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Ascendas India Trust
▼ Neutral
Previous: Overweight
AINT.SI, AIT SP
Not cheap in a rising-rate environment; downgrade to Neutral
4Q FY11 results: AIT reported 4Q FY11 DPU of S$0.0150, down
13% Q/Q, primarily on account of start-up losses given higher
operating expenses and finance costs for newly completed buildings
(1.2msf completed in Dec-Q). Hence, while the underlying portfolio
rental income (in Rs terms) increased by 8% Q/Q, NPI and
distributable income were down 3% Q/Q and 13% Q/Q respectively.
Management indicated that recent completions (42%-68% leased) are
in the fit-out stage and corresponding rental income will start to ramp
up over the next 2-3Qs, thereby offsetting the increase in expenses.
Full year FY11 DPU stood at 0.658, implying a dividend yield of
6.8%. FY11 BPS was S$0.80, down 3.6% Q/Q, on adverse FX.
• Operational performance remains steady; leasing momentum
picking up on new completions: Overall occupancy across AIT’s
initial portfolio (4.8msf) remains steady at 97% despite witnessing
33% lease expiries in FY11. FY12/13 will see 25.3-18.4% renewals.
Leasing activity for the new buildings (1.7msf) was quite robust (42-
68% leased) during the Mar-Q. Encouraged by the strong precommitment
trends, the trust has brought an additional 0.54msf of SEZ
building under construction in ITPB, Bangalore. In addition to this, the
recently announced acquisition in Hyderabad (0.4msf of operational
office space) is expected to conclude in the next two months (~0.16
cent annualized DPU accretion).
• Downgrade to Neutral: AIT is trading at an FY12E dividend yield of
7.8%, compared to the Indian government 10-year bond yield of 8.1%
(pre-tax). Valuations on the stock are getting aggressive, in our view,
especially in the current rising-interest-rate environment. We believe
further rate increases over CY11 (we estimate a 100bp rise in FY12)
coupled with Rupee depreciation (3% in the past month) will continue
to weigh on the stock price. We slightly revise our FY13 DPU estimate
by 2% to factor in the proposed acquisition (0.4msf), and the
imposition of a higher MAT tax rate (18.5%) on SEZ properties. We
roll over our PT timeframe to Mar-12 from Mar-11, but maintain our
DDM-based PT at S$1.1.
Ascendas India Trust (AIT) is a
Singapore business trust with REITlike
characteristics which owns four IT
parks in three key cities (Bangalore,
Chennai, Hyderabad) in India,
comprising 4.6 msf of incomeproducing
properties, 1.7 msf of
planned developments over the next
two years, as well as 24 acres
designated as SEZ in Bangalore. It is
externally managed by the Trustee-
Manager (Ascendas Property Fund
Trustee Pte Ltd), a wholly owned
subsidiary of Ascendas, AIT’s sponsor.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ascendas India Trust
▼ Neutral
Previous: Overweight
AINT.SI, AIT SP
Not cheap in a rising-rate environment; downgrade to Neutral
4Q FY11 results: AIT reported 4Q FY11 DPU of S$0.0150, down
13% Q/Q, primarily on account of start-up losses given higher
operating expenses and finance costs for newly completed buildings
(1.2msf completed in Dec-Q). Hence, while the underlying portfolio
rental income (in Rs terms) increased by 8% Q/Q, NPI and
distributable income were down 3% Q/Q and 13% Q/Q respectively.
Management indicated that recent completions (42%-68% leased) are
in the fit-out stage and corresponding rental income will start to ramp
up over the next 2-3Qs, thereby offsetting the increase in expenses.
Full year FY11 DPU stood at 0.658, implying a dividend yield of
6.8%. FY11 BPS was S$0.80, down 3.6% Q/Q, on adverse FX.
• Operational performance remains steady; leasing momentum
picking up on new completions: Overall occupancy across AIT’s
initial portfolio (4.8msf) remains steady at 97% despite witnessing
33% lease expiries in FY11. FY12/13 will see 25.3-18.4% renewals.
Leasing activity for the new buildings (1.7msf) was quite robust (42-
68% leased) during the Mar-Q. Encouraged by the strong precommitment
trends, the trust has brought an additional 0.54msf of SEZ
building under construction in ITPB, Bangalore. In addition to this, the
recently announced acquisition in Hyderabad (0.4msf of operational
office space) is expected to conclude in the next two months (~0.16
cent annualized DPU accretion).
• Downgrade to Neutral: AIT is trading at an FY12E dividend yield of
7.8%, compared to the Indian government 10-year bond yield of 8.1%
(pre-tax). Valuations on the stock are getting aggressive, in our view,
especially in the current rising-interest-rate environment. We believe
further rate increases over CY11 (we estimate a 100bp rise in FY12)
coupled with Rupee depreciation (3% in the past month) will continue
to weigh on the stock price. We slightly revise our FY13 DPU estimate
by 2% to factor in the proposed acquisition (0.4msf), and the
imposition of a higher MAT tax rate (18.5%) on SEZ properties. We
roll over our PT timeframe to Mar-12 from Mar-11, but maintain our
DDM-based PT at S$1.1.
Ascendas India Trust (AIT) is a
Singapore business trust with REITlike
characteristics which owns four IT
parks in three key cities (Bangalore,
Chennai, Hyderabad) in India,
comprising 4.6 msf of incomeproducing
properties, 1.7 msf of
planned developments over the next
two years, as well as 24 acres
designated as SEZ in Bangalore. It is
externally managed by the Trustee-
Manager (Ascendas Property Fund
Trustee Pte Ltd), a wholly owned
subsidiary of Ascendas, AIT’s sponsor.
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