SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

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Equity Bottom-Up

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    <div class='content-caption'>Sasseur REIT - CEO</div>
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<p>Through his diverse career spanning more than three decades, engineer by training Anthony Ang has always tried to define success on his own terms.<br><br>
One dictum that resonates with him is the warning inherent in American Catholic monk and author Thomas Merton’s observation: “People may spend their whole lives climbing the ladder of success only to find, once they reach the top, that the ladder is leaning against the wrong wall.”<br><br>
“I wouldn’t want to try and prescribe the best definition of success, but many who have gone before have suggested that success and happiness do not generally consist of only having material wealth and status, but also of possessing the right values and goals in life,” said the CEO of the manager of SGX-listed Sasseur REIT.<br><br>
One of Ang’s role models is Austrian neurologist and psychiatrist Viktor Frankl – a Holocaust survivor and author of “Man’s Search for Meaning”, a bestseller that chronicles his experiences as a prisoner in Nazi concentration camps during World War II.<br><br>
“Frankl, one of my favourite authors, focused on the need for meaning and purpose in life – something that transcends our existence and taps the best energies within us,” he added.<br><br>
Although Ang graduated with a Bachelor of Science degree in Mechanical Engineering with First Class Honours from London’s Imperial College, he found that his interests lay elsewhere.<br><br>
“For my generation, studying engineering as a discipline was seen as the best way to unlock a great career and future, but I couldn’t envisage myself sitting at a drafting table for hours every day – I preferred a more frontline job,” he recalled.<br><br>
So in 1979, Ang began his career with Singapore’s Economic Development Board, rising up the ranks to become the Regional Director of EDB’s North America operations, during which he picked up effective policy-making and investment skills for a range of industries.<br><br>
That became a springboard for his subsequent career moves spanning a plethora of sectors: from Executive Director and Group General Manager of Armstrong Industrial Corporation running its manufacturing operations, to Senior Vice President of Vertex Management overseeing venture capital investments, and Executive Vice President of GIC Real Estate – which marked his first foray into the property sector.<br><br>
Ang, who also holds a Master of Business Administration degree from INSEAD, later went on to take up various CEO appointments within the ARA Group, including its flagship US$1.13 billion ARA Asia Dragon Fund, and Hong Kong-listed Fortune REIT.<br><br><strong>Buoyant Prospects</strong><br><br>
Ang – currently Singapore’s Non-Resident Ambassador to the Republic of Tunisia – was appointed to helm the manager of Sasseur REIT in 2017.<br><br>
“Looking back, you realise that life can change very quickly, but there’s no point worrying about what is to come,” he pointed out.<br><br>
“Instead, just do your best, be resilient – find ways around problems – and most importantly, stay positive and enjoy the journey. A belief in God can also be a positive anchor.”<br><br>
Making its trading debut on SGX Mainboard in March 2018, Sasseur REIT is the first listed retail outlet mall REIT in Asia. With an initial portfolio of four retail outlet malls located in the cities of Chongqing, Kunming and Hefei, the REIT offers investors the opportunity to invest in China’s fast-growing retail outlet mall sector.<br><br>
Some of the most popular brands in its portfolio include Coach, +39 Space (with Prada, Dior, Gucci and other Italian luxury brands), FILA, Adidas and Nike.<br><br>
Sasseur REIT is managed by Sasseur Asset Management Pte Ltd. Its Sponsor – Sasseur Cayman Holding Ltd – was founded in 1989 by Vito Xu, Chairman of both the Sponsor and the REIT manager. The Sponsor is one of the leading premium outlet mall groups in China, focused on the development and operation of retail outlet malls in the country.<br><br>
The Sponsor’s strategic shareholders are L Catterton Asia – a private equity fund partnership between L Capital of the LVMH Group and Catterton of the US – and Ping An Real Estate Co Ltd, a subsidiary of Ping An Insurance (Group) Co of China Ltd, a Fortune Global 500 enterprise.<br><br>
Through these parties, the REIT can forge strategic partnerships, as well as leverage an extensive real estate network to grow its portfolio of brands and assets.<br><br>
Last September, Sasseur REIT won Best Retail REIT (Platinum), Best CEO (Platinum) and Best Investor Relations (Gold) at the Asia Pacific Best of the Breeds REITs Awards™ 2019. Three months later, the REIT was included in FTSE EPRA NAREIT Global Emerging Index.<br><br>
Sasseur REIT has outperformed many of its Singapore REIT peers, ranking amongst the top five performers with a total return of 52% in 2019. It also emerged as the top-performing China S-REIT for the financial year ended 31 December 2019.<br><br>
One of the REIT’s key value propositions is its unique Entrusted Management Agreement (EMA) model, Ang noted. Under this lease arrangement, rental income paid to the REIT comprises a fixed component rent as well as a variable rent that is tied to the performance of underlying tenant sales.<br><br>
