CCT

CCT: 4Q11 results above consensus.
DPU came in at 1.92cts, +4.9% qoq, mainly due to higher non tax-deductible add backs. Yoy, DPU was -1% yoy, due to loss of income from divested properties and negative rental reversion from Six Battery Road and Capital Tower, but was offset by strong earnings from Raffles City Singapore.
Portfolio occupancy slipped 1.4 ppt, though mainly due to ongoing asset enhancement works at Six battery Road.
Gearing inched up 2.8ppt to 30.2% and continues to be healthy with a 4.1x interest cover. CCT obtained $650m of committed funding to meet the 2012 refinancing needs, of which $200m will be through its MTN programme at a rate of 3.25%. CCT remains on the lookout for acquisitions and has a $1b debt headroom if it gears up to 40%. Nevertheless, mgt noted that the lack of attractively priced assets severely limits targets at present.

Stanchart maintains Outperform with TP $1.30. Says CCT is already pricing in trough prime office capital values of $1500 psf at current levels. Notes the stock trades at 0.7x P/B, provides FY12E DPU yield of 6.5% and has a very healthy balance sheet.
UBS keeps at Buy, but trims TP to $1.28 from $1.40.