DASIN RETAIL TRUST (SGX:CEDU)
Dasin Retail Trust - Short-Term Pain For Long-Term Gain
- DASIN RETAIL TRUST (SGX:CEDU)'s 1Q19 revenue were below our expectations due to a new AEI initiative at Xiaolan Metro Mall, while NPI margins were kept in check due to lower property expenses.
- Portfolio occupancy took a hit, from 99.1% in 4Q18 to 97.6% in 1Q19, due to the new S$1.0mn AEI initiative at Xiaolan Metro Mall.
- Favourable renewal and rental escalation rates are expected at Xiaolan Metro Mall once the ongoing AEI is completed in 3Q19.
- Maintain ACCUMULATE with unchanged Target Price of S$0.94.
The Positives
NPI margins improved across the board.
- While revenue declined on the whole, NPI was held up by lower property expenses across all assets, which relate to the lower maintenance, cleaning, advertising and promotion costs. Shiqi Metro Mall, Dasin Retail Trust’s largest contributor by GRI, saw its NPI margin improve to 87% in 1Q19 from 78% in 1Q18.
The Negatives
Occupancy at Xiaolan Metro Mall fell to 95% from 99.2% in 4Q18.
- This was due to a new S$1.0mn AEI initiative at Xiaolan Metro Mall, its second biggest contributor by GRI. c.2.5k sqm of GFA on the fifth floor of Xiaolan Metro Mall has been closed for tenant reconfiguration, ahead of the original lease term expiry in 2026. The AEI is expected to complete in 3Q19.
Outlook
- While occupancy will be depressed in the near term, favourable renewal and rental escalation rates are progressively expected at Xiaolan Metro Mall once the ongoing AEI is completed. We remain positive on the inorganic growth prospects for Dasin Retail Trust, with its ROFR pipeline of 20 properties spanning four cities – 14 of which have been completed. Doumen Metro Mall and Shunde Metro Mall, both completed in 2018, are possible acquisitions as they would provide Dasin Retail Trust the runway for growth.
Maintain ACCUMULATE with adjusted target price of S$0.94
- Our target price of S$0.94 translates to a FY19e yield of 8.4% and a P/NAV of 0.60x.
Phillip Research Team
Phillip Securities Research
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https://www.stocksbnb.com/
2019-05-15
SGX Stock
Analyst Report
0.940
SAME
0.940
* The report is produced by Phillip Securities Research under the ‘SGX StockFacts Research Programme’ (administered by SGX) and has received monetary compensation for the production of the report from the entity mentioned in the report.
