SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
<h2>FIRST SPONSOR GROUP LIMITED</h2>
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<h3>Property development, the growth driver</h3>
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<li>80.4% YoY growth in 3Q20 gross profit largely attributable to 246% YoY growth in property development revenue. 9M20 PATMI up 33.4% YoY</li>
<li>Unrecognised development sales of S$599mn. S$1.93bn of gross development value (GDV) for unlocking, equivalent to six years of sales.</li>
<li>Enlarged share base from 1:4 bonus issue. Maintain BUY with revised target price of S$1.56, from S$1.65 previously; Valuation is based on a 90% diluted basis (previously 100%)</li>
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The Positives
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+ Robust 3Q20, notwithstanding Covid-19. 3Q20 revenue rose 34.7% YoY, led by more carpark lots sold at its Millennium Waterfront project (Plot A: 1091; Plot C: 882) which have zero carrying book costs. 9M20 topline held up, largely due to a 41.8% YoY increase in property financing revenue. The increase was aided by one-off loan restructuring income of S$15.5mn and establishment fees from its new development venture in Australia.
+ Better-than-expected property holdings. Its two Wenjiang hotels made a combined gross operating profit of RMB6.7m during the quarter, up 39% YoY. European hotels were mixed. While most of its non-core-city Bilderberg hotels and Bilderberg Bellevue Hotel Dresden in Germany benefited from local leisure demand during summer, its two core-city Bilderberg hotels in Amsterdam and Rotterdam were hit by low corporate demand. Nevertheless, the European hotels made a gross operating profit of €3.9 mn for 3Q20 vis-à-vis -€3.6mn in 1H20.
+ 14.8% YoY DPS growth registered in FY20e. In lieu of a final dividend, FSG has announced a second interim cash DPS of 2.0c for FY20, bringing total DPS declared YTD to 3.1c. This is 14.8% higher than the FY19 full year DPS of 2.7 cents. FSG will work towards a stable dividend payout with a steady growth when appropriate, subject to prevailing market conditions.
The Negatives
- Financial subsidies from governments which cushioned hotel losses to taper off. FSG’s European hotels are being supported by subsidies from the German and Dutch governments, which provided a €4.9mn cushion to the hotels’ gross operating profits. The Dutch government recently announced Temporary Emergency Measure for the Preservation of Jobs (NOW) 3, which is less generous than NOW 1 and 2. NOW 1 and 2 allowed claims of up to 90% of a company's wage bill, depending on loss of turnover. Under NOW 3, the wage claim is capped at 80% and will be decreased every three months: from 80% to 70% and to 60%.
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
FIRST SPONSOR GROUP LIMITED




Property development, the growth driver





80.4% YoY growth in 3Q20 gross profit largely attributable to 246% YoY growth in property development revenue. 9M20 PATMI up 33.4% YoY
Unrecognised development sales of S$599mn. S$1.93bn of gross development value (GDV) for unlocking, equivalent to six years of sales.
Enlarged share base from 1:4 bonus issue. Maintain BUY with revised target price of S$1.56, from S$1.65 previously; Valuation is based on a 90% diluted basis (previously 100%)






The Positives




+ Robust 3Q20, notwithstanding Covid-19. 3Q20 revenue rose 34.7% YoY, led by more carpark lots sold at its Millennium Waterfront project (Plot A: 1091; Plot C: 882) which have zero carrying book costs. 9M20 topline held up, largely due to a 41.8% YoY increase in property financing revenue. The increase was aided by one-off loan restructuring income of S$15.5mn and establishment fees from its new development venture in Australia.
+ Better-than-expected property holdings. Its two Wenjiang hotels made a combined gross operating profit of RMB6.7m during the quarter, up 39% YoY. European hotels were mixed. While most of its non-core-city Bilderberg hotels and Bilderberg Bellevue Hotel Dresden in Germany benefited from local leisure demand during summer, its two core-city Bilderberg hotels in Amsterdam and Rotterdam were hit by low corporate demand. Nevertheless, the European hotels made a gross operating profit of €3.9 mn for 3Q20 vis-à-vis -€3.6mn in 1H20.
+ 14.8% YoY DPS growth registered in FY20e. In lieu of a final dividend, FSG has announced a second interim cash DPS of 2.0c for FY20, bringing total DPS declared YTD to 3.1c. This is 14.8% higher than the FY19 full year DPS of 2.7 cents. FSG will work towards a stable dividend payout with a steady growth when appropriate, subject to prevailing market conditions.
The Negatives
- Financial subsidies from governments which cushioned hotel losses to taper off. FSG’s European hotels are being supported by subsidies from the German and Dutch governments, which provided a €4.9mn cushion to the hotels’ gross operating profits. The Dutch government recently announced Temporary Emergency Measure for the Preservation of Jobs (NOW) 3, which is less generous than NOW 1 and 2. NOW 1 and 2 allowed claims of up to 90% of a company's wage bill, depending on loss of turnover. Under NOW 3, the wage claim is capped at 80% and will be decreased every three months: from 80% to 70% and to 60%.





















(Non-SGX Report) First Sponsor Group Limited: Property Development, the Growth Driver

