SPH REIT (SGX:SK6U)
SPH REIT - Slow Recovery
SPH REIT's 3Q21 DPU in line, maintain HOLD
- SPH REIT (SGX:SK6U)’s 3Q21 DPU rose 11.3% q-o-q on the back of recovering fundamentals, underpinned by its suburban Singapore assets and resilient Australian malls. Paragon, at ~56% of revenue and 64% of its AUM, remains weak, with negative rental reversions to persist, given slow tenant sales and absent tourism spend. The numbers were in line and we maintain our forecasts and DDM-based S$0.80 target price (COE: 7.8%, LTG: 1.5%).
- Stay at HOLD for SPH REIT.
- We prefer Frasers Centrepoint Trust (SGX:J69U) for its concentrated suburban mall portfolio.
Singapore portfolio supported by suburban malls
- SPH REIT's portfolio occupancy rose q-o-q from 98.0% to 98.4% due to the better performance of its suburban assets, with Clementi Mall and Rail Mall both fully occupied.
- While revenue at Paragon jumped ~151% y-o-y in 3Q21 with the easing of rent relief provisions, it fell ~9% q-o-q on the back of weaker rental reversions. Its tenant sales fell to ~40% below pre-Covid levels in May, from Singapore’s ‘heightened alert’ capacity restrictions but should rise as they get eased from 4Q21. Its expiring leases in FY22 at 29% of gross rental income, are attributed to smaller specialty and luxury names, as leases for its anchors Metro and M&S have already been renewed.
Australia assets resilient, possible AEI upside
Conservative balance sheet
- SPH REIT's balance sheet remains conservative with low funded deal for the S$480m asset could add ~8% to our FY22 estimates.
- See
Chua Su Tye
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-07-13
SGX Stock
Analyst Report
0.800
SAME
0.800
