Q: You were a bit lukewarm on BEI.UN when asked about it two months ago but I wonder if your opinion has changed a bit after their Q3 results from 9 Nov. The investment firms seemed to have liked their performance and there were a number of upgrades and/or raised targets.
Thanks as always.
Thanks as always.
5i Research Answer:
Yes, the results were solid. Rental revenue rose 9.8% to $137.8M and beat estimates. Funds flow per unit was 96c, vs 85c last year, and ahead of estimates (94c). Occupancy rose to 98.5%. More important, BEI raised its forecast for the year and expects 12.5% to 14% net operating income growth. BEI is seeing good results from its cost-savings program, and is likely benefiting from economic strength in its regions. Momentum is good and brokers have upgraded targets. It does look better. We would still be a bit lukewarm on the valuation, however. At 18.6X cash flow, it is certainly one of the more expensive names in the sector. And this of course makes the distribution yield only 1.77%. But we can't argue with the results or forecast.