Cambridge – DBSV

Earnings dilutive acquisitions

• Acquisition of 2 assets worth S$37.1m; part-funded by placement of 83.6m new units

• Lowered earnings by 2-6% in FY10-11F

• Downgrade to HOLD, TP S$0.51.

Looking towards growth. Cambridge REIT acquired 2 industrial properties for S$37.7m, yielding c8.0%. Income from these properties is backed by long-term leases of over 7 years with periodic step-ups. The acquisition is expected to complete in Sept 2010.

Private placement 83.6m new units to raise S$40m gross proceeds; new 3-year debt facility secured. The acquisition will be funded through (i) S$23.7m from private placement proceeds, (ii) S$13m drawn down from its debt facility at estimated c3.05% cost. The remaining placement proceeds of cS$15m will be used for future acquisitions or fund its planned asset enhancement initiatives. Gearing post acquisition is expected to head down to 41.5% from 42.3% as of 30th Jun 2010.

Dilutive to earnings, DPU adjusted downwards by 2-6%. Expect earnings dilution since placement price implies a yield of 10% against the asset yield of c8%. Our DPU estimates are adjusted downwards to 5.0 – 4.8 Scts in FY10-11F, reflecting the transaction.

Downgrade to HOLD, TP adjusted to S$0.51. We are somewhat surprised at management’s decision to acquire assets that are earnings dilutive. We remain on look out for future initiatives (AEI plans) that would grow earnings to offset the dilution. Given limited upside to our TP of S$0.51, we downgrade the stock to HOLD.

Cambridge Industrial cut to Outperform by CLSA

CLSA downgrades Cambridge Industrial Trust (J91U.SG) to Outperform from Buy on reduced upside to its $0.54 target price, says Dow Jones.

CLSA trims FY10-12 DPU estimates by 2%-3% to reflect dilution due to enlarged unit base following recent private placement to help fund S$37.1 million acquisition of 2 industrial properties in Singapore.

Research house notes CIT plans to retire $32 million of debt this month, bringing gearing to 39.5% from 41.5%; “our key concern is further equity dilutive acquisitions.” REIT off 1.0% at $0.505.

Ezion +1.6%; More contracts expected: CIMB

Ezion Holdings (5ME.SG) +1.6% at $0.65 as stronger 2Q10 performance suggests demand for company’s offshore support vessels, logistics services likely to remain resilient, says Dow Jones.

Expectations backed by Ezion clinching A$70 million ($85.4 million) contract from unnamed multi-national oil major to carry out marine logistics work in Australia over 4 years. Project comes just weeks after Ezion unveiled plans to set up 2 bases in Australia to support country’s offshore oil & gas sector. “With the set-up of the two Australian marine supply bases, we are expecting Ezion to secure (more) marine logistics contracts,” says CIMB, which has Outperform call with $0.98 target. 2Q10 net profit at $16.5 million vs S$4.1 million year earlier on gain from divestment of 1 of its jack-up rigs, plus higher chartering revenue. Orderbook quotes suggest this week’s high of $0.675 unlikely to give way.

Charts - SP Austnet

SP Austnet is treading on the base of the range.
Has the trend changed from uptrend to down trend?
Support at $0.98/$0.975. A break may see $0.965/$0.96
MACD and Stochastics turning down.

Charts - YangZiJiang

YZJ broke $1.47 resistance today on a upward trend.
Strong support at $1.45.
Range between $1.41 to $1.52.
Will it surpass its last high of $1.56?

Charts - Ezra

Ezra is on an uptrend with higher highs and higher lows.
Resistance at $2.04.
Natural support at $2.00.
Range from $1.98 to $2.10

Charts- Ezion

Resistance at 0.71 cents.
Support at 0.695 cents.
MACD turning down.
RSI in overbought region.