Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2><h3>SREITs results in a glance (see detailed spreadsheet and calendar attached)</h3><table class="table table-striped"><tbody><tr><td style="width: 162.6pt;"> </td><td style="width: 162.5pt;">ECWREIT</td><td style="width: 162.5pt;">SASSR</td><td style="width: 162.5pt;">BHGREIT</td></tr><tr><td style="width: 162.6pt;">Period</td><td style="width: 162.5pt;">1Q21</td><td style="width: 162.5pt;">1Q21</td><td style="width: 162.5pt;">1Q21</td></tr><tr><td style="width: 162.6pt;">Gross Revenue (S$ m)</td><td style="width: 162.5pt;">30.8 (+30.9% YoY)</td><td style="width: 162.5pt;">EMA Rental Income: 34.1 (+23.4% YoY)</td><td style="width: 162.5pt;">Not Disclosed</td></tr><tr><td style="width: 162.6pt;">NPI (S$ m)</td><td style="width: 162.5pt;">27.7 (+30.9% YoY)</td><td style="width: 162.5pt;">EMA Rental Income (Excluding straight-line adjustments): 32.3 (+27.8% YoY)</td><td style="width: 162.5pt;">Not Disclosed</td></tr><tr><td style="width: 162.6pt;">DPU (S$ c)</td><td style="width: 162.5pt;">1.53</td><td style="width: 162.5pt;">1.759 (+31.9% YoY)</td><td style="width: 162.5pt;">Not Disclosed</td></tr><tr><td style="width: 162.6pt;">NAV per Unit (S$)</td><td style="width: 162.5pt;">0.91</td><td style="width: 162.5pt;">0.922</td><td style="width: 162.5pt;">Not Disclosed</td></tr><tr><td style="width: 162.6pt;">P/B (x)</td><td style="width: 162.5pt;">0.81</td><td style="width: 162.5pt;">1.00</td><td style="width: 162.5pt;">0.64(Based on 4Q20 NAV)</td></tr><tr><td style="width: 162.6pt;">Occupancy (%)</td><td style="width: 162.5pt;"> 99.1</td><td style="width: 162.5pt;">93.5</td><td style="width: 162.5pt;">92.1</td></tr><tr><td style="width: 162.6pt;">Reversion (%)</td><td style="width: 162.5pt;"> NA</td><td style="width: 162.5pt;">Not Disclosed</td><td style="width: 162.5pt;">Not Disclosed</td></tr><tr><td style="width: 162.6pt;">Gearing (%)</td><td style="width: 162.5pt;">38.3</td><td style="width: 162.5pt;">27.6</td><td style="width: 162.5pt;">35.6</td></tr><tr><td style="width: 162.6pt;">Cost of Debt (%)</td><td style="width: 162.5pt;">4.1</td><td style="width: 162.5pt;">3.3</td><td style="width: 162.5pt;">3.8</td></tr><tr><td style="width: 162.6pt;">1 Yr Fwd Yield (%)</td><td style="width: 162.5pt;">7.76</td><td style="width: 162.5pt;">7.46</td><td style="width: 162.5pt;">NA</td></tr><tr><td style="width: 162.6pt;">Debt Hedged (%)</td><td style="width: 162.5pt;">100% of offshore facilities</td><td style="width: 162.5pt;">Not Disclosed</td><td style="width: 162.5pt;">60% of offshore loans</td></tr><tr><td style="width: 162.6pt;">Target Price</td><td style="width: 162.5pt;">Under Review</td><td style="width: 162.5pt;">NA</td><td style="width: 162.5pt;">NA</td></tr><tr><td style="width: 162.6pt;">Rating</td><td style="width: 162.5pt;">Under Review</td><td style="width: 162.5pt;">NA</td><td style="width: 162.5pt;">NA</td></tr></tbody></table><h3><a href="https://www.smartkarma.com/entities/ec-world-reit" target="_blank" data-smartkarma-citation="entities:22842" rel="noopener">EC World Reit (ECWREIT SP)</a> 1Q21 DPU +32.3% YoY; Robust growth but DI retention persist with retained DI snowballing to S$5.49m</h3><ul><li>Both revenue and NPI grew by 30.9% YoY in 1Q21 to S$30.8m (26.9% BB est.) and S$27.7m (28.1% BB est.), respectively, mainly due to absence of rental rebates in 1Q20 and strengthening of RMB. In RMB terms, gross revenue and NPI were 26.0% and 26.1% YoY higher, respectively</li><li>1Q21 DPU increased 32.3% YoY or 7.4% QoQ to S$1.532c (26.9% BB est.), mainly due to absence of rental rebates given. ECWREIT continued to retain 10% of DI in 1Q21 (vs. 10% in 4Q20 and 5% in 1Q20) on a conservative view of uncertainties arising from prolonged COVID-19 pandemic globally and for general working capital purpose</li><li>ECWREIT has secured renewal of major lease at Hengde Logistics, extending WALE to 3.2 years (by GRI) from 3.1 years as at 31Mar21. ~11.8% of GRI will be due for renewal for the remaining of FY21E</li><li>Portfolio occupancy remains robust at 99.1% (vs. 99.3% in 4Q20 and 96.7% in 3Q20)</li><li>On 30Apr, ECWREIT announced an incident of a displacement and collapse of a berth at Chongxian Port Investment that resulted in the damage of two gantry cranes located within the vicinity of the berth. Due to the location of the damaged area, the operations at the damaged berth and the 2 adjacent berths have been suspended. The rest of the port operation is not affected. The cause of the incident is still being investigated. ECWREIT is working closely with the insurer to assess the quantum of revenue loss and property damage recoverable by insurance claims</li><li>Portfolio gearing stands at 38.3% (vs. 38.1% in 4Q20 and 38.6% in 1Q20) with average cost of debt of 4.1% pa. (vs. 4.2% in 4Q20 and 4.3% in 1Q20) and 100% of offshore facilities hedged</li><li>ECWREIT currently trades at 7.76% FY21E yield and 0.81x P/B.</li></ul>Comments: 1Q21 revenue and NPI came in at 26.5% and 26.0% of our full-year FY21E estimates, respectively. Meanwhile, 1Q21 DPU came in at 27.5% of FY21E estimates. Note that we have assumed a 10% DI retention for FY21E, the higher than expected 1Q21 DPU was due to a lower 1Q21 tax rate at 24.7% (vs. our projected 38.0%). Including 1Q21’s S$1.38m, total retained DI since 1Q20 has amounted to S$5.49m (or S$0.681c per Unit). Port Logistics had done well in 1Q21, with revenue increasing 40.4% YoY to S$12.7m, and NPI increasing 41.8% YoY to S$11.9m (NPI margin +0.9pp. YoY to 93.5%). E-commerce Logistics has also recorded a strong 1Q21 growth, with revenue and NPI rising 32.4% and 30.9% YoY to S$14.7m and S$12.7m, respectively (NPI margin -1.0% to 86.5%). On the other hand, Specialised Logistics was muted in 1Q21, with Revenue and NPI flattish YoY at S$3.4m and S$3.1m, respectively (NPI margin +0.7pp. to 90.7%). While insurance claims could offset the revenue loss and restoration costs somewhat, we are cognizant that Chongxian Port Investment contributed to ~27% and ~28% of FY20 Revenue and NPI, respectively. We are currently reviewing our recommendations for ECWREIT.

