SASSEUR REIT (SGX:CRPU)
Sasseur REIT - Short-Term China Headwinds
Slow quarter, better fundamentals in FY22E
- Sasseur REIT (SGX:CRPU)’s 3Q21 DPU rose 3.8% y-o-y/13.4% q-o-q, with 2.0% y-o-y/3.9% q-o-q growth in its entrusted management agreement rental income. Sales from Jul were dampened by movement restrictions following intermittent COVID outbreaks, and exacerbated by atypical warm weather during its Sep anniversary events, but occupancies improved on the back of AEIs and tenant remixing efforts, and look set to strengthen in 2022.
- We maintain DPUs and our DDM-based target price (COE: 9.8%, LTG: 3.0%) for Sasseur REIT.
- Catalysts are better-than-expected sales growth and DPU upside from potential acquisitions, backed by a strong balance sheet and visible sponsor pipeline.
Portfolio sales fell ~10.3% y-o-y
- Portfolio sales rose 12.0% q-o-q in 3Q21 due to seasonality, but fell 10.3% y-o-y, as pandemic measures checked shopper traffic and higher temperatures curbed buying sentiment. The Chongqing Liangjiang Outlet performed better, with sales at +15.7% q-o-q/-8.2% y-o-y, contributing ~55%/c.52% of 3Q/9M21 sales. Contribution from fashion, sports and international brands increased to 62.3% and 76.4% of its portfolio NLA and revenue (from 59.3% and 75.1% respectively in 2Q21).
- Closed borders will continue to spur domestic demand, and management remains optimistic on sales in 4Q, although we expect y-o-y comparables are likely to be softer at -5-10%.
AEIs bolstering occupancies and rents
- Sasseur REIT's portfolio with a new gym operator lease signed at ~20% higher rents.
Readying balance sheet for deals
- Sasseur REIT's balance sheet is strong with gearing of 27.2%, the lowest amongst peers, and S$867m in debt headroom (at 50% limit). While deal opportunities are backed by its sponsor’s 13 pipeline malls, its CEO is eyeing growth from two stabilised ROFR assets in Xi’an and Guiyang.
- Refinancing options to de-risk its 1.5-year debt maturity profile are underway, in preparation for a potential acquisition opportunity.
- See
Chua Su Tye
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-11-15
SGX Stock
Analyst Report
1.050
SAME
1.050
