SINGAPORE (July 26): Ascendas India Trust (a-iTrust) is off to a good start in FY19, with 1Q19 DPU jumping 23% y-o-y to 1.60 cents which was in line with expectations.
1Q19 DPU would have been stronger if not for the depreciation of the INR versus SGD with 1Q19 DPU in INR terms increasing by 33% y-o-y.
The strong results were largely due to the impact of positive rental reversions in prior quarters as well as contribution from investments and acquisitions made over the past year.
This also resulted in revenue and net property income in INR terms increasing by 6% and 20% y-o-y respectively.
However, as a-iTrust is phasing out the dedicated power plant at ITPB, utilities income fell in 1Q19 and will drop in the quarters ahead, impacting overall revenue.
Overall committed portfolio occupancy remains healthy at 96%, up from 95% at end 4Q18. The improvement was mainly driven by higher occupancies at The V and Blueridge.
a-iTrust remains in a strong financial position with gearing at 31%, providing sufficient debt headroom to fund its announced acquisitions and investments.
Meanwhile, average cost of debt was lower at 5.5%, down from 6.3% at end March.
Management has guided that the decrease is temporary as there was a short-term increase in the proportion of SGD debt as aiTrust draws down on short-term revolving facilities to fund the investments in AURUM IT SEZ and aVance 5&6. Consequently, the proportion of fixed rate debt also fell to 73% from 86% previously.
In conjunction with its 1Q19 results, a-iTrust also announced that it is planning to build a 653,000 sf building at ITPB called MTB 5.
Construction is expected to start in 2H18 with targeted completion in 2HCY20.
a-iTrust has already secured a leading IT services company to lease 100% of the building.
The move further expands a-iTrust’s already development pipeline. Combined with its other developments, total floor area will increase by 44% to 18.1m sf over the next few years.
DBS is maintaining its “buy” call with target price of $1.25.
“We continue to like a-iTrust for its visible development pipeline and favourable near-term demand-supply fundamentals in its key markets. This we estimate will translate to DPU CAGR of 13% p.a. over the next three years,” says lead analyst Mervin Song in a Thursday report.
As at 11.45am, units in a-iTrust are trading at $1.09, giving it a FY19F yield of 6.3%.
