- Sasseur REIT (SGX:CRPU)'s FY23 rental income in S$ terms was within expectations (S$ 126.7mil, +0.6% y-o-y, +10.7% y-o-y in RMB. DPU was within our expectation at S$0.0625 for the whole year, representing a 4.6% decline y-o-y due to RMB depreciation of 7% in FY23. Keeping the exchange rate the same, DPU would have increased by ~4.1% y-o-y.
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- Outlet sales in RMB were in line with our projection. It spiked 31.9% y-o-y to RMB4.6bn, leveraging on the consumption downtrading and various promotional events in FY23.
- We reiterate our BUY recommendation on Sasseur REIT with a lower DDM target price of S$0.87 (previously S$0.90) on the back of a fading recovery tailwind and weaker-for-longer exchange rate. FY24e-FY25e DPU forecasts have been lowered by 2-3% to 6.36-6.67 Singapore cents.
The Positives
FY23 outlet sales up 31.7% (RMB4.7bn).
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- Overall, sales reached 96.6% of their pre-COVID level. This trend is anticipated to continue, delivering a stronger FY24 performance.
- We expect FY24 sales to grow in the low teens amidst the ongoing retail sales recovery and ongoing consumption downgrade.
Healthy operating metric.
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