“This model provides a stable fixed income that grows at 3% annually, offering downside protection in unexpected situations and disruptions, such as COVID-19, which resulted in temporary closure of our outlet malls,” he said. “There is also the variable component that is pegged to sales in our outlets, offering potential income upside.”<br><br>
And Sasseur REIT has a radically different business model, Ang added. “We have a hybrid lease structure, comprising 100% sales-based leases with no fixed rental – where rental income for the outlet is collected as a percentage of sales of the branded goods tenants – as well as a combination of both sales-based and fixed rentals for some special tenants in lifestyle activities or F&amp;B.”<br><br>
“We believe that this, together with the EMA income model, sets Sasseur apart from other REITs, as they align the interests of the manager with that of our tenants and the REIT, or our unitholders.”<br><br><strong>Conspicuous Consumption </strong><br><br>
Medium to longer term growth drivers for the REIT include burgeoning demand for luxury brands from China’s mushrooming middle class, and potential acquisitions in the form of mall assets owned by the Sponsor.<br><br>
“The outlet mall business is one of the country’s fastest growing retail segments, supported by increased spending power and aspirations of middle-class Chinese consumers,” Ang said.<br><br>
China’s outlet malls are forecast to become the largest globally, exceeding that of the US by 2030, according to independent research data.<br><br>
Outlet malls also function as counter-cyclical elements in the economy, benefiting from downturns when budgets shrink and consumers seek better value-for-money bargains, he added.<br><br>
As for the potential assets that can be injected into Sasseur REIT, the Sponsor has two right-of-first-refusal (ROFR) and nine pipeline properties. These include four new mall assets located along the more affluent coastal cities of Shenzhen, Xiamen, Yangzhou and Shanghai – scheduled to open later this year and over the next few years, operated by the Sponsor.<br><br>
ROFR assets are those where the REIT has priority of choice when the Sponsor decides to sell, while pipeline assets are third-party owned but operated by the Sponsor, and become ROFR assets for the REIT if acquired by the Sponsor.<br><br>
“When you look at the REIT industry, size matters. Currently, we have S$1.6 billion worth of assets under management, and if you do not have at least S$3 billion in AUM, you’re not considered significant, so acquisitions are key to our growth,” Ang pointed out.<br><br>
“We want to make an acquisition every two to three years – this is the kind of consistency that investors look for. And it’s not a problem to acquire every other year in the future, due to the number of ROFR and pipeline assets available, and also because our Sponsor is a leader in this industry.”<br><br><strong>Lifestyle Destinations</strong><br><br>
In terms of the challenges presented by the rise of e-commerce on the outlet mall industry, Ang sees mitigated impact. “We believe our outlets have competitive advantages over e-commerce, such as non-overlapping product segments, and lower sales commissions for merchants – they pay average sales commissions of approximately 20% on e-commerce platforms, versus 10%-16% on sales as rental at our outlet malls.”<br><br>
Sasseur’s outlet malls are also designed as lifestyle destinations, enhancing the shopping activity by offering multi-faceted experiences that include playgrounds, an indoor zoo and sports concepts. “That’s how we pull in our shoppers,” he added.<br><br>
Heightened marketing, robust safety measures at the outlets, as well as enhanced customer engagement efforts by the REIT, particularly during COVID-19 closures between January and March this year, have helped its outlet malls to reopen successfully and perform strongly.<br><br>
Its four outlet malls generated combined sales of 835.7 million yuan for the second quarter ended 30 June 2020, 18.6% lower year-on-year and comparing favourably with other retail businesses hit by the pandemic.<br><br>
This figure is also 56% higher than the combined sales of 534.5 million yuan in the first quarter, underscoring the fact that business recovery is well underway across its portfolio.<br><br>
“We believe the hit from COVID-19 on our outlet business will be short-lived,” Ang said. “As the situation in China continues to improve, we expect the remaining quarters of this year to deliver stronger performances, and sales to return to pre-pandemic levels.”<br><br>
China’s retail sales rose for the first time in August since the coronavirus pandemic began, gaining 0.5% year-on-year, reversing a drop of 1.1% in July and a plunge of 20.5% in the January to February period.<br><br>
Meanwhile, what keeps the genial 65-year-old going is the satisfaction he derives from playing the role of a rainmaker – effecting real and positive change, whether at work, at play, or just interacting with those who cross his path.<br><br>
“I enjoy solving a problem, figuring something out, or doing something completely new,” he said. “Of course, this involves human relationships – people must enjoy working with you, and be able to trust you, because that’s when things happen.”<br><br>
Key principles that he has passed on to his son, 28, and daughter 29, include a strong moral code, and the capacity to learn and adapt continually. “I always tell them, don’t worry about the future and stop comparing yourself with others,” he said with a chuckle.<br><br>
“In my mind, the key to success is very simple – have a goal but do not limit yourself; have the best possible education, gather as much life experience as you can, and always look for meaning in all you do.”</p>

