Credit Suisse believes the company’s $275m capital raising should address any market concerns about gearing. The issue is dilutive to earnings by around -20% but pro forma gearing reduces to 22.6% from 32.1%.
Amid uncertainty over how long the pandemic will affect trade, the broker suggests the extra liquidity means there is less of a risk of being squeezed by banks, although there could be a debate over whether the capital was raised to early.
The company still intends to pay a second half distribution so a part of this raising will be paid back to investors, Credit Suisse points out. Rating is upgraded to Outperform from Neutral and the target is reduced to $3.32 from $4.70.
Sector: Real Estate.
Target price is $3.32.Current Price is $3.15. Difference: $0.17 – (brackets indicate current price is over target). If CQR meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).
