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)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<p><em><strong>Non- SGX Report: 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>
<div>
<div>
<div>
<div>
<h2>BHG Retail REIT</h2>
<h3>Stable growth with resilient portfolio</h3>
<div>
<div>
<div>
<div>
<ul>
<li>Committed occupancy improved to 97.0% from 93.5% in 2H20 as four portfolio assets saw recovery.</li>
<li>Gross revenue and net property income increased by 10.8% and 6.6% YoY respectively. 2H21 DPU was up by 4% to 1.05 Scts.</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/278/807/original/image_47105468871654101581216.png?1654101583" class="editor-image img-responsive" data-smartkarma-image-id="278807"></figure>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>

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.




BHG Retail REIT
Stable growth with resilient portfolio





Committed occupancy improved to 97.0% from 93.5% in 2H20 as four portfolio assets saw recovery.
Gross revenue and net property income increased by 10.8% and 6.6% YoY respectively. 2H21 DPU was up by 4% to 1.05 Scts.











(Non-SGX Report) BHG Retail REIT - Stable Growth with Resilient Portfolio

<figure>
      <img src='https://api2.sgx.com/sites/default/files/2021-12/Capture_7.PNG' alt='Top 10 performing SREITs since Nov 1, 2021' />
    </figure>
    <div class='content-caption'>Top 10 performing SREITs since Nov 1, 2021</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<p>Global Reit markets dipped over the last 3 sessions of November, as investors grappled with the unknowns of the Covid Omicron variant.</p>

<p>Similarly, the 3 sessions saw the iEdge S-Reit Index shave off 3.8 per cent in total returns, ending November with a 2.4 per cent decline.<br><br>
The top five performers over the month of November were firstly, S-REITs with healthcare assets – First REIT (12.2 per cent in total returns) and ParkwayLife REIT (6.6 per cent) – and secondly, S-REITs with assets located in China – Sasseur REIT (4.7 per cent), EC World REIT (3.1 per cent) and BHG Retail REIT (2.9 per cent).<br><br>
As uncertainty over the Omicron variant eased gradually, the iEdge S-Reit Index regained 1.2 per cent over the first 7 sessions of December, bringing its total returns since the start of November to a decline of 1.2 per cent.</p>

<p>S-Reits with healthcare and China-based assets continued to be the top performers over the extended period from the start of November to Dec 9, 2021.<br><br>
These S-REITs were: First REIT (18.0 per cent in total returns), BHG Retail REIT (15.4 per cent), ParkwayLife REIT (8.9 per cent), Sasseur REIT (4.7 per cent) and Mapletree North Asia Commercial Trust (4.5 per cent).<br><br>
First Reit, in its third quarter business update ended Sep 30, 2021, noted that it continued to see performance stabilising, following the restructuring of the master lease agreements for 14 Indonesia hospitals in January 2021 and its recapitalisation efforts in Q12021.</p>

<p>Last week, the trust also unveiled its 2.0 Growth Strategy, which includes diversifying into developed markets, strengthening of capital structure, reshaping of portfolio for capital-efficient growth as well as a pivoting to ride megatrends like ESG (environmental, social and governance).<br><br>
In line with its 2.0 Growth Strategy, First REIT announced the proposed acquisition of 12 nursing homes in Japan from its sponsor, OUE Lippo Healthcare for JPY 24.2 billion.<br><br>
Post-acquisition, First Reit will increase its exposure to developed markets, from 3.6 per cent of its asset value as at H12021, to 27.1 per cent on a pro forma basis.</p>

<p>Sasseur Reit declared distribution per unit (DPU) of 1.831 Singapore cents for Q32021, an increase of 13.4 per cent year on year.</p>

<p>The Reit manager noted that despite strict government regulations, the Reit's outlet sales grew 12.0 per cent quarter on quarter to 996.6 million yuan.</p>

<p>For the 9-month period ended Sep 30, 2021, Sasseur Reit's four outlets registered total sales of 3.02 billion yuan, representing an increase of 21.8 per cent compared to a year ago.</p>