<p> </p>

<p><strong>Sasseur REIT</strong><br><br>
Sasseur REIT is the first retail outlet mall REIT listed in Asia. Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in the People’s Republic of China through its initial portfolio of four quality retail outlet mall assets strategically located in fast-growing cities in China, such as Chongqing, Kunming and Hefei, with a net lettable area of 312,844 square metres. The REIT is established to invest principally, directly or indirectly, in a diversified portfolio of income-producing real estate, as well as real estate-related assets, which are used primarily for retail outlet mall purposes, with an initial focus on Asia.</p>

<p>Sasseur REIT is managed by the Manager, an indirect wholly owned subsidiary of the Sponsor, Sasseur Cayman Holding Ltd. The Sponsor Group is one of the leading premium outlet groups in China, and ranked within the top 500 service companies in the country. With about 30 years of experience in art-commerce, the Sponsor Group has attained recognition in Asia as a leading outlet operator that adopts the strategic approach of integrating emotion, aesthetics, scenario planning and prudent capital management.<br><br>
The company website is: <a href="http://www.sasseurreit.com"><strong>www.sasseurreit.com</strong></a>.<br><br>
Click <a href="https://www.sgx.com/securities/equities/CRPU"><strong>here</strong> </a>for the company's StockFacts page.<br><br>
For the three months ended 30 June 2020 financial results, click <a href="http://ir.listedcompany.com/tracker.pl?type=6&amp;id=793096&amp;"><strong>here</strong></a>.</p>

