical mean yield and P/BV), we think that the sector is near a turning point but is not outright cheap.
Rising bond yields would also limit cap rate compression and push up borrowing cost. That said, we believe that SREITs book values are fairly well-supported given the premium that transacted values commanded. The near-term impact of higher borrowing cost should meanwhile be manageable, given healthy asset leverage, high percentage of hedges and staggered debt maturity.
Maintain Neutral
Near term, we expect the impact of rising bond yields on spreads to continue dominating. Bond yields may not rise in a straight line, but the direction is a one-way bet. We see little to fuel positivity, with the backdrop of rising rates and weakening S$, and the sector still up 11% on a 1-year basis. The only redeeming factor is growth, but with impediments from restructuring pressures locally. Maintain Neutral.
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
REIT
June 26, 2013
5
LT ave: 4.1% 4 3 2 1 2003 Ex-crisis: 3.7%
1 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Bloomberg Fixed (% of total Current cost of Impact of a 50bps increase in Ticker Gearing ratio debt) borrowing interest cost on (t+1) DPU PREIT 32% 85% 1.5% -0.6% ART 41% 66% 3.1% -1.6% CDREIT 28% 50% 2.5% -1.2% AREIT 28% 75% 2.3% -0.9% CACHE 29% 70% 3.3% -0.8% CREIT 35% 82% 3.5% -0.9% MLT 34% 70% 4.1% -1.3% MINT 35% 88% 2.4% -0.5% FCOT 39% 63% 2.4% -2.3% CCT 30% 78% 3.2% -1.0% KREIT 43% 60% 3.0% -2.4% SUN 39% 60% 2.2% -2.9% CMT 35% 94% 2.8% -0.3% FCT 31% 94% 3.3% -0.2% SGREIT 32% 81% 2.7% -0.7% MCT 41% 75% 3.1% -1.5% TOTAL 34% 72% 2.8% -1.2%
Top picks: AREIT, Suntec, FCT Recommendations: Outperform AREIT, CACHE, CREIT FCT SUN, FCOT Neutral MINT, MLT CMT, SGREIT, MCT CCT, KREIT CDLHT, ART PREIT
SOURCE: CIMB, COMPANY REPORTS
Underperform
Industrial
REIT
June 26, 2013
PREIT SP
Neutral
$2.27
$2.33
$1,083
AXRB MK
Neutral
$3.70
$4.03
$534
Calculations are performed using EFA Monthly Interpolated Annualisation and Aggregation algorithms to December year ends
REIT
June 26, 2013
Cache
PREIT
KREIT
AREIT
SSREIT
CDLHT
SGREIT
Please fill in the values above to have them entered in your rep
PCRT
FCOT
MINT
LMRT
MCT
KREIT
PREIT
SSREIT
AREIT
Cache
CMT
MLT
ART
Suntec
SGREIT
Cambridge
CDLHT
FEHT
CRCT
FIRT
FRT
FCT
CCT
(5)
(10)
Cambridge
MGCCT
Suntec
FEHT
CRCT
FIRT
MCT
Title: Source:
ART
CCT
MLT
FRT
FCT
REIT
June 26, 2013
2. HOUSE VIEW ON S$, INTEREST RATES AND QE 2.1 On S$ and interest rates
Our FX team believes that S$ will weaken against US$ to 1.27 by end-2013. Our weaker S$ view was an anti-consensus view at the start of the year but recent risk aversion has brought the FX pair close to our target. We expect a combination of 1) risk aversion, 2) receding inflation in Singapore, 3) weaker growth in Asian economies, and 4) likely weakening of the yen again to prevent S$ from returning to the previous appreciating path. The question for interest rates is whether rates will go up in a hurry. We view the rise in 10YR yields across the world as a reflection of increased risk aversion, not central banks changing their stance on interest rates. In fact, the Federal Reserve made a most dovish speech last week after equity markets started to collapse. One has to recognise that the markets decline was in spite of a sustained easy money policy stance in the US, not because the Fed turned hawkish. Without a change in the Fed fund rates, we do not expect the 3M S$ SIBOR to creep up significantly either.
Figure 6: MAS has weakened its firm grip on FX policy
NEER 115 Stronger S$ 113 111 109 Weaker S$ 107
105
Title: Source:
Dec-12 Mar-13 May-13
2.5
Please fill in the values above to have them entered in your rep
2.0
1.5
1.0
103 101 99 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13
0.5
0.0
SOURCE: CEIC
2.2 On tapering of QE
End of QE must be accompanied by growth. Even though Bernanke noted in the FOMC meeting in June that it will start cutting back on QE later this year, this is contingent on improving economic conditions and sustaining job creation; recent data have been mixed. We expect sufficient signalling, raising of transparency levels and resetting of targets to avoid a disorderly sell-off in the bond market. In the event that yields rise faster than expected due to more aggressive sell-offs, the Fed retains the option of extending its policy guidance of balance sheet expansion to limit these moves. Strong US economy will not solve all of Asias ills. Our strategists believe that a strong US economy prompting a pullback in QE will not solve all of Asias ills, given the risks from disappointing Chinese growth, a strong US$ (driving liquidity withdrawal) and a weak yen impacting North Asian exports. The US recovery will help drive exports higher but the impact will remain selective, especially as growth is still likely to be sub-3% in 2014 and the world will also deal with an unwinding of bond yields which will start to raise valuation concerns.
REIT
June 26, 2013
3.5
3.0 2.5
4.0
3.5 3.0 2.5 2.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2.0
1.5 1.0
0.1 0.0
5 0
Yield/volatility
Average
Volatility (RHS)
SOURCES: CIMB, BLOOMBERG
3.2 How did REITs fare historically when bond yields rose?
We detail below the performance of REITs relative to respective country indices during past episodes of interest rate increases. US REITs have traditionally underperformed during periods of rising interest rates while S-REITs performance was more mixed though the performance could have been skewed by the limited number of names listed in the early days of 2004-5. That said, we highlight some differences this time round compared to the past 1) Bond yields have never been so low in the listing history of REITs and 2) A structurally slower Asian growth could affect cyclical stocks share-price performance, and SREITs could outperform cyclical stocks in an environment where liquidity still abounds.
6
REIT
June 26, 2013
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
SOURCES: CIMB, BLOOMBERG
14
12 10 8 6 4 2 0 1972 1977 1982 1987 1992 1997 2002 2007 2012
REIT
June 26, 2013
average levels of about 2.4%, translating into an overall sector yield of about 6.7%.
+1s.d: 8.4%
5.0
4.0 2003
2004
2006
2007 Mean
2008 +1SD
2009
2010 -1SD
2011
2012
2013
Ex-crisis mean
SOURCES: CIMB, BLOOMBERG
Figure 15: Average bond yields and spreads through history Spreads can compress as yields rise
REITS' spreads against 10Y bond yields (%) 7.7 4.6 3.7 2.7 2.4 2.2 2.4 2.3 1.8 2.1 3.1 5.4 8.8 4.7 3.9 4.0 3.8 5.0 5.8 5.0 4.3 3.8 3.0 3.0 4.2
1H2003 2H2003 1H2004 2H2004 1H2005 2H2005 1H2006 2H2006 1H2007 2H2007 1H2008 2H2008 1H2009 2H2009 1H2010 2H2010 1H2011 2H2011 1H2012 2H2012 1H2013 6/25/2013 When bond yields are near 3% When bond near 3%, strip out 2007-8 When bond yields are increasing
10Y Bond yields (%) 2.2 3.6 3.3 3.2 2.9 2.9 3.4 3.3 2.9 2.8 2.5 3.0 2.1 2.5 2.7 2.2 2.5 1.8 1.6 1.4 1.4 2.8 3.1 3.2 2.4
REITs' forward yields (%) 9.9 8.2 7.0 5.9 5.3 5.1 5.8 5.7 4.7 4.9 5.6 8.5 10.9 7.2 6.6 6.1 6.3 6.8 7.4 6.4 5.7 6.6 6.1 6.2 6.7
GDP Growth (%) 4.6 9.2 7.4 8.8 8.9 1.7 -1.0 14.8 4.9 2.1 2.9
Some more downside; but sector is close to being fairly valued. Based on the above, assuming a 10-year bond yield of 3% (historical average) and that yield spreads remain around 390-422bp (in between mean levels and periods of rising interest rates), we estimate that SREITs could still have another 30-60bp of yield expansion to go, implying sector yields of about 6.9-7.2% or 6-11% share price downside. We are thus nearing a turning point, albeit still not at levels where the sector is outright cheap.
8
REIT
June 26, 2013
This is particularly so, considering the backdrop of rising bond yields over the longer run from current record-low levels, regardless of when the QE actually tapers off. More recently, in the Jun FOMC meeting, Bernanke, in fact, noted that it will start cutting back on QE later this year and may stop it entirely by mid-2014 if the economy continues to improve and the unemployment rate falls to 7% by mid-2014.
Figure 16: Indication of steepness of yield curve (10yr bond yield- 3M SIBOR)
% 4.0 3.5 3.1% 10yr bond yield - 3MSIBOR 3.3% 2.5% 3MSIBOR
Figure 17: Indication of steepness of yield curve (10yr bond yield- 2yr bond yield)
% 3.5 3.0 2.7% 10yr- 3MSIBOR 2yr bond yield
2.7%
3.0
2.5 2.0 1.5 1.0
2.3%
2.5
2.4%
2.4%
2.3%
2.4%
2.4%
2.0
1.5 1.0
0.5
0.0
0.5
Aug-2011
Aug-1999
Aug-2001
Aug-2003
Aug-2005
Aug-2007
Aug-2009
0.0
Aug-2007
Aug-1999
Aug-2001
Aug-2003
Aug-2005
Aug-2009
-0.5 -1.0
Conversely, we believe that the sector could see a further leg down on a sharper and faster-than-expected spike in bond yields or underperform cyclical stocks on stronger-than-expected economic growth.
Aug-2011
REIT
June 26, 2013
5%
Title: Source:
Please fill in the values above to have them entered in your rep
19 9 19 0 9 19 1 9 19 2 9 19 3 9 19 4 9 19 5 9 19 6 9 19 7 9 19 8 9 20 9 0 20 0 0 20 1 0 20 2 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 1 20 0 1 2 1 C 012 ur re nt
A study of office cap values and bond yields. The average office cap rates for Grade A buildings have compressed to c.3.75%, below its historical average of 4.2%. The average spread between commercial yields vs. SG10Yr yields is around 1.6% on a 20-year horizon. Yield spreads (excluding the GFC period of 2H08-1H09) averaged around 1.45% in the last 10 years. With the c.140bp rise in SG long bond yields (to c.280bp) over the past two months, the spread has narrowed from 245bp to 95bp below the historical mean. The 20-year average of the SG long bond yield is around 270bp, at current levels. Simplistically, a mean reversion in yield spreads should imply a c.100bp expansion in commercial cap rates or a c.18-20% downside in capital values.
10
1Q 0 3Q 2 0 1Q 2 0 3Q 3 0 1Q 3 0 3Q 4 0 1Q 4 0 3Q 5 0 1Q 5 0 3Q 6 0 1Q 6 0 3Q 7 0 1Q 7 0 3Q 8 0 1Q 8 0 3Q 9 0 1Q 9 1 3Q 0 1 1Q 0 1 3Q 1 1 1Q 1 1 3Q 2 1 1Q 2 13
MASB10Y Index Retail (Prime)
REIT
June 26, 2013
Figure 20: Office rental yield spreads against 10-year bond yields
6% 5% 4% 2,000 3% 1,500 2% 3,000
4%
Title: Source:
Please fill in the values above to have them entered in your rep
1% 0%
1,000
500 1%
Grade A cap values Office market yields vs SG10yr yield spread Average spreads (ex GFC period)
The trend analysis above assumes mean reversion and ignores the cyclicality of the office sector. Average yield spreads during downcycles range from 2.5-4% (low interest rates but higher cap rates) and 0.2-1.5% during upcycles (high interest rates but lower cap rates). During periods of bottoming for the office sector, physical yield spreads typically ranged between 1.3 and 1.6% (1993-1995, 2004-2006 and 2009-2010) before narrowing further. We believe that the key drivers of the magnitude of cap rate expansion are ultimately rental growth potential and vacancy, rather than bond yields alone. We note historically a 0.9 positive correlation between office capital values and rents and a 0.9 negative correlation vs. vacancy rates. The relationship of interest rates and capital values has meanwhile not been as strong. Valuers cap rates more conservative than transacted. We also highlight the gap between cap rates used by valuers and transacted cap rates. We note that cap rates used by valuers have generally been more conservative. This probably translated into the NAV premiums that REITs of some subsectors trade at, other than office where expectations are perhaps more muted and cap rates in book values are arguably closest to transacted cap rates due to the higher level of trading activities. The gap in cap rates could provide some buffer to book values (for retail, industrial and hospitality) even if bond yields rise, in our view.
