Maybank KE expects Sasseur REIT to show growth momentum into 2H19

China yuan coins

Sasseur REIT was set to continue its growth momentum in the seasonally stronger second half of the year after its results beat IPO projections for a fifth straight quarter, Maybank KimEng said in a note last week.

“Its outlet malls in China remain well-placed to play into the market’s retail premiumisation trend, as they gain wallet share among brand-conscious yet price-sensitive aspirational consumers,” the brokerage said.

Sasseur REIT reported last Tuesday its second quarter effective market area (EMA) rental income was 146 million yuan, beating its IPO forecast by 1.3 percent.

However, in Singapore dollar terms, EMA rental income was S$29.1 million, 0.3 percent shy of the projection from the projection in the REIT’s IPO prospectus, the Chinese outlet-mall owner said in a filing to SGX. The exchange rate was 5.0094 yuan to the Singapore dollar, compared with the IPO projection for 4.930 yuan, the filing said.

The distribution per unit (DPU) for the quarter was 1.608 Singapore cents, 10.5 percent higher than the 1.455 Singapore cents projected in the IPO prospectus, Sasseur REIT said.

Maybank KimEng said it saw further catalysts ahead from strong portfolio sales and the possibility of acquisitions.

“We expect the REIT to eye more meaningful deals, given a visible medium-term pipeline from its sponsor’s expanding property portfolio,” the 6 August note said.

After factoring in the REIT’s recent acquisition of additional shop units at the annex block of its Hefei outlets, the brokerage increased its 2019-20 DPU forecasts by 1 percent to 1.3 percent.

That raised its target price to S$0.95 from S$0.90; it kept a Buy call.

Sasseur REIT units ended Thursday up 0.63 percent at S$0.81 each; Singapore’s market was closed on Friday and Monday for public holidays.

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