2 Things Investors Should Know About Cache Logistics Before Invest In This December

Cache Logistics Trust (SGX: K2LU) is a Singapore-based REIT. The REIT invests in income-producing real estate used for logistics purposes in Asia-Pacific, as well as real estate-related assets.

Cache Logistics Trust is an Singapore undervalued stock that focuses on logistics properties. It currently has 27 logistics warehouse properties in its portfolio, which are located in Singapore, Australia, and China.

Here Multi Management Future Solutions presenting two things to know about the REIT right now which investors should know to invest in this December: its latest financial performance and valuation.                                     

Financial performance
Here we are showing the financial performance of Cache Logistic Trust’s third quarter of the last two years to the year ending 31 December 2018 (FY18).

	3Q FY18	3Q FY 17	Change (%)
Gross Revenue	31,498	27,432	14.8
Net Property Income (NPI)	23,063	21,338	8.1
Income Available For Distribution	15,858	16,448	3.6
-From Operations	15,472	15,883	2.6
-From Capital	386	565	31.7
Distribution Per Unit (DPU) (CENTS)	1.475	1.541	4.3
-From Operations	1.439	1.488	3.3
-From Capital	0.036	0.53	32.1
Number of Unit In issue and to be issued	1,074.70	1,067.20	0.7

The YOY improvement in gross revenue and net property income (NPI) were due to higher contributions from the 9-property Australian portfolio acquired in February 2018, as well as higher revenue from 51 Alps Ave.

The decline in distribution per unit (DPU) was due to a lower income available for distribution and an increase in the number of units issued. As at 30 September 2018, the logistics REIT clocked in a gearing ratio of 35.6% while its committed occupancy rate stood at 96.9%.

Valuation

The two useful valuation metrics for assessing REITs are the price-to-book (PB) ratio and the distribution yield.

Here we are presenting the Cache Logistic Trust’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 41 REITs that are in Singapore’s stock market.                   

     

	Distribution Yield	Price To Book
Cache Logistic Trust	8.90%	0
Average Of 41 REITs	6.90%	0.89
Premium/ (discount)	22%	3%

We can see that Cache Logistic Trust’s valuation is lower than the market average due to its high distribution yield and low PB ratio.