Ascott Residential Trust: Announced strong set of 1Q11 results at top end of analyst estimates, with rev for 1Q11 at $67.3m, +55% YoY and -7.6% QoQ, while Distribution Income at $24m, +133% YoY and flat QoQ. DPU for period at 2.14c exceeded management expectations of 1.71c, and +29% YoY. Increase in rev and gross profit mainly due to contributions from 28 properties acquired by Ascott Reit in Oct10, partially offset by divestment of Ascott Beijing and Country Woods....
Grp noted that portfolio in Tokyo had minimal damages from 11thMar Jap earthquake and do not expect material financial impact. Going forward, grp has guides for overall FY11 RevPAU to be higher vs last yr, led by SG and UK portfolios, while on-going asset enhancements in China, Vietnam and UK will be completed in phases in 2011 and will increase returns of portfolio…..
We note that at current price, grp trades at 0.93x P/B and 6.6% forecast yield, vs historical average of 0.86x and vs closest peer CDL H-Trust of 1.3x P/B and 5.8% yield, while gearing ratio at 41.1% maintains well within the 60% gearing limit allowable, giving headroom for further acquisitions. CS maintains Neutral with $1.30 TP and Morgan Stanley maintains O/W with $1.35 TP, on back of recovering RevPAU trends and a promising pipeline.
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