Singapore Retail REITs - CGS-CIMB Research 2020-03-30: Negative Impact From New Measures

Singapore Retail REITs - CGS-CIMB Research | SGinvestors.io CAPITALAND MALL TRUST (SGX:C38U) FRASERS CENTREPOINT TRUST (SGX:J69U) SPH REIT (SGX:SK6U) MAPLETREE COMMERCIAL TRUST (SGX:N2IU) STARHILL GLOBAL REIT (SGX:P40U)

Singapore Retail REITs - Negative Impact From New Measures

  • The Singapore government has issued an advisory urging Singaporeans to avoid making any non-essential visits to malls and supermarkets.
  • We estimate 12-19% FY20F DPU impact from 2 months’ rent rebate to 90% of tenants and loss of 90% variable income until year-end (9 months’ impact).
  • Prefer Sheng Siong (SGX:OV8), which could be a beneficiary when people stay at home.



New measures to minimise spread of Covid-19

  • Over the weekend, the Singapore government issued an advisory urging its residents to avoid making any non-essential visits to malls and supermarkets. This comes a day after crowds were seen outside some shopping malls as mall operators regulated the number of shoppers to comply with Singapore’s new safe-distancing measures.
  • On 27 Mar, Singapore ordered all entertainment venues to close and limited gatherings to less than 10 persons. While malls will remain open, the new measure limits mall capacity to 1 person per 16 sq m of usable space.


Prompt action from REITs after stimulus package announcement



Large DPU impact likely in 2020

  • The new measures will significantly reduce the density of crowds in the malls, including the suburban malls. Based on our checks with the REITs, these measures will also impact urban malls, which have already seen large declines in shopper traffic and tenant sales.
  • Based on our analysis, a 2-month rent rebate given to 90% of the malls’ tenants plus 90% of variable income wiped out for 9 months until year-end and 50% carpark income reduction will reduce REITs’ FY20F DPU by 12-19%.
  • Some countries have ordered malls to close. In this situation, REITs’ rental income will be significantly affected as only ~40% of the malls’ income is generated from essential services (F&B and supermarkets) on average. An additional one-month mall closure will reduce our FY20 DPU forecasts by another 6-8% pts.
  • Given the lower support granted to malls overseas, retail REITs with overseas presence will be in a worse position as compared to the local-focused mall under these circumstances.
  • We prefer Sheng Siong (SGX:OV8), which could be a beneficiary as people stay at home.





EING Kar Mei CFA CGS-CIMB Research | LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2020-03-30
SGX Stock Analyst Report ADD MAINTAIN ADD 2.750 SAME 2.750
ADD MAINTAIN ADD 3.100 SAME 3.100
ADD MAINTAIN ADD 1.240 SAME 1.240
HOLD MAINTAIN HOLD 2.610 SAME 2.610
HOLD MAINTAIN HOLD 0.790 SAME 0.790



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