We raise our distributable income forecasts to S$180.6m (up 18% yoy) for FY09 and S$188.7m (up 23% yoy) for FY10. This arises from lower interest costs as debt is paid down in 2H09 with rights proceeds of S$828m. FY09 rental income should be resilient, with 6% up for renewal in the office segment in 2H09. We expect negative rental reversion to kick in next year when 18% of rental revenue in the office segment is due for renewal, thus resulting in a 3% yoy decline in revenue to S$357m in FY10. We expect office rents to decline 20% by end-2009 from 2Q09, and an additional 15% yoy in 2010, owing to a full supply pipeline.
According to management, leasing enquiries for office space have increased as Grade A rents now look attractive, having declined a steep 48% from the 3Q08 peak to S$9.50 psf in 2Q09. In addition, we are confident of management’s ability to retain tenants through proactive leasing. For instance, 9% of leases due for renewal in FY10 have been renewed ahead of time, and 29% of those due in FY12. CCT also strictly forbids subletting by tenants to prevent dilution of its bargaining power. We assume occupancy rates of 95% in FY09 and 90% in FY10.
A decline in office rents is now widely expected by the market, with Bloomberg consensus forecasting a 5% yoy decline in CCT’s net profit in FY10 and 3% yoy decline in FY11. Despite this, yields will still be an attractive 7.9-7.5% in FY10-11, based on consensus.
We lower our DCF-based target price to S$1.00 (from S$1.60) to reflect the higher share base following the rights issue in May. However, our valuation of CCT increases 13% to S$2.6bn to reflect our higher earnings assumptions. Dividend yields are a decent 7.6% for FY09F and 7.8% for FY10F.
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I am surprised too! Thought the market was nervous about the coming huge supply of office space? May be some institutions have finally discovered that this stock is far too cheap to ignore.
erictkw ( Date: 04-Sep-2009 16:54) Posted:
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Once one has bought into this counter at very low price (below $0.90 per unit), it is considered a value investment already. To the patient value investors of this counter, there is only expectation of the counter giving out growing distributions over the coming years. Hopefully, this will help to increase one's annual income yield plus any capital gain from the rising counter price in future time when it is fully valued. The downside is minimal while the upside is highly probable. Of course, if the fundamentals of this REIT changes in future, then it's time to exit. If fundamentals do not deteroriate, just ride along it's good fundamentals and track record of the management.
Keep this counter for long term, guys, good dividends yield (much better than FD) and good upside potential, meaning, capital gains on share price.
I have made tidy sum from this counter, not going to sell at near terms.
Wah... wat cause this one to surge suddently? anyone? 
DJ MARKET TALK: S-REITs Offer Yield Arbitrage Opportunities -OCBC
0220 GMT [Dow Jones] Singapore REITs offer opportunities for yield arbitrage, says OCBC Investment Research. Notes S-REITs re-rated strongly year-to-date on improving risk appetite, but some have done better than others. "We are seeing some interesting opportunities for yield arbitrage both within and between sub-sectors." Notes Suntec REIT (T82U.SG) trading at yield premium to CapitaCommercial Trust (C61U.SG) despite support from its retail portfolio, similar gearing; Suntec also at big yield premium to K-REIT (K71U.SG) despite identical DPU estimates. Also notes office REITs trading at considerable yield premium to pure foreign plays. Expects pockets of yield divergence to close up, particularly as clarity increases on the Singapore office market outlook. Maintains Neutral call on sector with CapitaCommercial Trust and Ascott Residence Trust (A68U.SG) top picks. FTSE ST REIT index last +1.3%. (KIG)
Tuesday, September 1, 2009
yes, you are right....but i dont see any risk ,...this one is more resilent..
Short-term cannot predict the unit price movement......But, I can safely say in few years time, this counter will be at least $2 per unit*. And if one's average holding unit price is below $1 per unit, he will likely end up with more than 10% distribution yield when the annual distributions keep on increasing for next few years (which I think CapitaComm should have no problem growing their distributions based on their track record). Believe or not, wait until then to see the price move up.......Of course, major refiancing may come back to haunt this REIT few years down the road again........However, I think they should be able to refinance by then considering they have strong sponsor (Capitaland) and also proven track record....... Even if all else fails, if one has a low average holding unit price, one can still make a comfortable exit and be able to absorb any future drop in unit price few years down the road........ This is investing with calculated high probability in mind for things to happen in future after considering and taking care of possible risks........
*I am not MFT.....Just that it is pure common sense that this counter's price cannot remain at current valuations forever.....It is inevitable that it's unit price has to rise given it's status as the largest office REIT in Singapore with good fundamental track record so far.......
if say hold this counter till end dec 2010, any guess on it's likely price by then?
haha... that's wat i keep saying to console myself.
jeremyow ( Date: 18-Aug-2009 11:43) Posted:
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ya.. it was a wrong move to buy in tat time... so dump all liao feel better also.
reits also got those cheongster one.. but this one cannot due to its more for commercial space which in due time, office space will be alot..
jeremyow ( Date: 18-Aug-2009 11:43) Posted:
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Aiyah, don't expect much from such counters. Counters like this are slow movers.......The primary aim of investing in such counters is more for their stable growth in distributions payout over the long term than capital appreciation through unit price movement (no doubt this can happen as well)......This is a long term investment counter, not suitable for short-term play.......If one wants fast volatile share price movement, look out for more exciting counters like SAR, Midas, etc. mentioned in the other forum threads.......
I was disappointed with them earlier on also.. den make use of the CD announcement den i dump all my holdings.. manage to breakeven on this counter but wasted 2 full months on it..
yongjp ( Date: 18-Aug-2009 11:28) Posted:
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ayo...in stocks up and down wan lah...u shld hv exit strategy to cutloss leh :)
yongjp ( Date: 18-Aug-2009 11:28) Posted:
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Really disappointed in this sorry excuse of a stock. Holding it since 0.945..
Tempted to sell if not because of the losses incurred. DAMN YOU CAPITACOMM!!!
ahh..let me revitalise this thread....this burger seems to be under heavy shorting siah !! 83cts loosing support soon ;P
anyone knows the reason for the heavy selldown today?
O yes this morn broke resistance at $2. Up up!
o_0 damn song! dividends exceed expectations :D
wa really quite terrible. Testing next lvl of support le