<p> </p>

<p><strong>About kopi-C: the Company brew</strong></p>

<p><strong>Text: Jennifer Tan-Stanisic</strong><br><strong>Photo: Company file</strong><br><br><em>kopi-C </em>is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.<br><br>
For previous editions of <em>kopi-C: the Company brew,</em> please click <a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10"><strong>here</strong></a>.  <br><br>
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="///C:/Users/tanje/Desktop/Working%20Files/kopi-C/jennifer.t@sgx.com"><strong>jennifer.t@sgx.com</strong></a>.</p>
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    Sasseur REIT - CEO


Through his diverse career spanning more than three decades, engineer by training Anthony Ang has always tried to define success on his own terms.  
One dictum that resonates with him is the warning inherent in American Catholic monk and author Thomas Merton’s observation: “People may spend their whole lives climbing the ladder of success only to find, once they reach the top, that the ladder is leaning against the wrong wall.”  
“I wouldn’t want to try and prescribe the best definition of success, but many who have gone before have suggested that success and happiness do not generally consist of only having material wealth and status, but also of possessing the right values and goals in life,” said the CEO of the manager of SGX-listed Sasseur REIT.  
One of Ang’s role models is Austrian neurologist and psychiatrist Viktor Frankl – a Holocaust survivor and author of “Man’s Search for Meaning”, a bestseller that chronicles his experiences as a prisoner in Nazi concentration camps during World War II.  
“Frankl, one of my favourite authors, focused on the need for meaning and purpose in life – something that transcends our existence and taps the best energies within us,” he added.  
Although Ang graduated with a Bachelor of Science degree in Mechanical Engineering with First Class Honours from London’s Imperial College, he found that his interests lay elsewhere.  
“For my generation, studying engineering as a discipline was seen as the best way to unlock a great career and future, but I couldn’t envisage myself sitting at a drafting table for hours every day – I preferred a more frontline job,” he recalled.  
So in 1979, Ang began his career with Singapore’s Economic Development Board, rising up the ranks to become the Regional Director of EDB’s North America operations, during which he picked up effective policy-making and investment skills for a range of industries.  
That became a springboard for his subsequent career moves spanning a plethora of sectors: from Executive Director and Group General Manager of Armstrong Industrial Corporation running its manufacturing operations, to Senior Vice President of Vertex Management overseeing venture capital investments, and Executive Vice President of GIC Real Estate – which marked his first foray into the property sector.  
Ang, who also holds a Master of Business Administration degree from INSEAD, later went on to take up various CEO appointments within the ARA Group, including its flagship US$1.13 billion ARA Asia Dragon Fund, and Hong Kong-listed Fortune REIT.  Buoyant Prospects  
Ang – currently Singapore’s Non-Resident Ambassador to the Republic of Tunisia – was appointed to helm the manager of Sasseur REIT in 2017.  
“Looking back, you realise that life can change very quickly, but there’s no point worrying about what is to come,” he pointed out.  
“Instead, just do your best, be resilient – find ways around problems – and most importantly, stay positive and enjoy the journey. A belief in God can also be a positive anchor.”  
Making its trading debut on SGX Mainboard in March 2018, Sasseur REIT is the first listed retail outlet mall REIT in Asia. With an initial portfolio of four retail outlet malls located in the cities of Chongqing, Kunming and Hefei, the REIT offers investors the opportunity to invest in China’s fast-growing retail outlet mall sector.  
Some of the most popular brands in its portfolio include Coach, +39 Space (with Prada, Dior, Gucci and other Italian luxury brands), FILA, Adidas and Nike.  
Sasseur REIT is managed by Sasseur Asset Management Pte Ltd. Its Sponsor – Sasseur Cayman Holding Ltd – was founded in 1989 by Vito Xu, Chairman of both the Sponsor and the REIT manager. The Sponsor is one of the leading premium outlet mall groups in China, focused on the development and operation of retail outlet malls in the country.  
The Sponsor’s strategic shareholders are L Catterton Asia – a private equity fund partnership between L Capital of the LVMH Group and Catterton of the US – and Ping An Real Estate Co Ltd, a subsidiary of Ping An Insurance (Group) Co of China Ltd, a Fortune Global 500 enterprise.  
Through these parties, the REIT can forge strategic partnerships, as well as leverage an extensive real estate network to grow its portfolio of brands and assets.  
Last September, Sasseur REIT won Best Retail REIT (Platinum), Best CEO (Platinum) and Best Investor Relations (Gold) at the Asia Pacific Best of the Breeds REITs Awards™ 2019. Three months later, the REIT was included in FTSE EPRA NAREIT Global Emerging Index.  
Sasseur REIT has outperformed many of its Singapore REIT peers, ranking amongst the top five performers with a total return of 52% in 2019. It also emerged as the top-performing China S-REIT for the financial year ended 31 December 2019.  
One of the REIT’s key value propositions is its unique Entrusted Management Agreement (EMA) model, Ang noted. Under this lease arrangement, rental income paid to the REIT comprises a fixed component rent as well as a variable rent that is tied to the performance of underlying tenant sales.  
“This model provides a stable fixed income that grows at 3% annually, offering downside protection in unexpected situations and disruptions, such as COVID-19, which resulted in temporary closure of our outlet malls,” he said. “There is also the variable component that is pegged to sales in our outlets, offering potential income upside.”  
And Sasseur REIT has a radically different business model, Ang added. “We have a hybrid lease structure, comprising 100% sales-based leases with no fixed rental – where rental income for the outlet is collected as a percentage of sales of the branded goods tenants – as well as a combination of both sales-based and fixed rentals for some special tenants in lifestyle activities or F&amp;B.”  
“We believe that this, together with the EMA income model, sets Sasseur apart from other REITs, as they align the interests of the manager with that of our tenants and the REIT, or our unitholders.”  Conspicuous Consumption   
Medium to longer term growth drivers for the REIT include burgeoning demand for luxury brands from China’s mushrooming middle class, and potential acquisitions in the form of mall assets owned by the Sponsor.  
“The outlet mall business is one of the country’s fastest growing retail segments, supported by increased spending power and aspirations of middle-class Chinese consumers,” Ang said.  
China’s outlet malls are forecast to become the largest globally, exceeding that of the US by 2030, according to independent research data.  
Outlet malls also function as counter-cyclical elements in the economy, benefiting from downturns when budgets shrink and consumers seek better value-for-money bargains, he added.  
As for the potential assets that can be injected into Sasseur REIT, the Sponsor has two right-of-first-refusal (ROFR) and nine pipeline properties. These include four new mall assets located along the more affluent coastal cities of Shenzhen, Xiamen, Yangzhou and Shanghai – scheduled to open later this year and over the next few years, operated by the Sponsor.  
ROFR assets are those where the REIT has priority of choice when the Sponsor decides to sell, while pipeline assets are third-party owned but operated by the Sponsor, and become ROFR assets for the REIT if acquired by the Sponsor.  
“When you look at the REIT industry, size matters. Currently, we have S$1.6 billion worth of assets under management, and if you do not have at least S$3 billion in AUM, you’re not considered significant, so acquisitions are key to our growth,” Ang pointed out.  
“We want to make an acquisition every two to three years – this is the kind of consistency that investors look for. And it’s not a problem to acquire every other year in the future, due to the number of ROFR and pipeline assets available, and also because our Sponsor is a leader in this industry.”  Lifestyle Destinations  
In terms of the challenges presented by the rise of e-commerce on the outlet mall industry, Ang sees mitigated impact. “We believe our outlets have competitive advantages over e-commerce, such as non-overlapping product segments, and lower sales commissions for merchants – they pay average sales commissions of approximately 20% on e-commerce platforms, versus 10%-16% on sales as rental at our outlet malls.”  
Sasseur’s outlet malls are also designed as lifestyle destinations, enhancing the shopping activity by offering multi-faceted experiences that include playgrounds, an indoor zoo and sports concepts. “That’s how we pull in our shoppers,” he added.  
Heightened marketing, robust safety measures at the outlets, as well as enhanced customer engagement efforts by the REIT, particularly during COVID-19 closures between January and March this year, have helped its outlet malls to reopen successfully and perform strongly.  
Its four outlet malls generated combined sales of 835.7 million yuan for the second quarter ended 30 June 2020, 18.6% lower year-on-year and comparing favourably with other retail businesses hit by the pandemic.  
This figure is also 56% higher than the combined sales of 534.5 million yuan in the first quarter, underscoring the fact that business recovery is well underway across its portfolio.  
“We believe the hit from COVID-19 on our outlet business will be short-lived,” Ang said. “As the situation in China continues to improve, we expect the remaining quarters of this year to deliver stronger performances, and sales to return to pre-pandemic levels.”  
China’s retail sales rose for the first time in August since the coronavirus pandemic began, gaining 0.5% year-on-year, reversing a drop of 1.1% in July and a plunge of 20.5% in the January to February period.  
Meanwhile, what keeps the genial 65-year-old going is the satisfaction he derives from playing the role of a rainmaker – effecting real and positive change, whether at work, at play, or just interacting with those who cross his path.  
“I enjoy solving a problem, figuring something out, or doing something completely new,” he said. “Of course, this involves human relationships – people must enjoy working with you, and be able to trust you, because that’s when things happen.”  
Key principles that he has passed on to his son, 28, and daughter 29, include a strong moral code, and the capacity to learn and adapt continually. “I always tell them, don’t worry about the future and stop comparing yourself with others,” he said with a chuckle.  
“In my mind, the key to success is very simple – have a goal but do not limit yourself; have the best possible education, gather as much life experience as you can, and always look for meaning in all you do.”