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 <img src='https://api2.sgx.com/sites/default/files/2020-10/Capture_2.PNG' alt='Sasseur REIT - CEO' />
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 <div class='content-caption'>Sasseur REIT - CEO</div>
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Through his diverse career spanning more than three decades, engineer by training Anthony Ang has always tried to define success on his own terms. 
One dictum that resonates with him is the warning inherent in American Catholic monk and author Thomas Merton’s observation: “People may spend their whole lives climbing the ladder of success only to find, once they reach the top, that the ladder is leaning against the wrong wall.” 
“I wouldn’t want to try and prescribe the best definition of success, but many who have gone before have suggested that success and happiness do not generally consist of only having material wealth and status, but also of possessing the right values and goals in life,” said the CEO of the manager of SGX-listed Sasseur REIT. 
One of Ang’s role models is Austrian neurologist and psychiatrist Viktor Frankl – a Holocaust survivor and author of “Man’s Search for Meaning”, a bestseller that chronicles his experiences as a prisoner in Nazi concentration camps during World War II. 
“Frankl, one of my favourite authors, focused on the need for meaning and purpose in life – something that transcends our existence and taps the best energies within us,” he added. 
Although Ang graduated with a Bachelor of Science degree in Mechanical Engineering with First Class Honours from London’s Imperial College, he found that his interests lay elsewhere. 
“For my generation, studying engineering as a discipline was seen as the best way to unlock a great career and future, but I couldn’t envisage myself sitting at a drafting table for hours every day – I preferred a more frontline job,” he recalled. 
So in 1979, Ang began his career with Singapore’s Economic Development Board, rising up the ranks to become the Regional Director of EDB’s North America operations, during which he picked up effective policy-making and investment skills for a range of industries. 
That became a springboard for his subsequent career moves spanning a plethora of sectors: from Executive Director and Group General Manager of Armstrong Industrial Corporation running its manufacturing operations, to Senior Vice President of Vertex Management overseeing venture capital investments, and Executive Vice President of GIC Real Estate – which marked his first foray into the property sector. 
Ang, who also holds a Master of Business Administration degree from INSEAD, later went on to take up various CEO appointments within the ARA Group, including its flagship US$1.13 billion ARA Asia Dragon Fund, and Hong Kong-listed Fortune REIT. Buoyant Prospects 
Ang – currently Singapore’s Non-Resident Ambassador to the Republic of Tunisia – was appointed to helm the manager of Sasseur REIT in 2017. 
“Looking back, you realise that life can change very quickly, but there’s no point worrying about what is to come,” he pointed out. 
“Instead, just do your best, be resilient – find ways around problems – and most importantly, stay positive and enjoy the journey. A belief in God can also be a positive anchor.” 
Making its trading debut on SGX Mainboard in March 2018, Sasseur REIT is the first listed retail outlet mall REIT in Asia. With an initial portfolio of four retail outlet malls located in the cities of Chongqing, Kunming and Hefei, the REIT offers investors the opportunity to invest in China’s fast-growing retail outlet mall sector. 
Some of the most popular brands in its portfolio include Coach, +39 Space (with Prada, Dior, Gucci and other Italian luxury brands), FILA, Adidas and Nike. 
Sasseur REIT is managed by Sasseur Asset Management Pte Ltd. Its Sponsor – Sasseur Cayman Holding Ltd – was founded in 1989 by Vito Xu, Chairman of both the Sponsor and the REIT manager. The Sponsor is one of the leading premium outlet mall groups in China, focused on the development and operation of retail outlet malls in the country. 
The Sponsor’s strategic shareholders are L Catterton Asia – a private equity fund partnership between L Capital of the LVMH Group and Catterton of the US – and Ping An Real Estate Co Ltd, a subsidiary of Ping An Insurance (Group) Co of China Ltd, a Fortune Global 500 enterprise. 
Through these parties, the REIT can forge strategic partnerships, as well as leverage an extensive real estate network to grow its portfolio of brands and assets. 
Last September, Sasseur REIT won Best Retail REIT (Platinum), Best CEO (Platinum) and Best Investor Relations (Gold) at the Asia Pacific Best of the Breeds REITs Awards™ 2019. Three months later, the REIT was included in FTSE EPRA NAREIT Global Emerging Index. 
Sasseur REIT has outperformed many of its Singapore REIT peers, ranking amongst the top five performers with a total return of 52% in 2019. It also emerged as the top-performing China S-REIT for the financial year ended 31 December 2019. 
One of the REIT’s key value propositions is its unique Entrusted Management Agreement (EMA) model, Ang noted. Under this lease arrangement, rental income paid to the REIT comprises a fixed component rent as well as a variable rent that is tied to the performance of underlying tenant sales. 
“This model provides a stable fixed income that grows at 3% annually, offering downside protection in unexpected situations and disruptions, such as COVID-19, which resulted in temporary closure of our outlet malls,” he said. “There is also the variable component that is pegged to sales in our outlets, offering potential income upside.” 
And Sasseur REIT has a radically different business model, Ang added. “We have a hybrid lease structure, comprising 100% sales-based leases with no fixed rental – where rental income for the outlet is collected as a percentage of sales of the branded goods tenants – as well as a combination of both sales-based and fixed rentals for some special tenants in lifestyle activities or F&amp;B.” 
“We believe that this, together with the EMA income model, sets Sasseur apart from other REITs, as they align the interests of the manager with that of our tenants and the REIT, or our unitholders.” Conspicuous Consumption 
Medium to longer term growth drivers for the REIT include burgeoning demand for luxury brands from China’s mushrooming middle class, and potential acquisitions in the form of mall assets owned by the Sponsor. 
“The outlet mall business is one of the country’s fastest growing retail segments, supported by increased spending power and aspirations of middle-class Chinese consumers,” Ang said. 
China’s outlet malls are forecast to become the largest globally, exceeding that of the US by 2030, according to independent research data. 
Outlet malls also function as counter-cyclical elements in the economy, benefiting from downturns when budgets shrink and consumers seek better value-for-money bargains, he added. 
As for the potential assets that can be injected into Sasseur REIT, the Sponsor has two right-of-first-refusal (ROFR) and nine pipeline properties. These include four new mall assets located along the more affluent coastal cities of Shenzhen, Xiamen, Yangzhou and Shanghai – scheduled to open later this year and over the next few years, operated by the Sponsor. 
ROFR assets are those where the REIT has priority of choice when the Sponsor decides to sell, while pipeline assets are third-party owned but operated by the Sponsor, and become ROFR assets for the REIT if acquired by the Sponsor. 
“When you look at the REIT industry, size matters. Currently, we have S$1.6 billion worth of assets under management, and if you do not have at least S$3 billion in AUM, you’re not considered significant, so acquisitions are key to our growth,” Ang pointed out. 
“We want to make an acquisition every two to three years – this is the kind of consistency that investors look for. And it’s not a problem to acquire every other year in the future, due to the number of ROFR and pipeline assets available, and also because our Sponsor is a leader in this industry.” Lifestyle Destinations 
In terms of the challenges presented by the rise of e-commerce on the outlet mall industry, Ang sees mitigated impact. “We believe our outlets have competitive advantages over e-commerce, such as non-overlapping product segments, and lower sales commissions for merchants – they pay average sales commissions of approximately 20% on e-commerce platforms, versus 10%-16% on sales as rental at our outlet malls.” 
Sasseur’s outlet malls are also designed as lifestyle destinations, enhancing the shopping activity by offering multi-faceted experiences that include playgrounds, an indoor zoo and sports concepts. “That’s how we pull in our shoppers,” he added. 
Heightened marketing, robust safety measures at the outlets, as well as enhanced customer engagement efforts by the REIT, particularly during COVID-19 closures between January and March this year, have helped its outlet malls to reopen successfully and perform strongly. 
Its four outlet malls generated combined sales of 835.7 million yuan for the second quarter ended 30 June 2020, 18.6% lower year-on-year and comparing favourably with other retail businesses hit by the pandemic. 
This figure is also 56% higher than the combined sales of 534.5 million yuan in the first quarter, underscoring the fact that business recovery is well underway across its portfolio. 
“We believe the hit from COVID-19 on our outlet business will be short-lived,” Ang said. “As the situation in China continues to improve, we expect the remaining quarters of this year to deliver stronger performances, and sales to return to pre-pandemic levels.” 
China’s retail sales rose for the first time in August since the coronavirus pandemic began, gaining 0.5% year-on-year, reversing a drop of 1.1% in July and a plunge of 20.5% in the January to February period. 
Meanwhile, what keeps the genial 65-year-old going is the satisfaction he derives from playing the role of a rainmaker – effecting real and positive change, whether at work, at play, or just interacting with those who cross his path. 
“I enjoy solving a problem, figuring something out, or doing something completely new,” he said. “Of course, this involves human relationships – people must enjoy working with you, and be able to trust you, because that’s when things happen.” 
Key principles that he has passed on to his son, 28, and daughter 29, include a strong moral code, and the capacity to learn and adapt continually. “I always tell them, don’t worry about the future and stop comparing yourself with others,” he said with a chuckle. 
“In my mind, the key to success is very simple – have a goal but do not limit yourself; have the best possible education, gather as much life experience as you can, and always look for meaning in all you do.”

 

Sasseur REIT 
Sasseur REIT is the first retail outlet mall REIT listed in Asia. Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in the People’s Republic of China through its initial portfolio of four quality retail outlet mall assets strategically located in fast-growing cities in China, such as Chongqing, Kunming and Hefei, with a net lettable area of 312,844 square metres. The REIT is established to invest principally, directly or indirectly, in a diversified portfolio of income-producing real estate, as well as real estate-related assets, which are used primarily for retail outlet mall purposes, with an initial focus on Asia.

Sasseur REIT is managed by the Manager, an indirect wholly owned subsidiary of the Sponsor, Sasseur Cayman Holding Ltd. The Sponsor Group is one of the leading premium outlet groups in China, and ranked within the top 500 service companies in the country. With about 30 years of experience in art-commerce, the Sponsor Group has attained recognition in Asia as a leading outlet operator that adopts the strategic approach of integrating emotion, aesthetics, scenario planning and prudent capital management. 
The company website is: <a href="http://www.sasseurreit.com">www.sasseurreit.com</a>. 
Click <a href="https://www.sgx.com/securities/equities/CRPU">here </a>for the company's StockFacts page. 
For the three months ended 30 June 2020 financial results, click <a href="http://ir.listedcompany.com/tracker.pl?type=6&amp;id=793096&amp;">here</a>.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10">here</a>.   
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="///C:/Users/tanje/Desktop/Working%20Files/kopi-C/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.
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    Sasseur REIT - CEO


