Starhill Global REIT - DBS Research 2020-04-02: Speedbumps Ahead

STARHILL GLOBAL REIT (SGX:P40U) | SGinvestors.io STARHILL GLOBAL REIT (SGX:P40U)

Starhill Global REIT - Speedbumps Ahead

  • Starhill Global REIT's key properties Ngee Ann City and Wisma Atria face challenging times given the lack of tourists and local traffic to Orchard Road with COVID-19 outbreak.
  • Australia exposure impacted by weak currency and weakening operating data.



Speedbumps ahead

  • While we like Starhill Global REIT (SGX:P40U) for its diversified earnings base supported by c.49% of revenues pegged to stable long-term leases with periodic rent reviews, we see challenges for its malls in Singapore and Australia which are impacted by the ongoing COVID-19 outbreak and falling consumer demand.
  • We cut our target price to factor higher cost of equity assumption and earnings estimates by 8%-12%.
  • Our revised target price of S$0.45 reflects higher beta assumption mirroring a recessionary environment, compensated by lower risk-free rates.


Challenges rising for its Singapore and Australia malls.

  • We see rising vacancy risk for Starhill Global REIT's Singapore office and retail space (Wisma Atria) given the tightening measures introduced by the government on limiting tourists (its main target market) and locals. We see a majority of tenants across various trade sectors looking for some form of rental assistance in the coming quarters given the quieter foot traffic.
  • Similarly in Australia, lower consumer spending is anticipated given the lockdown on travel into Australia.


Future proofing of Starhill Gallery will contribute in the medium term.






Singapore Research Team DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2020-04-02
SGX Stock Analyst Report HOLD DOWNGRADE BUY 0.450 DOWN 0.80



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