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

DASIN RETAIL TRUST (SGX:CEDU) | SGinvestors.io 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.



A challenging year – DPU lower than expected

  • 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.


Poorer DPU performance in FY20 partially attributed to rental rebates

  • 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.


Dasin to recover operationally in FY21

  • 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


FY21F DPU to return to growth but faces distribution waiver

  • 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.

Downgrade Dasin Retail Trust to HOLD with lower DCF-based target price of S$0.74.



Rich valuation compared to peers.

  • 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



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