Singapore Retail Sector - DBS Research 2021-04-06: First Uptick In Retail Sales Since 2020

Singapore Retail REITs - DBS Research | SGinvestors.io FRASERS CENTREPOINT TRUST (SGX:J69U) LENDLEASE GLOBAL COMMERCIAL REIT (SGX:JYEU) MAPLETREE COMMERCIAL TRUST (SGX:N2IU)

Singapore Retail Sector - First Uptick In Retail Sales Since 2020

  • Singapore's February 2021 total retail sales rose 5.5% y-o-y, the first y-o-y growth since 2020, boosted by CNY spending.
  • Online sales were at the lower end of our expectations at 10.1% of total sales.
  • Outperformers watches & jewellery (+34% y-o-y) and apparel (+32%) made up for the drop in F&B (-15%), which was affected by capacity limitations.
  • Prefer Frasers Centrepoint Trust (SGX:J69U), Mapletree Commercial Trust (SGX:N2IU) and Lendlease REIT (SGX:JYEU) for retail ‘trade reopening’ plays.



February 2021 Singapore retail sales observations

  • February total retail sales rose 5.5% to S$3.3bn boosted by festive CNY spending.
  • Online sales was at only 10.1% of the total retail mix, at the lower end of our expectations.
  • Outperforming trade sectors included watches & jewellery (+34% y-o-y), apparel & footwear (+32%) and supermarket sales (+14%), while laggards were cosmetics & medical goods (-19%).
  • We note that CNY fell in a different month this year in February (versus January in 2020). Comparing y-o-y performance for Jan & Feb in aggregate, retail sales declined by a slight ~1.2% in 2021 compared to 2020, a commendable performance in our view.


Our thoughts


Back to office, time to doll up again?

  • Trade sectors such as apparel & footwear and watches & jewellery posted a surprise increase in the month of Feb 2021, given the lacklustre performance in the months leading up to CNY. As written in our recent report, Singapore Property: Life will soon be normal again , the recent move to raise work-in-office cap to 75% from the current 50% will propel new demand for the above-mentioned trade sectors as Singaporeans switch out of “ lounge wear” for office attire again.
  • We are hopeful that spending will slowly rotate back to beauty & health on the same note, although we suspect that e-commerce players such as Shopee and Lazada may have eaten into a significant portion of the pie from players with their aggressive marketing campaigns.
  • That said, we believe there is good momentum in retail sales, especially up to 1H21.

Other trade sectors made up for the drop in F&B.

  • Looking at Jan-Feb as an aggregate, F&B sales declined 15.5% across January and February in 2021 compared to 2020. Almost one-fifth of total F&B expenditure was made through online sources, which would have benefited restaurants (+8.5% y-o-y) and to some extent food caterers (-56%).
  • We note that many landlords that had made an effort to steer towards omnichannel sales (such as the Makan Master app by Frasers) may have captured a portion of these online sales, although we think this may be one-off given the
    1. social limitations for restaurant dine-ins across the CNY period, and
    2. families opting to stay in if they had been unable to secure reservations at various restaurants,
    3. more conservative “per-head” budget for CNY dinners in 2021 due to the uncertain economic conditions, based on anecdotal evidences and various media sources.

Recovery is right on track.

  • The further relaxation of social distancing rules will spur economic activities. F&B dining and public transport demand is set to increase as workforce returns to workplaces and more events take place. Our anticipated recovery scenario for F&B is right on track while grocery demand will normalise.

Revisiting the recovery bandwagon.

  • While the spending gap between suburban and central malls continues to be stubbornly wider than expected, we note that the domestic portion of spending had outpaced on a y-o-y basis. This may be partially due to lack of tourist spending (typically ~20% of annual total retail sales) and may lose steam in 2H21 given the strong spending momentum during festivities last year (Nov – Dec 2020) and potential re-opening of our borders for selected destinations (Australia, Hong Kong and Taiwan currently).
  • The key re-rating catalyst will likely be reopening local borders to big inbound markets such as China that may result in a sharp rerating of our central malls.

Our retail REITs picks.

Our consumer picks.

  • We are positive on ComfortDelGro (SGX:C52) as a key beneficiary of rising public transport usage, taxi and DTL demand.
  • We are positive on Koufu (SGX:VL6) as workforce returns. Kiosks, Foodcourts at offices and malls will benefit from higher footfall. About 9% of foodcourts are in offices and around 30% are in Malls.
  • Grocery retailers’ valuation remain attractive despite anticipated tapering of grocery demand.
  • We are negative on Jumbo Group (SGX:42R) as mass tourists have yet to return to Singapore.





Geraldine WONG DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2021-04-06
SGX Stock Analyst Report BUY MAINTAIN BUY 3.000 SAME 3.000
BUY MAINTAIN BUY 0.900 SAME 0.900
BUY MAINTAIN BUY 2.250 SAME 2.250



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