Dasin Retail Trust - DBS Research 2021-03-02: Waiting For Its Moment

DASIN RETAIL TRUST (SGX:CEDU)

Dasin Retail Trust - Waiting For Its Moment

Downgrade Dasin Retail Trust to HOLD with target price of S$0.74.
Shunde and Tanbei malls to contribute to full-year income in FY21F.
Dasin Retail Trust's FY21F revenue and NPI may rise by ~20% and ~19% respectively on rental rebate savings.
Distribution waiver set to dampen DPU recovery.

Dasin Retail Trust (SGX:CEDU)'s FY20 revenue and net property income were up 15.1% and 16.8% y-o-y respectively due to contributions from Shunde and Tanbei acquisitions.
Dasin Retail Trust's FY20 DPU dipped 42.2% y-o-y mainly due to an enlarged unit base arising from rights issue of 120.5m units in 2020, and the coming off of distribution waivers that meant an additional ~55m units were entitled to distributions.
Portfolio occupancy was stable at 96.5%, inching down from 97.0% in 1H20 as a result of lower occupancies at Dasin E-Colour.
Higher gearing of 37.8% attributed to completion of acquisition of Shunde and Tanbei Metro Malls in 2020.

An estimated ~S$8m of rental rebates were handed out in FY20 as the pandemic struck, lowering rental income accordingly.
Additionally, Dasin Retail Trust's FY20 finance costs rose 17.0% y-o-y to S$36.0m as a result of increased borrowings to fund the acquisition.
Together with the rights issue and the coming off of ~55m units previously waived from distributions, Dasin Retail Trust's FY20 DPU tumbled to 3.94 cents.

FY20 occupancy was fairly resilient at 96.5% with Dasin E-Colour faring the worse at 86.0%. We expect portfolio occupancies to improve in FY21 given the better pandemic situation in China.
Dasin E-Colour could see better occupancies in FY21, as the adjacent school (which is a key source of footfall) resumes normal operations.
Overall, we are forecasting Dasin Retail Trust's FY21F revenue and net property income to grow by 20.0% and 19.2% y-o-y respectively, supported by full-year contributions from Shunde and Tanbei Metro Malls

Notably, another batch of ~110m distribution waiver units are expected to come off and be entitled to distributions in FY21
The relatively higher gearing of 37.8% (FY19: 36.5%), may also point to limited room to fund acquisitions. We note the short term to maturity of 0.6 year for the offshore facility and will be watching closely.
As a result, while we expect Dasin Retail Trust's NPI to grow by 19.2% y-o-y in FY21F, DPU is expected to recover 11.4% y-o-y to 4.39 cents.

We are revising our distributable income down as our previous net property income forecasts were too optimistic. Certainly, Dasin is expected to improve operationally in FY21F boosted by potential savings from rental rebates and better occupancies. Still, the Group’s valuation appears rich with a 6.1% FY21F yield.
See Dasin Retail Trust Share Price; Dasin Retail Trust Target Price; Dasin Retail Trust Analyst Reports; Dasin Retail Trust Dividend History; Dasin Retail Trust Announcements; Dasin Retail Trust Latest News.

Dasin Retail Trust currently trades at an FY21F yield of ~6% which we believe may limit any upside in the near term. This compares to a peer average FY21F yield of 7.4%. Upside may hence be capped in the near term especially if we compare to peers including CapitaLand China Trust (SGX:AU8U) and Sasseur REIT (SGX:CRPU) which are trading at FY21F yields of 6.7% and 7.9% respectively.

Woon Bing Yong DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2021-03-02

SGX Stock Analyst Report HOLD DOWNGRADE BUY 0.74 DOWN 0.860