11
1Q 0 3Q 2 0 1Q 2 0 3Q 3 0 1Q 3 0 3Q 4 0 1Q 4 0 3Q 5 0 1Q 5 0 3Q 6 0 1Q 6 0 3Q 7 0 1Q 7 0 3Q 8 0 1Q 8 0 3Q 9 0 1Q 9 1 3Q 0 1 1Q 0 1 3Q 1 1 1Q 1 1 3Q 2 1 1Q 2 13
Retail rental yields vs SG10yr yield spread Average spreads (ex GFC period)
REIT
June 26, 2013
Weighted ave: 6.6%; Biz/ sci parks: 6.1% 6.5-7.25% Local: 5.5-7.5%, Remaining: 5-12% dep. on country Flatted factories: 7-7.6%
Suburban retail: 5.5-5.65% 5.5-5.65% Retail: 5.0-5.3%; Office: 4.3-4.5% Local: 4.25-5.25%
5.3% 4.7%
Office: 4-4.5% Office: ~4% for local assets Office: 4.0-4.6%; Retail: 5.5-5.6% Local/ Aus office: 4%/ 7.5-8%
6.6% 6.8%
5.2%
Figure 23: Implied cap rates have broadly tracked property yields
6.5%
6.0% 5.5%
Figure 24: but appear to have moved more in tandem with bond yields over the past year
4.0%
3.5% 3.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Implied cap rate (CMT) Prime retail physical yield
5.0%
4.5% 4.0%
2.5%
2.0% 1.5%
3.5%
3.0% 2.5% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Implied cap rate (CCT) Prime office physical yield
1.0%
0.5% 0.0%
12
REIT
June 26, 2013
13
REIT
June 26, 2013
Figure 27: Scoring by exposure of REITs to rising interest rates (combined view of leverage, borrowings hedged and length of debt maturity (to update)
40 35 30 25
Less exposed
20
15 10 5 0
More exposed
We measure sensitivity of REITs to a 50bp increase in interest costs. Excluding refinancing, REITs which are most exposed to a 50bp increase in interest costs include Suntec, KREIT and FCOT. FCT, CMT and MINT are among the least exposed.
14
REIT
June 26, 2013
Figure 28: Impact of a 50bps increase in interest cost (taking into consideration exposure to floating debt)
Bloomberg Fixed (% of total Current cost of Impact of a 50bps increase in Ticker Gearing ratio debt) borrowing interest cost on (t+1) DPU PREIT 32% 85% 1.5% -0.6% ART 41% 66% 3.1% -1.6% CDREIT 28% 50% 2.5% -1.2% AREIT 28% 75% 2.3% -0.9% CACHE 29% 70% 3.3% -0.8% CREIT 35% 82% 3.5% -0.9% MLT 34% 70% 4.1% -1.3% MINT 35% 88% 2.4% -0.5% FCOT 39% 63% 2.4% -2.3% CCT 30% 78% 3.2% -1.0% KREIT 43% 60% 3.0% -2.4% SUN 39% 60% 2.2% -2.9% CMT 35% 94% 2.8% -0.3% FCT 31% 94% 3.3% -0.2% SGREIT 32% 81% 2.7% -0.7% MCT 41% 75% 3.1% -1.5% TOTAL 34% 72% 2.8% -1.2%
SOURCES: CIMB, COMPANY REPORTS
AEI fruition, full-year impact of previous years' AEIs, Westgate coming on stream Positive rental reversions, particularly Causeway Pt and NorthPt Positive rental reversions at VivoCity and Mapletree Anson Toshin lease rental uplift, rental step-ups at Msian assets & positive rental reversions
Market street carpark development coming on stream in FY15; flattish in the interim Marginal growth near-term eroded by expiring income support Asset enhancements at Suntec City Mall CPPU redemption, ongoing leasing at China Sq, expiry of master lease at
Acquisition accretion for recent S$300m acquisition; further S$80m priced in for FY13 Maldives acqn and Orchard Hotel AEI, offseting near-term decline in revPARs
15
REIT
June 26, 2013
29% 29%
16
REIT
June 26, 2013
Upgrade
Industrial Ascendas Reit AREIT SP Cache Logistics Trust CACHE SP Cambridge Industrial Trust CREIT SP Mapletree Logistics Trust MLT SP Mapletree Industrial Trust MINT SP Simple Average Office Frasers Commercial Trust FCOT SP CapitaCommercial Trust CCT SP Keppel REIT KREIT SP Suntec REIT SUN SP Simple Average Retail CapitaMall Trust CT SP Frasers Centrepoint Trust FCT SP Starhill Global REIT SGREIT SP Mapletree Commercial Trust MCT SP Simple Average Healthcare Parkway Life REIT PREIT SP
$ $ $ $ $
$ $ $ $ $
O O O N N
$ $ $ $
$ $ $ $
Upgrade Upgrade
O N N O
$ $ $ $
$ $ $ $
Upgrade
N O N N
$2.27
3.7%
4.4%
0.75
7.0% $
2.33
2.72
4.9%
1.5
17
REIT | Singapore
June 26, 2013
Ascendas REIT
AREIT SP / AEMN.SI Current S$2.13 S$2.50 S$3.05 17.5%
Conviction| |
LONG TERM
Market Cap
Free Float
US$4,032m
S$5,114m
US$20.38m
S$25.46m
83.0%
2,399 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
We lower our FY14-15 DPU by 1% for marginal adjustments in borrowing costs. We lower our DDM-based target price, now based on a higher discount rate of 7.2% (previously 6.4%; raised across the board following higher bond yields). Maintain Outperform with catalysts expected from accretive AEI and asset developments.
Steady growth
We expect steady DPU growth from positive rental reversions and past investments coming on stream. With current market rents at 9-35% higher than passing rents due for renewal in FY13/14 and room for uplift from the conversion of single-tenanted buildings, we expect double-digit positive rental reversions to continue. A series of past developments and asset enhancement should also bear fruit in FY13, potentially boosting DPU growth over FY14.
Relative to FSSTI (RHS) 121 118 114 111 107 104 100 97 93 90 86
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Mar-12A 503.3 368.3 494.1 281.7 0.14 11.5% 15.33 0.14 6.37% 36.5% 1.88 1.13 7.62% Mar-13A 575.8 408.8 301.0 304.6 0.12 (12.8%) 17.58 0.14 6.45% 28.4% 1.94 1.10 6.33% Mar-14F 630.0 441.0 334.7 341.8 0.14 15.0% 15.28 0.14 6.67% 31.2% 1.94 1.10 7.19% (0.329%) 1.00 Mar-15F 685.9 487.0 360.7 368.3 0.15 7.5% 14.22 0.15 7.17% 35.8% 1.93 1.10 7.76% (0.376%) 1.01 Mar-16F 695.6 493.9 367.5 375.1 0.15 1.6% 13.99 0.16 7.29% 35.8% 1.92 1.11 7.92% (0.369%) 0.96
2.6
2.4
2.2
40 2.0 30 20 10
Jun-12 Sep-12 Source: Bloomberg Dec-12 Mar-13
Vol m
2.50
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Ascendas REIT
June 26, 2013
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Mar-13A 6,447 0 407 6,854 20 0 47 38 105 135 235 71 441 1,744 113 1,857 4,661 0 4,661 Mar-14F 6,857 0 296 7,153 2 0 47 38 87 135 235 71 441 2,025 113 2,138 4,654 0 4,654 Mar-15F 7,360 0 300 7,660 17 0 47 38 102 135 235 71 441 2,547 113 2,660 4,646 0 4,646 Mar-16F 7,382 0 278 7,660 17 0 47 38 102 135 235 71 441 2,547 113 2,660 4,639 0 4,639
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Mar-13A 301.8 98.7 4.2 (0.5) (29.8) 374.5 (113.9) (149.7) 0.0 (263.6) (430.1) 697.6 (309.4) (69.8) (111.7) (0.9) 118.5 (387.3) Mar-14F 334.7 65.8 0.0 0.0 7.5 408.0 (69.4) (168.4) 0.0 (237.8) 280.4 0.0 (341.8) (126.7) (188.1) (17.9) 177.8 384.8 Mar-15F 360.7 82.7 0.0 0.0 7.8 451.3 (17.5) (490.0) 0.0 (507.5) 522.5 0.0 (368.3) (82.7) 71.4 15.2 (48.5) 383.6 Mar-16F 367.5 82.7 0.0 0.0 7.8 458.0 0.0 0.0 0.0 0.0 0.0 0.0 (375.1) (82.7) (457.9) 0.1 465.7 375.3
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Mar-13A 14.4% 11.0% 71.0% 1.33% 3.00 0.285% 101% 0.24 0.24 0.044 188% 4.45% Mar-14F 9.4% 7.9% 70.0% 3.45% 5.45 0.000% 102% 0.20 0.20 0.004 140% 4.71% Mar-15F 8.9% 10.4% 71.0% 7.49% 4.90 0.000% 102% 0.23 0.23 0.038 253% 4.81% Mar-16F 1.4% 1.4% 71.0% 1.59% 4.98 0.000% 102% 0.23 0.23 0.039 251% 4.73%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Mar-13A 2.2 N/A N/A N/A 95.0% 6,599.0 N/A Mar-14F 2.3 N/A N/A N/A 95.0% 6,897.7 N/A Mar-15F 2.3 N/A N/A N/A 95.0% 7,405.2 N/A Mar-16F 2.3 N/A N/A N/A 95.0% 7,405.2 N/A
19
REIT SINGAPORE
June 26, 2013
LONG TERM
Market Cap
Free Float
US$1,218m
S$1,545m
US$1.94m
S$2.43m
41.0%
1,143 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 288.7 157.5 180.3 96.2 0.065 19.0% 18.99 0.085 6.95% 40.4% 1.36 0.90 4.89% Dec-12A 303.8 159.1 162.4 99.7 0.070 7.7% 17.63 0.088 7.15% 39.6% 1.35 0.90 5.12% Dec-13F 350.4 176.4 80.1 113.4 0.065 (6.0%) 18.75 0.090 7.38% 40.9% 1.37 0.90 4.80% 0% 0.86 Dec-14F 370.8 189.7 88.6 117.0 0.069 6.1% 17.67 0.090 7.34% 41.3% 1.29 0.95 5.21% 0% 0.87 Dec-15F 375.6 192.1 89.7 119.3 0.069 (0.9%) 17.83 0.091 7.44% 41.9% 1.27 0.97 5.37% 0% 0.85
Vol m
Mar-13
1.30
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 2,788 0 53 2,841 125 0 36 0 162 111 168 13 292 1,022 47 1,069 1,547 94 1,641 Dec-13F 3,176 0 62 3,238 93 0 36 0 130 111 285 13 409 1,094 47 1,141 1,714 104 1,817 Dec-14F 3,186 0 69 3,255 68 0 36 0 104 111 309 13 433 1,080 47 1,127 1,685 114 1,799 Dec-15F 3,196 0 76 3,271 52 0 36 0 88 111 309 13 433 1,099 47 1,146 1,656 124 1,780
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 200.0 50.6 (19.4) (20.6) (85.4) 125.2 (18.9) 32.4 (5.7) 7.8 0.1 0.0 (100.1) (46.8) (146.8) (13.8) 133.0 89.5 Dec-13F 112.7 43.2 0.0 (22.3) 22.5 156.1 (27.4) (380.0) 1.7 (405.7) 189.0 199.4 (113.4) (57.2) 217.8 (31.8) (249.6) (105.6) Dec-14F 122.8 44.0 0.0 (24.0) 23.9 166.6 (28.6) 0.0 1.3 (27.4) 9.5 0.0 (117.0) (57.5) (165.0) (25.8) 139.3 103.5 Dec-15F 124.1 44.9 0.0 (24.2) 25.0 169.9 (28.7) 0.0 0.9 (27.8) 19.5 0.0 (119.3) (58.2) (157.9) (15.8) 142.1 115.7
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A 5.3% 1.1% 52.4% 2.9% 3.35 13.7% 61% 0.55 0.55 0.43 (304%) 5.39% Dec-13F 15.3% 10.8% 50.3% 3.2% 3.42 19.8% 141% 0.32 0.32 0.23 (348%) 2.52% Dec-14F 5.8% 7.6% 51.2% (0.5%) 3.69 19.5% 132% 0.24 0.24 0.16 (504%) 2.63% Dec-15F 1.3% 1.3% 51.1% 1.4% 3.68 19.5% 133% 0.20 0.20 0.12 (712%) 2.67%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A N/A N/A 238.0 N/A N/A 2,785.1 N/A Dec-13F N/A N/A 226.1 N/A N/A 3,173.5 N/A Dec-14F N/A N/A 237.4 N/A N/A 3,183.0 N/A Dec-15F N/A N/A 244.5 N/A N/A 3,192.6 N/A
21
REIT | Singapore
June 26, 2013
LONG TERM
Market Cap
Free Float
US$723.4m
S$917.5m
US$2.21m
S$2.76m
88.3%
702.4 m shares
CIMB Analyst(s)
Portfolio resilience
We continue to like Caches resilient portfolio, led by rental step-up for its master leases. Portfolio occupancy is a strong 100%. Low asset leverage of 29% leaves room for acquisition growth, which we consider to be its main catalyst.