Through his diverse career spanning more than three decades, engineer by training Anthony Ang has always tried to define success on his own terms.  
One dictum that resonates with him is the warning inherent in American Catholic monk and author Thomas Merton’s observation: “People may spend their whole lives climbing the ladder of success only to find, once they reach the top, that the ladder is leaning against the wrong wall.”  
“I wouldn’t want to try and prescribe the best definition of success, but many who have gone before have suggested that success and happiness do not generally consist of only having material wealth and status, but also of possessing the right values and goals in life,” said the CEO of the manager of SGX-listed Sasseur REIT.  
One of Ang’s role models is Austrian neurologist and psychiatrist Viktor Frankl – a Holocaust survivor and author of “Man’s Search for Meaning”, a bestseller that chronicles his experiences as a prisoner in Nazi concentration camps during World War II.  
“Frankl, one of my favourite authors, focused on the need for meaning and purpose in life – something that transcends our existence and taps the best energies within us,” he added.  
Although Ang graduated with a Bachelor of Science degree in Mechanical Engineering with First Class Honours from London’s Imperial College, he found that his interests lay elsewhere.  
“For my generation, studying engineering as a discipline was seen as the best way to unlock a great career and future, but I couldn’t envisage myself sitting at a drafting table for hours every day – I preferred a more frontline job,” he recalled.  
So in 1979, Ang began his career with Singapore’s Economic Development Board, rising up the ranks to become the Regional Director of EDB’s North America operations, during which he picked up effective policy-making and investment skills for a range of industries.  
That became a springboard for his subsequent career moves spanning a plethora of sectors: from Executive Director and Group General Manager of Armstrong Industrial Corporation running its manufacturing operations, to Senior Vice President of Vertex Management overseeing venture capital investments, and Executive Vice President of GIC Real Estate – which marked his first foray into the property sector.  
Ang, who also holds a Master of Business Administration degree from INSEAD, later went on to take up various CEO appointments within the ARA Group, including its flagship US$1.13 billion ARA Asia Dragon Fund, and Hong Kong-listed Fortune REIT.  Buoyant Prospects  
Ang – currently Singapore’s Non-Resident Ambassador to the Republic of Tunisia – was appointed to helm the manager of Sasseur REIT in 2017.  
“Looking back, you realise that life can change very quickly, but there’s no point worrying about what is to come,” he pointed out.  
“Instead, just do your best, be resilient – find ways around problems – and most importantly, stay positive and enjoy the journey. A belief in God can also be a positive anchor.”  
Making its trading debut on SGX Mainboard in March 2018, Sasseur REIT is the first listed retail outlet mall REIT in Asia. With an initial portfolio of four retail outlet malls located in the cities of Chongqing, Kunming and Hefei, the REIT offers investors the opportunity to invest in China’s fast-growing retail outlet mall sector.  
Some of the most popular brands in its portfolio include Coach, +39 Space (with Prada, Dior, Gucci and other Italian luxury brands), FILA, Adidas and Nike.  
Sasseur REIT is managed by Sasseur Asset Management Pte Ltd. Its Sponsor – Sasseur Cayman Holding Ltd – was founded in 1989 by Vito Xu, Chairman of both the Sponsor and the REIT manager. The Sponsor is one of the leading premium outlet mall groups in China, focused on the development and operation of retail outlet malls in the country.  
The Sponsor’s strategic shareholders are L Catterton Asia – a private equity fund partnership between L Capital of the LVMH Group and Catterton of the US – and Ping An Real Estate Co Ltd, a subsidiary of Ping An Insurance (Group) Co of China Ltd, a Fortune Global 500 enterprise.  
Through these parties, the REIT can forge strategic partnerships, as well as leverage an extensive real estate network to grow its portfolio of brands and assets.  
Last September, Sasseur REIT won Best Retail REIT (Platinum), Best CEO (Platinum) and Best Investor Relations (Gold) at the Asia Pacific Best of the Breeds REITs Awards™ 2019. Three months later, the REIT was included in FTSE EPRA NAREIT Global Emerging Index.  
Sasseur REIT has outperformed many of its Singapore REIT peers, ranking amongst the top five performers with a total return of 52% in 2019. It also emerged as the top-performing China S-REIT for the financial year ended 31 December 2019.  
One of the REIT’s key value propositions is its unique Entrusted Management Agreement (EMA) model, Ang noted. Under this lease arrangement, rental income paid to the REIT comprises a fixed component rent as well as a variable rent that is tied to the performance of underlying tenant sales.  
“This model provides a stable fixed income that grows at 3% annually, offering downside protection in unexpected situations and disruptions, such as COVID-19, which resulted in temporary closure of our outlet malls,” he said. “There is also the variable component that is pegged to sales in our outlets, offering potential income upside.”  
And Sasseur REIT has a radically different business model, Ang added. “We have a hybrid lease structure, comprising 100% sales-based leases with no fixed rental – where rental income for the outlet is collected as a percentage of sales of the branded goods tenants – as well as a combination of both sales-based and fixed rentals for some special tenants in lifestyle activities or F&amp;B.”  
“We believe that this, together with the EMA income model, sets Sasseur apart from other REITs, as they align the interests of the manager with that of our tenants and the REIT, or our unitholders.”  Conspicuous Consumption   
Medium to longer term growth drivers for the REIT include burgeoning demand for luxury brands from China’s mushrooming middle class, and potential acquisitions in the form of mall assets owned by the Sponsor.  
“The outlet mall business is one of the country’s fastest growing retail segments, supported by increased spending power and aspirations of middle-class Chinese consumers,” Ang said.  
China’s outlet malls are forecast to become the largest globally, exceeding that of the US by 2030, according to independent research data.  
Outlet malls also function as counter-cyclical elements in the economy, benefiting from downturns when budgets shrink and consumers seek better value-for-money bargains, he added.  
As for the potential assets that can be injected into Sasseur REIT, the Sponsor has two right-of-first-refusal (ROFR) and nine pipeline properties. These include four new mall assets located along the more affluent coastal cities of Shenzhen, Xiamen, Yangzhou and Shanghai – scheduled to open later this year and over the next few years, operated by the Sponsor.  
ROFR assets are those where the REIT has priority of choice when the Sponsor decides to sell, while pipeline assets are third-party owned but operated by the Sponsor, and become ROFR assets for the REIT if acquired by the Sponsor.  
“When you look at the REIT industry, size matters. Currently, we have S$1.6 billion worth of assets under management, and if you do not have at least S$3 billion in AUM, you’re not considered significant, so acquisitions are key to our growth,” Ang pointed out.  
“We want to make an acquisition every two to three years – this is the kind of consistency that investors look for. And it’s not a problem to acquire every other year in the future, due to the number of ROFR and pipeline assets available, and also because our Sponsor is a leader in this industry.”  Lifestyle Destinations  
In terms of the challenges presented by the rise of e-commerce on the outlet mall industry, Ang sees mitigated impact. “We believe our outlets have competitive advantages over e-commerce, such as non-overlapping product segments, and lower sales commissions for merchants – they pay average sales commissions of approximately 20% on e-commerce platforms, versus 10%-16% on sales as rental at our outlet malls.”  
Sasseur’s outlet malls are also designed as lifestyle destinations, enhancing the shopping activity by offering multi-faceted experiences that include playgrounds, an indoor zoo and sports concepts. “That’s how we pull in our shoppers,” he added.  
Heightened marketing, robust safety measures at the outlets, as well as enhanced customer engagement efforts by the REIT, particularly during COVID-19 closures between January and March this year, have helped its outlet malls to reopen successfully and perform strongly.  
Its four outlet malls generated combined sales of 835.7 million yuan for the second quarter ended 30 June 2020, 18.6% lower year-on-year and comparing favourably with other retail businesses hit by the pandemic.  
This figure is also 56% higher than the combined sales of 534.5 million yuan in the first quarter, underscoring the fact that business recovery is well underway across its portfolio.  
“We believe the hit from COVID-19 on our outlet business will be short-lived,” Ang said. “As the situation in China continues to improve, we expect the remaining quarters of this year to deliver stronger performances, and sales to return to pre-pandemic levels.”  
China’s retail sales rose for the first time in August since the coronavirus pandemic began, gaining 0.5% year-on-year, reversing a drop of 1.1% in July and a plunge of 20.5% in the January to February period.  
Meanwhile, what keeps the genial 65-year-old going is the satisfaction he derives from playing the role of a rainmaker – effecting real and positive change, whether at work, at play, or just interacting with those who cross his path.  
“I enjoy solving a problem, figuring something out, or doing something completely new,” he said. “Of course, this involves human relationships – people must enjoy working with you, and be able to trust you, because that’s when things happen.”  
Key principles that he has passed on to his son, 28, and daughter 29, include a strong moral code, and the capacity to learn and adapt continually. “I always tell them, don’t worry about the future and stop comparing yourself with others,” he said with a chuckle.  
“In my mind, the key to success is very simple – have a goal but do not limit yourself; have the best possible education, gather as much life experience as you can, and always look for meaning in all you do.”

 

Sasseur REIT  
Sasseur REIT is the first retail outlet mall REIT listed in Asia. Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in the People’s Republic of China through its initial portfolio of four quality retail outlet mall assets strategically located in fast-growing cities in China, such as Chongqing, Kunming and Hefei, with a net lettable area of 312,844 square metres. The REIT is established to invest principally, directly or indirectly, in a diversified portfolio of income-producing real estate, as well as real estate-related assets, which are used primarily for retail outlet mall purposes, with an initial focus on Asia.

