Sasseur REIT - CGS-CIMB Research 2022-11-11: Hurt By Operational Disruptions

Sasseur REIT - Hurt By Operational Disruptions

  • Sasseur REIT (SGX:CRPU)'s 3Q22/9M22 EMA (Entrusted Management Agreement) rental income, comprising fixed and variable components, grew 1.1%/0.1% to RMB152.0m/453.9m. The 3% y-o-y growth in fixed component (due to bult-in escalations) was partially offset by 3.3%/6.7% decline in variable component. Due to more pronounced depreciation of the RMB against S$ in 3Q, EMA rental income fell 2.1% in 3Q22 to S$30.8m, but was up 0.4% y-o-y to S$94.3m in 9M22.
  • See Sasseur REIT's dividend history. 3Q22/9M22 DPU of 1.838/5.248 cents was up 0.4%/0.8% y-o-y, helped by S$2.1m in tax refund attributed to Chongqing, which qualified for a reduced preferential rate of 15% (vs. 25% previously). Chongqing’s favourable tax rates will be valid for the next 10 years.
  • 3Q22/9M22 tenant sales declined 3.5%/6.3% due to the shortened operating hours and malls closures.
    • Chongqing and Bishan endured 10 and 6 days of shortened operating hours due to the local government's directives to conserve electricity during the Aug 22 heatwave, while
    • Bishan and Kunming were closed for 7 and 11 days for mandatory sanitation due to COVID-19 cases linked to the malls.
  • However, tenant sentiment remained resilient, as evidenced by the stellar leasing quarter - lease expiries by GRI fell from 48.9% as at 2Q22 to 4.4% at end-3Q22. Portfolio occupancy reached a 4-year high of 96.9%, surpassing pre-COVID levels.
  • Sasseur REIT has also commenced an AEI to expand the VIP lounge at Chongqing from 69 sqm to > 200sqm to improve customer experience for VIP members, who contribute a significant ~60% of outlet sales. The AEI is expected to be completed by end-2022.
  • Sasseur REIT's weighted average cost of debt increased q-o-q from 4.4% to 4.7%, while interest rate coverage slipped q-o-q from 5.1x to 4.9x and gearing deteriorated q-o-q from 26.1% to 26.4%. Management is in advanced stages of negotiation with lenders for the refinancing of 100% or ~S$501m of its loans which are maturing in May 23. The maturing loans will be refinanced into two maturity dates, de-risking Sasseur REIT’s debt maturity profile.
  • We keep our FY22-24F DPU estimates for Sasseur REIT unchanged and maintain our DDM-based target price of S$1.06. Lifting of China’s zero-COVID policy should stabilise earnings.
  • Sasseur REIT's share price is trading at 9.7% FY22F DPU yield, at 1.2 standard deviation of historical yield.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LOCK Mun Yee CGS-CIMB Research | Natalie ONG CGS-CIMB Research | 2022-11-11

Previous report by CGS-CIMB:
2022-05-12 Sasseur REIT - Performance In Line.

Price targets by other brokers at Sasseur REIT Target Prices.
Listing of research reports at Sasseur REIT Analyst Reports.

Relevant links:
Sasseur REIT Share Price History,
Sasseur REIT Announcements,
Sasseur REIT Dividends & Corporate Actions,
Sasseur REIT News Articles

SGX Stock / REIT Search


Trust Bank God Of Fortune Referral Code PGKPSWAE Trust Bank Referral Code 🧧