FSL release 2Q FY09 results.
Key points:
- DPU US2.45 cents, which 74% of net cash from operation, no distribution reinvestment scheme this round
- No surprise from the business side
- Allocation of 50% free cash flow for distribution (last quarter was 75%), so 3Q FY09 guidance is US1.50 cents (down 38%)
- The cash retained will be used to repay debt.
As I highlighted in a previous posting, distribution from depreciation undermines the sustainablity of the trust in the long run, and has immediate impact on the unit price. However, reducing the payout would hit the unitholders pocket immediately, especially retirees dependent on the distribution.
http://mycroeconomics.blogspot.com/2009/07/depreciation-noncash-non-concern.html
It is interesting to see how the market reacts to this today.
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