Sasseur REIT is managed by the Manager, an indirect wholly owned subsidiary of the Sponsor, Sasseur Cayman Holding Ltd. The Sponsor Group is one of the leading premium outlet groups in China, and ranked within the top 500 service companies in the country. With about 30 years of experience in art-commerce, the Sponsor Group has attained recognition in Asia as a leading outlet operator that adopts the strategic approach of integrating emotion, aesthetics, scenario planning and prudent capital management.  
The company website is: www.sasseurreit.com.  
Click here for the company's StockFacts page.  
For the three months ended 30 June 2020 financial results, click here.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



Sasseur REIT Taps Aspirations of China’s Middle Class

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 </figure>
 <div class='content-caption'>Dasin-CEO</div>
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Wang Qiu’s unassuming appearance belies a spirit of quiet determination and true grit – qualities that have seen the engineer by training through a two decade-long career spanning the construction engineering and real estate sectors. 
“Through life’s journey, you will face many challenges. The key is not to shy away from difficulties, but find ways to overcome them,” said Liaoning-born Wang, Chief Executive Officer of the trustee-manager of SGX-listed Dasin Retail Trust. 
“There’s always a solution to every problem.” 
A Bachelor of Construction Engineering graduate from China’s Harbin Engineering University, Wang began her career in 1999 with Zhongshan Sheng Xing Co Ltd, a curtain wall manufacturing business within the Zhongshan Dasin Holdings group of companies, which is the Sponsor of Dasin Retail Trust. 
It proved to be a high-intensity, high-pressure job with a steep learning curve. 
“I spent 10 years in that role. Of the 365 days in each year, there were 10 days when we had a break for the Lunar New Year holidays. For the remaining 355 days, I was constantly in battle mode – dealing with precise manufacturing requirements, coordinating complex work plans, managing tight timelines and responding to emergencies at any hour,” she recalled. 
Those experiences honed Wang’s attention to detail, resilience and focus. “I learnt what it meant to get the job done, regardless of the project’s complexity or the issues that emerged,” she added. 
Between 2011 and February 2020, Wang went on to hold various appointments within the Sponsor’s group of companies, including Secretary to the Board of Directors and General Manager of the company’s Risk Management division. 
Between October 2014 and January 2017, she spearheaded the project team behind Dasin Retail Trust’s initial public offering, and in March this year, assumed the role of CEO of the trustee-manager of the trust. 
Listed on SGX Mainboard in January 2017, Dasin Retail Trust is the only China retail property trust providing direct exposure to the fast-growing Guangdong-Hong Kong-Macau Greater Bay Area. 
Its principal mandate is to invest in, own or develop land, uncompleted developments and income-producing real estate in the Greater China region, used primarily for retail purposes, as well as real estate-related assets, with a focus on retail malls. Dasin’s portfolio comprises seven retail malls strategically located in Foshan, Zhuhai and Zhongshan cities in China. 
Dasin is managed by Dasin Retail Trust Management Pte Ltd. Its Sponsor – Zhongshan Dasin Real Estate Co Ltd – is focused on the development and management of real estate, including retail malls, hotels, educational facilities and residential properties. 
The Sponsor has been involved in the construction and development of various real estate projects in the Greater Bay Area. It has also established itself as one of the leading, award-winning developers in Zhongshan over the past two decades. Persistence Pays Off 
In July, Dasin Retail Trust announced it had completed the acquisition of Shunde Metro Mall in Foshan city and Tanbei Metro Mall in Zhongshan city for an agreed property value of S$375 million. With this acquisition – its second within three years of listing – the trust’s portfolio size has nearly tripled to about 11.7 billion yuan from 4.6 billion yuan. 
Wang attributes the achievement of this significant milestone to her tenacity. “During the pandemic, many have unlocked a range of hidden talents, such as cooking, baking and handicraft, but my main claim to fame was the Shunde-Tanbei acquisition,” she said, half tongue-in-cheek. 
Her persistence ran counter to recommendations from the joint book runners and concerns from management over ongoing market volatility, as well as the impact on valuations and revenues following COVID-19. 
“I didn’t want to postpone the completion of the acquisition. I believe we should focus on what’s in front of us, because what can or will happen in the future is anybody’s guess,” she recalled. 
“Together with my team, we were determined to see it through, regardless of the challenges, and we did.” 
Post-acquisition, the fruits of their labour have been sweet. “As a result of our hard work, we’ve obtained recognition from many external parties, and the team has also gained more confidence to undertake bigger goals.” 
“I used to ponder many “what ifs” when I was younger,” Wang admitted. “Now, I know that life is not only about “possibilities”, but also about making decisions, taking the first step, and completing that journey – with steady determination.” 
And this has just been one of many steps in Dasin’s growth journey – Wang has a personal target to grow the trust’s market capitalisation to S$1 billion within the next three to five years, through a combination of organic growth and acquisitions. And some low-hanging fruit would be the Sponsor’s right-of-first-refusal (ROFR) pipeline of assets. 
Key investment criteria include attractive long-term cash flows, yields above Dasin’s weighted average cost of capital, as well as the potential for net asset growth. Another focus would be tenant mix and occupancy characteristics, as well as properties with longer leases, so as to extend the portfolio’s weighted average lease expiry (WALE). 
“S$1 billion is the starting point for a medium-sized trust,” she pointed out. “Achieving this goal will allow us to better realise the benefits of scale, such as reducing our capital cost and improving operational efficiencies. At the same time, we can attract more attention from institutional investors, or be included as a constituent of key indexes.” Burgeoning Economic Potential 
Dasin Retail Trust’s location within the Greater Bay Area – poised to emerge as the world’s largest bay area economy – also bodes well for its future. 
Two new financial markets – the up-and-coming Guangzhou and Macau bourses – would add to the US$8.8 trillion combined market capitalisation of Hong Kong and Shenzhen, turning the region Asia's largest capital pool, and amplifying the Greater Bay Area's economic potential. 
Planned as the central city within the area under the provincial government’s 2017-2030 plan, Zhongshan is positioned to become a high-end equipment manufacturing hub, as well as a regional technology and biomedical research and development centre. Zhuhai is targeted as a world-class centre of leisure and tourism, with a focus on the general aviation industry. 
Notwithstanding the bright outlook, Dasin Retail Trust’s more immediate challenges include COVID-19 and evolving consumer trends. 
“This year’s economic performance has been impacted by the pandemic and the upcoming US elections, but opportunities still exist in any crisis,” Wang noted. 
“We believe the impact of the outbreak on China’s retail sector will be short-lived.” 
Wang remains “cautiously optimistic” about retail sales when the situation normalises. “Many families who have cancelled travel plans and those emerging from quarantines will be more interested in “experiential” activities, with the pent-up spending driving local consumption,” she noted. 
Dasin has stepped up its events-driven marketing programmes, such as music festivals, cultural exhibitions and sports competitions, which have buoyed footfall in its malls and sparked a rebound in monthly turnover rents. 
“Our turnover rent in June represented more than 90% of average monthly turnover rent in the fourth quarter of 2019, compared with 36% seen in February 2020,” she said. 
“We believe the recovery will continue, and monthly turnover rents will normalise soon.” E-Commerce-Proof 
While Wang acknowledges the threat of e-commerce, she believes Dasin’s malls are well-positioned to serve their densely populated catchment areas, functioning as one-stop centres for the community’s daily needs. 
“Because we have adjusted our operations to accelerate the integration of online and offline into an omni-channel offering, some of our businesses were not only unaffected during the pandemic, they saw significant year-on-year increases in sales,” she added. 
Through proactive asset and lease management, the trust has introduced more experiential trades – including sports, leisure, entertainment – as well as defensive retail offerings – such as supermarkets and home appliance stores – to its malls. 
“Apart from improving shopper traffic, this enhanced tenant mix has increased our resistance to e-commerce, making its impact minimal or almost non-existent.” 
The trust has also set up its own member management system – “Dasin Hui” – a platform that provides comprehensive information on products and services in its malls to enhance the shopping experience. 
“This enables us to draw customers from online channels into physical stores,” Wang noted. 
“We’ve also identified the brands that are more suitable for either e-commerce channels or brick-and-mortar stores, which allows us to better target and pivot the tenant mix.” 
At the same time, Wang is keeping an eye on the sustainability of the trust’s distribution per unit (DPU), with the distribution waiver from major unitholders terminating after 2021. 
“The revenue, net property income and distributable income of our portfolio have grown at a compound annual growth rate of 9.6%, 8.8% and 9.0% respectively since IPO, while the acquisitions of Doumen Metro Mall, Shunde Metro Mall and Tanbei Metro Mall have further accelerated DPU growth,” she pointed out. 
This has narrowed the gap between Dasin Retail Trust’s core DPU and the DPU with distribution waiver. 
“Going forward, we will continue to deliver competitive DPUs to our investors through organic growth, including rental adjustments, rental reversions and asset enhancement initiatives, as well as inorganic growth, via accretive acquisitions.” 
And when this 43-year-old mother is not managing the operations of the trust, she can be found with her son, 14, and daughter, seven. Ensuring they grow up with the right values is a priority. 
“I want my children to face challenges with courage, and be able to solve their problems through determination and persistence – these are important touchstones,” Wang said. 
“Last but not least, they must remember that great things are never achieved alone – they are carried out by a team of people – so they must never be afraid to ask for help,” she added. 
“Team members can open up fresh perspectives, which in turn lead to new and innovative solutions to problems.” 
 

