Excerpts from DBS Research report

Analysts: Derek TAN & Singapore Research Team

Right place, ripe time
• Net property income set to see c.20% y-o-y boost in FY20F despite COVID-19

Dasin Retail

Share price: 
78.5 c

Target: 
86 c

• ROFR over 18 quality assets built by Zhongshan Dasin, a dominant Greater Bay Area real estate player

• Unique pure play retail REIT with exposure to Greater Bay Area

• Initiate with BUY and TP of S$0.86

Wang Qiu7.20Wang Qiu was appointed CEO of the trustee-manager of Dasin Retail Trust in March 2020. Photo: Company
Nascent properties to accelerate growth. Out of the 7 properties DASIN RETAIL TRUST (“Dasin”) is expected to own by FY20F, Doumen, Shunde and Tanbei commenced operations in 2018 and have yet to mature.

We believe these properties enjoy lease structures with built-in rental escalations that would drive organic growth.

For e.g. Ocean Mall’s non-anchor tenant leases have rental escalation of 7-10% per annum.

On our estimates, we expect net property income (NPI) in FY20F and FY21F NPI to rise by c.18% and c.35% y-o-y to S$71m and S$96m driven by Doumen, Shunde and Tanbei.

Exposure to the economic heart of China. Dasin’s asset concentration in the Greater Bay Area (GBA) enables the Trust to tap on the region’s growth.

Guangdong’s GDP soared 10.7% in 2019, outperforming China’s GDP growth of 6.0%.

With the Chinese government releasing a blueprint outlining its high hopes for the area, Dasin is well placed to benefit from GBA’s growing prosperity going forward.

Upside from acquisitions. Dasin has a right of first refusal (ROFR) over 12 completed properties as at end-FY19 with a further 6 ROFR properties under development.

Acquisitions of the completed ROFR properties would potentially more than double its portfolio gross floor area to 1.5m sqm.

Based on gearing of c.35-40% at end-FY20F, we estimate that Dasin has debt headroom of c.S$150m to drive inorganic growth in the near future.

Valuation:

Initiate with BUY and DCF-based TP of S$0.86 based on WACC of 7.3% and terminal growth rate of 2.5%.

derek tanAnalyst Derek TanOur TP implies FY21F target yield of 8.0% versus current peer average trading yield of 8.0%.

Key Risks to Our View:
A resurgence of COVID-19 could lead to another round of shutdowns while a prolonged recession could also result in weak consumer confidence and depressed rents and occupancies.



You may also be interested in:


You have no rights to post comments

Counter NameLastChange
AEM Holdings3.280-
Avi-Tech Electronics0.250-
Best World1.7100.030
Broadway Ind0.091-0.001
China Sunsine0.395-
ComfortDelGro1.300-
Delfi Limited1.130-
Food Empire1.090-
Fortress Minerals0.310-
Geo Energy Res0.280-
GSS Energy0.027-0.001
Hong Leong Finance2.4900.010
Hongkong Land (USD)3.2000.010
InnoTek0.410-0.005
ISDN Holdings0.3350.005
ISOTeam0.040-
IX Biopharma0.0440.001
Jiutian Chemical0.026-
KSH Holdings0.3000.010
Leader Env0.052-0.001
Medtecs Intl0.1410.001
Nordic Group0.400-
Oxley Holdings0.100-
REX International0.164-0.002
Riverstone0.6200.010
Sinostar PEC0.135-
Southern Alliance Mining0.660-0.010
Straco Corp.0.470-
Sunpower Group0.2500.010
The Trendlines0.091-
Totm Technologies0.038-
Uni-Asia Group0.900-0.005
Wilmar Intl3.580-0.040
Yangzijiang Shipbldg1.5100.020
 

We have 967 guests and no members online

rss_2 NextInsight - Latest News