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached) ECWREITSASSRBHGREITPeriod1Q211Q211Q21Gross Revenue (S$ m)30.8 (+30.9% YoY)EMA Rental Income: 34.1 (+23.4% YoY)Not DisclosedNPI (S$ m)27.7 (+30.9% YoY)EMA Rental Income (Excluding straight-line adjustments): 32.3 (+27.8% YoY)Not DisclosedDPU (S$ c)1.531.759 (+31.9% YoY)Not DisclosedNAV per Unit (S$)0.910.922Not DisclosedP/B (x)0.811.000.64(Based on 4Q20 NAV)Occupancy (%) 99.193.592.1Reversion (%) NANot DisclosedNot DisclosedGearing (%)38.327.635.6Cost of Debt (%)4.13.33.81 Yr Fwd Yield (%)7.767.46NADebt Hedged (%)100% of offshore facilitiesNot Disclosed60% of offshore loansTarget PriceUnder ReviewNANARatingUnder ReviewNANAEC World Reit (ECWREIT SP) 1Q21 DPU +32.3% YoY; Robust growth but DI retention persist with retained DI snowballing to S$5.49mBoth revenue and NPI grew by 30.9% YoY in 1Q21 to S$30.8m (26.9% BB est.) and S$27.7m (28.1% BB est.), respectively, mainly due to absence of rental rebates in 1Q20 and strengthening of RMB. In RMB terms, gross revenue and NPI were 26.0% and 26.1% YoY higher, respectively1Q21 DPU increased 32.3% YoY or 7.4% QoQ to S$1.532c (26.9% BB est.), mainly due to absence of rental rebates given. ECWREIT continued to retain 10% of DI in 1Q21 (vs. 10% in 4Q20 and 5% in 1Q20) on a conservative view of uncertainties arising from prolonged COVID-19 pandemic globally and for general working capital purposeECWREIT has secured renewal of major lease at Hengde Logistics, extending WALE to 3.2 years (by GRI) from 3.1 years as at 31Mar21. ~11.8% of GRI will be due for renewal for the remaining of FY21EPortfolio occupancy remains robust at 99.1% (vs. 99.3% in 4Q20 and 96.7% in 3Q20)On 30Apr, ECWREIT announced an incident of a displacement and collapse of a berth at Chongxian Port Investment that resulted in the damage of two gantry cranes located within the vicinity of the berth. Due to the location of the damaged area, the operations at the damaged berth and the 2 adjacent berths have been suspended. The rest of the port operation is not affected. The cause of the incident is still being investigated. ECWREIT is working closely with the insurer to assess the quantum of revenue loss and property damage recoverable by insurance claimsPortfolio gearing stands at 38.3% (vs. 38.1% in 4Q20 and 38.6% in 1Q20) with average cost of debt of 4.1% pa. (vs. 4.2% in 4Q20 and 4.3% in 1Q20) and 100% of offshore facilities hedgedECWREIT currently trades at 7.76% FY21E yield and 0.81x P/B.Comments: 1Q21 revenue and NPI came in at 26.5% and 26.0% of our full-year FY21E estimates, respectively. Meanwhile, 1Q21 DPU came in at 27.5% of FY21E estimates. Note that we have assumed a 10% DI retention for FY21E, the higher than expected 1Q21 DPU was due to a lower 1Q21 tax rate at 24.7% (vs. our projected 38.0%). Including 1Q21’s S$1.38m, total retained DI since 1Q20 has amounted to S$5.49m (or S$0.681c per Unit). Port Logistics had done well in 1Q21, with revenue increasing 40.4% YoY to S$12.7m, and NPI increasing 41.8% YoY to S$11.9m (NPI margin +0.9pp. YoY to 93.5%). E-commerce Logistics has also recorded a strong 1Q21 growth, with revenue and NPI rising 32.4% and 30.9% YoY to S$14.7m and S$12.7m, respectively (NPI margin -1.0% to 86.5%). On the other hand, Specialised Logistics was muted in 1Q21, with Revenue and NPI flattish YoY at S$3.4m and S$3.1m, respectively (NPI margin +0.7pp. to 90.7%). While insurance claims could offset the revenue loss and restoration costs somewhat, we are cognizant that Chongxian Port Investment contributed to ~27% and ~28% of FY20 Revenue and NPI, respectively. We are currently reviewing our recommendations for ECWREIT.

