Ascott Residential Trust

Ascott Residential Trust: Announced FY11 results which was in-line with street, despite a drop in 4Q11 DPU attributed to one-off events. Rev at $75.3m, +3% yoy and +3.2% qoq and DPU at 1.83c, -15% yoy and -18% qoq. Results brings FY11 rev to $288.7m, +39% yoy and DPU at 8.53c, +13% yoy and 10% higher than Co’s initial forecast.

Better yoy operating performance was mainly due to strong performance from Grp’s service residences in SG and UK, as well as accretive contributions from the acquisition of 28 serviced residences in Oct10.

4Q11 however saw DPU dipped 15% yoy, incurred by one-off events, namely, establishment of a US$2b Euro-MTN programme at a cost ofS$0.5m and higher loan related expenses and cash holding costs of $0.8m incurred on early refinancing of secured borrowings due in 2012 and provision of $2.1m for licensing related matters for a serviced residence in China.

Going forward, grp remains confident of prospects, noting that exposure across different economic cycles will continue to enhance stability of income and asset value and expects to weather through the uncertainties and continue to deliver a profitable operating performance in 2012.

We note that grp’s fundamentals remain sound, with Wale of 7 yrars, while gearing of 40.8% stands well within the 60% gearing limit allowable, with an interest coverage of 3.8x. At current price, grp trades at 8.5% FY11 yield and at 0.8x P/B.

CIMB maintains neutral with $1.09 TP.
Macquarie maintains O/p with $1.31 TP
Morgan Stanley maintains E/w with $0.95 TP
Daiwa maintains Buy with $1.33 TP.
UOB Kay Hian maintains Buy with $.25 TP.