Dasin Retail Trust 
Listed on SGX Mainboard in January 2017, Dasin is the only China retail property trust providing direct exposure to the fast-growing Guangdong-Hong Kong-Macau Greater Bay Area. Its principal mandate is to invest in, own or develop land, uncompleted developments and income-producing real estate in Greater China (comprising People’s Republic of China, Hong Kong and Macau), used primarily for retail purposes, as well as real estate-related assets, with an initial focus on retail malls. The portfolio comprises seven retail malls strategically located in Foshan, Zhuhai and Zhongshan cities. 
Dasin Retail Trust is managed by Dasin Retail Trust Management Pte Ltd, and its Sponsor is Zhongshan Dasin Real Estate Co Ltd. The Sponsor Group, established in 2001, is focused on the development and management of real estate, including retail malls, hotels, educational facilities and residential properties. Involved mainly in the construction and development of real estate projects in the Greater Bay Area, the Sponsor has established itself as one of the leading developers in Zhongshan, winning a number of national-level industry awards over the past 19 years. 
The company website is: <a href="http://www.dasintrust.com/">www.dasintrust.com</a> 
Click <a href="https://www.sgx.com/securities/equities/CEDU">here </a>for the company's StockFacts page. 
For the half year ended 30 June 2020 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/MXCOLGHLOLA98KO4/627679_DASINRT-Press%20Release-1H2020_13%20August%202020.pdf">here</a>. 
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10">here</a>.  
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    Dasin-CEO


Wang Qiu’s unassuming appearance belies a spirit of quiet determination and true grit – qualities that have seen the engineer by training through a two decade-long career spanning the construction engineering and real estate sectors.  
“Through life’s journey, you will face many challenges. The key is not to shy away from difficulties, but find ways to overcome them,” said Liaoning-born Wang, Chief Executive Officer of the trustee-manager of SGX-listed Dasin Retail Trust.  
“There’s always a solution to every problem.”  
A Bachelor of Construction Engineering graduate from China’s Harbin Engineering University, Wang began her career in 1999 with Zhongshan Sheng Xing Co Ltd, a curtain wall manufacturing business within the Zhongshan Dasin Holdings group of companies, which is the Sponsor of Dasin Retail Trust.  
It proved to be a high-intensity, high-pressure job with a steep learning curve.  
“I spent 10 years in that role. Of the 365 days in each year, there were 10 days when we had a break for the Lunar New Year holidays. For the remaining 355 days, I was constantly in battle mode – dealing with precise manufacturing requirements, coordinating complex work plans, managing tight timelines and responding to emergencies at any hour,” she recalled.  
Those experiences honed Wang’s attention to detail, resilience and focus. “I learnt what it meant to get the job done, regardless of the project’s complexity or the issues that emerged,” she added.  
Between 2011 and February 2020, Wang went on to hold various appointments within the Sponsor’s group of companies, including Secretary to the Board of Directors and General Manager of the company’s Risk Management division.  
Between October 2014 and January 2017, she spearheaded the project team behind Dasin Retail Trust’s initial public offering, and in March this year, assumed the role of CEO of the trustee-manager of the trust.  
Listed on SGX Mainboard in January 2017, Dasin Retail Trust is the only China retail property trust providing direct exposure to the fast-growing Guangdong-Hong Kong-Macau Greater Bay Area.  
Its principal mandate is to invest in, own or develop land, uncompleted developments and income-producing real estate in the Greater China region, used primarily for retail purposes, as well as real estate-related assets, with a focus on retail malls. Dasin’s portfolio comprises seven retail malls strategically located in Foshan, Zhuhai and Zhongshan cities in China.  
Dasin is managed by Dasin Retail Trust Management Pte Ltd. Its Sponsor – Zhongshan Dasin Real Estate Co Ltd – is focused on the development and management of real estate, including retail malls, hotels, educational facilities and residential properties.  
The Sponsor has been involved in the construction and development of various real estate projects in the Greater Bay Area. It has also established itself as one of the leading, award-winning developers in Zhongshan over the past two decades.  Persistence Pays Off  
In July, Dasin Retail Trust announced it had completed the acquisition of Shunde Metro Mall in Foshan city and Tanbei Metro Mall in Zhongshan city for an agreed property value of S$375 million. With this acquisition – its second within three years of listing – the trust’s portfolio size has nearly tripled to about 11.7 billion yuan from 4.6 billion yuan.  
Wang attributes the achievement of this significant milestone to her tenacity. “During the pandemic, many have unlocked a range of hidden talents, such as cooking, baking and handicraft, but my main claim to fame was the Shunde-Tanbei acquisition,” she said, half tongue-in-cheek.  
Her persistence ran counter to recommendations from the joint book runners and concerns from management over ongoing market volatility, as well as the impact on valuations and revenues following COVID-19.  
“I didn’t want to postpone the completion of the acquisition. I believe we should focus on what’s in front of us, because what can or will happen in the future is anybody’s guess,” she recalled.  
“Together with my team, we were determined to see it through, regardless of the challenges, and we did.”  
Post-acquisition, the fruits of their labour have been sweet. “As a result of our hard work, we’ve obtained recognition from many external parties, and the team has also gained more confidence to undertake bigger goals.”  
“I used to ponder many “what ifs” when I was younger,” Wang admitted. “Now, I know that life is not only about “possibilities”, but also about making decisions, taking the first step, and completing that journey – with steady determination.”  
And this has just been one of many steps in Dasin’s growth journey – Wang has a personal target to grow the trust’s market capitalisation to S$1 billion within the next three to five years, through a combination of organic growth and acquisitions. And some low-hanging fruit would be the Sponsor’s right-of-first-refusal (ROFR) pipeline of assets.  
Key investment criteria include attractive long-term cash flows, yields above Dasin’s weighted average cost of capital, as well as the potential for net asset growth. Another focus would be tenant mix and occupancy characteristics, as well as properties with longer leases, so as to extend the portfolio’s weighted average lease expiry (WALE).  
“S$1 billion is the starting point for a medium-sized trust,” she pointed out. “Achieving this goal will allow us to better realise the benefits of scale, such as reducing our capital cost and improving operational efficiencies. At the same time, we can attract more attention from institutional investors, or be included as a constituent of key indexes.”  Burgeoning Economic Potential  
Dasin Retail Trust’s location within the Greater Bay Area – poised to emerge as the world’s largest bay area economy – also bodes well for its future.  
Two new financial markets – the up-and-coming Guangzhou and Macau bourses – would add to the US$8.8 trillion combined market capitalisation of Hong Kong and Shenzhen, turning the region Asia's largest capital pool, and amplifying the Greater Bay Area's economic potential.  
Planned as the central city within the area under the provincial government’s 2017-2030 plan, Zhongshan is positioned to become a high-end equipment manufacturing hub, as well as a regional technology and biomedical research and development centre. Zhuhai is targeted as a world-class centre of leisure and tourism, with a focus on the general aviation industry.  
Notwithstanding the bright outlook, Dasin Retail Trust’s more immediate challenges include COVID-19 and evolving consumer trends.  
“This year’s economic performance has been impacted by the pandemic and the upcoming US elections, but opportunities still exist in any crisis,” Wang noted.  
“We believe the impact of the outbreak on China’s retail sector will be short-lived.”  
Wang remains “cautiously optimistic” about retail sales when the situation normalises. “Many families who have cancelled travel plans and those emerging from quarantines will be more interested in “experiential” activities, with the pent-up spending driving local consumption,” she noted.  
Dasin has stepped up its events-driven marketing programmes, such as music festivals, cultural exhibitions and sports competitions, which have buoyed footfall in its malls and sparked a rebound in monthly turnover rents.  
“Our turnover rent in June represented more than 90% of average monthly turnover rent in the fourth quarter of 2019, compared with 36% seen in February 2020,” she said.  
“We believe the recovery will continue, and monthly turnover rents will normalise soon.”  E-Commerce-Proof  
While Wang acknowledges the threat of e-commerce, she believes Dasin’s malls are well-positioned to serve their densely populated catchment areas, functioning as one-stop centres for the community’s daily needs.  
“Because we have adjusted our operations to accelerate the integration of online and offline into an omni-channel offering, some of our businesses were not only unaffected during the pandemic, they saw significant year-on-year increases in sales,” she added.  
Through proactive asset and lease management, the trust has introduced more experiential trades – including sports, leisure, entertainment – as well as defensive retail offerings – such as supermarkets and home appliance stores – to its malls.  
“Apart from improving shopper traffic, this enhanced tenant mix has increased our resistance to e-commerce, making its impact minimal or almost non-existent.”  
The trust has also set up its own member management system – “Dasin Hui” – a platform that provides comprehensive information on products and services in its malls to enhance the shopping experience.  
“This enables us to draw customers from online channels into physical stores,” Wang noted.  
“We’ve also identified the brands that are more suitable for either e-commerce channels or brick-and-mortar stores, which allows us to better target and pivot the tenant mix.”  
At the same time, Wang is keeping an eye on the sustainability of the trust’s distribution per unit (DPU), with the distribution waiver from major unitholders terminating after 2021.  
“The revenue, net property income and distributable income of our portfolio have grown at a compound annual growth rate of 9.6%, 8.8% and 9.0% respectively since IPO, while the acquisitions of Doumen Metro Mall, Shunde Metro Mall and Tanbei Metro Mall have further accelerated DPU growth,” she pointed out.  
This has narrowed the gap between Dasin Retail Trust’s core DPU and the DPU with distribution waiver.  
“Going forward, we will continue to deliver competitive DPUs to our investors through organic growth, including rental adjustments, rental reversions and asset enhancement initiatives, as well as inorganic growth, via accretive acquisitions.”  
And when this 43-year-old mother is not managing the operations of the trust, she can be found with her son, 14, and daughter, seven. Ensuring they grow up with the right values is a priority.  
“I want my children to face challenges with courage, and be able to solve their problems through determination and persistence – these are important touchstones,” Wang said.  
“Last but not least, they must remember that great things are never achieved alone – they are carried out by a team of people – so they must never be afraid to ask for help,” she added.  
“Team members can open up fresh perspectives, which in turn lead to new and innovative solutions to problems.” 
 