ASEAN Builder's Scoop (12May21) - ECWREIT strong growth despite retention

External broker reports(aggregated public sources), KGI Securities Singapore

KGI Securities

External broker reports(aggregated public sources)

KGI Securities Singapore

We are a pioneer Securities & Derivatives, Trading and Clearing Member of Singapore Exchange as well as a pioneer member of ICE Futures Singapore & ICE Clear Singapore. We offer our valued clients round the clock (24 hour) single-touch point for multi-asset clients and 24 hour high-touch desk for global products. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<ul><li>Outstanding 4Q23 performance. Despite a 4.6% YoY decline in total distributable income per unit (DPU) to 6.249 Scts in FY23, the business performance showcased better-than-expected results in 4Q23.</li><li>4Q23 DPU rose 8.7% YoY to 1.415 Scts. Outlet sales in RMB rose by an impressive 84.6% YoY, with a consistent 16.2% MoM increase, driven by the outlets’ Red Festival and year-end promotions.</li><li>Amidst growing consumer caution towards domestic spending, outlet sales have witnessed a notable resurgence, benefiting from the prevailing trend of economizing on consumption in the country.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Outstanding 4Q23 performance. Despite a 4.6% YoY decline in total distributable income per unit (DPU) to 6.249 Scts in FY23, the business performance showcased better-than-expected results in 4Q23.4Q23 DPU rose 8.7% YoY to 1.415 Scts. Outlet sales in RMB rose by an impressive 84.6% YoY, with a consistent 16.2% MoM increase, driven by the outlets’ Red Festival and year-end promotions.Amidst growing consumer caution towards domestic spending, outlet sales have witnessed a notable resurgence, benefiting from the prevailing trend of economizing on consumption in the country.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sasseur REIT (SASSR SP/CRPU.SI) - REIT-Laxing Consumption

