CPF - Closing Status 1 August

Divested away Saizen Reit 14 lots in this week as part of usual CPF stock holdings re-balancing for $136 nett gain.  In its 3Q14 results, NPI +2.5%, profit +JPY 314 mil.  Quarter-on-quarter gross revenue remained stable while net property income decreased by 4.1% as compared to 2Q FY2014. Property operating expenses increased by 9.4%, due mainly to seasonal expenses.  Higher profit due mainly to (i) the increase in net income from property operations, and (ii) the non-recurrence of refinancing-related costs incurred in 3Q FY2013, namely swap breakage costs (JPY 135.5 million) and loan commission written-off (JPY 148.0 million). Average occupancy rate at 91.1%.  As Saizen REIT’s distributable income from operations is generated in JPY, its S$-denominated distributions have been hedged.  Interest rates for 90% of loans outstanding are fixed.  Nearest loan maturity is in February 2018.  Gearing at 38%.   Deloitte & Touche has in early June'14 completed the strategic review of options for enhancing its unitholder’s value.  The review concluded that as a matter of priority, focus will be placed on its capital structure, in particular, its cash management and levels of leverage. As funds are made available as the capital structure is optimised, it will continue to seek opportunities to expand its property portfolio in line with its principal investment strategies.  It may also consider a buy-back of its shares at times of Unit price weakness, as a useful signaling mechanism and provided that is deemed as an effective use of capital at that time.  Following capital structure optimisation, more ambitious growth strategies will be explored, subject to availability, compatibility, returns and execution considerations.

Divested away CM Pacific 5 lots in this week as part of usual CPF stock holdings re-balancing for $89 nett gain.  For its 1Q2014 financial results, revenue +6% driven by the revenue growth from Yongtaiwen Expressway which accounted for 80% of its revenue.  Profit +14% driven by higher profit contribution from its toll road assets and the recognition of deferred income and effective interest income on compensation receivable from the relocation of certain toll stations along the Guihuang Highway. This was partly offset by higher finance costs and withholding tax and lower exchange gain.It recently announced the acquisition of Jiurui Expressway.  The Jiurui Expressway is a newly-opened expressway with promising growth potential in traffic flow. It is one of the key routes in Jiangxi Province, PRC and an important interprovincial boundary crossing, passing through Jiujiang Municipality, PRC and connecting with Ruichang Municipality, PRC. Due to its strategic location, it has experienced significant increase in traffic flow since it was open to traffic in January 2011. This growth trend is expected to continue due to the robust economic growth of Jiangxi Province, PRC. In addition, a number of expressways and bridges currently under construction in the surrounding areas will be open to traffic from 2014 to 2017. The traffic flow on the Jiurui Expressway is expected to be further boosted once these expressways and bridges are operational. These factors are expected to drive the Jiurui Expressway’s future traffic flow and growth in toll revenue.

CPF stock holdings walk since previous posting :-

-$4,438 Total Returns as of 11 July

+$226 Nett gain on sales of Saizen Reit, CM Pacific

+$808 Unrealised positions improved

-$3,405 Total Returns as of 1 August

previous journal :- CPF - Closing Status 11 July

Remarks :- Profits locked in to-date $3,252 / year 2014 $2,608