<p>Similarly, EC World Reit announced higher DPU of 1.662 Singapore cents for Q32021, an increase of 19.7 per cent year on year.</p>

<p>Four out of EC World Reit's portfolio of 8 properties cater to the e-commerce logistics sector. The occupancy rate of its Wuhan Meiluote property increased from 79.4 per cent to 84.5 per cent, as it secured a 3-month lease starting Oct 1, 2021, in anticipation of the annual Singles Day sales.</p>

<p>As at Oct 31, 2021, EC World Reit's portfolio occupancy is 99.2 per cent. <br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/pure-play-data-centre-digital-core-reit-to-start-trading-on-monday"> </a><a href="https://www.businesstimes.com.sg/companies-markets/s-reits-with-healthcare-and-china-assets-outshine-in-november">read </a>the original version.</em></strong></p>
</body></html>



      
    
    Top 10 performing SREITs since Nov 1, 2021


Global Reit markets dipped over the last 3 sessions of November, as investors grappled with the unknowns of the Covid Omicron variant.

Similarly, the 3 sessions saw the iEdge S-Reit Index shave off 3.8 per cent in total returns, ending November with a 2.4 per cent decline.  
The top five performers over the month of November were firstly, S-REITs with healthcare assets – First REIT (12.2 per cent in total returns) and ParkwayLife REIT (6.6 per cent) – and secondly, S-REITs with assets located in China – Sasseur REIT (4.7 per cent), EC World REIT (3.1 per cent) and BHG Retail REIT (2.9 per cent).  
As uncertainty over the Omicron variant eased gradually, the iEdge S-Reit Index regained 1.2 per cent over the first 7 sessions of December, bringing its total returns since the start of November to a decline of 1.2 per cent.

S-Reits with healthcare and China-based assets continued to be the top performers over the extended period from the start of November to Dec 9, 2021.  
These S-REITs were: First REIT (18.0 per cent in total returns), BHG Retail REIT (15.4 per cent), ParkwayLife REIT (8.9 per cent), Sasseur REIT (4.7 per cent) and Mapletree North Asia Commercial Trust (4.5 per cent).  
First Reit, in its third quarter business update ended Sep 30, 2021, noted that it continued to see performance stabilising, following the restructuring of the master lease agreements for 14 Indonesia hospitals in January 2021 and its recapitalisation efforts in Q12021.

Last week, the trust also unveiled its 2.0 Growth Strategy, which includes diversifying into developed markets, strengthening of capital structure, reshaping of portfolio for capital-efficient growth as well as a pivoting to ride megatrends like ESG (environmental, social and governance).  
In line with its 2.0 Growth Strategy, First REIT announced the proposed acquisition of 12 nursing homes in Japan from its sponsor, OUE Lippo Healthcare for JPY 24.2 billion.  
Post-acquisition, First Reit will increase its exposure to developed markets, from 3.6 per cent of its asset value as at H12021, to 27.1 per cent on a pro forma basis.

Sasseur Reit declared distribution per unit (DPU) of 1.831 Singapore cents for Q32021, an increase of 13.4 per cent year on year.

The Reit manager noted that despite strict government regulations, the Reit's outlet sales grew 12.0 per cent quarter on quarter to 996.6 million yuan.

For the 9-month period ended Sep 30, 2021, Sasseur Reit's four outlets registered total sales of 3.02 billion yuan, representing an increase of 21.8 per cent compared to a year ago.

Similarly, EC World Reit announced higher DPU of 1.662 Singapore cents for Q32021, an increase of 19.7 per cent year on year.

Four out of EC World Reit's portfolio of 8 properties cater to the e-commerce logistics sector. The occupancy rate of its Wuhan Meiluote property increased from 79.4 per cent to 84.5 per cent, as it secured a 3-month lease starting Oct 1, 2021, in anticipation of the annual Singles Day sales.