External broker reports(aggregated public sources), RHB Invest

RHB Invest

RHB Investment Bank is one of the leading capital market players in Malaysia. Supported by an award-winning research team of experienced product specialists, RHB Group Investment Banking offers a full range of investment banking products and services covering primary markets, such as advisory (corporate & debt restructuring, mergers and acquisitions, takeovers), fundraising via both equity and debt instruments, and secondary markets including securities trading for both institutional and retail clients. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>1Q23 tenant sales jumped 17.9% YoY. We expect FY23e tenant sales to rise by 25% given the re-opening in China, 18 days of closure a year ago and the shift in consumption towards bargains in outlet malls.</li><li>1Q23 DPU of 1.849 cents was highest since listing.</li><li>Stable income base guaranteed by the sponsor with 3% annual rental escalation provides a cushion 5.4% dividend yield from this fixed component alone. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

1Q23 tenant sales jumped 17.9% YoY. We expect FY23e tenant sales to rise by 25% given the re-opening in China, 18 days of closure a year ago and the shift in consumption towards bargains in outlet malls.1Q23 DPU of 1.849 cents was highest since listing.Stable income base guaranteed by the sponsor with 3% annual rental escalation provides a cushion 5.4% dividend yield from this fixed component alone. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sasseur REIT - Riding On Robust Consumption

External broker reports(aggregated public sources), UOB Kay Hian

UOB Kay Hian

Backed by the UOB Group, UOB Kay Hian is one of Asia’s largest brokerage firms. Headquartered in Singapore, we are supported by more than 80 branches worldwide including a growing network of offices across Southeast Asia, Greater China, the United Kingdom and North America. Our global footprint and strong international presence have enabled us to feel the pulse of key financial markets and deliver incisive intelligence across industry sectors and asset classes. Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>Sasseur REIT (SGX:CRPU) reported 1Q23 DPU of 1.849 cents (+1.5% y-o-y), which is slightly above our expectations.</li><li>Sasseur REIT retained S$0.9m in 1Q23 for working capital purposes (1Q22: S$2.5m).</li><li>Payout ratio was 96.2% in 1Q23. Sasseur REIT's rental income increased 7.7% y-o-y in 1Q23.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sasseur REIT (SGX:CRPU) reported 1Q23 DPU of 1.849 cents (+1.5% y-o-y), which is slightly above our expectations.Sasseur REIT retained S$0.9m in 1Q23 for working capital purposes (1Q22: S$2.5m).Payout ratio was 96.2% in 1Q23. Sasseur REIT's rental income increased 7.7% y-o-y in 1Q23.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sasseur REIT - 1Q23 Slightly Above Expectation

Singapore

Sasseur Real Estate Investment Trust is a Singapore-based real estate investment trust that invests in a diversified portfolio of income-producing retail outlet malls and related real estate assets, primarily in China. Its portfolio includes four outlet malls located in Chongqing, Hefei, and Kunming. The company was founded in Singapore in 2017.

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Sasseur (SASSR SP)

ASEAN Builder's Scoop (12May21) - ECWREIT strong growth despite retention

ECWREIT strong growth despite retention; SASSR rebounded from a low-base; CAPL fund mgmt, resi the bright spots; FPL SG & AUS supporting growth;...

SCCM Asia Research

Sasseur REIT (SASSR SP/CRPU.SI) - REIT-Laxing Consumption

Outstanding 4Q23 performance. Despite a 4.6% YoY decline in total distributable income per unit (DPU) to 6.249 Scts in FY23, the business...

KGI Securities

Sasseur REIT - Riding On Robust Consumption

Stable income base guaranteed by the sponsor with 3% annual rental escalation provides a cushion 5.4% dividend yield from this fixed component alone.

RHB Invest

Sasseur REIT - 1Q23 Slightly Above Expectation

Sasseur REIT (SGX:CRPU) reported 1Q23 DPU of 1.849 cents (+1.5% y-o-y), which is slightly above our expectations.Sasseur REIT retained S$0.9m in...

UOB Kay Hian

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