Thursday, April 21, 2011

K-Reit Asia rated 'neutral' by CIMB

Stock Name: K-REIT
Company Name: K-REIT ASIA
Research House: CIMB

CIMB in an Apr 15 research report says: "1Q11 DPU of 1.79 cents was in-line with our expectation and consensus, forming 24% of our FY2011 forecast. We expect back-end loaded contributions from its additional 19% stake at Prudential Tower.

"No major surprises from this set of results as DPU grew 5% q-o-q on fuller rental contributions from 77 King Street. Positives came from strengthening rentals across its local portfolio which remains fully-occupied though occupancies at 77 King Street remained weak.

"We fine-tuned our estimates but keep our DDM-based target price at $1.52 (discount rate: 7.2%). While the next major catalyst for K-REIT would likely come from an injection of Ocean Financial Centre, we see an accretive injection remote at current physical yields of sub-4% and the likely need for equity fund raising. MAINTAIN NEUTRAL."

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