 

Sasseur REIT  
Sasseur REIT is the first retail outlet mall REIT listed in Asia. Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in the People’s Republic of China through its initial portfolio of four quality retail outlet mall assets strategically located in fast-growing cities in China, such as Chongqing, Kunming and Hefei, with a net lettable area of 312,844 square metres. The REIT is established to invest principally, directly or indirectly, in a diversified portfolio of income-producing real estate, as well as real estate-related assets, which are used primarily for retail outlet mall purposes, with an initial focus on Asia.

Sasseur REIT is managed by the Manager, an indirect wholly owned subsidiary of the Sponsor, Sasseur Cayman Holding Ltd. The Sponsor Group is one of the leading premium outlet groups in China, and ranked within the top 500 service companies in the country. With about 30 years of experience in art-commerce, the Sponsor Group has attained recognition in Asia as a leading outlet operator that adopts the strategic approach of integrating emotion, aesthetics, scenario planning and prudent capital management.  
The company website is: www.sasseurreit.com.  
Click here for the company's StockFacts page.  
For the three months ended 30 June 2020 financial results, click here.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



Sasseur REIT Taps Aspirations of China’s Middle Class

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<div><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;</strong>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></div>
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<p>COMPANY RESULTS</p>
<h2>Sasseur REIT (SASSR SP)</h2>
<h3>2Q20: Rapid Recovery In Outlet Sales</h3>
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<p>China’s success in managing the COVID-19 pandemic has sped up its economic recovery, which Sasseur was able to ride on. Sasseur’s four outlet malls achieved a strong 56% qoq recovery in sales, and we expect the growth momentum to extend into 2H20. Chinese consumers have a penchant for affordable branded goods offered by outlet malls and Sasseur is benefitting from pent-up demand and “revenge” shopping. Sasseur provides attractive 2021 distribution yield of 8.6% and trades at P/NAV of 0.9x. Maintain BUY with target price of S$0.99.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/870/original/image_33430358561601515146250.png?1601515147" class="editor-image img-responsive" data-smartkarma-image-id="162870"></figure>
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<p>RESULTS</p>
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<li>Sasseur REIT reported 2Q20 DPU of 1.512 S cents (-6.0% yoy), bringing 1H20 DPU to 2.846 S cents (-12.8% yoy). 1H20 represented 46% of our 2020 DPU forecast. Results are in line with our expectations as the negative impact from the 7-week closure of outlet malls in 1Q20 was already baked into our forecast.</li>
<li><strong>Outlet sales show signs of steady recovery.</strong> Total outlet sales for the four malls were Rmb835.7m in 2Q20, which is 56.3% higher qoq and represents a swift recovery on a sequential basis. Total sales for 2Q20 was Rmb396m for Chongqing (+70.3% qoq), Rmb78.6m for Bishan (+51.5% qoq) and Rmb217.7m for Hefei (+69.6% qoq). Sasseur benefitted from pent-up demand and “revenge” shopping as the Chinese economy recovers from strict lockdowns earlier in the year.</li>
<li><strong>Portfolio occupancy remained resilient at 93.6%</strong> (-1.2ppt qoq). Occupancy for 2Q20 was 100% for Chongqing (flat qoq), 94.7% for Hefei (-0.8ppt qoq) and 97.3% for Kunming (+1.3ppt qoq). Occupancy for Bishan eased 2.3ppt qoq to 84.2% due to bunching up of lease expiry. Sasseur’s total VIP members increased by 14.1% ytd to 1.8m despite the COVID-19 pandemic.</li>
<li><strong>Variable component of EMA rental income has rebounded.</strong> Sasseur’s Entrusted Management Agreement (EMA) model provides downside protection from sales volatility as the fixed component income comprises approximately 70% of resultant rent with an annual step-up of 3%. For 2Q20, the variable component of EMA rental income increased 55.4% qoq to Rmb38.5m, reflecting the strong rebound in shopper traffic and tenant sales.</li>
<li>Sasseur REIT is maintaining its payout ratio at 100% and did not retain any cash.</li>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.

COMPANY RESULTS
Sasseur REIT (SASSR SP)
2Q20: Rapid Recovery In Outlet Sales




China’s success in managing the COVID-19 pandemic has sped up its economic recovery, which Sasseur was able to ride on. Sasseur’s four outlet malls achieved a strong 56% qoq recovery in sales, and we expect the growth momentum to extend into 2H20. Chinese consumers have a penchant for affordable branded goods offered by outlet malls and Sasseur is benefitting from pent-up demand and “revenge” shopping. Sasseur provides attractive 2021 distribution yield of 8.6% and trades at P/NAV of 0.9x. Maintain BUY with target price of S$0.99.





RESULTS





Sasseur REIT reported 2Q20 DPU of 1.512 S cents (-6.0% yoy), bringing 1H20 DPU to 2.846 S cents (-12.8% yoy). 1H20 represented 46% of our 2020 DPU forecast. Results are in line with our expectations as the negative impact from the 7-week closure of outlet malls in 1Q20 was already baked into our forecast.
Outlet sales show signs of steady recovery. Total outlet sales for the four malls were Rmb835.7m in 2Q20, which is 56.3% higher qoq and represents a swift recovery on a sequential basis. Total sales for 2Q20 was Rmb396m for Chongqing (+70.3% qoq), Rmb78.6m for Bishan (+51.5% qoq) and Rmb217.7m for Hefei (+69.6% qoq). Sasseur benefitted from pent-up demand and “revenge” shopping as the Chinese economy recovers from strict lockdowns earlier in the year.
Portfolio occupancy remained resilient at 93.6% (-1.2ppt qoq). Occupancy for 2Q20 was 100% for Chongqing (flat qoq), 94.7% for Hefei (-0.8ppt qoq) and 97.3% for Kunming (+1.3ppt qoq). Occupancy for Bishan eased 2.3ppt qoq to 84.2% due to bunching up of lease expiry. Sasseur’s total VIP members increased by 14.1% ytd to 1.8m despite the COVID-19 pandemic.
Variable component of EMA rental income has rebounded. Sasseur’s Entrusted Management Agreement (EMA) model provides downside protection from sales volatility as the fixed component income comprises approximately 70% of resultant rent with an annual step-up of 3%. For 2Q20, the variable component of EMA rental income increased 55.4% qoq to Rmb38.5m, reflecting the strong rebound in shopper traffic and tenant sales.
Sasseur REIT is maintaining its payout ratio at 100% and did not retain any cash.


















