UOB Kay Hian maintains ‘buy’ on Pacific Shipping Trust, target price 37 US cents
Pacific Shipping Trust (PST) declared a 2Q09 DPU of 0.99 US cents, similar to 1Q09 DPU of 0.98 US cents, but lower than 2Q08’s 1.09 US cents. We estimate 2009 and 2010 dividend yield of 12.7% and 10.0%, respectively, after adjusting for a change in distribution payout policy from 90% to 70%.
PST has no loan-to-value covenants in its loan documents. All loans are amortised. Its current net gearing stands at 89%, the lowest among the shipping trusts. We forecast 2009 and 2010 dividend yield of 12.7% and 10.0% respectively after adjusting for the reduced distribution payout ratio.
Maintain BUY with target price of US$0.37 based on 2010 P/B of 0.9x, higher than the P/B ascribed to the other two shipping trusts given PST’s stronger financial position.
Pacific Shipping Trust units are undervalued compared to their book value and 'value in use', says PST (July 09)
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Jurong Districentre is part of the Cambridge trust portfolio
Nomura maintains ‘neutral’ rating on Cambridge trust; target price 36 cents.
Cambridge Industrial Trust reported 1H09 distribution per unit that meets 54% of our and consensus FY09 forecasts. Portfolio valuation is marked down by 9% vs our projection of 31.5% over the cycle.
Management continues to explore ways to deleverage and conserve cash, which suggests the view on portfolio valuation remains cautious.
….but Daiwa Institute of Research raises its target price to 53 cents.
We have raised our six-month target-price, based on our RNG valuation method, to S$0.53 (from S$0.48) after adjusting down our effective cap-rate assumption to 8% (from 8.5%). We see limited downside risk with the rental portfolio trading below market rentals and the valuation below replacement cost. Cambridge is trading currently at a price to NAV of 0.66x and a target-price to NAV of 0.84x.
Catalysts and action:
• We have made negligible revisions to our DPU forecasts, revised up by 0.3% for FY09 and revised down by 0.9% for FY10 and 1.1% for FY11.
• We maintain our 1 (Buy) rating for Cambridge. We believe a well-executed asset-divestment programme (undertaken in a logical and disciplined manner) could trigger unit-price outperformance. On the portfolio alone, Cambridge still offers attractive value (DPU yield and discount to NAV), in our view.
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Source: DBS Vickers, Bloomberg
DBS Vickers sieves out small-caps with room to run
To sieve out stocks with sound fundamental and still have some more room to go in terms of share price performance, we have done a screen of the stocks in DBSV coverage, based on the following criteria:
1) Fundamentally sound companies with a Buy rating
2) Market Capitalization < S$1bn
3) More than 10% upside to target price
4) Trading below recent high in last three months
Our picks would be:
1) Mermaid Maritime (S$0.65, TP: S$0.85) – A niche offshore play with high earnings visibility. Results for 3Q09 (FYE Sep), likely out in mid Aug, expected to be strong and to reverse from loss position in 2Q09.
2) Ezra (S$1.33, TP: S$1.59) – Catalysts include commencement of production on FPSO, likely in 4Q09 and potential contract wins.
3) Ezion (S$0.61, TP: S$0.76) – Biggest owner of liftboats in Southeast Asia by 2010, is likely to report a good set of 2Q09
4) Hi-P (S$0.69, TP: S$0.79) – Operating performance in 2Q09 expected to be lower q-o-q but medium term prospects positive.
5) CSE Global (S$0.59, TP: S$0.66) – Sound operating cash flow and healthy order flow.
6) Ascott Residence Trust (S$0.84, TP: S$0.99) - Stability is emerging, and is one of the key beneficiaries of the global economic recovery, given its focus on corporate medium term accommodation demand and diversified tenant base.
7) Ho Bee (S$0.98, TP: S$1.07) - Exposure to the residential sector; Sentosa exposure could benefit from Resorts World opening in early 2010.
