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

<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.</div>
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Singapore Company Update&nbsp;
<h2>Dasin Retail Trust&nbsp;</h2>
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<h3>Waiting for its moment</h3>

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Investment Thesis
Rich valuation compared to peers. Dasin currently trades at an FY21F yield of c.6% which we believe may limit any upside in the near term. This compares to a peer average FY21F yield of 7.4%.
Benefits from Greater Bay Area exposure could take time. Dasin’s asset concentration in the Greater Bay Area (GBA) enables the Trust to tap on the region’s growth. While we are optimistic on its prospects, growth in GBA may be uneven and take time to spread to Zhongshan and Foshan.
Key catalyst – Watch for bounce in China offline retail sales. Approximately 20% of Dasin’s leases by gross rental income are based on either turnover rent, or the higher of base rent or turnover rent. As such, a surprisingly large jump in offline retail sales could indicate better rental income for Dasin.
Valuation: Downgrade to HOLD with DCF-based TP of S$0.74 based on WACC of 7.0% and terminal growth rate of 2.5%. Our TP implies FY21F target yield of c.6% versus current peer average trading yield of 7.4%.
Where we differ: While we are the only house covering the stock, we have assumed more conservative occupancies as China consumer confidence remains below 2019 levels.
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.
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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.

Singapore Company Update&nbsp;
Dasin Retail Trust&nbsp;




Waiting for its moment





Investment Thesis
Rich valuation compared to peers. Dasin currently trades at an FY21F yield of c.6% which we believe may limit any upside in the near term. This compares to a peer average FY21F yield of 7.4%.
Benefits from Greater Bay Area exposure could take time. Dasin’s asset concentration in the Greater Bay Area (GBA) enables the Trust to tap on the region’s growth. While we are optimistic on its prospects, growth in GBA may be uneven and take time to spread to Zhongshan and Foshan.
Key catalyst – Watch for bounce in China offline retail sales. Approximately 20% of Dasin’s leases by gross rental income are based on either turnover rent, or the higher of base rent or turnover rent. As such, a surprisingly large jump in offline retail sales could indicate better rental income for Dasin.
Valuation: Downgrade to HOLD with DCF-based TP of S$0.74 based on WACC of 7.0% and terminal growth rate of 2.5%. Our TP implies FY21F target yield of c.6% versus current peer average trading yield of 7.4%.
Where we differ: While we are the only house covering the stock, we have assumed more conservative occupancies as China consumer confidence remains below 2019 levels.
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.









(Non-SGX Report) Dasin Retail Trust: Waiting for Its Moment

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<li>
Of the S-REITs on SGX, at least five have 100% of their assets located in China. They are CapitaLand Retail China Trust (“CRCT”), Sasseur REIT, Dasin Retail Trust, EC World REIT and BHG Retail REIT and have averaged a 3.4% decline in total return in the 2020 year to 14 Dec. 
	 </li>
	<li>
On 17 Nov, CRCT launched an equity fundraising to finance part of its proposed purchase of interests in business parks and a Guangzhou mall as part of its Disciplined Portfolio Reconstitution strategy to unlock value for unitholders. 
	 </li>
	<li>EC World REIT has generated a 2.6% total return in the 2020 year to 14 Dec. Its 3QFY20 (ended 30 Sep) gross revenue and NPI increased 10.8% and 14.0% YoY respectively mainly due to contribution from Fuzhou E-commerce (acquired in August 2019) and organic rental escalations.</li>
</ul>
 

Of the S-REITs on SGX, at least five have 100% of their assets located in China. They are CapitaLand Retail China Trust, Sasseur REIT, Dasin Retail Trust, EC World REIT and BHG Retail REIT. Together the five REITs have a combined market capitalisation of more than S$3 billion and their portfolios span retail and logistics property segments. Refer to the <a href="https://api2.sgx.com/sites/default/files/2020-12/SGX%20Research%20-%20SREIT%20%26%20Property%20Trusts%20Chartbook%20-%20December%202020.pdf">SGX Research SREITs &amp; Property Trusts Chartbook - December 2020</a> for more information on the Singapore REITs sector.

 