Dasin Retail Trust  
Listed on SGX Mainboard in January 2017, Dasin is the only China retail property trust providing direct exposure to the fast-growing Guangdong-Hong Kong-Macau Greater Bay Area. Its principal mandate is to invest in, own or develop land, uncompleted developments and income-producing real estate in Greater China (comprising People’s Republic of China, Hong Kong and Macau), used primarily for retail purposes, as well as real estate-related assets, with an initial focus on retail malls. The portfolio comprises seven retail malls strategically located in Foshan, Zhuhai and Zhongshan cities.  
Dasin Retail Trust is managed by Dasin Retail Trust Management Pte Ltd, and its Sponsor is Zhongshan Dasin Real Estate Co Ltd. The Sponsor Group, established in 2001, is focused on the development and management of real estate, including retail malls, hotels, educational facilities and residential properties. Involved mainly in the construction and development of real estate projects in the Greater Bay Area, the Sponsor has established itself as one of the leading developers in Zhongshan, winning a number of national-level industry awards over the past 19 years.  
The company website is: www.dasintrust.com  
Click here for the company's StockFacts page.  
For the half year ended 30 June 2020 financial results, click here.  
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.  



Dasin Retail Trust Eyes Greater Bay Area Growth

<div>
Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
<h2>FIRST SPONSOR GROUP LIMITED</h2>
<h3>Your financier, developer and landlord</h3>
<div>
<div>
<div>
<div>
<ul>
<li>Unrecognised property development revenue of S$586mn with another S$1.95bn worth of gross development value (GDV) to be unlocked, equivalent to 5 years of sales.</li>
<li>Property financing loan book grew at 19% CAGR in the past 5 years. These securitised loans offer recurring income at low to mid-teens returns. We are estimating loan book growth of around 8% for FY20e and FY21e.</li>
<li>Initiate coverage with BUY and target price of S$1.65.</li>
</ul>
</div>
</div>
</div>
</div>
</div>
Company Background Listed on the mainboard of the SGX on 22 July 2014, First Sponsor Group (FSG) is a property developer (FY19 revenue: 50%), owner (22.5%) and financier (27.5%). It operates in China (FY19 assets: 58%), Europe (40%) and Australia (2%). Hong Leong Group Singapore (35.8%) and Tai Tak Estates (44.1%) are its two controlling shareholders.
<div>
Investment Merits
<ol>
<li>
<ol>
<li>1H20 unrecognised revenue equates to 1-2 years of sales; GDV to unlock is equivalent to 5 years of sales; demand for Dongguan’s residential properties exceeds expectations. Unrecognised revenue as of 1H20 from development properties amounted to S$586mn. FSG holds GDV of S$1.95bn that has yet to be unlocked. Buying sentiment in Dongguan exceeded FSG’s expectations after business resumed in late February 2020. Residential units at most of its projects that were launched in April have been almost fully sold. Another residential block in The Pinnacle was launched for pre-sales on 14 July and has sold more than 85%.</li>
<li>Humen TOD to become one of FSG’s largest development projects. FSG won the bid for a mixed-use development on 29 June at RMB6.6bn (c.S$1.3bn) in a joint venture with China Poly Group (CPOLYZ CH, Not Rated) and China State Railway Group (390 HK, Not Rated). The land will be developed into a transit-oriented development with more than 1mn sqm Gross Floor Area (GFA). FSG has a c.17% effective equity interest in the JV.</li>
<li>High recurring income for its Chinese property financing business plus double-digit growth in securitised loan book. FSG charges interest rates of low to mid-teens p.a. for its property financing business. LTV of its loan book is 40-60%. PRC loan book grew at a CAGR of 19% from 2015 to 2019. 1H20 loan book grew 12% YoY to RMB2,295mn (S$459mn). To date, FSG has not incurred any bad-debt losses in property financing. We are estimating loan book growth of around 8% for FY20e and FY21e.</li>
</ol>
</li>
</ol>
<div>
<div>
Key risks
<ol>
<li>
<ol>
<li>Worst may not be over for the hotel portfolio; stunted recovery is expected. As of 30 June 2020, all temporarily closed hotels except Bilderberg Garden Amsterdam had re-opened. FSG’s well-diversified portfolio is situated in areas where most hotels saw a greater recovery in August (Netherlands portfolio ex-Amsterdam/Rotterdam and Germany). However, the Netherlands has seen a resurgence of Covid-19 cases lately as new cases in September exceeded its peak in April. We are expecting a stunted recovery for the hotel portfolio.</li>
</ol>
</li>
</ol>
<div>
<div>
<div>
<div>
We initiate coverage with a BUY rating. Our target price is S$1.65, based on its historical 30% average discount to RNAV. This implies a potential total return of 33.6% and dividend yield of 1.75%.
</div>
</div>
</div>
</div>
</div>
</div>
</div>


Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
FIRST SPONSOR GROUP LIMITED
Your financier, developer and landlord





Unrecognised property development revenue of S$586mn with another S$1.95bn worth of gross development value (GDV) to be unlocked, equivalent to 5 years of sales.
Property financing loan book grew at 19% CAGR in the past 5 years. These securitised loans offer recurring income at low to mid-teens returns. We are estimating loan book growth of around 8% for FY20e and FY21e.
Initiate coverage with BUY and target price of S$1.65.






Company Background Listed on the mainboard of the SGX on 22 July 2014, First Sponsor Group (FSG) is a property developer (FY19 revenue: 50%), owner (22.5%) and financier (27.5%). It operates in China (FY19 assets: 58%), Europe (40%) and Australia (2%). Hong Leong Group Singapore (35.8%) and Tai Tak Estates (44.1%) are its two controlling shareholders.

Investment Merits



1H20 unrecognised revenue equates to 1-2 years of sales; GDV to unlock is equivalent to 5 years of sales; demand for Dongguan’s residential properties exceeds expectations. Unrecognised revenue as of 1H20 from development properties amounted to S$586mn. FSG holds GDV of S$1.95bn that has yet to be unlocked. Buying sentiment in Dongguan exceeded FSG’s expectations after business resumed in late February 2020. Residential units at most of its projects that were launched in April have been almost fully sold. Another residential block in The Pinnacle was launched for pre-sales on 14 July and has sold more than 85%.
Humen TOD to become one of FSG’s largest development projects. FSG won the bid for a mixed-use development on 29 June at RMB6.6bn (c.S$1.3bn) in a joint venture with China Poly Group (CPOLYZ CH, Not Rated) and China State Railway Group (390 HK, Not Rated). The land will be developed into a transit-oriented development with more than 1mn sqm Gross Floor Area (GFA). FSG has a c.17% effective equity interest in the JV.
High recurring income for its Chinese property financing business plus double-digit growth in securitised loan book. FSG charges interest rates of low to mid-teens p.a. for its property financing business. LTV of its loan book is 40-60%. PRC loan book grew at a CAGR of 19% from 2015 to 2019. 1H20 loan book grew 12% YoY to RMB2,295mn (S$459mn). To date, FSG has not incurred any bad-debt losses in property financing. We are estimating loan book growth of around 8% for FY20e and FY21e.





Key risks



Worst may not be over for the hotel portfolio; stunted recovery is expected. As of 30 June 2020, all temporarily closed hotels except Bilderberg Garden Amsterdam had re-opened. FSG’s well-diversified portfolio is situated in areas where most hotels saw a greater recovery in August (Netherlands portfolio ex-Amsterdam/Rotterdam and Germany). However, the Netherlands has seen a resurgence of Covid-19 cases lately as new cases in September exceeded its peak in April. We are expecting a stunted recovery for the hotel portfolio.







We initiate coverage with a BUY rating. Our target price is S$1.65, based on its historical 30% average discount to RNAV. This implies a potential total return of 33.6% and dividend yield of 1.75%.








