Sasseur REIT - Maybank Kim Eng 2020-05-14: Ready For Recovery


Sasseur REIT - Ready For Recovery

Sasseur REIT's 1Q20 DPU in line, maintain BUY

  • Sasseur REIT (SGX:CRPU)’s 1Q20 DPU at -19.4% y-o-y was in line with our estimates as its four outlet malls were closed for 48-54% of all operating days following the Covid-19 outbreak. While sales declined 55.7% y-o-y, its rental income fell less by 18.2% y-o-y, with support from its EMA-backed fixed rent.
  • We see a recovery in 2Q following its Mar reopening and a lift from Spring sales events, and for sales growth to pick-up momentum in the seasonally-stronger 2H.
  • We see catalysts from better-than-expected 2Q20 portfolio sales and contributions from potential deals, backed by a visible pipeline and SGD379m debt headroom.
  • We maintain our forecasts and DDM-based SGD0.95 Target Price (COE: 10.0%, LTG: 3.0%). BUY.

Sales down 55.7% y-o-y with mall closures

  • Sasseur REIT's portfolio sales declined 55.7% y-o-y on the back of operational disruptions and the temporary closure of its four malls (over a period of between 44-49 days) following the Covid-19 outbreak.
  • Portfolio occupancy dipped q-o-q from 96.0% to 94.6%, with weaker occupancies at Bishan and Hefei, due to ongoing adjustments to their tenancy mix. Fashion, sports and international brands were 58.0% of its overall NLA and 77.4% of revenue contributions as of end-Mar 2020, and are expected to grow further.

Strong reopening sales on pent-up demand

  • Sasseur REIT had closed all four malls since 26 Jan as a precautionary measure due to Covid-19; they have since reopened (11-15 Mar), and pent-up demand has resulted in a 129% y-o-y jump in first day portfolio sales. Its annual Spring sales events planned for Mar and rescheduled to end-Apr, reported a stronger four-fold jump in first-day sales, and should contribute to 2Q’s revenue.
  • AEIs planned for its Chongqing and Hefei Outlets will commence in May-Jun through 4Q20-1Q21.

Visible deal pipeline, DPU upside

Chua Su Tye Maybank Kim Eng Research | 2020-05-14
SGX Stock Analyst Report BUY MAINTAIN BUY 0.950 SAME 0.950