We keep our DPUs but lower our DDM-based target price on a higher discount rate of 7.9% (previously 7.1%; raised across the board following higher bond yields). Our estimates assume S$120m of acquisitions for FY13. Maintain Outperform with accretive acquisitions as catalysts.
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Organic growth
We expect growth from locked-in annual rental escalations of 1.25-2.5% and acquisitions, which should mitigate the impact of any rising interest rates. Cache faces no lease-renewal risks in FY13, with the majority of its leases expiring only in FY15-16 and occupancy at 100%. We look forward to contributions from its most recent acquisition, Precise Two, in 2Q13. The property has been leased to Precise Development for six years (with an option for another six), and we expect locked-in rental step-up of 4.0% every two years to add to its organic growth and resilience.
Maintain Outperform
We continue to like Caches resilient portfolio, with built-in growth from rental step-up. On the other hand, locked-in step-up could limit its DPU growth when interest rates rise (vs. some other REITs where rentals could benefit from a pick-up in the economy) while acquisitions could be affected by rising funding costs (both debt and equity). For now, maintain Outperform with catalysts expected from accretive acquisitions.
Relative to FSSTI (RHS) 123 120 117 114 111 108 105 102 99 96 93
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 64.61 61.92 69.84 52.49 0.073 47.7% 16.32 0.082 6.95% 29.1% 0.93 1.27 7.91% Dec-12A 72.64 69.14 66.41 57.46 0.060 (17.3%) 19.74 0.084 7.06% 31.2% 0.96 1.24 6.36% Dec-13F 82.90 79.41 57.67 64.37 0.078 29.9% 15.19 0.085 7.16% 30.9% 0.98 1.21 8.06% 0% 1.00 Dec-14F 88.24 84.74 62.48 69.01 0.080 2.9% 14.76 0.088 7.46% 30.9% 0.97 1.22 8.23% 0% 1.00 Dec-15F 89.82 86.32 64.03 70.52 0.082 2.0% 14.48 0.090 7.59% 30.9% 0.97 1.23 8.44% 0% 0.99
Vol m
Mar-13
1.31
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 972 0 0 972 13 0 2 0 15 5 0 0 5 308 0 309 672 0 672 Dec-13F 1,092 0 0 1,092 13 0 2 0 15 5 0 0 5 342 0 342 759 0 759 Dec-14F 1,092 0 0 1,092 13 0 2 0 15 5 0 0 5 342 0 342 759 0 759 Dec-15F 1,092 0 0 1,092 13 0 2 0 15 5 0 0 5 342 0 342 759 0 759
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 66.6 20.8 (0.5) (0.2) 4.3 91.0 (0.6) (102.0) (0.2) (102.8) 60.0 59.1 (55.7) (22.9) 40.5 28.8 (22.4) 25.4 Dec-13F 57.7 12.8 0.0 0.0 5.0 75.4 (0.0) (120.0) 0.0 (120.0) 33.2 86.8 (64.4) (9.5) 46.1 1.6 (44.5) (20.8) Dec-14F 62.5 13.2 0.0 0.0 5.0 80.8 (0.0) 0.0 0.0 0.0 0.0 0.0 (69.0) (10.0) (79.0) 1.8 80.8 70.8 Dec-15F 64.0 13.2 0.0 0.0 5.1 82.3 (0.0) 0.0 0.0 0.0 0.0 0.0 (70.5) (10.0) (80.5) 1.9 82.4 72.4
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A 12.4% 11.7% 95.2% 1.6% 2.94 0.23% 87% 2.80 2.80 2.51 (1076%) 7.21% Dec-13F 14.1% 14.8% 95.8% 1.4% 5.49 0.00% 112% 2.79 2.79 2.50 (2048%) 5.51% Dec-14F 6.4% 6.7% 96.0% 4.3% 5.70 0.00% 110% 2.79 2.79 2.50 (2201%) 5.64% Dec-15F 1.8% 1.9% 96.1% 1.7% 5.82 0.00% 110% 2.78 2.78 2.49 (2246%) 5.78%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A 1.5 N/A N/A N/A 100.0% N/A N/A Dec-13F 1.5 N/A N/A N/A 100.0% N/A N/A Dec-14F 1.6 N/A N/A N/A 100.0% N/A N/A Dec-15F 1.6 N/A N/A N/A 100.0% N/A N/A
23
REIT | Singapore
June 26, 2013
LONG TERM
Market Cap
Free Float
US$664.4m
S$842.8m
US$2.28m
S$2.84m
94.8%
1,216 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Our FY14-15 DPUs are lower after tweaking our borrowing cost numbers. Coupled with a higher discount rate of 8.3% (previously 7.5%), we cut our DDM-based target price. Our estimates factor in S$100m of new developments for FY13-14. Maintain Outperform, with catalysts expected from value-unlocking, accretive investments and strong reversions.
provide Cambridge with ample funds for development, AEIs and acquisitions.
Capital management
Its debt maturity is fairly chunky in FY14 but we believe that management could proactively refinance the loans ahead of maturity. Management has hedged a fairly high 82% of its total borrowings and we estimate that a 50bp increase in borrowing costs could reduce its DPU by 0.9%.
Maintain Outperform
Its forward yields of >7% post the recent selldown are attractive, in light of the upside from value-unlocking (e.g. strata lots at Lam Soon Industrial Building that can be sold as residential or strata-industrial lots) and accretive investments backed by divestment proceeds. The recent spike in bond yields could affect the pricing expectations of sellers of assets (including holders of strata-lots at Lam Soon Industrial Building), enhancing the likelihood of the Lam Soon deal going through.
Relative to FSSTI (RHS) 142 136 130 123 117 111 105 98 92
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 80.4 69.11 85.17 50.40 0.031 (15.1%) 21.46 0.042 6.19% 32.2% 0.62 1.10 5.19% Dec-12A 89.0 76.23 89.46 57.58 0.038 20.7% 18.13 0.048 6.98% 37.8% 0.65 1.06 5.96% Dec-13F 102.2 87.91 69.33 63.19 0.045 19.0% 15.32 0.050 7.37% 36.6% 0.66 1.04 6.84% 0.00% 1.13 Dec-14F 114.0 96.94 63.38 70.63 0.048 8.4% 14.13 0.054 7.89% 36.7% 0.66 1.04 7.34% (0.73%) 0.88 Dec-15F 116.2 98.75 64.84 72.09 0.049 0.7% 14.03 0.054 7.93% 36.7% 0.66 1.04 7.40% (1.07%) 0.86
Vol m
0.76
Current Target
SOURCES: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 1,014 0 0 1,014 90 0 2 200 292 20 71 0 90 423 5 428 787 0 0 787 Dec-13F 1,061 0 0 1,061 123 0 2 200 325 22 71 0 93 437 5 442 850 0 0 850 Dec-14F 1,111 0 0 1,111 118 0 2 200 320 25 71 0 96 454 5 460 876 0 0 876 Dec-15F 1,111 0 0 1,111 119 0 2 200 321 26 71 0 96 454 5 460 876 0 0 876
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 89.5 19.6 1.3 0.0 (44.0) 66.3 (19.8) (113.4) 0.0 (133.2) 137.2 0.0 0.0 (59.3) 77.9 11.0 (66.8) 50.7 Dec-13F 69.3 19.8 2.9 0.0 (13.4) 78.7 (56.6) 9.4 9.0 (38.1) 14.0 50.2 0.0 (71.5) (7.2) 33.4 40.7 34.8 Dec-14F 63.4 20.6 2.6 0.0 0.0 86.6 (50.0) 0.0 (2.9) (52.9) 17.5 25.4 0.0 (81.3) (38.4) (4.6) 33.9 30.6 Dec-15F 64.8 20.9 0.5 0.0 (0.0) 86.2 0.0 0.0 3.8 3.8 0.0 0.0 0.0 (89.7) (89.7) 0.4 90.1 69.1
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A 10.7% 10.3% 85.7% 12.9% 3.31 0% 64% 3.23 3.23 0.99 624% 7.42% Dec-13F 14.9% 15.3% 86.0% 5.6% 3.81 0% 91% 3.48 3.48 1.32 42% 5.15% Dec-14F 11.6% 10.3% 85.0% 7.0% 4.05 0% 111% 3.34 3.34 1.23 47% 4.50% Dec-15F 1.9% 1.9% 85.0% 0.5% 4.08 0% 111% 3.33 3.33 1.23 48% 4.53%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A N/A N/A N/A 7,701 98.9% 1,013.6 N/A Dec-13F N/A N/A N/A 8,014 98.9% 1,060.8 N/A Dec-14F N/A N/A N/A 8,014 98.9% 1,110.8 N/A Dec-15F N/A N/A N/A 8,014 98.9% 1,110.8 N/A
25
REIT | Singapore
June 26, 2013
Capitacommercial Trust
CCT SP / CACT.SI Current S$1.42 S$1.51 S$1.69 6.4%
Conviction| |
LONG TERM
Market Cap
Free Float
US$3,218m
S$4,082m
US$11.32m
S$14.14m
67.9%
2,843 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Price Close 1.80 1.70 1.60 1.50 1.40 1.30 150 1.20
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 361.2 277.3 474.4 212.8 0.065 (41.0%) 21.76 0.075 5.29% 29.9% 1.60 0.89 4.19% Dec-12A 375.8 295.5 385.9 228.5 0.069 6.0% 20.52 0.080 5.66% 29.6% 1.66 0.86 4.24% Dec-13F 382.5 301.4 224.3 230.7 0.074 7.3% 19.13 0.080 5.64% 30.1% 1.65 0.86 4.49% (1.10%) 1.07 Dec-14F 387.1 303.4 225.9 230.0 0.074 (0.1%) 19.15 0.080 5.60% 31.0% 1.64 0.86 4.50% (1.09%) 1.04 Dec-15F 401.5 313.0 252.7 261.2 0.083 12.2% 17.07 0.090 6.35% 31.7% 1.64 0.87 5.07% (0.68%) 1.05
Vol m
100 50
Jun-12 Sep-12 Source: Bloomberg Dec-12 Mar-13
1.51
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Capitacommercial Trust
June 26, 2013
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 6,826 13 1 6,840 140 0 23 0 163 87 50 18 155 2,022 96 2,119 4,715 0 4,715 Dec-13F 6,961 9 1 6,971 115 0 23 0 139 89 197 18 303 1,942 96 2,039 4,753 0 4,753 Dec-14F 7,123 7 1 7,132 49 0 23 0 73 90 350 18 458 1,883 96 1,980 4,753 0 4,753 Dec-15F 7,220 2 1 7,223 41 0 23 0 65 93 730 18 841 1,583 96 1,680 4,753 0 4,753
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 386.0 74.7 8.0 0.0 (172.0) 296.7 (53.1) (452.8) 4.7 (501.2) 75.1 0.0 (218.6) (89.3) (232.9) (437.4) (203.4) (186.9) Dec-13F 224.3 64.2 1.5 (0.0) 6.6 296.7 (67.5) (0.6) (61.4) (129.5) 67.2 38.0 (235.8) (60.7) (191.4) (24.3) 169.3 174.5 Dec-14F 225.9 64.4 1.1 (0.0) 6.8 298.1 (68.2) (0.6) (88.1) (157.0) 94.1 0.0 (235.2) (65.8) (206.9) (65.8) 143.5 172.8 Dec-15F 252.8 47.0 3.3 (0.0) 6.9 310.0 (68.9) (0.6) 6.2 (63.4) 80.0 0.0 (267.0) (67.5) (254.5) (8.0) 249.1 262.0
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A 4.03% 6.57% 78.6% 7.0% 3.59 0.025% 59% 1.05 1.05 0.90 (433%) 5.61% Dec-13F 1.77% 1.99% 78.8% (0.4%) 4.38 0.011% 103% 0.46 0.46 0.38 (401%) 3.18% Dec-14F 1.22% 0.65% 78.4% (0.6%) 4.26 0.011% 102% 0.16 0.16 0.11 (377%) 3.16% Dec-15F 3.72% 3.19% 78.0% 13.2% 4.19 0.011% 103% 0.08 0.08 0.05 (372%) 3.49%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A 8.3 N/A N/A N/A 95.2% 6,695.1 N/A Dec-13F 8.1 N/A N/A N/A 94.1% 6,829.8 N/A Dec-14F 8.1 N/A N/A N/A 97.4% 6,992.1 N/A Dec-15F 8.3 N/A N/A N/A 98.3% 6,584.9 N/A
27
REIT | Singapore
June 26, 2013
LONG TERM
Market Cap
Free Float
US$1,271m
S$1,612m
US$3.89m
S$4.85m
67.0%
970.0 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Supply pressures
We expect the combination of bumper supply, subdued corporate travels and the absence of bi-annual events in 2013 to affect CDLHTs local revPARs and DPU in FY13. Local hotels revPAR slipped 8% yoy in 1Q, mainly on a 7% drop in ARRs as higher-yielding corporates are substituted by lower-yielding leisure visitors. The absence of Food & Hotels Asia this year contributed to a similarly muted Apr showing, with CDLHT disclosing an 8% drop in revPAR for the first 23 days of Apr. Looking ahead, a turnaround in corporate travels and CommunicAsia (reported +2k visitors yoy to 51k visitors) and a weaker S$ could provide near-term relief, though we expect the supply of mid-tier hotel rooms to continue
