Cache Logistics Trust

Cache Logistics Trust: OCBC maintains Buy with $1.45 TP. House note that valuation looks undemanding. House reiterating prognosis that Cache Logistics Trust (CACHE) is likely to continue to deliver sustainable growth for FY13. CACHE has a portfolio of quality assets which has a 100% occupancy rate and strong weighted average lease to expiry of 3.7 years. Together with the recent acquisition of Precise Two, CACHE is likely to meet our growth projection for 2013. Since 22 May, the S-REITs sector, including CACHE, has recently experienced a sell-down on fears that the US Federal Reserve may reduce the pace of its bond purchase programme and raise the interest rates in the coming months. However, believe that the market reaction on CACHE is overdone, given its strong financial position and active capital management. At current price, CACHE offers a FY13-14F DPU yield of 6.8-7.1%, which represents an attractive spread of 471-500 bps to SG’s 10-year bond yield. House now revise fair value to $1.40 from $1.45 on higher risk-free rate assumption