Non-SGX Report: Sasseur REIT (SASSR SP): 2Q20: Rapid Recovery In Outlet Sales

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<p><em><strong>These equity research reports are not written by the SGX</strong>.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
<p>COMPANY RESULTS</p>
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<h2>Sasseur REIT (SASSR SP)</h2>
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<h3>2Q20: Rapid Recovery In Outlet Sales</h3>
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<p>China’s success in managing the COVID-19 pandemic has sped up its economic recovery, which Sasseur was able to ride on. Sasseur’s four outlet malls achieved a strong 56% qoq recovery in sales, and we expect the growth momentum to extend into 2H20. Chinese consumers have a penchant for affordable branded goods offered by outlet malls and Sasseur is benefitting from pent-up demand and “revenge” shopping. Sasseur provides attractive 2021 distribution yield of 8.6% and trades at P/NAV of 0.9x. Maintain BUY with target price of S$0.99.</p>
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<p><strong>2Q20 RESULTS</strong></p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/592/original/image_721939679111599496039809.png?1599496041" class="editor-image img-responsive" data-smartkarma-image-id="157592"></figure>
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<p><strong>RESULTS</strong></p>
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<li>Sasseur REIT reported 2Q20 DPU of 1.512 S cents (-6.0% yoy), bringing 1H20 DPU to 2.846 S cents (-12.8% yoy). 1H20 represented 46% of our 2020 DPU forecast. Results are in line with our expectations as the negative impact from the 7-week closure of outlet malls in 1Q20 was already baked into our forecast.</li>
<li><strong>Outlet sales show signs of steady recovery</strong>. Total outlet sales for the four malls were Rmb835.7m in 2Q20, which is 56.3% higher qoq and represents a swift recovery on a sequential basis. Total sales for 2Q20 was Rmb396m for Chongqing (+70.3% qoq), Rmb78.6m for Bishan (+51.5% qoq) and Rmb217.7m for Hefei (+69.6% qoq). Sasseur benefitted from pent-up demand and “revenge” shopping as the Chinese economy recovers from strict lockdowns earlier in the year.</li>
<li><strong>Portfolio occupancy remained resilient at 93.6%</strong> (-1.2ppt qoq). Occupancy for 2Q20 was 100% for Chongqing (flat qoq), 94.7% for Hefei (-0.8ppt qoq) and 97.3% for Kunming (+1.3ppt qoq). Occupancy for Bishan eased 2.3ppt qoq to 84.2% due to bunching up of lease expiry. Sasseur’s total VIP members increased by 14.1% ytd to 1.8m despite the COVID-19 pandemic.</li>
<li><strong>Variable component of EMA rental income has rebounded</strong>. Sasseur’s Entrusted Management Agreement (EMA) model provides downside protection from sales volatility as the fixed component income comprises approximately 70% of resultant rent with an annual step-up of 3%. For 2Q20, the variable component of EMA rental income increased 55.4% qoq to Rmb38.5m, reflecting the strong rebound in shopper traffic and tenant sales.</li>
<li>Sasseur REIT is maintaining its payout ratio at 100% and did not retain any cash.</li>
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<p><strong>KEY FINANCIALS</strong></p>
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These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
COMPANY RESULTS




Sasseur REIT (SASSR SP)




2Q20: Rapid Recovery In Outlet Sales





China’s success in managing the COVID-19 pandemic has sped up its economic recovery, which Sasseur was able to ride on. Sasseur’s four outlet malls achieved a strong 56% qoq recovery in sales, and we expect the growth momentum to extend into 2H20. Chinese consumers have a penchant for affordable branded goods offered by outlet malls and Sasseur is benefitting from pent-up demand and “revenge” shopping. Sasseur provides attractive 2021 distribution yield of 8.6% and trades at P/NAV of 0.9x. Maintain BUY with target price of S$0.99.




2Q20 RESULTS





RESULTS





Sasseur REIT reported 2Q20 DPU of 1.512 S cents (-6.0% yoy), bringing 1H20 DPU to 2.846 S cents (-12.8% yoy). 1H20 represented 46% of our 2020 DPU forecast. Results are in line with our expectations as the negative impact from the 7-week closure of outlet malls in 1Q20 was already baked into our forecast.
Outlet sales show signs of steady recovery. Total outlet sales for the four malls were Rmb835.7m in 2Q20, which is 56.3% higher qoq and represents a swift recovery on a sequential basis. Total sales for 2Q20 was Rmb396m for Chongqing (+70.3% qoq), Rmb78.6m for Bishan (+51.5% qoq) and Rmb217.7m for Hefei (+69.6% qoq). Sasseur benefitted from pent-up demand and “revenge” shopping as the Chinese economy recovers from strict lockdowns earlier in the year.
Portfolio occupancy remained resilient at 93.6% (-1.2ppt qoq). Occupancy for 2Q20 was 100% for Chongqing (flat qoq), 94.7% for Hefei (-0.8ppt qoq) and 97.3% for Kunming (+1.3ppt qoq). Occupancy for Bishan eased 2.3ppt qoq to 84.2% due to bunching up of lease expiry. Sasseur’s total VIP members increased by 14.1% ytd to 1.8m despite the COVID-19 pandemic.
Variable component of EMA rental income has rebounded. Sasseur’s Entrusted Management Agreement (EMA) model provides downside protection from sales volatility as the fixed component income comprises approximately 70% of resultant rent with an annual step-up of 3%. For 2Q20, the variable component of EMA rental income increased 55.4% qoq to Rmb38.5m, reflecting the strong rebound in shopper traffic and tenant sales.
Sasseur REIT is maintaining its payout ratio at 100% and did not retain any cash.