CapitaLand Retail China Trust 

<ul>
<li>For the quarter ended 30 September 2020, CRCT had an aggregate leverage ratio of 34.7%, compared with 33.6% as at 30 June 2020
	<ul>
<li>Interest cover was 3.7 times, compared with 4.0 times for the previous period</li>
	</ul>
</li>
	<li>Disciplined Portfolio Reconstitution - Create Value
	<ul>
<li>Increase diversification of revenue stream</li>
		<li>Expand footprint into targeted growth cities</li>
		<li>Engage Sponsor’s pipeline and third-party vendors</li>
	</ul>
</li>
	<li>Disciplined Portfolio Reconstitution - Unlock Value
	<ul>
<li>Monetise older assets and acquire newer assets with higher growth potential</li>
		<li>Decrease exposure to lower growth and non-core malls</li>
	</ul>
</li>
	<li>Drive Organic Growth and Innovative Value Enhancement - Extract Value
	<ul>
<li>Drive operational excellence, continuous AEI and space optimisation</li>
	</ul>
</li>
	<li>Forging Ahead on Strong Foundation
	<ul>
<li>Resilient and quality portfolio that focuses on offering lifestyle essentials and necessities to densely populated vicinity</li>
		<li>Experienced ground team with strong domain knowledge to capture new business trends</li>
	</ul>
</li>
	<li>CRCT to tap on the strength and depth of CapitaLand’s expertise and network to enter into new asset classes</li>
	<li>CapitaLand Group has in-depth local market knowledge across China; full spectrum of real estate capabilities and resources</li>
	<li>CRCT will be the dedicated S-REIT for CapitaLand Group’s non-lodging China business with acquisition pipeline access to CapitaLand’s China’s assets</li>
</ul>
Click <a href="https://links.sgx.com/FileOpen/20201030_CRCT%203Q%202020%20Business%20Updates_slides.ashx?App=Announcement&amp;FileID=637308">here</a> for full business update. On 17 November, CRCT launched an equity fundraising to finance part of its proposed purchase of interests in business parks and a Guangzhou mall as part of its Disciplined Portfolio Reconstitution strategy to unlock value for unitholders. For fundraising details click <a href="https://links.sgx.com/1.0.0/corporate-announcements/YMWIGWW36OI12IVD/530320891374712df9457cbe823ad1f3534a98ceaaa499e02b703b4afc61da9f">here</a> and results click <a href="https://links.sgx.com/1.0.0/corporate-announcements/A5QUA2QPEOY7Z5CM/76901c7172795d0493630d541ecd875c9f36b1fcdd36dc735be823c71cd2f101">here</a>.

 

Sasseur REIT

<ul>
<li>For the quarter ended 30 September 2020, Sasseur REIT’s portfolio of four outlet malls in China has reported distributable income of S$21.2 million, a 16.9% increase from S$18.2 million in 2Q 2020</li>
	<li>The portfolio delivered robust sales growth in 3Q 2020 as shown in its higher EMA Rental Income due to a 30.3% higher variable rental income of RMB 50.2 million as compared to RMB 38.5 million in 2Q 2020</li>
	<li>The REIT declared a distribution per unit (DPU) of 1.764 cents for 3Q 2020, 16.7% higher than 2Q 2020</li>
	<li>Sasseur REIT’s portfolio occupancy rate for 3Q 2020 remained stable at 93.1%</li>
	<li>To-date, its strong sales performance – 56.4% growth from 1Q to 2Q and 32.9% growth from 2Q to 3Q this year – has demonstrated the resilience of its outlet mall sector, which is underpinned by the Sasseur group’s operational expertise, and deep knowledge of the China consumer preferences and behaviour</li>
	<li>The REIT manager remains upbeat that the retail outlet industry will strengthen as China’s economic prospects improve</li>
	<li>Sasseur REIT believes that it is a role model of China’s “internal circulation” domestic economy
	<ul>
<li>Its customer base comprises predominantly domestic Chinese consumers, hence global travel restrictions have no impact</li>
		<li>China is also likely to be the only economy to reach pre-crisis level by the end of 2020</li>
		<li>China’s growing middle class is expected to play a pivotal role in fuelling the country’s economic recovery</li>
		<li>Stronger domestic demand and increased localisation in some affected industries will mitigate the impact from the problems of the external economy</li>
		<li>This strategy, officially called “dual circulation”, will be the basis for China’s formulation of its 14th five-year plan</li>
	</ul>
</li>
</ul>
Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/RULNHTVJI1WME634/639099_Sasseur_REIT-Press_Release_Q3FY2020.pdf">here</a> for full results release.

 

Dasin Retail Trust 

<ul>
<li>Investment and Growth Strategy
	<ul>
<li>Investment Regions – China including Hong Kong and Macau with focus on the Greater Bay Area (GBA)</li>
		<li>Asset Class – Retail malls, to position and target more diversified and higher income segments</li>
	</ul>
</li>
	<li>Financial Requirements – Improve overall portfolio yield with long-term growth potential</li>
	<li>Extensive ROFR Pipeline Spanning Two Cities
	<ul>
<li>Nine completed ROFR properties and six ROFR properties under development</li>
		<li>ROFR projects are located in the core of the GBA</li>
		<li>The Trust’s investment portfolio would be approximately 1.9 times that of the current if all the completed ROFR projects were to be included in the Trust</li>
	</ul>
</li>
	<li>Outlook for Greater Bay Area
	<ul>
<li>Comprises nine cities in Guangdong Province (Shenzhen, Guangzhou, Foshan, Dongguan, Zhuhai, Zhongshan, Huizhou, Zhaoqing and Jiangmen) and two special administrative regions (Hong Kong and Macau)</li>
		<li>Population is estimated to grow by 43% to 100 million over the next 15 years</li>
		<li>Well-placed to emerge as the world’s largest bay area economy</li>
		<li>New blueprint unveiled at the 40th anniversary celebration of Shenzhen becoming China’s first-ever special economic zone</li>
		<li>Shenzhen is tasked with enriching the new practice of one country, two systems</li>
		<li>Aims to turn Hong Kong, Macau, Shenzhen and eight other Guangdong cities into a technology and finance powerhouse rivalling California’s Silicon Valley by 2035</li>
		<li>PBOC, CBIRC, CSRC and SAFE have jointly issued a total of 26 specific measures to promote trade and investments in the GBA</li>
	</ul>
</li>
	<li>Uncertainties are expected in the short term, and the business environment for the trust remains challenging</li>
	<li>The trust’s existing lease structures are highly resistant; will continue to optimise the tenant mix</li>
	<li>Experienced ground staff who are knowledgeable and sensitive to retail trends</li>
	<li>Healthy financial position and strong operational capabilities</li>
	<li>Strict cost controls and risk management strategies</li>
</ul>
Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/UTFVST7AM32JWP90/640391_DASINRT-Business%20Updates-EN_25%20Nov%202020.pdf">here</a> for full business update.