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 141.1 135.2 176.3 106.3 0.11 14.7% 15.21 0.11 6.66% 25.2% 1.60 1.04 6.98% Dec-12A 149.5 139.3 122.2 109.5 0.11 1.8% 14.94 0.11 6.82% 24.8% 1.61 1.03 6.91% Dec-13F 160.1 141.6 109.7 111.5 0.11 1.6% 14.71 0.11 6.89% 27.6% 1.62 1.03 6.99% 0.00% 0.92 Dec-14F 162.8 144.3 111.7 113.4 0.11 1.3% 14.53 0.12 6.97% 28.2% 1.62 1.02 7.06% (1.59%) 0.91 Dec-15F 170.2 150.4 117.9 119.1 0.12 5.0% 13.84 0.12 7.28% 28.1% 1.63 1.02 7.39% 0.94% 0.97
10 5
Jun-12 Sep-12 Source: Bloomberg Dec-12 Mar-13
1.71
Current Target
SOURCES: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 2,045 0 0 2,045 75 0 14 0 89 25 260 0 285 270 15 285 1,564 0 1,564 Dec-13F 2,138 0 0 2,138 83 0 14 0 97 27 260 0 287 357 15 372 1,576 0 1,576 Dec-14F 2,144 0 0 2,144 115 0 14 0 128 27 260 0 287 382 15 397 1,589 0 1,589 Dec-15F 2,151 0 0 2,151 123 0 14 0 136 29 260 0 288 382 15 397 1,602 0 1,602
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 124.5 15.7 1.2 (2.4) (2.8) 136.2 (6.1) 0.0 0.7 (5.5) 0.0 0.0 (110.2) (15.6) (125.9) 4.9 131.4 117.2 Dec-13F 111.6 15.4 1.8 (1.9) 12.8 139.6 (6.2) (86.8) 0.7 (92.3) 86.8 0.0 (111.5) (14.7) (39.3) 8.0 48.0 118.7 Dec-14F 113.7 15.9 0.4 (2.0) 13.0 141.1 (6.5) 0.0 0.7 (5.7) 25.0 0.0 (113.4) (15.4) (103.8) 31.6 136.1 144.4 Dec-15F 120.0 15.7 1.3 (2.1) 13.4 148.2 (6.5) 0.0 1.0 (5.5) 0.0 0.0 (119.1) (15.4) (134.5) 8.2 143.7 127.0
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A 6.0% 3.0% 93.2% 2.44% 7.65 1.90% 90% 0.31 0.31 0.26 (2259%) 5.75% Dec-13F 7.1% 1.7% 88.5% 0.98% 7.92 1.67% 102% 0.34 0.34 0.29 (1088%) 5.02% Dec-14F 1.7% 1.9% 88.7% 1.19% 7.77 1.76% 102% 0.45 0.45 0.40 (961%) 4.96% Dec-15F 4.6% 4.2% 88.3% 4.45% 8.13 1.71% 101% 0.47 0.47 0.43 (973%) 5.17%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A N/A N/A 207.4 N/A 88.5% 2,044.9 N/A Dec-13F N/A N/A 193.5 N/A 87.4% 2,137.9 N/A Dec-14F N/A N/A 197.3 N/A 87.9% 2,144.4 N/A Dec-15F N/A N/A 200.1 N/A 87.9% 2,150.9 N/A
29
REIT | Singapore
June 26, 2013
CapitaMall Trust
CT SP / CMLT.SI Current S$1.91 S$2.06 S$2.23 7.6%
Conviction| |
LONG TERM
Market Cap
Free Float
US$5,207m
S$6,604m
US$17.26m
S$21.56m
70.0%
3,456 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
We hold back from upgrading to Outperform due to the limited upside. We keep DPUs unchanged but lower our DDM-based target price on a higher discount rate of 7.2% (previously 6.7%; raised across the board following higher bond yields). We see re-rating catalysts from accretive asset enhancements and acquisitions.
Upgrade to Neutral
We turn more positive on CMT given its defensive attributes and DPU growth profile in the current environment as well as its more palatable valuations following the recent selldown. We upgrade CMT to Neutral from Underperform previously, holding back from an upgrade to Outperform due to limited upside (its share price has held up relatively well in the recent selldown).
Price Close 2.5 2.4 2.3 2.2 2.1 2.0 1.9 1.8 25 1.7 20 15 10 5
Jun-12 Sep-12 Source: Bloomberg Dec-12
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 630.6 418.2 389.6 301.6 0.08 2.50% 23.17 0.09 4.91% 37.3% 1.58 1.21 5.27% Dec-12A 661.6 445.3 537.1 316.9 0.08 2.57% 22.59 0.09 4.95% 36.1% 1.65 1.16 5.24% Dec-13F 698.7 475.5 320.3 358.8 0.09 9.58% 20.61 0.10 5.43% 34.8% 1.65 1.15 5.61% 0% 0.95 Dec-14F 716.6 487.7 336.9 370.6 0.10 5.19% 19.59 0.11 5.61% 35.2% 1.66 1.15 5.89% 0% 0.94 Dec-15F 734.3 499.7 355.0 387.6 0.10 5.36% 18.60 0.11 5.87% 35.3% 1.66 1.15 6.19% 0% 0.93
Vol m
Mar-13
2.06
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
CapitaMall Trust
June 26, 2013
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 8,755 0 2 8,757 1,118 0 13 0 1,131 289 405 0 694 3,162 329 3,491 5,703 0 5,703 Dec-13F 8,875 0 5 8,880 846 0 13 0 859 305 300 0 605 3,087 329 3,416 5,717 0 5,717 Dec-14F 8,952 0 8 8,960 862 0 13 0 875 313 300 0 613 3,164 329 3,493 5,728 0 5,728 Dec-15F 8,978 0 12 8,991 878 0 13 0 891 321 300 0 621 3,190 329 3,520 5,741 0 5,741
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 535.1 112.1 55.5 0.0 (160.3) 542.4 (239.4) 116.1 15.3 (108.1) 207.6 242.1 (311.6) (112.0) 26.2 460.4 440.1 529.9 Dec-13F 320.3 106.5 16.9 0.0 5.5 449.2 (74.5) (1.3) 62.9 (12.9) (180.2) 0.0 (358.8) (125.7) (664.6) (228.4) 442.8 130.4 Dec-14F 336.9 101.8 8.5 0.0 5.5 452.8 (38.0) (1.3) 63.5 24.1 76.8 0.0 (370.6) (130.1) (423.8) 53.1 481.9 423.7 Dec-15F 355.0 95.7 8.4 0.0 5.5 464.6 (20.0) (1.3) 67.8 46.4 26.5 0.0 (387.6) (131.0) (492.2) 18.9 516.1 406.5
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A 4.92% 6.46% 67.3% 0.96% 2.86 0.000% 59% 1.63 1.63 1.61 (177%) 5.64% Dec-13F 5.61% 6.78% 68.1% 9.73% 3.23 0.000% 112% 1.42 1.42 1.40 (156%) 3.26% Dec-14F 2.57% 2.57% 68.1% 3.28% 3.25 0.000% 110% 1.43 1.43 1.41 (152%) 3.44% Dec-15F 2.47% 2.47% 68.1% 4.61% 3.31 0.000% 109% 1.43 1.43 1.41 (154%) 3.60%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A 11.5 N/A N/A N/A 90.7% N/A N/A Dec-13F 11.7 N/A N/A N/A 98.7% N/A N/A Dec-14F 12.2 N/A N/A N/A 98.7% N/A N/A Dec-15F 12.4 N/A N/A N/A 99.5% N/A N/A
31
REIT SINGAPORE
June 26, 2013
LONG TERM
Market Cap
Free Float
US$685.9m
S$870.0m
US$2.09m
S$2.60m
75.0%
645.9 m shares
CIMB Analyst(s)
In-built growth
FCOTs three-year DPU CAGR of 13% is the highest among S-REIT peers, which should help it to offset pressures from a weakening A$ and rising interest rates. Asset leverage is fairly high but we see asset values as well supported.
Proceeds from any divestment of the hotel site at China Square could also be used to pare down loans. We lower DPUs due to adjustments to A$ assumptions and interest costs. Our DDM-based target price is reduced given a higher discount rate of 8.3% (previously 7.7%). Maintain Outperform for strong in-built growth. Re-rating catalysts are further yield-enhancing moves. underlying passing rents on asset and we estimate a 17% uplift in NPI when the master lease lapses.
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Maintain Outperform
DPU CAGR of 13% (with upside potential) is the highest among S-REIT peers, which should help to offset pressures from a weakening A$ and rising interest rates. Maintain Outperform given re-rating catalysts from further yield-enhancing moves.
Relative to FSSTI (RHS) 145 139 133 126 120 114 108 101 95
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Sep-11A 119.6 96.0 46.1 36.32 0.023 28% 56.73 0.058 4.34% 36.0% 1.38 0.96 1.69% Sep-12A 132.9 102.5 150.1 43.05 0.023 (1%) 57.41 0.067 5.05% 31.9% 1.53 0.86 1.58% Sep-13F 119.2 90.8 52.4 52.26 0.052 127% 25.26 0.079 5.96% 38.5% 1.50 0.89 3.46% (0.73%) 1.22 Sep-14F 120.6 92.5 43.8 61.32 0.065 24% 20.37 0.089 6.74% 38.8% 1.44 0.92 4.43% (3.15%) 0.87 Sep-15F 142.5 97.8 48.8 66.40 0.071 9% 18.71 0.096 7.23% 38.6% 1.43 0.93 4.93% (2.28%) 0.93
Vol m
Mar-13
1.47
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Sep-12A 1,758 0 0 1,758 459 0 10 113 582 65 0 124 189 747 71 818 990 0 343 1,332 Sep-13F 1,758 0 0 1,758 85 0 10 0 95 59 0 5 64 714 71 785 990 0 14 1,004 Sep-14F 1,758 0 0 1,758 72 0 10 0 82 59 0 5 65 714 71 785 990 0 0 990 Sep-15F 1,758 0 0 1,758 83 0 10 0 93 70 0 5 76 714 71 785 990 0 0 990
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Sep-12A 185.0 (29.2) 36.3 (0.5) (59.6) 132.0 (5.0) 240.1 0.7 235.7 110.7 0.0 (58.0) (27.4) 25.4 393.1 368.5 447.5 Sep-13F 60.2 16.7 (6.7) 0.0 6.4 76.6 0.0 113.5 0.7 114.2 (151.9) (328.2) (59.9) (24.1) (564.1) (373.3) 191.5 4.7 Sep-14F 44.0 34.7 0.7 0.0 6.4 85.7 0.0 0.0 0.7 0.7 0.0 (14.3) (61.3) (24.4) (100.0) (13.7) 87.1 51.9 Sep-15F 49.0 35.1 10.8 0.0 6.4 101.2 0.0 0.0 0.7 0.7 0.0 0.0 (66.4) (24.7) (91.1) 10.8 102.6 67.2
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Sep-12A 11.1% 6.8% 77.2% 16.3% 1.97 8.65% 29% 3.08 3.08 2.42 (358%) 6.85% Sep-13F (10.3%) (11.5%) 76.1% 18.1% 2.19 0.22% 100% 1.49 1.49 1.33 (116%) 2.50% Sep-14F 1.1% 1.9% 76.7% 13.1% 2.23 0.29% 140% 1.26 1.26 1.11 (145%) 2.37% Sep-15F 18.2% 5.8% 68.6% 7.2% 2.36 0.27% 136% 1.23 1.23 1.09 (153%) 2.65%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Sep-12A 6.0 N/A N/A 2,658 95.8% 1,757.5 N/A Sep-13F 7.1 N/A N/A 2,456 94.8% 1,757.5 N/A Sep-14F 7.1 N/A N/A 2,456 96.0% 1,757.5 N/A Sep-15F 7.2 N/A N/A 2,456 96.0% 1,757.5 N/A
33
REIT | Singapore
June 26, 2013
LONG TERM
Market Cap
Free Float
US$1,195m
S$1,516m
US$1.95m
S$2.43m
38.0%
823.5 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Strong capital management Changi City Point for the next stage of growth
We continue to see positive rental reversions at Causeway Point and NorthPoint (which account for 70% of rentals to be renewed for the remaining months of FY13), with occupancy costs still below optimal levels and growing tenant sales. With foot traffic yet to return to pre-AEI levels, Causeway Point could continue to reap benefits from AEI and enjoy upside from rental reversions and growing GTO rents. Growth is, however, expected to moderate with the completion of AEI at Causeway Point. The next stage of growth will thus have to come from an acquisition of Changi City Point, FCTs debt maturity is well staggered (weighted average length of debt maturity of 3.4 years), with no more than 70% of borrowings due in each year (other than FY16 where maturity is a tad lumpier at 45% of total borrowings). Given this, coupled with a high 94% of borrowings hedged, FCT is among those which are least exposed to interest rate hikes, in our view, with a 50bp increase in interest rates barely making a dent on DPU (0.2%).