KEY FINANCIALS


































<p><em><strong>These equity research reports are not written by the SGX.</strong> SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p><div>
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<p>COMPANY RESULTS</p>
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<h2>Sasseur REIT (SASSR SP)</h2>
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<p><strong>1Q20: Recovery In Sales From Pent-up Demand</strong></p>
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<p><strong>Unlike other retail REITs, Sasseur REIT kept its payout ratio at 100% and did not retain cash. Its unique EMA rental model provides income stability in our view. Fixed component income increased 3.9% yoy to Rmb102.4m and accounted for 80.5% of total EMA rental income, cushioning Sasseur from the negative impact of mall closures. Sasseur’s four outlet malls re-opened in mid-March. It will benefit as consumers return with renewed fervour. Maintain BUY with a higher target price of S$0.96.</strong></p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/151/058/original/image_28411803621596734021109.png?1596734023" class="editor-image img-responsive" data-smartkarma-image-id="151058"></figure>
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<p><strong>RESULTS</strong></p>
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<p>• <strong>1Q20 DPU of 1.334 S cents (-19.4% yoy).</strong> The results represented 21.9% of our 2020 forecast. It was in line with our expectations as the negative impact from the temporary closure of outlet malls had already been baked into our forecast.</p>
<p>• <strong>Post-lockdown outlet sales show signs of normalisation.</strong> Total outlet sales for the four malls came in at Rmb534.5m for 1Q20, 55.7% lower yoy. Sasseur REIT’s (Sasseur) total sales for 1Q20 was at Rmb232.5m for Chongqing (-61.8% yoy), Rmb51.9m for Bishan (- 58.4% yoy), Rmb128.4m for Hefei (-47.2% yoy) and Rmb121.8m for Kunming (-46.8% yoy). This is largely a result of temporary closures of Sasseur’s four outlet malls over a period of 44-49 days, representing 48-54% of the total operating days in 1Q20.</p>
<p><strong>• Portfolio occupancy remained stable</strong> at 94.8% (-1.2ppt qoq), demonstrating the positive partnership between the tenants and entrusted managers of each outlet mall. Occupancy for 1Q20 was at 100% for Chongqing (flat qoq), 86.5% for Bishan (-6ppt qoq), 95.5% for Hefei (- 0.8ppt qoq) and 96.0% for Kunming (+1.1ppt qoq). Furthermore, total VIP members increased 4.8% qoq to 1.66m in 1Q20 despite the lockdown.</p>
<p><strong>• EMA rental model provides income stability</strong>. Under Sasseur’s unique Entrusted Management Agreement (EMA) model, the fixed component income comprises approximately 70% of resultant rent with an annual step-up of 3%. This model cushions Sasseur’s unitholders from excessive fluctuations in sales, which provides downside protection from unexpected business interruptions, such as mall closures. For 1Q20, fixed component income increased 3.9% yoy to Rmb102.4m, which accounted for 80.5% of total EMA rental income.</p>
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These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.



COMPANY RESULTS




Sasseur REIT (SASSR SP)




1Q20: Recovery In Sales From Pent-up Demand




Unlike other retail REITs, Sasseur REIT kept its payout ratio at 100% and did not retain cash. Its unique EMA rental model provides income stability in our view. Fixed component income increased 3.9% yoy to Rmb102.4m and accounted for 80.5% of total EMA rental income, cushioning Sasseur from the negative impact of mall closures. Sasseur’s four outlet malls re-opened in mid-March. It will benefit as consumers return with renewed fervour. Maintain BUY with a higher target price of S$0.96.





RESULTS




• 1Q20 DPU of 1.334 S cents (-19.4% yoy). The results represented 21.9% of our 2020 forecast. It was in line with our expectations as the negative impact from the temporary closure of outlet malls had already been baked into our forecast.
• Post-lockdown outlet sales show signs of normalisation. Total outlet sales for the four malls came in at Rmb534.5m for 1Q20, 55.7% lower yoy. Sasseur REIT’s (Sasseur) total sales for 1Q20 was at Rmb232.5m for Chongqing (-61.8% yoy), Rmb51.9m for Bishan (- 58.4% yoy), Rmb128.4m for Hefei (-47.2% yoy) and Rmb121.8m for Kunming (-46.8% yoy). This is largely a result of temporary closures of Sasseur’s four outlet malls over a period of 44-49 days, representing 48-54% of the total operating days in 1Q20.
• Portfolio occupancy remained stable at 94.8% (-1.2ppt qoq), demonstrating the positive partnership between the tenants and entrusted managers of each outlet mall. Occupancy for 1Q20 was at 100% for Chongqing (flat qoq), 86.5% for Bishan (-6ppt qoq), 95.5% for Hefei (- 0.8ppt qoq) and 96.0% for Kunming (+1.1ppt qoq). Furthermore, total VIP members increased 4.8% qoq to 1.66m in 1Q20 despite the lockdown.
• EMA rental model provides income stability. Under Sasseur’s unique Entrusted Management Agreement (EMA) model, the fixed component income comprises approximately 70% of resultant rent with an annual step-up of 3%. This model cushions Sasseur’s unitholders from excessive fluctuations in sales, which provides downside protection from unexpected business interruptions, such as mall closures. For 1Q20, fixed component income increased 3.9% yoy to Rmb102.4m, which accounted for 80.5% of total EMA rental income.

























