Cityspring

Cityspring: Co has managed to turn a profit in 3Q after losses for prev 2 quarters. Cash earnings at $16.8m posted an increase of 73.4% on a yoy basis. However, earnings were down 18.6% qoq. DPU remains unchanged at 1.05c for this quarter. On a quarterly basis, cashflow is still positive with its cash balance excluding restricted balances increasing to $123.2m compared to $116.2m in 2Q…

In response to S&P putting Basslink’s bond on CreditWatch with negative implications, co has set up A$20m escrow (holding) account for Basslink bonds. S&P has since removed the CreditWatch but bonds continue to be BBB- with negative outlook. Co lacks catalysts in near future although DPU of 1.05c per quarter has been maintained throughout past year...

Further downside risks remain as Basslink has received a dispute notice on 17 Sept 2010, on risk sharing agreements which can impact income and cash earnings. At current price, yield is approx 7.8%. Support at prev low at 0.535 and 0.50, co is in LT downtrend and below 200 day MA.