Maintain Outperform
We continue to like FCT for its resilient suburban retail exposure and defensive balance sheet positioning.
Relative to FSSTI (RHS) 121 118 114 111 108 104 101 98 94 91
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Sep-11A 117.9 82.6 152.3 64.38 0.07 (11.7%) 25.37 0.08 4.52% 31.3% 1.40 1.31 5.38% Sep-12A 147.2 104.4 185.6 82.35 0.10 41.5% 17.93 0.10 5.44% 30.1% 1.53 1.20 6.99% Sep-13F 156.9 112.2 91.4 87.99 0.11 7.9% 16.61 0.11 5.79% 31.0% 1.53 1.20 7.22% 0% 0.93 Sep-14F 160.9 115.1 93.9 90.51 0.11 2.5% 16.21 0.11 5.94% 31.3% 1.53 1.20 7.40% 0% 0.99 Sep-15F 163.6 117.0 95.4 92.08 0.12 1.4% 15.99 0.11 6.03% 31.6% 1.53 1.20 7.50% 0% 0.95
Vol m
Mar-13
2.02
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Sep-12A 1,888 0 0 1,888 23 0 0 6 29 40 58 15 112 519 23 542 1,263 0 1,263 Sep-13F 1,899 0 0 1,899 35 0 0 6 41 34 58 15 107 544 23 567 1,266 0 1,266 Sep-14F 1,910 0 1 1,910 38 0 0 6 44 35 58 15 108 554 23 577 1,270 0 1,270 Sep-15F 1,921 0 1 1,922 40 0 0 6 47 36 58 15 108 564 23 587 1,273 0 1,273
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Sep-12A 185.6 7.8 5.4 0.0 (110.9) 87.9 (19.0) (8.7) 0.0 (27.7) 183.0 (0.8) (78.4) (181.5) (77.6) (17.4) 60.2 226.7 Sep-13F 91.4 8.6 (5.5) 0.0 (8.3) 86.2 (10.9) 4.1 0.0 (6.8) 25.0 0.0 (88.0) (15.1) (78.1) 1.3 79.4 85.4 Sep-14F 93.9 8.9 0.9 0.0 (8.2) 95.4 (11.0) 4.1 0.0 (6.8) 10.0 0.0 (90.5) (15.5) (96.0) (7.4) 88.6 79.2 Sep-15F 95.4 9.2 0.6 0.0 (8.2) 97.0 (11.0) 4.1 0.0 (6.9) 10.0 0.0 (92.1) (15.8) (97.9) (7.8) 90.1 80.5
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Sep-12A 24.9% 26.4% 70.9% 20.3% 5.06 0% 44.4% 0.26 0.26 0.20 (182%) 10.0% Sep-13F 6.6% 7.4% 71.5% 6.5% 5.25 0% 96.3% 0.38 0.38 0.32 (208%) 4.7% Sep-14F 2.5% 2.6% 71.5% 2.6% 5.31 0% 96.4% 0.41 0.41 0.35 (243%) 4.8% Sep-15F 1.7% 1.7% 71.5% 1.5% 5.32 0% 96.5% 0.43 0.43 0.37 (244%) 4.9%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Sep-12A 12.9 N/A N/A 879 96.8% 1,816.0 N/A Sep-13F 12.9 N/A N/A 879 99.1% 1,826.9 N/A Sep-14F 13.1 N/A N/A 879 99.4% 1,837.9 N/A Sep-15F 13.4 N/A N/A 879 99.4% 1,848.9 N/A
35
REIT | Singapore
June 26, 2013
Keppel REIT
KREIT SP / KASA.SI Current S$1.27 S$1.29 S$1.45 1.6%
Conviction| |
LONG TERM
Market Cap
Free Float
US$2,685m
S$3,406m
US$13.94m
S$17.47m
40.5%
2,631 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Maintain Neutral
KREITs high headline yields of near 6% remain its key draw, although we see this afforded mainly by its high asset leverage, fairly high percentage of management fees paid by units (50%) and substantial income support (we estimate that income support net of tax makes up about 25% of KREITs distributable income in FY13). The share price has also held up well YTD, making its P/BV among the highest among the office REITs and the company potentially susceptible to selling pressure.
Price Close 1.7 1.5 1.3 1.1 250 0.9 200 150 100 50
Jun-12 Sep-12 Source: Bloomberg Dec-12
Relative to FSSTI (RHS) 138 132 127 121 116 110 104 99 93
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 78.0 61.7 290.1 113.0 0.047 18.6% 37.06 0.071 5.57% 37.0% 1.28 0.99 2.52% Dec-12A 156.9 124.7 327.4 199.6 0.046 (1.8%) 27.44 0.078 6.12% 39.5% 1.32 0.96 3.56% Dec-13F 182.2 144.2 149.9 208.1 0.056 21.9% 22.53 0.078 6.16% 40.7% 1.31 0.97 4.29% (0.61%) 0.94 Dec-14F 189.4 149.9 164.7 214.0 0.061 7.9% 20.89 0.079 6.22% 40.9% 1.30 0.98 4.66% (1.21%) 0.94 Dec-15F 205.0 162.1 179.8 209.4 0.066 7.8% 19.38 0.076 6.01% 40.7% 1.29 0.98 5.05% (1.84%) 0.99
Vol m
Mar-13
1.29
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Keppel REIT
June 26, 2013
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 5,910 92 0 6,002 102 0 29 7 137 140 155 21 316 2,268 90 2,358 3,464 2 3,466 Dec-13F 6,100 52 0 6,153 107 0 29 7 142 105 155 21 281 2,405 90 2,495 3,517 2 3,519 Dec-14F 6,185 21 0 6,206 143 0 29 7 178 109 155 21 285 2,458 90 2,548 3,549 2 3,551 Dec-15F 6,206 8 0 6,214 164 0 29 7 200 118 155 21 294 2,458 90 2,548 3,570 2 3,572
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 349 36 (2) (6) (191) 185 (5) (100) 163 58 255 0 (212) (183) (139) 104 243 452 Dec-13F 166 (8) (35) (16) 37 144 0 (190) 146 (45) 137 53 (208) (76) (94) 5 99 184 Dec-14F 180 (28) 4 (15) 45 185 0 (84) 140 55 53 31 (214) (75) (205) 36 241 239 Dec-15F 191 (57) 9 (11) 49 181 0 (21) 116 95 0 21 (209) (67) (255) 21 276 220
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A 101% 102% 79.5% 9.7% 0.34 4.27% 61% 0.43 0.43 0.32 43% 5.46% Dec-13F 16% 16% 79.1% 0.7% 1.08 9.78% 139% 0.51 0.51 0.38 (154%) 2.41% Dec-14F 4% 4% 79.1% 1.0% 1.29 8.38% 130% 0.62 0.62 0.50 (169%) 2.60% Dec-15F 8% 8% 79.1% (3.4%) 1.82 5.86% 116% 0.68 0.68 0.56 (130%) 2.81%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A 7.8 N/A N/A 2,861 97.8% N/A N/A Dec-13F 8.2 N/A N/A 3,035 99.2% N/A N/A Dec-14F 8.5 N/A N/A 3,035 99.4% N/A N/A Dec-15F 8.9 N/A N/A 3,035 99.4% N/A N/A
37
REIT SINGAPORE
June 26, 2013
LONG TERM
Market Cap
Free Float
US$1,827m
S$2,318m
US$3.91m
S$4.89m
54.0%
2,068 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Maintain Neutral
With strong rental reversions and acquisition accretion, we believe that MCT has set a high growth benchmark in FY13 that will be difficult to replicate in FY14. Maintain Neutral. Re-rating catalysts could come from accretive acquisitions.
Price Close 1.6 1.5 1.4 1.3 1.2 1.1 1.0 0.9 25 0.8 20 15 10 5
Jun-12 Sep-12 Source: Bloomberg Dec-12
Relative to FSSTI (RHS) 143 137 131 124 118 112 106 99 93
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Mar-12A 177.3 124.0 208.0 98.2 0.048 18.8% 23.13 0.053 4.71% 37.5% 0.96 1.17 5.24% Mar-13A 219.5 156.0 310.8 123.5 0.058 19.6% 19.33 0.065 5.79% 40.8% 1.06 1.06 5.73% Mar-14F 254.7 183.4 127.7 136.1 0.062 6.4% 18.17 0.066 5.86% 40.8% 1.06 1.06 5.82% (0.58%) 0.96 Mar-15F 261.4 188.3 130.7 139.3 0.063 2.2% 17.78 0.067 5.99% 40.8% 1.06 1.06 5.96% (1.68%) 0.97 Mar-16F 270.3 194.6 136.8 145.5 0.066 4.6% 16.99 0.070 6.26% 40.8% 1.06 1.06 6.23% (1.61%) 0.97
Vol m
Mar-13
1.22
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Mar-13A 3,831 0 0 3,831 47 0 7 1 55 60 0 6 66 1,586 39 1,625 2,195 0 2,195 Mar-14F 3,831 0 0 3,831 47 0 7 1 55 60 0 6 66 1,586 39 1,625 2,195 0 2,195 Mar-15F 3,831 0 0 3,831 47 0 7 1 55 60 0 6 66 1,586 39 1,625 2,195 0 2,195 Mar-16F 3,831 0 0 3,831 47 0 7 1 55 60 0 6 66 1,586 39 1,625 2,195 0 2,195
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Mar-13A 311 26 10 14 (204) 157 (9) (681) 0 (690) 462 222 (129) (24) 531 (3) (533) (95) Mar-14F 128 36 0 0 8 172 0 0 0 0 0 0 (136) (36) (172) 0 172 136 Mar-15F 131 37 0 0 9 176 0 0 0 0 0 0 (139) (37) (177) 0 177 139 Mar-16F 137 37 0 0 9 183 0 0 0 0 0 0 (145) (37) (183) 0 183 146
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Mar-13A 23.8% 25.8% 71.1% 23.1% 5.33 0% 40% 0.83 0.83 0.71 (237%) 9.03% Mar-14F 16.0% 17.6% 72.0% 1.1% 4.57 0% 107% 0.83 0.83 0.71 (280%) 3.28% Mar-15F 2.7% 2.6% 72.0% 2.3% 4.50 0% 107% 0.83 0.83 0.71 (288%) 3.36% Mar-16F 3.4% 3.4% 72.0% 4.4% 4.67 0% 106% 0.83 0.83 0.71 (298%) 3.52%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Mar-13A 6.4 N/A N/A 2,102 93.8% N/A N/A Mar-14F 6.5 N/A N/A 2,102 95.0% N/A N/A Mar-15F 6.6 N/A N/A 2,102 95.0% N/A N/A Mar-16F 6.8 N/A N/A 2,102 95.0% N/A N/A
39
REIT | Singapore
June 26, 2013
LONG TERM
Market Cap
Free Float
US$1,694m
S$2,149m
US$4.58m
S$5.73m
69.7%
1,641 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Maintain Neutral
Some value has emerged following the broad-based selldown but we keep our Neutral rating, pending clarity on backfilling at the Signature and further growth catalysts. We think that the higher headline yields are aimed at compensating for the shorter remaining land tenure for some assets.
