SASSEUR REIT (SGX:CRPU)
Sasseur REIT - Recovery Gains Traction
Sasseur REIT's 1Q21 DPU up 31.9% y-o-y
- Sasseur REIT (SGX:CRPU) delivered strong 1Q21 DPU at +31.9% y-o-y, on the back of a +23.4% y-o-y in its entrusted management agreement (EMA) rental income. This was driven by a ~113% y-o-y jump in its portfolio sales, which was underpinned by stable occupancies. Sales recovery is gaining traction post-Covid, and we see strong momentum into FY21 as occupancies improve from AEIs and tenant remixing efforts, with catalysts from better-than-expected portfolio sales growth and upside from potential acquisitions, backed by a strong balance sheet and visible sponsor pipeline.
- We maintain DPUs forecast and our DDM-based S$1.05 target price for Sasseur REIT (COE: 10.2%, LTG: 3.0%). BUY.
Portfolio sales jumped 112.6% y-o-y
- Portfolio sales jumped 112.6% y-o-y, driven by stronger recovery post-COVID, as well as added tenant mix and operational efficiencies from its AEIs. It added 6.8% q-o-q to the VIP member count in 1Q21, versus +33.0% y-o-y for FY20.
- Portfolio occupancy was stable at 93.5%, with the Chongqing outlet remaining fully occupied. Occupancy at the Bishan outlet should improve from 81.0% given the +114.6% y-o-y increase in sales, and from tenant mix adjustments. Merged operations for the two outlets have resulted in a renaming to Chongqing Liangjiang and Chongqing Bishan.
AEIs, expansion to support sales growth
- The AEI at Hefei has neared completion, while a reconfiguration of retail space at Chongqing remains on track, with improved efficiency and new brands to support further improvement in both shopper traffic and tenant sales.
- Sasseur REIT's management retained 10% of its distributable income (or S$2.4m) to fund AEIs and expansion, and we expect these could help to improve building efficiency at Bishan. Fashion, sports and international brands were stable at 60.7% of its portfolio NLA at end 1Q21 and 80.5% of revenue contributions (vs 79.3% in 4Q20) and are expected to grow.
Strong balance sheet, potential deal upside
- Sasseur REIT's balance sheet is strong with low 27.6% gearing (27.9% at end-Dec 2020) and S$834m debt headroom as of end-Mar 2021.
- Management is eyeing inorganic growth opportunities. These are backed by a visible pipeline from its sponsor’s growing property portfolio in China, which now includes two ROFR assets and 12 others (as three were added in Suzhou, Nanjing and Shijiazhuang in 4Q20), that could boost its GFA by 5.5x.
- See
Chua Su Tye
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-05-12
SGX Stock
Analyst Report
1.05
SAME
1.05
