Profit stronger than expected. While revenue of US$32.5m (up 10% qoq) was in line with expectations, net profit surged 54% qoq to US$11m. This was largely on the back of lower-than-expected interest expenses and the lack of transaction fees. Distributable cash flows increased 8% qoq to US$16.8m. The DPU payout of 2.14UScts corresponds to only 54% of available cash.

But even existing credit facilities may shrink. With sharp contractions in asset prices, lenders may choose to restrict the amount to be drawn down from available facilities. This is on top of the Trust’s inability to secure funding for the US$711m of committed capex due next year. At worst, the Trust may have to sell the Maersk vessels (with charter) to a 3rd party at a sizeable haircut.

Are more DPU cuts on the way? The Trust would need to repay about US$158m of loans next year, including a US$130m tranche in April’10. The possible redelivery of the Maersk Djibouti in Feb’2010 implies added revenue pressure. The 5% cut in DPU may, thus, be no more than a signal, given the uncertainties. However, at current valuations, even a 50% cut in DPU going forward would imply a FY09 yield of more than 22%. We conservatively impute a 20% cut in DPU for the next 3 quarters. Maintain HOLD, TP cut to S$0.39.