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Mar-12A 246.4 171.3 220.4 131.7 0.082 15.3% 15.91 0.08 6.47% 37.8% 1.02 1.28 8.32% Mar-13A 276.4 195.4 279.3 151.0 0.089 8.5% 14.67 0.09 7.12% 34.8% 1.10 1.18 8.38% Mar-14F 278.2 197.6 144.2 150.8 0.088 (0.9%) 14.80 0.09 7.06% 37.3% 1.10 1.18 7.99% (1.25%) 0.97 Mar-15F 289.3 205.7 150.5 157.1 0.092 4.4% 14.18 0.10 7.36% 38.4% 1.10 1.18 8.35% (2.92%) 0.98 Mar-16F 301.6 214.2 158.7 165.3 0.097 5.4% 13.44 0.10 7.75% 38.4% 1.10 1.18 8.80% (1.91%) 1.00
10 5
Jun-12 Sep-12 Source: Bloomberg Dec-12 Mar-13
1.41
Current Target
SOURCES: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Mar-13A 2,853 0 27 2,880 72 0 15 0 88 81 206 5 291 826 46 872 1,804 0 1,804 Mar-14F 2,895 0 106 3,001 72 0 15 0 88 81 344 5 430 809 46 855 1,804 0 1,804 Mar-15F 2,895 0 160 3,055 72 0 15 0 88 81 126 5 212 1,081 46 1,127 1,804 0 1,804 Mar-16F 2,895 0 160 3,055 72 0 15 0 88 81 139 5 225 1,068 46 1,114 1,804 0 1,804
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Mar-13A 280.5 26.8 3.7 (4.5) (132.6) 173.9 (13.4) (17.2) (0.0) (30.6) (79.4) 44.9 (132.9) (25.6) (193.1) (49.8) 143.6 38.5 Mar-14F 144.2 30.0 0.0 0.0 0.0 174.1 (79.0) (42.0) 0.3 (120.7) 121.0 0.0 (150.8) (23.7) (53.5) (0.0) 53.8 144.5 Mar-15F 150.5 31.4 0.0 0.0 0.0 181.9 (54.0) 0.0 0.3 (53.7) 54.0 0.0 (157.1) (25.1) (128.3) (0.0) 128.3 150.5 Mar-16F 158.7 31.4 0.0 0.0 0.0 190.1 0.0 0.0 0.3 0.3 0.0 0.0 (165.3) (25.1) (190.5) 0.0 190.5 158.7
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Mar-13A 12.2% 14.1% 70.7% 10% 6.35 0.426% 54% 0.30 0.30 0.25 (189%) 9.65% Mar-14F 0.6% 1.1% 71.0% (1%) 5.75 0.000% 105% 0.20 0.20 0.17 (402%) 4.76% Mar-15F 4.0% 4.1% 71.1% 4% 5.73 0.000% 104% 0.41 0.41 0.34 509% 4.83% Mar-16F 4.3% 4.1% 71.0% 5% 5.99 0.000% 104% 0.39 0.39 0.32 212% 5.05%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Mar-13A 1.9 N/A N/A N/A 94.0% N/A N/A Mar-14F 1.9 N/A N/A N/A 94.0% N/A N/A Mar-15F 1.9 N/A N/A N/A 94.8% N/A N/A Mar-16F 1.9 N/A N/A N/A 95.1% N/A N/A
41
REIT | Singapore
June 26, 2013
LONG TERM
Market Cap
Free Float
US$1,997m
S$2,534m
US$4.46m
S$5.57m
59.0%
2,432 m shares
CIMB Analyst(s)
Lacking in catalysts
Underpinned by its long WALE (more than five years) and high occupancy, lease renewals and hence rental reversions should be fairly limited each year. Funding costs could be on the rise, capping upside in accretion from acquisitions.
We keep our DPUs but lower our DDM-based target price, now based on a higher discount rate of 8.1% (previously 7.1%; raised across the board following higher bond yields). Our estimates factor in S$150m of acquisitions for FY14. Maintain Neutral on a lack of catalysts for now.
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Awaiting acquisitions
Underpinned by its long WALE (more than five years) and high occupancy, lease renewals and thus rental reversions should be fairly limited each year, with acquisitions/ development being critical sources of growth. To this end, management is on the lookout for acquisitions in China, South Korea, Malaysia and Singapore and recently made a small acquisition in South Korea. However, with funding costs (both debt and equity) potentially on the rise, accretion could be capped, particularly if competition for assets continues to prop up capital values.
Maintain Neutral
Maintain Neutral on a lack of meaningful catalysts and with risks of rising funding costs. We prefer AREIT among the larger-cap industrial REITs, for purer local exposure, lower vulnerability to interest-rate hikes and stronger growth.
Relative to FSSTI (RHS) 123 120 117 114 111 108 105 102 99 96 93
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Mar-12A 278.7 241.4 160.3 162.7 0.068 (73%) 15.32 0.067 6.45% 35.0% 0.90 1.15 2.01% Mar-13A 307.8 268.1 202.7 166.4 0.067 276% 15.60 0.069 6.59% 33.8% 0.92 1.13 7.32% Mar-14F 318.2 276.3 197.3 174.9 0.072 8% 14.41 0.072 6.91% 36.1% 0.92 1.13 7.87% 0% 1.08 Mar-15F 325.2 282.4 201.5 179.0 0.074 2% 14.07 0.074 7.08% 36.1% 0.92 1.13 8.05% 0% 1.09 Mar-16F 329.2 285.9 204.7 182.3 0.075 2% 13.82 0.075 7.21% 36.1% 0.92 1.13 8.20% 0% 1.05
1.20
1.10
1.00
200 0.90 150 100 50
Jun-12 Sep-12 Source: Bloomberg Dec-12 Mar-13
Vol m
1.08
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Mar-13A 4,050 0 0 4,050 135 0 12 40 187 159 289 12 460 1,145 50 1,195 2,232 6 344 2,582 Mar-14F 4,200 0 0 4,200 135 0 12 40 187 159 289 12 460 1,295 50 1,345 2,232 6 344 2,582 Mar-15F 4,200 0 0 4,200 135 0 12 40 187 159 289 12 460 1,295 50 1,345 2,232 6 344 2,582 Mar-16F 4,200 0 0 4,200 135 0 12 40 187 159 289 12 460 1,295 50 1,345 2,232 6 344 2,582
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Mar-13A 236.6 37.9 24.7 (10.4) (44.5) 244.4 0.0 (196.6) 0.0 (196.6) 131.9 0.0 (178.5) (37.2) (83.8) (36.0) 47.8 142.5 Mar-14F 230.9 35.7 0.0 (13.7) (22.3) 230.5 0.0 (149.2) 0.0 (149.2) 150.0 0.0 (174.9) (36.4) (61.3) 20.0 81.2 194.8 Mar-15F 235.3 37.2 0.0 (14.0) (22.3) 236.3 0.0 0.8 0.0 0.8 0.0 0.0 (179.0) (38.0) (217.0) 20.0 237.0 199.0 Mar-16F 238.8 37.2 0.0 (14.2) (22.3) 239.5 0.0 0.8 0.0 0.8 0.0 0.0 (182.3) (38.0) (220.3) 20.0 240.3 202.3
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Mar-13A 302% 303% 87.1% 285% 5.98 5.95% 82% 0.41 0.41 0.29 (159%) 4.76% Mar-14F 3% 3% 86.8% 5% 6.68 5.95% 89% 0.41 0.41 0.29 (191%) 4.57% Mar-15F 2% 2% 86.8% 2% 6.56 5.95% 89% 0.41 0.41 0.29 (196%) 4.59% Mar-16F 1% 1% 86.8% 2% 6.66 5.95% 89% 0.41 0.41 0.29 (199%) 4.67%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Mar-13A N/A N/A N/A N/A 98.5% 4,050.4 N/A Mar-14F N/A N/A N/A N/A 98.5% 4,200.4 N/A Mar-15F N/A N/A N/A N/A 98.5% 4,200.4 N/A Mar-16F N/A N/A N/A N/A 98.5% 4,200.4 N/A
43
REIT SINGAPORE
June 26, 2013
LONG TERM
Market Cap
Free Float
US$1,083m
S$1,373m
US$1.26m
S$1.57m
64.2%
605.0 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
We lower FY14-15 DPU by 1%, on moderating CPI expectations for Singapore. Coupled with a higher discount rate of 7% (previously 6.2%; raised across the board following higher bond yields), our DDM-based target price dips. Maintain Neutral as we believe positives have been priced in.
Defensive positioning
Asset leverage was 31.6% as at end-1Q, leaving debt headroom for acquisitions. While debt maturities appear chunkier in FY14-15, we expect management to term out FY14 borrowings pre-emptively without a major jump in costs. Some 85% of its loans have been hedged as fixed-rate debt and we estimate that a 50bp increase in interest rates would have a 0.6% impact on DPU.
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 87.8 80.3 102.0 58.05 0.10 20.8% 23.73 0.10 4.23% 34.6% 1.48 1.53 6.62% Dec-12A 94.1 86.4 115.4 62.41 0.11 10.3% 21.50 0.10 4.54% 32.8% 1.57 1.44 6.91% Dec-13F 103.2 94.8 66.5 65.85 0.11 4.1% 20.66 0.11 4.79% 37.1% 1.58 1.44 6.98% 0.08% 1.00 Dec-14F 110.7 101.7 70.2 69.79 0.12 5.6% 19.56 0.12 5.08% 37.0% 1.58 1.43 7.35% (0.18%) 1.06 Dec-15F 113.0 103.9 72.3 71.92 0.12 3.0% 18.98 0.12 5.24% 36.9% 1.59 1.43 7.54% (0.96%) 1.00
Vol m
Mar-13
2.33
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 1,427 0 3 1,430 31 0 9 0 40 13 14 2 29 467 22 490 951 0 951 Dec-13F 1,561 0 3 1,564 4 0 9 0 14 16 14 2 32 570 21 591 954 0 954 Dec-14F 1,565 0 3 1,568 5 0 9 0 14 17 14 2 33 570 21 591 957 0 957 Dec-15F 1,569 0 3 1,572 5 0 9 0 14 17 14 2 34 570 21 591 960 0 960
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 121.6 8.6 2.2 (4.0) (54.5) 73.8 (3.7) (56.9) 0.0 (60.6) 55.1 0.0 (61.0) (7.8) (13.8) (0.6) 13.2 60.5 Dec-13F 73.8 9.3 2.8 (7.4) 0.0 78.6 (3.7) (130.0) 1.2 (132.5) 103.1 0.0 (65.8) (9.4) 27.8 (26.1) (54.0) 39.7 Dec-14F 78.4 11.3 1.1 (8.2) 0.0 82.7 (3.7) 0.0 2.6 (1.2) 0.0 0.0 (69.8) (11.3) (81.1) 0.4 81.5 70.2 Dec-15F 80.5 11.3 0.4 (8.2) 0.0 84.0 (3.7) 0.0 2.6 (1.2) 0.0 0.0 (71.9) (11.3) (83.2) (0.4) 82.9 71.5
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A 7.19% 7.62% 91.9% 7.49% 8.78 5.1% 54.1% 1.36 1.36 1.04 (1313%) 7.96% Dec-13F 9.72% 9.73% 91.9% 5.52% 8.89 10.0% 99.1% 0.43 0.43 0.14 (2814%) 4.36% Dec-14F 7.20% 7.21% 91.9% 5.99% 7.92 10.4% 99.4% 0.42 0.42 0.15 (1456%) 4.44% Dec-15F 2.14% 2.20% 91.9% 3.04% 8.11 10.1% 99.4% 0.41 0.41 0.13 (1239%) 4.57%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A N/A N/A N/A 2,265 100.0% 1,427.3 N/A Dec-13F N/A N/A N/A 2,265 100.0% 1,561.1 N/A Dec-14F N/A N/A N/A 2,265 100.0% 1,564.8 N/A Dec-15F N/A N/A N/A 2,265 100.0% 1,568.5 N/A
45
REIT SINGAPORE
June 26, 2013
LONG TERM
Market Cap
Free Float
US$1,241m
S$1,574m
US$2.65m
S$3.31m
55.0%
1,943 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Remain Neutral
Standard rental uplifts from master leases should ensure growth while extended debt maturities coupled with fairly-high interest-rate hedges should limit its exposure to rate increases. That said, we believe its defensive portfolio has priced in at 0.9x P/BV, with a lack of clarity for portfolio growth longer term amid the difficulty of making accretive acquisitions of prime properties. Maintain Neutral.
