Sasseur REIT - Maybank Research 2022-02-18: A Strong Finish

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SASSEUR REIT (SGX:CRPU)

Sasseur REIT - A Strong Finish

Strong results, better fundamentals in FY22E

• Sasseur REIT (SGX:CRPU)’s 4Q21 DPU dipped 1.8% y-o-y but rose 3.8% q-o-q, with 2.2% y-o-y/6.5% q-o-q growth in its entrusted management agreement (EMA) rental income. FY21 DPU at +8.7% y-o-y was strong, even with ~8% of distributions retained, and ahead of ours and consensus’ estimates.
• Occupancies rose q-o-q, and should improve further in FY22E, after AEIs and tenant remixing efforts.

Sales up ~16.6% q-o-q/12.3% y-o-y in 4Q/FY21

• Portfolio sales rose 16.6% q-o-q in 4Q21 due to seasonality, but fell 6.8% y-o-y as pandemic measures checked shopper traffic and higher temperatures curbed buying sentiment. The Chongqing Liangjiang Outlet continued to perform better, with sales at +10.5% q-o-q/-4.5% y-o-y, representing ~52% of 4Q/FY21 sales.
• Contribution from fashion, sports and international brands rose to ~79% of gross rental income (from ~76% in 3Q21) from higher ASPs, but should ease into the 1H22 summer months.
• Sales growth momentum is strong, and we expect better y-o-y comparables in FY22.

AEIs bolstering occupancies and rents

• Sasseur REIT's portfolio occupancy rose to 94.5% (from 93.7% in 3Q21) with improvements across all outlets. Chongqing Liangjiang remains fully occupied, and yields look set to rise with a conversion of the level 5 office to retail space (which completed in Dec 2021).
• Hefei’s occupancy climbed further to 95.7% (from 95.2%) post-AEI, while Chongqing Bishan’s occupancy improved to 83.5% (from 82.0%); management expects this to rise further to ~90% in FY22, as an AEI to decant the mall completes in 1Q22, and tenant remixing initiatives are expected to boost sportswear contribution.

Readying balance sheet for deals

• Sasseur REIT's AUM rose 4.4% y-o-y to S$1.8b on a stronger rental growth 5% to S$1.10 (COE: 9.8%, LTG: 3.0%).
• See
  • Sasseur REIT's Share Price,
  • Sasseur REIT's Target Price,
  • Sasseur REIT's Analyst Reports,
  • Sasseur REIT's Dividend History,
  • Sasseur REIT's Announcements,
  • Sasseur REIT's Latest News.
• We see catalysts from better-than-expected sales growth, and DPU upside from potential acquisitions, backed by a strong balance sheet and visible sponsor pipeline. BUY.

Chua Su Tye Maybank Research | https://www.maybank-ke.com.sg/ 2022-02-18

SGX Stock Analyst Report BUY MAINTAIN BUY 1.10 UP 1.050