Company Name: CACHE LOGISTICS TRUST
Research House: OCBC
OCBC starts Cache Logistics Trust (K2LU.SG) at Buy with a $1.03 fair value. It says CLT has six quality logistics properties in Singapore, which are 100% leased. It says FY10 DPU of 5.558 S-cents represents an annualised yield of 8.2%; “with forward yields of circa 8.0% for FY11/FY12, CLT also compares favorably with the overall S-REITs sector average yield of 6.9%.”
However, OCBC remains cautious on CLT’s outlook due to increased competition and inflation risks: “CLT has about 97.3% of portfolio GFA in modern ramp-up warehouses, representing 24.9% market share of ramp-up warehouse space in Singapore.
Notwithstanding that this differentiates CLT from its competitors, it also manifests as a concentration risk.” The house adds, “we recognize CLT’s competitive advantage in the ramp-up space in the near term. However, CLT’s assets...are expected to face increased competition due to new warehouse and logistics developments. It says further catalyst for raising its fair value includes yield-accretive acquisitions both locally and overseas. REIT is flat at $0.935.
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