Relative to FSSTI (RHS) 140 135 130 125 120 115 110 105 100 95
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 180.1 143.6 104.4 80.1 0.045 7.24% 17.85 0.041 5.09% 30.5% 0.86 0.94 5.29% Dec-12A 186.0 148.4 130.1 85.3 0.049 9.03% 16.37 0.044 5.42% 30.1% 0.88 0.92 5.68% Dec-13F 202.3 161.1 108.3 103.9 0.053 6.85% 15.32 0.051 6.26% 30.8% 0.87 0.93 6.03% 0% 0.85 Dec-14F 210.3 167.5 114.3 114.5 0.053 0.43% 15.26 0.053 6.56% 30.7% 0.87 0.93 6.07% 0% 0.98 Dec-15F 213.3 169.7 116.4 116.6 0.054 1.85% 14.98 0.054 6.68% 30.7% 0.87 0.93 6.19% 0% 1.04
Vol m
Mar-13
0.86
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 2,713 10 8 2,731 79 0 9 0 89 44 492 4 540 357 41 398 1,709 0 173 1,882 Dec-13F 2,765 10 9 2,785 73 0 9 0 82 48 0 7 55 882 47 929 1,882 0 1,882 Dec-14F 2,765 10 10 2,786 74 0 9 0 84 50 0 7 57 882 48 930 1,882 0 1,882 Dec-15F 2,766 10 11 2,787 75 0 9 0 84 51 0 7 58 882 48 931 1,882 0 1,882
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 134.0 32.1 (11.8) (3.9) (34.5) 115.8 (20.7) (0.3) 0.5 (20.4) (1.2) 0.0 (92.3) (27.6) (121.0) (25.6) 96.0 67.2 Dec-13F 112.7 30.8 4.6 (4.4) 0.3 144.0 (0.3) (62.7) 9.6 (53.3) 33.0 0.0 (109.4) (21.1) (97.5) (6.9) 91.1 92.8 Dec-14F 119.0 30.8 1.9 (4.6) 0.8 147.9 (0.3) (1.7) 0.5 (1.5) 0.0 0.0 (115.6) (28.9) (144.5) 1.9 146.9 115.6 Dec-15F 121.2 30.8 0.7 (4.7) 0.9 148.9 (0.3) (1.7) 0.5 (1.5) 0.0 0.0 (117.7) (29.7) (147.4) 0.1 148.0 116.6
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A 3.29% 3.4% 79.8% 6.6% 4.02 2.93% 66% 0.16 0.16 0.15 (244%) 4.60% Dec-13F 8.74% 8.5% 79.7% 15.6% 4.58 3.89% 96% 1.48 1.48 1.32 (697%) 3.81% Dec-14F 3.98% 3.9% 79.6% 4.8% 4.78 3.90% 100% 1.46 1.46 1.30 (544%) 3.99% Dec-15F 1.41% 1.3% 79.6% 1.8% 4.85 3.90% 100% 1.44 1.44 1.28 (531%) 4.06%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A 12.2 N/A N/A 1,660 96.2% N/A N/A Dec-13F 12.9 N/A N/A 1,649 96.7% N/A N/A Dec-14F 13.3 N/A N/A 1,649 96.7% N/A N/A Dec-15F 13.6 N/A N/A 1,649 96.7% N/A N/A
47
REIT | Singapore
June 26, 2013
Suntec REIT
SUN SP / SUNT.SI Current S$1.49 S$1.68 S$1.96 13.0%
Conviction| |
LONG TERM
Market Cap
Free Float
US$2,642m
S$3,351m
US$13.64m
S$17.04m
95.0%
2,252 m shares
CIMB Analyst(s)
Donald CHUA
T (65) 6210 8606 E donald.chua@cimb.com
Upgrade to Outperform
Trading at 0.7x P/BV, a tad below the ex-crisis average of 0.8x since its listing and the lowest within the whole sector, we believe that the market has priced in potential negatives from rising borrowing costs, while according limited value to the asset enhancement at Suntec City Mall. We see a viable entry point for a play on a potential turnaround of the mall, with near-term downside supported by the Chijmes divestment proceeds. We thus upgrade Suntec to Outperform from Neutral. Key catalysts include a successful turnaround of Suntec City Mall.
Relative to FSSTI (RHS) 137 132 127 122 117 112 107 102 97 92
Financial Summary
Gross Property Revenue (S$m) Net Property Income (S$m) Net Profit (S$m) Distributable Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield Asset Leverage BVPS (S$) P/BV (x) Recurring ROE % Change In DPS Estimates CIMB/consensus EPS (x) Dec-11A 270.3 193.4 631.8 220.7 0.11 56.1% 13.76 0.10 6.69% 37.5% 1.99 0.75 5.69% Dec-12A 261.9 163.4 413.2 213.0 0.12 9.7% 12.54 0.09 6.39% 36.7% 2.07 0.72 5.84% Dec-13F 251.9 157.1 124.3 209.8 0.05 (53.6%) 27.04 0.09 6.22% 38.1% 2.05 0.72 2.67% 0.00% 0.76 Dec-14F 280.3 177.8 145.3 221.1 0.06 15.9% 23.34 0.10 6.49% 38.7% 2.03 0.73 3.12% (1.38%) 0.75 Dec-15F 326.2 213.2 185.4 250.5 0.08 26.5% 18.45 0.11 7.29% 38.8% 2.01 0.74 3.98% (1.23%) 0.69
Vol m
1.68
Current Target
SOURCE: CIMB, COMPANY REPORTS IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA
Suntec REIT
June 26, 2013
Balance Sheet
(S$m) Total Investments Intangible Assets Other Long-term Assets Total Non-current Assets Total Cash And Equivalents Inventories Trade Debtors Other Current Assets Total Current Assets Trade Creditors Short-term Debt Other Current Liabilities Total Current Liabilities Long-term Borrowings Other Long-term Liabilities Total Non-current Liabilities Shareholders' Equity Minority Interests Preferred Shareholders Funds Total Equity Dec-12A 7,509 39 2 7,551 200 0 5 0 205 50 682 36 767 2,167 38 2,204 4,660 124 4,784 Dec-13F 7,683 39 2 7,724 195 0 5 0 200 48 682 33 763 2,340 38 2,378 4,660 124 4,784 Dec-14F 7,763 39 2 7,804 200 0 5 0 206 53 682 33 768 2,420 38 2,458 4,660 124 4,784 Dec-15F 7,783 39 2 7,824 209 0 5 0 214 62 682 32 776 2,440 38 2,478 4,660 124 4,784
Cash Flow
(S$m) Pre-tax Profit Depreciation And Non-cash Adj. Change In Working Capital Tax Paid Others Cashflow From Operations Capex Net Investments And Sale Of FA Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Equity Raised/(Repaid) Dividends Paid Cash Interest And Others Cash Flow From Financing Total Cash Generated Free Cashflow To Firm Free Cashflow To Equity Dec-12A 427.0 (121.5) 6.2 (5.1) (116.2) 190.4 0.0 (14.5) 147.0 132.5 24.1 0.0 (214.0) (46.4) (236.3) 86.6 346.6 300.6 Dec-13F 125.8 8.8 (1.9) (1.5) 31.1 162.2 (173.7) 61.9 33.9 (77.9) 173.7 0.0 (209.8) (52.6) (88.7) (4.5) 105.6 205.4 Dec-14F 146.4 3.2 5.4 (1.2) 31.5 185.4 (80.0) 68.4 30.0 18.4 80.0 0.0 (221.1) (57.7) (198.8) 5.0 225.1 226.2 Dec-15F 186.3 (5.0) 8.7 (0.9) 31.6 220.8 (20.0) 74.2 22.2 76.4 20.0 0.0 (250.5) (58.1) (288.7) 8.4 318.5 259.0
Key Ratios
Gross Property Revenue Growth NPI Growth Net Property Income Margin DPS Growth Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Current Ratio Quick Ratio Cash Ratio ROIC (%) Return On Average Assets Dec-12A (3.1%) (15.5%) 62.4% (4.5%) 1.33 0.40% 52% 0.27 0.27 0.26 81% 5.41% Dec-13F (3.8%) (3.9%) 62.4% (2.7%) 1.28 1.22% 169% 0.26 0.26 0.26 (241%) 1.58% Dec-14F 11.3% 13.2% 63.4% 4.4% 1.50 0.81% 152% 0.27 0.27 0.26 (344%) 1.82% Dec-15F 16.4% 19.9% 65.4% 12.3% 1.97 0.51% 135% 0.28 0.28 0.27 (397%) 2.31%
Key Drivers
Rental Rate Psf Pm (S$) Acq. (less development) (US$m) RevPAR (S$) Net Lettable Area (NLA) ('000 Sf) Occupancy (%) Assets Under Management (m) (S$) Funds Under Management (m) (S$) Dec-12A 8.2 N/A N/A 3,493 98.3% N/A N/A Dec-13F 8.5 N/A N/A 3,493 89.9% N/A N/A Dec-14F 8.8 N/A N/A 3,493 89.9% N/A N/A Dec-15F 9.1 N/A N/A 3,493 98.6% N/A N/A
49
REIT
June 26, 2013
DISCLAIMER
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. By accepting this report, the recipient hereof represents and warrants that he is entitled to receive such report in accordance with the restrictions set forth below and agrees to be bound by the limitations contained herein (including the Restrictions on Distributions set out below). Any failure to comply with these limitations may constitute a violation of law. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this report may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB. Unless otherwise specified, this report is based upon sources which CIMB considers to be reasonable. Such sources will, unless otherwise specified, for market data, be market data and prices available from the main stock exchange or market where the relevant security is listed, or, where appropriate, any other market. Information on the accounts and business of company(ies) will generally be based on published statements of the company(ies), information disseminated by regulatory information services, other publicly available information and information resulting from our research. Whilst every effort is made to ensure that statements of facts made in this report are accurate, all estimates, projections, forecasts, expressions of opinion and other subjective judgments contained in this report are based on assumptions considered to be reasonable as of the date of the document in which they are contained and must not be construed as a representation that the matters referred to therein will occur. Past performance is not a reliable indicator of future performance. The value of investments may go down as well as up and those investing may, depending on the investments in question, lose more than the initial investment. No report shall constitute an offer or an invitation by or on behalf of CIMB or its affiliates to any person to buy or sell any investments. CIMB, its affiliates and related companies, their directors, associates, connected parties and/or employees may own or have positions in securities of the company(ies) covered in this research report or any securities related thereto and may from time to time add to or dispose of, or may be materially interested in, any such securities. Further, CIMB, its affiliates and its related companies do and seek to do business with the company(ies) covered in this research report and may from time to time act as market maker or have assumed an underwriting commitment in securities of such company(ies), may sell them to or buy them from customers on a principal basis and may also perform or seek to perform significant investment banking, advisory, underwriting or placement services for or relating to such company(ies) as well as solicit such investment, advisory or other services from any entity mentioned in this report. CIMB or its affiliates may enter into an agreement with the company(ies) covered in this report relating to the production of research reports. CIMB may disclose the contents of this report to the company(ies) covered by it and may have amended the contents of this report following such disclosure. The analyst responsible for the production of this report hereby certifies that the views expressed herein accurately and exclusively reflect his or her personal views and opinions about any and all of the issuers or securities analysed in this report and were prepared independently and autonomously. No part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations(s) or view(s) in this report. CIMB prohibits the analyst(s) who prepared this research report from receiving any compensation, incentive or bonus based on specific investment banking transactions or for providing a specific recommendation for, or view of, a particular company. Information barriers and other arrangements may be established where necessary to prevent conflicts of interests arising. However, the analyst(s) may receive compensation that is based on his/their coverage of company(ies) in the performance of his/their duties or the performance of his/their recommendations and the research personnel involved in the preparation of this report may also participate in the solicitation of the businesses as described above. In reviewing this research report, an investor should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additional information is, subject to the duties of confidentiality, available on request. Reports relating to a specific geographical area are produced by the corresponding CIMB entity as listed in t he table below. The term CIMB shall denote, where appropriate, the relevant entity distributing or disseminating the report in the particular jurisdiction referenced below, or, in every other case, CIMB Group Holdings Berhad ("CIMBGH") and its affiliates, subsidiaries and related companies. Country Australia Hong Kong Indonesia India Malaysia Singapore South Korea Taiwan Thailand CIMB Entity CIMB Securities (Australia) Limited CIMB Securities Limited PT CIMB Securities Indonesia CIMB Securities (India) Private Limited CIMB Investment Bank Berhad CIMB Research Pte. Ltd. CIMB Securities Limited, Korea Branch CIMB Securities Limited, Taiwan Branch CIMB Securities (Thailand) Co. Ltd. Regulated by Australian Securities & Investments Commission Securities and Futures Commission Hong Kong Financial Services Authority of Indonesia Securities and Exchange Board of India (SEBI) Securities Commission Malaysia Monetary Authority of Singapore Financial Services Commission and Financial Supervisory Service Financial Supervisory Commission Securities and Exchange Commission Thailand
(i) As of June 25, 2013, CIMB has a proprietary position in the securities (which may include but not limited to shares, warrants, call warrants and/or any other derivatives) in the following company or companies covered or recommended in this report: (a) Ascendas REIT, Cache Logistics Trust, Capitacommercial Trust, CapitaMall Trust, CDL Hospitality Trust, Frasers Centrepoint Trust, Frasers Commercial Trust, IGB REIT, Mapletree Industrial Trust, Mapletree Logistics Trust, Perennial China Retail Trust, Suntec REIT| (ii) As of June 26, 2013, the analyst(s) who prepared this report, has / have an interest in the securities (which may include but not limited to shares, warrants, call warrants and/or any other derivatives) in the following company or companies covered or recommended in this report: (a) - | The information contained in this research report is prepared from data believed to be correct and reliable at the time of issue of this report. CIMB may or may not issue regular reports on the subject matter of this report at any frequency and may cease to do so or change the periodicity of reports at any time. CIMB is under no obligation to update this report in the event of a material change to the information contained in this report. This report does not purport to contain all the information that a prospective investor may require. CIMB or any of its affiliates does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Neither CIMB nor any of its affiliates nor its related persons shall be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof. This report is general in nature and has been prepared for information purposes only. It is intended for circulation amongst CIMB and its affiliates clients generally and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. The information and opinions in this report are not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other financial instruments thereof. Investors are advised to make their own independent evaluation of the information contained in this research report, consider their own individual investment objectives, financial situation and particular needs and consult their own professional and financial advisers as to the legal, business, financial, tax and other aspects before participating in any transaction in respect of the securities of company(ies) covered in this research report. The securities of such company(ies) may not be eligible for sale in all jurisdictions or to all categories of investors. Australia: Despite anything in this report to the contrary, this research is provided in Australia by CIMB Securities (Australia) Limited (CSAL) (ABN 84 002 768 701, AFS Licence number 240 530). CSAL is a Market Participant of ASX Ltd, a Clearing Participant of ASX Clear Pty Ltd, a Settlement Participant of ASX Settlement Pty Ltd, and, a participant of Chi X Australia Pty Ltd. This research is only available in Australia to persons who are wholesale clients (within the meaning o f the Corporations Act 2001 (Cth)) and is supplied solely for the use of such wholesale clients and shall not be distributed or passed on to any other person. This research has been prepared without taking into account the objectives, financial situation or needs of the individual recipient. France: Only qualified investors within the meaning of French law shall have access to this report. This report shall not be considered as an offer to subscribe to, or used in connection with, any offer for subscription or sale or marketing or direct or indirect distribution of financial instruments and it is not intended as a solicitation for the purchase of any financial