Non-SGX Report: : FIRST SPONSOR GROUP LIMITED:  Your Financier, Developer and Landlord

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<ul>
<li>
SGX lists at least 50 companies and trusts associated with 12 family empires managed by some of the richest families in Singapore and Asia. 
	 </li>
	<li>
The combined market cap of these family empire-linked companies and trusts account for nearly a third of the total market cap on Singapore Exchange. They include Singapore’s Wee, Kwek, Ng and Kuok families, Indonesia’s Widjaja, Riady and Salim groups, as well as the Sirivadhanabhakdis in Thailand. 
	 </li>
	<li>Among these 42 companies and 10 trusts, four companies and one REIT have clocked consistently strong performances over the last three calendar years (2018, 2017 and 2016), while registering low volatility levels. They are Frasers Centrepoint Trust, Ho Bee Land, Haw Par Corp, Jardine Matheson and First Sponsor Group.</li>
</ul>
 

SGX lists at least 24 companies and two trusts associated with seven business empires run by some of Singapore’s richest families. These home-grown companies and/or conglomerates on SGX have a combined market capitalisation of more than S$100 billion. They belong to the Wee, Kwek, Ng, Kuok, Koh, Goi and Chua families, with many of the patriarchs being ranked among the city-state’s richest people.

SGX also lists at least 18 companies and eight trusts associated with five foreign family empires – three Indonesian, one Thai and one British – with a combined market capitalisation of more than S$200 billion. The Indonesian business empires are associated with the Widjaja, Riady and Salim families, while Thai corporate ownership is represented by the Sirivadhanabhakdis, and the Jardine Group of companies is controlled by the Scottish/British Keswick family.

The combined market cap of these 50 companies/trusts account for nearly one-third of the total market capitalisation on Singapore Exchange. Their businesses range from banking and finance, hospitality, real estate development and investment (including REITs), to leisure, retail, food and beverage, agriculture, commodities, utilities, shipping and healthcare.

Previously published Market Updates on family empire-linked stocks on SGX are listed below:

<ul>
<li><a href="https://www2.sgx.com/research-education/market-updates/20190523-dividend-yield-plays-amongst-sgxs-family-empire-linked">Dividend Yield Plays Amongst SGX’s Family Empire-Linked Stocks</a></li>
	<li><a href="https://www2.sgx.com/research-education/market-updates/20190516-ytd-performances-family-empire-plays-sgx">YTD Performances of Family Empire Plays on SGX</a></li>
	<li><a href="https://www2.sgx.com/research-education/market-updates/20190509-highlights-home-grown-family-empires-sgx">Highlights of Home-Grown Family Empires on SGX</a></li>
	<li><a href="https://www2.sgx.com/research-education/market-updates/20190509-highlights-foreign-family-empires-listed-sgx">Highlights of Foreign Family Empires Listed on SGX</a></li>
</ul>
Among these 50 companies and trusts, four companies and one REIT have clocked consistently strong performances over three consecutive calendar years (2018, 2017 and 2016), while registering low volatility levels – below the benchmark Straits Times Index (STI) average of 23%.

Historical volatility refers to price fluctuations exhibited by a stock over time. The 260-day price volatility equals the annualised standard deviation of the relative price change for the 260 most recent trading days’ closing price, expressed as a percentage.

Haw Par Corp averaged a total return of +16.7% over the last three years and a 260-day volatility of 7.9%, while Jardine Matheson Holdings averaged a three-year total return of +14.2% and volatility of 20.0%. Frasers Centrepoint Trust, which averaged a +12.0% total return over the past three years, registered volatility of 12.4%. Ho Bee Land and First Sponsor Group averaged three-year total returns of +9.4% and +5.5% respectively, with 260-day volatility levels of 16.8% and 21.4% respectively.

The table below details the four companies and one trust that have registered positive total returns over three consecutive calendar years with low 260-day volatility levels.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$M)
			</td>
			<td>
			260D Volatility (%)
			</td>
			<td>
			Total Return 2018 (%)
			</td>
			<td>
			Total Return 2017 (%)
			</td>
			<td>
			Total Return 2016 (%)
			</td>
		</tr>
<tr>
<td>
			FRASERS CENTREPOINT TRUST
			</td>
			<td>
			J69U
			</td>
			<td>
			2,625
			</td>
			<td>
			12.4
			</td>
			<td>
			2.2
			</td>
			<td>
			24.8
			</td>
			<td>
			9.1
			</td>
		</tr>
<tr>
<td>
			HO BEE LAND
			</td>
			<td>
			H13
			</td>
			<td>
			1,563
			</td>
			<td>
			16.8
			</td>
			<td>
			0.1
			</td>
			<td>
			24.3
			</td>
			<td>
			3.8
			</td>
		</tr>
<tr>
<td>
			HAW PAR CORP
			</td>
			<td>
			H02
			</td>
			<td>
			2,988
			</td>
			<td>
			18.3
			</td>
			<td>
			7.9
			</td>
			<td>
			27.2
			</td>
			<td>
			14.9
			</td>
		</tr>
<tr>
<td>
			JARDINE MATHESON
			</td>
			<td>
			J36
			</td>
			<td>
			65,076
			</td>
			<td>
			20.0
			</td>
			<td>
			19.8
			</td>
			<td>
			4.0
			</td>
			<td>
			18.8
			</td>
		</tr>
<tr>
<td>
			FIRST SPONSOR GROUP
			</td>
			<td>
			ADN
			</td>
			<td>
			962
			</td>
			<td>
			21.4
			</td>
			<td>
			1.6
			</td>
			<td>
			7.2
			</td>
			<td>
			7.7
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			17.8
			</td>
			<td>
			6.3
			</td>
			<td>
			17.5
			</td>
			<td>
			10.9
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 31 May 2019)

Highlights of Some of Singapore and Asia’s Wealthiest Families

Frasers Centrepoint Trust

<ul>
<li>The REIT is part of Charoen Sirivadhanabhakdi’s stable of companies/trusts. Charoen, the founder and chairman of Thai beverage and real estate conglomerate TCC Group, was ranked by Forbes as <a href="https://www.forbes.com/profile/charoen-sirivadhanabhakdi/#73640c412668">Thailand’s fourth-richest man</a> in 2018, with a net worth of US$17.4 billion.</li>
	<li>A number of privately held companies in which Charoen and his wife Khunying Wanna jointly hold stakes, are substantial shareholders in various SGX-listed companies/trusts – Thai Beverage, Fraser and Neave, and Frasers Logistics &amp; Industrial Trust, Frasers Commercial Trust, Frasers Hospitality Trust and Frasers Property.</li>
</ul>
Ho Bee Land

<ul>
<li>Chua Thian Poh, ranked by Forbes as <a href="https://www.forbes.com/singapore-billionaires/list/">Singapore’s 23rd richest man</a> in 2018 with a net worth of US$1.5 billion, founded Ho Bee Land in 1987. The developer, known for luxury homes in the exclusive residential enclave of Sentosa Cove, was listed on SGX Mainboard in 1999.</li>
	<li>Chua has a deemed interest of 75.0% in Ho Bee Land, according to the company’s latest annual report. He and his son, Nicholas, hold positions on the company’s board.</li>
</ul>
Haw Par Corp

<ul>
<li>The company, which has businesses in leisure and healthcare and is known for producing the iconic Tiger Balm ointment, is part of banking and property magnate Wee Cho Yaw’s stable of companies.</li>
	<li>Wee was ranked <a href="https://www.forbes.com/singapore-billionaires/list/">Singapore’s sixth richest person</a> in 2018 by Forbes, with a total net worth of US$6.4 billion. In <a href="https://www.forbes.com/billionaires/">Forbes’ 2019 list of global billionaires</a>, Wee takes the 267th spot.</li>
	<li>Wee is the largest shareholder and Chairman Emeritus of Singapore’s third-largest lender by assets, United Overseas Bank. Apart from UOB and Haw Par, Wee and his sons also own stakes in SGX-listed United Overseas Insurance, UOL Group, UOB-Kay Hian Holdings and United Industrial Corp.</li>
</ul>
Jardine Matheson

<ul>
<li>Simon Keswick is the fourth-generation descendant of William Keswick, who founded the Keswick family dynasty that was linked to the Jardines Group by marriage. Of Scottish origin, the Keswick dynasty has been associated with the Far East since the 1850s, while Jardine, Matheson &amp; Co was founded in China, in the 1830s by Scotsmen William Jardine and James Matheson.</li>
	<li>Incorporated in Bermuda and headquartered in Hong Kong, Jardine Matheson has a primary listing on the London Stock Exchange and secondary listings on SGX and the Bermuda Stock Exchange. The group’s portfolio of businesses across Asia Pacific includes engineering, construction, auto dealerships, insurance services, property, hospitality, consumer goods. It is a constituent of Singapore’s benchmark STI.</li>
	<li>Jardine Strategic Holdings is a substantial shareholder in Jardine Cycle &amp; Carriage, Hongkong Land, Mandarin Oriental, Dairy Farm and Jardine Matheson. The latter in turn is a major shareholder of Jardine Strategic.</li>
</ul>
First Sponsor Group

<ul>
<li>The developer of residential and commercial properties in China and The Netherlands is part of the stable of companies owned by property and hotel mogul Kwek Leng Beng.</li>
	<li>Kwek was ranked <a href="https://www.forbes.com/singapore-billionaires/list/">Singapore’s 4th richest man</a> in 2018 by Forbes, with a net worth of US$7.6 billion. In <a href="https://www.forbes.com/billionaires/">Forbes’ 2019 list of global billionaires</a>, he took 745th position.</li>
	<li>Kwek is Executive Chairman of City Developments and Executive Director of Hong Leong Finance. His son, Sherman, is City Developments’ Group CEO, while nephew Eik Sheng is its Group Chief Strategy Officer. Another son, Kingston, is Non-Executive Director of First Sponsor.</li>
</ul>
</body></html>





SGX lists at least 50 companies and trusts associated with 12 family empires managed by some of the richest families in Singapore and Asia. 
	 