As at Oct 31, 2021, EC World Reit's portfolio occupancy is 99.2 per cent.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - S-Reits with healthcare and China assets outshine in November

<figure>
      <img src='https://api2.sgx.com/sites/default/files/2021-09/Capture_5.PNG' alt='SREIT with 100%' />
    </figure>
    <div class='content-caption'>SREIT with 100%</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<p>Chinese real estate and property-related stocks have been dominating headlines over the past week as investors remain cautious and watch for updates.<br><br>
Closer to home, there are four S-REITs which have their entire portfolio of assets in China – CapitaLand China Trust, Sasseur REIT, EC World REIT, and BHG Retail REIT.<br><br>
Together the four S-Reits have generated -0.9 per cent in average price returns over the past week, comparatively to the swings of Chinese property stocks.<br><br>
The Reits have averaged 8.0 per cent in total returns in the year-to-date, 6.1 per cent in average distribution yields, and an average gearing ratio of 34.1 per cent which is lower than the sector average of 37.4 per cent.</p>

<p>S-Reits have a regulated leverage limited of 50 per cent.</p>

<p>CapitaLand China Trust (CLCT) is the largest multi-asset China focused S-Reit with an expanded mandate from a pure retail Reit into a diversified portfolio of retail and business park assets since earlier this year.<br><br>
Its Sponsor is CapitaLand Investment Limited, a leading global real estate investment manager, which made its trading debut on the SGX last week.<br><br>
CLCT has a gearing ratio of 35.9 per cent and average term to maturity of 3.80 years, with the majority of the refinancing requirements in 2021 completed.</p>

<p>It has 78 per cent of its total term loans on fixed interest rates and has hedged approximately 55 per cent of its undistributed income to reduce foreign currency fluctuations.</p>

<p>Sasseur Reit operates four outlet malls located in Chongqing, Bishan, Hefei and Kunming and is Asia's first outlet mall Reit.</p>

<p>The Reit has a gearing ratio of 27.8 per cent which is the lowest across the S-Reits sector and sees this as providing ample debt headroom for potential acquisitions.</p>

<p>Sasseur Reit has an average debt to maturity of 1.7 years and an interest coverage ratio of 4.5 times as at June 30, 2021 which has improved from 4.0 times in Dec 31, 2020.</p>

<p>Its weighted average cost of debt reduced to 4.4 per cent per annum for H1 2021, from 5.3 per cent per annum in H1 2020.</p>

<p>EC World Reit has a diversified portfolio of assets used primarily for e-commerce, supply-chain management and logistics purposes in the e-commerce clusters of Hangzhou and Wuhan.</p>

<p>The Reit has a gearing ratio of 37.6 per cent, weighted average debt maturity of 1.13 years and interest coverage ratio of 2.86 times.</p>

<p>The Reit manager has expressed in its latest financial results that it will continue to actively explore and diversify sources of funding and hedging instruments to optimise its capital structure.</p>

<p>BHG Retail Reit has a diversified portfolio of six retail properties in Beijing, Chengdu, Hefei, Xining and Dalian. It has a gearing ratio of 34.9 per cent.</p>

<p>BHG Retail Reit has an average cost of debt at 3.7 per cent and interest coverage ratio of 2.6 times.</p>

<p>Over 80 per cent of its borrowings are denominated in Singapore dollars and US dollars and about 60 per cent of offshore loans are hedged via interest rate swaps. <br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/china-focused-s-reits-resilient-amid-onshore-property-focus"> </a><a href="https://www.businesstimes.com.sg/companies-markets/governance-and-transparency-scores-of-s-reits-hit-all-time-high">read</a><a href="https://www.businesstimes.com.sg/companies-markets/10-s-reits-yielding-long-term-annualised-returns"> </a>the original version.</em></strong></p>
</body></html>



      
    
    SREIT with 100%


Chinese real estate and property-related stocks have been dominating headlines over the past week as investors remain cautious and watch for updates.  
Closer to home, there are four S-REITs which have their entire portfolio of assets in China – CapitaLand China Trust, Sasseur REIT, EC World REIT, and BHG Retail REIT.  
Together the four S-Reits have generated -0.9 per cent in average price returns over the past week, comparatively to the swings of Chinese property stocks.  
The Reits have averaged 8.0 per cent in total returns in the year-to-date, 6.1 per cent in average distribution yields, and an average gearing ratio of 34.1 per cent which is lower than the sector average of 37.4 per cent.

