Cache Logistics Trust's DPU climbed 4%

But bosses worry over stiff warehouse rental in Singapore.

According to Maybank Kim Eng, 1Q13 revenue at SGD19.1m (flat QoQ; +13% YoY) , was 24% of ours and consensus estimate. 1Q13 DPU at 2.234 SG-cts (+4% QoQ; +7% YoY) was 25% of ours and consensus estimates.

Here's more:

Portfolio occupancy remains stable at 100% with a weighted average lease expiry of 3.7 years (3.9 yrs prev. qtr). CACHE retains its pole position in the ramp-up logistics warehouses space (~4.7m sqft) with ~20+% market share in Singapore.

Management maintains that it will continue to seek accretive acquisitions in Singapore, China and Malaysia. During the quarter, Cache signed on a new lease within APC Distrihub with Agility Logistics. With this letting, Cache has no remaining space due to expire in 2013.

The warehouse rental in Singapore remain challenging with 18% of available stock of warehouse space (private sector; 14m sqft) coming onboard in 2013-2015. CACHE has 36% and 33% of GFA up for renewal in 2015 and 2016 respectively.

We remain wary of its inherent concentration risks on its main master lessee (CWT/C&P). According to our estimates, CWT/C&P and its associated companies accounts for almost 90% of CACHE’s FY12 gross rental income. At FY13 DPU Yield of 6.1% and P/B of 1.4x, we think valuation appears on the high-side.

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