	
The combined market cap of these family empire-linked companies and trusts account for nearly a third of the total market cap on Singapore Exchange. They include Singapore’s Wee, Kwek, Ng and Kuok families, Indonesia’s Widjaja, Riady and Salim groups, as well as the Sirivadhanabhakdis in Thailand. 
	 
	Among these 42 companies and 10 trusts, four companies and one REIT have clocked consistently strong performances over the last three calendar years (2018, 2017 and 2016), while registering low volatility levels. They are Frasers Centrepoint Trust, Ho Bee Land, Haw Par Corp, Jardine Matheson and First Sponsor Group.

 

SGX lists at least 24 companies and two trusts associated with seven business empires run by some of Singapore’s richest families. These home-grown companies and/or conglomerates on SGX have a combined market capitalisation of more than S$100 billion. They belong to the Wee, Kwek, Ng, Kuok, Koh, Goi and Chua families, with many of the patriarchs being ranked among the city-state’s richest people.

SGX also lists at least 18 companies and eight trusts associated with five foreign family empires – three Indonesian, one Thai and one British – with a combined market capitalisation of more than S$200 billion. The Indonesian business empires are associated with the Widjaja, Riady and Salim families, while Thai corporate ownership is represented by the Sirivadhanabhakdis, and the Jardine Group of companies is controlled by the Scottish/British Keswick family.

The combined market cap of these 50 companies/trusts account for nearly one-third of the total market capitalisation on Singapore Exchange. Their businesses range from banking and finance, hospitality, real estate development and investment (including REITs), to leisure, retail, food and beverage, agriculture, commodities, utilities, shipping and healthcare.

Previously published Market Updates on family empire-linked stocks on SGX are listed below:


Dividend Yield Plays Amongst SGX’s Family Empire-Linked Stocks
	YTD Performances of Family Empire Plays on SGX
	Highlights of Home-Grown Family Empires on SGX
	Highlights of Foreign Family Empires Listed on SGX

Among these 50 companies and trusts, four companies and one REIT have clocked consistently strong performances over three consecutive calendar years (2018, 2017 and 2016), while registering low volatility levels – below the benchmark Straits Times Index (STI) average of 23%.

Historical volatility refers to price fluctuations exhibited by a stock over time. The 260-day price volatility equals the annualised standard deviation of the relative price change for the 260 most recent trading days’ closing price, expressed as a percentage.

Haw Par Corp averaged a total return of +16.7% over the last three years and a 260-day volatility of 7.9%, while Jardine Matheson Holdings averaged a three-year total return of +14.2% and volatility of 20.0%. Frasers Centrepoint Trust, which averaged a +12.0% total return over the past three years, registered volatility of 12.4%. Ho Bee Land and First Sponsor Group averaged three-year total returns of +9.4% and +5.5% respectively, with 260-day volatility levels of 16.8% and 21.4% respectively.

The table below details the four companies and one trust that have registered positive total returns over three consecutive calendar years with low 260-day volatility levels.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			260D Volatility (%)
			
			
			Total Return 2018 (%)
			
			
			Total Return 2017 (%)
			
			
			Total Return 2016 (%)
			
		


			FRASERS CENTREPOINT TRUST
			
			
			J69U
			
			
			2,625
			
			
			12.4
			
			
			2.2
			
			
			24.8
			
			
			9.1
			
		


			HO BEE LAND
			
			
			H13
			
			
			1,563
			
			
			16.8
			
			
			0.1
			
			
			24.3
			
			
			3.8
			
		


			HAW PAR CORP
			
			
			H02
			
			
			2,988
			
			
			18.3
			
			
			7.9
			
			
			27.2
			
			
			14.9
			
		


			JARDINE MATHESON
			
			
			J36
			
			
			65,076
			
			
			20.0
			
			
			19.8
			
			
			4.0
			
			
			18.8
			
		


			FIRST SPONSOR GROUP
			
			
			ADN
			
			
			962
			
			
			21.4
			
			
			1.6
			
			
			7.2
			
			
			7.7
			
		


			Average
			
			
			 
			
			
			 
			
			
			17.8
			
			
			6.3
			
			
			17.5
			
			
			10.9
			
		

Source: Bloomberg &amp; StockFacts (data as of 31 May 2019)

Highlights of Some of Singapore and Asia’s Wealthiest Families

Frasers Centrepoint Trust


The REIT is part of Charoen Sirivadhanabhakdi’s stable of companies/trusts. Charoen, the founder and chairman of Thai beverage and real estate conglomerate TCC Group, was ranked by Forbes as Thailand’s fourth-richest man in 2018, with a net worth of US$17.4 billion.
	A number of privately held companies in which Charoen and his wife Khunying Wanna jointly hold stakes, are substantial shareholders in various SGX-listed companies/trusts – Thai Beverage, Fraser and Neave, and Frasers Logistics &amp; Industrial Trust, Frasers Commercial Trust, Frasers Hospitality Trust and Frasers Property.

Ho Bee Land


Chua Thian Poh, ranked by Forbes as Singapore’s 23rd richest man in 2018 with a net worth of US$1.5 billion, founded Ho Bee Land in 1987. The developer, known for luxury homes in the exclusive residential enclave of Sentosa Cove, was listed on SGX Mainboard in 1999.
	Chua has a deemed interest of 75.0% in Ho Bee Land, according to the company’s latest annual report. He and his son, Nicholas, hold positions on the company’s board.

Haw Par Corp


The company, which has businesses in leisure and healthcare and is known for producing the iconic Tiger Balm ointment, is part of banking and property magnate Wee Cho Yaw’s stable of companies.
	Wee was ranked Singapore’s sixth richest person in 2018 by Forbes, with a total net worth of US$6.4 billion. In Forbes’ 2019 list of global billionaires, Wee takes the 267th spot.
	Wee is the largest shareholder and Chairman Emeritus of Singapore’s third-largest lender by assets, United Overseas Bank. Apart from UOB and Haw Par, Wee and his sons also own stakes in SGX-listed United Overseas Insurance, UOL Group, UOB-Kay Hian Holdings and United Industrial Corp.

Jardine Matheson


Simon Keswick is the fourth-generation descendant of William Keswick, who founded the Keswick family dynasty that was linked to the Jardines Group by marriage. Of Scottish origin, the Keswick dynasty has been associated with the Far East since the 1850s, while Jardine, Matheson &amp; Co was founded in China, in the 1830s by Scotsmen William Jardine and James Matheson.
	Incorporated in Bermuda and headquartered in Hong Kong, Jardine Matheson has a primary listing on the London Stock Exchange and secondary listings on SGX and the Bermuda Stock Exchange. The group’s portfolio of businesses across Asia Pacific includes engineering, construction, auto dealerships, insurance services, property, hospitality, consumer goods. It is a constituent of Singapore’s benchmark STI.
	Jardine Strategic Holdings is a substantial shareholder in Jardine Cycle &amp; Carriage, Hongkong Land, Mandarin Oriental, Dairy Farm and Jardine Matheson. The latter in turn is a major shareholder of Jardine Strategic.

First Sponsor Group


The developer of residential and commercial properties in China and The Netherlands is part of the stable of companies owned by property and hotel mogul Kwek Leng Beng.
	Kwek was ranked Singapore’s 4th richest man in 2018 by Forbes, with a net worth of US$7.6 billion. In Forbes’ 2019 list of global billionaires, he took 745th position.
	Kwek is Executive Chairman of City Developments and Executive Director of Hong Leong Finance. His son, Sherman, is City Developments’ Group CEO, while nephew Eik Sheng is its Group Chief Strategy Officer. Another son, Kingston, is Non-Executive Director of First Sponsor.




Consistent Performers Amongst SGX’s Family Empire-Linked Plays

Singapore

First Sponsor Group is an investment holding company primarily engaged in property development, property investment, hotel operations, and property financing. It develops and sells residential and commercial properties, owns and operates hotels and investment properties, and provides interest-bearing loans. The company was incorporated in 2007 and is headquartered in Singapore.

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