S-Reits have a regulated leverage limited of 50 per cent.

CapitaLand China Trust (CLCT) is the largest multi-asset China focused S-Reit with an expanded mandate from a pure retail Reit into a diversified portfolio of retail and business park assets since earlier this year.  
Its Sponsor is CapitaLand Investment Limited, a leading global real estate investment manager, which made its trading debut on the SGX last week.  
CLCT has a gearing ratio of 35.9 per cent and average term to maturity of 3.80 years, with the majority of the refinancing requirements in 2021 completed.

It has 78 per cent of its total term loans on fixed interest rates and has hedged approximately 55 per cent of its undistributed income to reduce foreign currency fluctuations.

Sasseur Reit operates four outlet malls located in Chongqing, Bishan, Hefei and Kunming and is Asia's first outlet mall Reit.

The Reit has a gearing ratio of 27.8 per cent which is the lowest across the S-Reits sector and sees this as providing ample debt headroom for potential acquisitions.

Sasseur Reit has an average debt to maturity of 1.7 years and an interest coverage ratio of 4.5 times as at June 30, 2021 which has improved from 4.0 times in Dec 31, 2020.

Its weighted average cost of debt reduced to 4.4 per cent per annum for H1 2021, from 5.3 per cent per annum in H1 2020.

EC World Reit has a diversified portfolio of assets used primarily for e-commerce, supply-chain management and logistics purposes in the e-commerce clusters of Hangzhou and Wuhan.

The Reit has a gearing ratio of 37.6 per cent, weighted average debt maturity of 1.13 years and interest coverage ratio of 2.86 times.

The Reit manager has expressed in its latest financial results that it will continue to actively explore and diversify sources of funding and hedging instruments to optimise its capital structure.

BHG Retail Reit has a diversified portfolio of six retail properties in Beijing, Chengdu, Hefei, Xining and Dalian. It has a gearing ratio of 34.9 per cent.

BHG Retail Reit has an average cost of debt at 3.7 per cent and interest coverage ratio of 2.6 times.

Over 80 per cent of its borrowings are denominated in Singapore dollars and US dollars and about 60 per cent of offshore loans are hedged via interest rate swaps.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - China focused S-Reits resilient amid onshore property focus

<div><strong>Non- SGX Report: These equity research reports are not written by the SGX.</strong>&nbsp;<em>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></div>
<div></div>
<div>
<h2>BHG Retail REIT</h2>
<h3>Poised for renewed growth</h3>
<div>
<ul>
<li>Committed occupancy improved slightly to 93.0% from 92.9% as three portfolio assets recovered.</li>
<li>Gross revenue and net property income increased 23.5% and 24.8% YoY respectively. This lifted 1H21 DPU by 33% to 1.12 Scts.</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/239/303/original/image_410495429131635863150935.png?1635863159" class="editor-image img-responsive" data-smartkarma-image-id="239303"></figure>
<div>
<div>
<div></div>
</div>
<div>
<p><strong>The Positives</strong><br><strong>+ Committed occupancy recovered slightly to 93.0% from 92.9% in 1H20.</strong><span style="font-size: var(--content-font-size);"> Occupancy recovered in three malls: Beijing Wanliu, Chengdu Konggang, and Hefei Changjiangxilu. Occupancy remained full at two malls: Xining Huayuan and Dalian Jinsanjiao.</span></p>
<div>
<p><strong>+ Increase in gross revenue and net property income.</strong> The recovery in its gross revenue and property income was underpinned by healthy occupancy and an uptick in new leasing demand. No rental rebates were given in 1H21. Rents for new and renewed leases continued to recover.</p>
<p><strong>+ Increase in DPU.</strong> With higher distributable income, DPU without waiver increased 33% to 1.12 Scts. The amount of distributions waived for its strategic investor units in 1H20 amounted to S$1.2mn, and the last distribution waiver was in 2H20. With the end of its sponsor’s distribution waiver, more units are entitled to distribution.</p>
<p><strong>The Negative</strong><br>- Nil.</p>
<p><strong>Outlook</strong><br><strong>China’s GDP grew 12.7% YoY in 1H21. Retail sales of consumer goods recovered in tandem, by 23.0% YoY to RMB21.2tn.</strong> Urban residents’ disposable income per capita improved 12.6% YoY.</p>
<p><strong>Coupled with recovering committed occupancy and continued AEI, BHG REIT appears poised for renewed growth.</strong> Gearing remained healthy at 34.9%, providing comfortable debt headroom to pursue M&amp;A growth opportunities.</p>
</div>
</div>
</div>
</div>
</div>

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.


