STARHILL GLOBAL REIT
P40.SI
Starhill Global REIT -
- 3Q15 in line. Strong showings in Australia and Singapore offset weakness in Malaysia and China.
- Still cautious on Singapore retail as reversions, shopper traffic & tenant sales are expected to fall this year.
- Maintain HOLD with TP bumped from SGD0.71 to SGD0.74 on 2-4% higher DPU, still at 7.5% yield target. Still our preferred retail REIT on recent acquisitions & master lease renewals.
What’s New
- 3Q was a strong quarter as expected. Myer Centre Adelaide had its first full quarter and Wisma Atria topped our expectations.
- Revenue and NPI grew 16.8% YoY (9.6% QoQ) and 10.2% YoY (5.6% QoQ), while DPU improved 3.1% YoY (1.6% QoQ).
- Australia NPI surged 113% YoY to SGD8.6m due to Myer. In Singapore, Wisma’s retail NPI rose 5.6% YoY to SGD11.5m as occupancy ramped up from 98.1% to 100%.
- Committed rent reversions of c.8.6% in 1H also kicked in. However, management guided that committed reversions signed in 3Q fell 7.7%, as it tried out new fashion/F&B concepts. It continues to see a difficult retail environment, especially for the fashion industry. Shopper traffic and tenant sales fell c.6.1% and c.4.9% for the year.
- Malaysia and China NPI declined 16% YoY and 27.5% YoY respectively, due to MYR depreciation and severe competition in Chengdu.
Top retail REIT pick
- Starhill remains our preferred exposure to retail REITs owing to its clear DPU growth path from:
- Myer (11% NPI), plus a potential 23% increase in NLA from AEI; and
- three master leases - Ngee Ann, Lot 10, Starhill Gallery at 38% NPI - up for renewal in Jun 2016.
- We raise DPU by 2-4% to accommodate Wisma’s strong showing.
- Applying our unchanged 7.5% yield target to FY16 DPU, our TP climbs from SGD0.71 to SGD0.74. Maintain HOLD in view of a generally difficult retail environment.
Joshua Tan
Maybank Kim Eng
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http://www.maybank-ke.com.sg/
2015-10-28
Maybank Kim Eng
SGX Stock
Analyst Report
0.74
Up
0.71