50
REIT
June 26, 2013
instrument. Hong Kong: This report is issued and distributed in Hong Kong by CIMB Securities Limited (CHK) which is licensed in Hong Kong by the S ecurities and Futures Commission for Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) activities. Any investors wishing to purchase or otherwise deal in the securities covered in this report should contact the Head of Sales at CIMB Securities Limited. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CHK has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CHK. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CHK. Unless permitted to do so by the securities laws of Hong Kong, no person may issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the securities covered in this report, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong). India: This report is issued and distributed in India by CIMB Securities (India) Private Limited (CIMB India) which is registered with SEBI as a stock-broker under the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 and in accordance with the provisions of Regulation 4 (g) of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013, CIMB India is not required to seek registration with SEBI as an Investment Adviser. The research analysts, strategists or economists principally responsible for the preparation of this research report are segregated from the other activities of CIMB India and they have received compensation based upon various factors, including quality, accuracy and value of research, firm profitability or revenues, client feedback and competitive factors. Research analysts', strategists' or economists' compensation is not linked to investment banking or capital markets transactions performed or proposed to be performed by CIMB India or its affiliates. Indonesia: This report is issued and distributed by PT CIMB Securities Indonesia (CIMBI). The views and opinions in this research repo rt are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBI has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMBI. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBI. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens wherever they are domiciled or to Indonesia residents except in compliance with applicable Indonesian capital market laws and regulations. Malaysia: This report is issued and distributed by CIMB Investment Bank Berhad (CIMB). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMB has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB. New Zealand: In New Zealand, this report is for distribution only to persons whose principal business is the investment of money or who, in the course of, and for the purposes of their business, habitually invest money pursuant to Section 3(2)(a)(ii) of the Securities Act 1978. Singapore: This report is issued and distributed by CIMB Research Pte Ltd (CIMBR). Recipients of this report are to contact CIMBR in Singapore in respect of any matters arising from, or in connection with, this report. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBR has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only. If the recipient of this research report is not an accredited investor, expert investor or institutional investor, CIMBR accepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBR. As of June 25, 2013, CIMBR does not have a proprietary position in the recommended securities in this report. South Korea: This report is issued and distributed in South Korea by CIMB Securities Limited, Korea Branch ("CIMB Korea") which is licensed as a cash equity broker, and regulated by the Financial Services Commission and Financial Supervisory Service of Korea. The views and opinions in this research report are our own as of the date hereof and are subject to change, and this report shall not be considered as an offer to subscribe to, or used in connection with, any offer for subscription or sale or marketing or direct or indirect distribution of financial investment instruments and it is not intended as a solicitation for the purchase of any financial investment instrument. This publication is strictly confidential and is for private circulation only, and no part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB Korea. Sweden: This report contains only marketing information and has not been approved by the Swedish Financial Supervisory Authority. The distribution of this report is not an offer to sell to any person in Sweden or a solicitation to any person in Sweden to buy any instruments described herein and may not be forwarded to the public in Sweden. Taiwan: This research report is not an offer or marketing of foreign securities in Taiwan. The securities as referred to in this research report have not been and will not be registered with the Financial Supervisory Commission of the Republic of China pursuant to relevant securities laws and regulations and may not be offered or sold within the Republic of China through a public offering or in circumstances which constitutes an offer or a placement within the meaning of the Securities and Exchange Law of the Republic of China that requires a registration or approval of the Financial Supervisory Commission of the Republic of China. Thailand: This report is issued and distributed by CIMB Securities (Thailand) Company Limited (CIMBS). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBS has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMBS. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBS. Corporate Governance Report: The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. CIMBS does not confirm nor certify the accuracy of such survey result. Score Range 90 100 80 89 70 79 Below 70 or No Survey Result Description Excellent Very Good Good N/A United Arab Emirates: The distributor of this report has not been approved or licensed by the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the United Arab Emirates. This report is strictly private and confidential and has not been reviewed by, deposited or registered with UAE Central Bank or any other licensing authority or governmental agencies in the United Arab Emirates. This report is being issued outside the United Arab Emirates to a limited number of institutional investors and must not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose. Further, the information contained in this report is not intended to lead to the
51
REIT
June 26, 2013
sale of investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory of the United Arab Emirates. United Kingdom and Europe: In the United Kingdom and European Economic Area, this report is being disseminated by CIMB Securities (UK) Limited (CIMB UK). CIMB UK is authorised and regulated by the Financial Services Authority and its registered office is at 27 Knightsbridge, London, SW1X 7YB. This report is for distribution only to, and is solely directed at, selected persons on the basis that those persons: (a) are persons that are eligible counterparties and professional clients of CIMB UK; (b) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the Order); (c) are persons falling within Article 49 (2) (a) to (d) (high net worth companies, unincorporated associations etc) of the Order; (d) are outside the United Kingdom; or (e) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with any investments to which this report relates may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as relevant persons). This report is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will be engaged in only with relevant persons. Only where this report is labelled as non-independent, it does not provide an impartial or objective assessment of the subject matter and does not constitute independent "investment research" under the applicable rules of the Financial Services Authority in the UK. Consequently, any such non-independent report will not have been prepared in accordance with legal requirements designed to promote the independence of investment research and will not subject to any prohibition on dealing ahead of the dissemination of investment research.. United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMB Research Pte Ltd, CIMB Investment Bank Berhad, PT CIMB Securities Indonesia, CIMB Securities (Thailand) Co. Ltd, CIMB Securities Limited, CIMB Securities (Australia) Limited, CIMB Securities (India) Private Limited,and is distributed solely to persons who qualify as "U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for Institutional Investors whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities and who have professional experience in such investments. Any person who is not a U.S. Institutional Investor or Major Institutional Investor must not rely on this communication. The delivery of this research report to any person in the United States of America is not a recommendation to effect any transactions in the securities discussed herein, or an endorsement of any opinion expressed herein. CIMB Securities (USA) Inc, is a FINRA/SIPC member and takes responsibility for the content of this report. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc. Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
Distribution of stock ratings and investment banking clients for quarter ended on 31 May 2013 1042 companies under coverage Rating Distribution (%) Outperform/Buy/Trading Buy Neutral Underperform/Sell/Trading Sell 52.1% 34.2% 13.7% Investment Banking clients (%) 7.6% 4.9% 5.5%
Recommendation Framework #1 * Stock OUTPERFORM: The stock's total return is expected to exceed a benchmark's total return by 5% or more over the next 12 months. NEUTRAL: The stock's total return is expected to be within +/-5% of a benchmark's total return. UNDERPERFORM: The stock's total return is expected to be below a benchmark's total return by 5% or more over the next 12 months. TRADING BUY: The stock's total return is expected to exceed a benchmark's total return by 5% or more over the next 3 months. TRADING SELL: The stock's total return is expected to be below a benchmark's total return by 5% or more over the next 3 months. relevant relevant relevant relevant relevant Sector OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 12 months. TRADING BUY: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index over the next 3 months. TRADING SELL: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index over the next 3 months.
* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand, Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. CIMB Research Pte Ltd (Co. Reg. No. 198701620M)
Recommendation Framework #2 ** Stock OUTPERFORM: Expected positive total returns of 10% or more over the next 12 months. NEUTRAL: Expected total returns of between -10% and +10% over the next 12 months. UNDERPERFORM: Expected negative total returns of 10% or more over the next 12 months. TRADING BUY: Expected positive total returns of 10% or more over the next 3 months. TRADING SELL: Expected negative total returns of 10% or more over the next 3 months. Sector OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +10% or better over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i) an equal number of stocks that are expected to have total returns of +10% (or better) or -10% (or worse), or (ii) stocks that are predominantly expected to have total returns that will range from +10% to -10%; both over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -10% or worse over the next 12 months. TRADING BUY: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of +10% or better over the next 3 months. TRADING SELL: The industry, as defined by the analyst's coverage universe, has a high number of stocks that are expected to have total returns of -10% or worse over the next 3 months.
** This framework only applies to stocks listed on the Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.
52
REIT
June 26, 2013
Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2012. AAV not available, ADVANC - Excellent, AEONTS Good, AMATA - Very Good, ANAN not available, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCH not available, BCP - Excellent, BEC - Very Good, BGH - not available, BJC Very Good, BH - Very Good, BIGC - Very Good, BTS - Excellent, CCET - Good, CENTEL Very Good, CK - Very Good, CPALL - Very Good, CPF - Very Good, CPN - Excellent, DELTA - Very Good, DTAC - Very Good, EGCO Excellent, ERW Excellent, GLOBAL - Good, GLOW - Very Good, GRAMMY Excellent, HANA - Very Good, HEMRAJ - Excellent, HMPRO - Very Good, INTUCH Very Good, ITD Very Good, IVL - Very Good, JAS Very Good, KAMART not available, KBANK - Excellent, KK Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR - Good, MAKRO Very Good, MCOT Excellent, MINT - Very Good, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - Excellent, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, RS Excellent, SAMART Excellent, SC Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI - Good, SPALI - Very Good, SRICHA not available, SSI not available, STA - Good, STEC - Very Good, TCAP - Very Good, THAI - Excellent, THCOM Very Good, TICON Very Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Very Good, TTW Very Good, TUF - Very Good, VGI not available, WORK Good.
53