BHG Retail REIT
Poised for renewed growth


Committed occupancy improved slightly to 93.0% from 92.9% as three portfolio assets recovered.
Gross revenue and net property income increased 23.5% and 24.8% YoY respectively. This lifted 1H21 DPU by 33% to 1.12 Scts.







The Positives + Committed occupancy recovered slightly to 93.0% from 92.9% in 1H20. Occupancy recovered in three malls: Beijing Wanliu, Chengdu Konggang, and Hefei Changjiangxilu. Occupancy remained full at two malls: Xining Huayuan and Dalian Jinsanjiao.

+ Increase in gross revenue and net property income. The recovery in its gross revenue and property income was underpinned by healthy occupancy and an uptick in new leasing demand. No rental rebates were given in 1H21. Rents for new and renewed leases continued to recover.
+ Increase in DPU. With higher distributable income, DPU without waiver increased 33% to 1.12 Scts. The amount of distributions waived for its strategic investor units in 1H20 amounted to S$1.2mn, and the last distribution waiver was in 2H20. With the end of its sponsor’s distribution waiver, more units are entitled to distribution.
The Negative - Nil.
Outlook China’s GDP grew 12.7% YoY in 1H21. Retail sales of consumer goods recovered in tandem, by 23.0% YoY to RMB21.2tn. Urban residents’ disposable income per capita improved 12.6% YoY.
Coupled with recovering committed occupancy and continued AEI, BHG REIT appears poised for renewed growth. Gearing remained healthy at 34.9%, providing comfortable debt headroom to pursue M&amp;A growth opportunities.






(Non-SGX Report) BHG Retail REIT: Poised for Renewed Growth

<p><em><strong>Non- SGX Report: 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>
<div>
<div>
<div>
<div>
<p>Singapore Company Focus</p>
<h2>BHG Retail REIT</h2>
<div>
<div>
<div>
<div>
<h3>Good proxy for China’s retail recovery</h3>
<div>
<div>
<div>
<div>
<ul style="list-style-type: disc;">
<li>
<p>DPU to reverse 3-year declining trend with projected 34.4% y-o-y rise in FY21F DPU</p>
</li>
<li>
<p>Good potential for long-term high rental supported by strong disposable income growth in China</p>
</li>
<li>
<p>ROFR over 12 assets by the established Beijing Hualian Group, the owner of Beijing SKP Mall</p>
</li>
<li>
<p>Initiate with BUY and TP of S$0.60</p>
</li>
</ul>
<div>
<div>
<div>
<div>
<p><strong>Bottoming DPU heralds new phase of growth.</strong> FY20F DPU marked the bottom in BHG REIT’s 3-year declining DPU trend. Going forward, we believe DPU will grow steadily starting with a c.34% y-o-y bounce this year to an estimated 3.01 Scts. The recovery will be led by the end of rental rebates and a recovery from COVID-19 restrictions. FY22F DPU is projected to grow c.8% y-o-y to 3.25 Scts and rise steadily from hereon as there are no more distribution waiver units remaining.</p>
<p><strong>High growth potential with exposure to key cities.</strong> BHG REIT has exposure to three properties located in Hefei and Chengdu. Urban disposable income per capita grew by a 5-year CAGR of 8.5% and 7.9% in Hefei and Chengdu, compared to Beijing’s 7.2%. Correspondingly, retail spending in Hefei and Chengdu grew faster at a 5-year CAGR of 16.6% and 7.3% versus 5.7% in Beijing. Arguably, BHG REIT’s assets in Hefei and Chengdu may potentially enjoy higher rental growth even as its Beijing Wanliu mall provides a stable foundation.</p>
<p><strong>Established Sponsor with pipeline of assets for acquisition</strong>. BHG REIT has a right-of-first-refusal (ROFR) over 12 assets. The REIT’s pipeline of assets may expand beyond the ROFR, with previous proposed acquisitions outside the ROFR. Using the proposed acquisition of Badaling Outlets as a basis, we estimate that BHG REIT has an acquisition firepower of between c.S$300m and S$500m when combined with a rights issue.</p>
<p><strong>Valuation:</strong><br>Initiate with BUY and DCF-based TP of S$0.60 based on WACC of 8.0% and terminal growth rate of 2.5%. Our TP implies FY22F target yield of 5.4%.</p>
<p><strong>Key Risks to Our View:</strong><br>Surge in COVID-19 cases leading to restrictions in Beijing, Chengdu or Hefei and higher-than-expected shift in retail spending to online space.</p>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>