Non-SGX Report: Sasseur REIT (SASSR SP): 1Q20: Recovery In Sales From Pent-Up Demand

<p><i><b>These equity research reports are not written by the SGX.</b> SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</i></p><p>COMPANY UPDATE</p>
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<h2>Sasseur REIT (SASSR SP)</h2>
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<p><strong>Staying Vigilant Amid COVID-19 Outbreak</strong></p>
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<p><strong>Sasseur REIT will be re-opening its Kunming outlet mall on 11 Mar 19 as it has obtained approval from local authorities, while its remaining three outlet malls remain temporarily closed as a precautionary measure against the COVID-19 outbreak. In response to these unexpected closures, management has undertaken strategic initiatives to grow online sales through its e-commerce portal. Distribution yield remains attractive at 8.0% even after cutting our 2020F DPU forecast by 13%. Maintain BUY with a lower target price of S$0.92.</strong></p>
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<p>WHAT’S NEW</p>
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<p><strong>Kunming outlet mall slated for re-opening on 11 March.</strong> Sasseur REIT has obtained approval from authorities in Kunming to re-open its outlet, and will continue to enforce preventive measures such as the frequent sanitising of mall facilities to ensure smooth operations. The recent spread of the COVID-19 virus in China has prompted Sasseur REIT to implement temporary closure of all four of its outlet malls; Chongqing and Bishan have been closed since 26 Jan 20; Hefei and Kunming have been closed since 27 Jan 20. These actions were undertaken to prevent the spread of the coronavirus and aligns with management’s stance on corporate social responsibility towards all stakeholders. Management aims to re-open the remaining three outlets as soon as possible.</p>
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<p><strong>Reopening of five of seven sponsor malls.</strong> On a positive note, sponsor Sasseur Holdings’<br>five outlet malls in Guiyang, Nanjing, Changchun, Lanzhou and Xi’an have re-opened as of 9<br>Mar 20 after obtaining approval from the respective provincial authorities. Management has<br>also indicated that reopening dates for the remaining two outlet malls should be in weeks rather than months as new COVID-19 cases within China have been falling rapidly. A healthy rebound in footfall and sales across all outlets is expected as the widespread work stoppages and corresponding loss of income should drive consumer demand for discounted products.</p>
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<p><strong>Exploring AEI opportunities for Chongqing outlet.</strong> The Chongqing outlet mall is the<br>portfolio’s most mature asset, having commenced operations since 2008. As such,<br>management believes that this is an opportune time to rejuvenate the outlet and reposition it as an exciting lifestyle and shopping destination for both locals and tourists. If feasible, management intends to begin AEI works as soon as 2H20.</p>
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These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.COMPANY UPDATE

Sasseur REIT (SASSR SP)

Staying Vigilant Amid COVID-19 Outbreak

Sasseur REIT will be re-opening its Kunming outlet mall on 11 Mar 19 as it has obtained approval from local authorities, while its remaining three outlet malls remain temporarily closed as a precautionary measure against the COVID-19 outbreak. In response to these unexpected closures, management has undertaken strategic initiatives to grow online sales through its e-commerce portal. Distribution yield remains attractive at 8.0% even after cutting our 2020F DPU forecast by 13%. Maintain BUY with a lower target price of S$0.92.

WHAT’S NEW

Kunming outlet mall slated for re-opening on 11 March. Sasseur REIT has obtained approval from authorities in Kunming to re-open its outlet, and will continue to enforce preventive measures such as the frequent sanitising of mall facilities to ensure smooth operations. The recent spread of the COVID-19 virus in China has prompted Sasseur REIT to implement temporary closure of all four of its outlet malls; Chongqing and Bishan have been closed since 26 Jan 20; Hefei and Kunming have been closed since 27 Jan 20. These actions were undertaken to prevent the spread of the coronavirus and aligns with management’s stance on corporate social responsibility towards all stakeholders. Management aims to re-open the remaining three outlets as soon as possible.

Reopening of five of seven sponsor malls. On a positive note, sponsor Sasseur Holdings’ five outlet malls in Guiyang, Nanjing, Changchun, Lanzhou and Xi’an have re-opened as of 9 Mar 20 after obtaining approval from the respective provincial authorities. Management has also indicated that reopening dates for the remaining two outlet malls should be in weeks rather than months as new COVID-19 cases within China have been falling rapidly. A healthy rebound in footfall and sales across all outlets is expected as the widespread work stoppages and corresponding loss of income should drive consumer demand for discounted products.

Exploring AEI opportunities for Chongqing outlet. The Chongqing outlet mall is the portfolio’s most mature asset, having commenced operations since 2008. As such, management believes that this is an opportune time to rejuvenate the outlet and reposition it as an exciting lifestyle and shopping destination for both locals and tourists. If feasible, management intends to begin AEI works as soon as 2H20.








Non-SGX Report: Sasseur REIT (SASSR SP): Staying Vigilant Amid COVID-19 Outbreak

Singapore

Sasseur Real Estate Investment Trust (“Sasseur REIT”) is the first outlet REIT listed in Asia. Sasseur REIT’s property portfolio comprises four outlets with an estimated appraised value of RMB 8.5 billion and net lettable area of 310,241 square metres. The outlets are strategically located in the high-growth cities of Chongqing, Hefei and Kunming in China and well-positioned to ride on the growth of the rising spending power of the Chinese middle class.

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Sasseur REIT (SASSR SP)

Sasseur REIT Taps Aspirations of China’s Middle Class

Through his diverse career spanning more than three decades, engineer by training Anthony Ang has always tried to define...

Singapore Exchange Ltd (SGX)

Non-SGX Report: Sasseur REIT (SASSR SP): 2Q20: Rapid Recovery In Outlet Sales

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

Non-SGX Report: Sasseur REIT (SASSR SP): 2Q20: Rapid Recovery In Outlet Sales

These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors....

Singapore Exchange Ltd (SGX)

Non-SGX Report: Sasseur REIT (SASSR SP): 1Q20: Recovery In Sales From Pent-Up Demand

These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please...

Singapore Exchange Ltd (SGX)

Non-SGX Report: Sasseur REIT (SASSR SP): Staying Vigilant Amid COVID-19 Outbreak

These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please...

Singapore Exchange Ltd (SGX)

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