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.




Singapore Company Focus
BHG Retail REIT




Good proxy for China’s retail recovery






DPU to reverse 3-year declining trend with projected 34.4% y-o-y rise in FY21F DPU


Good potential for long-term high rental supported by strong disposable income growth in China


ROFR over 12 assets by the established Beijing Hualian Group, the owner of Beijing SKP Mall


Initiate with BUY and TP of S$0.60






Bottoming DPU heralds new phase of growth. FY20F DPU marked the bottom in BHG REIT’s 3-year declining DPU trend. Going forward, we believe DPU will grow steadily starting with a c.34% y-o-y bounce this year to an estimated 3.01 Scts. The recovery will be led by the end of rental rebates and a recovery from COVID-19 restrictions. FY22F DPU is projected to grow c.8% y-o-y to 3.25 Scts and rise steadily from hereon as there are no more distribution waiver units remaining.
High growth potential with exposure to key cities. BHG REIT has exposure to three properties located in Hefei and Chengdu. Urban disposable income per capita grew by a 5-year CAGR of 8.5% and 7.9% in Hefei and Chengdu, compared to Beijing’s 7.2%. Correspondingly, retail spending in Hefei and Chengdu grew faster at a 5-year CAGR of 16.6% and 7.3% versus 5.7% in Beijing. Arguably, BHG REIT’s assets in Hefei and Chengdu may potentially enjoy higher rental growth even as its Beijing Wanliu mall provides a stable foundation.
Established Sponsor with pipeline of assets for acquisition. BHG REIT has a right-of-first-refusal (ROFR) over 12 assets. The REIT’s pipeline of assets may expand beyond the ROFR, with previous proposed acquisitions outside the ROFR. Using the proposed acquisition of Badaling Outlets as a basis, we estimate that BHG REIT has an acquisition firepower of between c.S$300m and S$500m when combined with a rights issue.
Valuation: Initiate with BUY and DCF-based TP of S$0.60 based on WACC of 8.0% and terminal growth rate of 2.5%. Our TP implies FY22F target yield of 5.4%.
Key Risks to Our View: Surge in COVID-19 cases leading to restrictions in Beijing, Chengdu or Hefei and higher-than-expected shift in retail spending to online space.

















(Non-SGX Report) BHG Retail REIT: Good Proxy for China’s Retail Recovery

Singapore

BHG Retail REIT is a real estate investment trust (REIT) in Singapore.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

BHG Retail REIT (BHGREIT SP)

(Non-SGX Report) BHG Retail REIT - Stable Growth with Resilient Portfolio

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)

REIT Watch - S-Reits with healthcare and China assets outshine in November

Global Reit markets dipped over the last 3 sessions of November, as investors grappled with the unknowns of the Covid Omicron...

Singapore Exchange Ltd (SGX)

REIT Watch - China focused S-Reits resilient amid onshore property focus

Chinese real estate and property-related stocks have been dominating headlines over the past week as investors remain cautious...

Singapore Exchange Ltd (SGX)

(Non-SGX Report) BHG Retail REIT: Poised for Renewed Growth

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) BHG Retail REIT: Good Proxy for China’s Retail Recovery

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)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)