 

EC World REIT

<ul>
<li>3QFY20 gross revenue and net property income increased 10.8% and 14.0% YoY respectively mainly due to contribution from Fuzhou E-commerce which was acquired in August 2019 and organic rental escalations</li>
	<li>Total amount available for distribution grew 3.5% YoY to S$12.3 million, attributed to higher revenue offset by higher finance cost due to larger loan quantum</li>
	<li>Distribution to unitholders of S$11.2 million, 5.9% lower than 3QFY19 mainly due to 9% retention of total amount available for distribution</li>
	<li>Resilient portfolio performance with only 3.8% of net lettable area due for renewal for rest of financial year</li>
	<li>The macroeconomic situation continues to be dependent on the sustainability of the COVID-19 epidemic control globally as well as geo-political climate</li>
	<li>The Manager continues to maintain a stable capital structure with no refinancing requirement in the near term</li>
	<li>The Manager will continue to actively explore and diversify sources of funding as well as hedging instruments to optimise ECW REIT’s capital structure</li>
</ul>
Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/7WU9RNRTVHFDL06I/638410_EC%20World%20REIT-Press%20Release-3QFY2020.pdf">here</a> for full results release.

 

BHG Retail REIT

<ul>
<li>Gearing of 35.7 % with interest coverage ratio of 2.4x</li>
	<li>Above 80% of borrowings are denominated in Singapore dollars and US dollars
	<ul>
<li>About 60% of offshore loans hedged via interest rate swaps</li>
	</ul>
</li>
	<li>Notwithstanding the near-term uncertainties and headwinds from COVID-19, the Manager remains focused and committed to proactively manage the existing portfolio, as well as to pursue growth</li>
	<li>Proactive Asset Management – Reinforce community positioning of its malls
	<ul>
<li>Build firm partnerships with tenants, and demonstrate proactive tenant management</li>
		<li>Tap on the Sponsor's (Beijing Hualian Department Store Co., Ltd.) and Beijing Hualian Group's retail network and experience</li>
	</ul>
</li>
	<li>Proactive Asset Enhancement – Achieve better efficiency or higher rental potential
	<ul>
<li>Upgrade existing facilities and reconfigure existing spaces</li>
	</ul>
</li>
	<li>Pursue Acquisition Growth – Continue to explore acquisition opportunities in both right of first refusal and third party quality income-producing retail properties</li>
	<li>China’s Outlook – According to the International Monetary Fund, which is forecasting a 1.9% GDP growth for China in 2020, the nation is the only major economy that is expected to grow this year
	<ul>
<li>Notwithstanding the gradual recovery, the government has rolled out a raft of measures including more fiscal spending, tax relief and cuts in lending rates and banks’ reserve requirements to revive the coronavirus-hit economy and support employment</li>
	</ul>
</li>
</ul>
Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/RFD49OEXTTJ45AS9/638359_3Q%202020%20Business%20Updates.pdf">here</a> for full business update.
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Of the S-REITs on SGX, at least five have 100% of their assets located in China. They are CapitaLand Retail China Trust (“CRCT”), Sasseur REIT, Dasin Retail Trust, EC World REIT and BHG Retail REIT and have averaged a 3.4% decline in total return in the 2020 year to 14 Dec. 
	 
	
On 17 Nov, CRCT launched an equity fundraising to finance part of its proposed purchase of interests in business parks and a Guangzhou mall as part of its Disciplined Portfolio Reconstitution strategy to unlock value for unitholders. 
	 
	EC World REIT has generated a 2.6% total return in the 2020 year to 14 Dec. Its 3QFY20 (ended 30 Sep) gross revenue and NPI increased 10.8% and 14.0% YoY respectively mainly due to contribution from Fuzhou E-commerce (acquired in August 2019) and organic rental escalations.

 

Of the S-REITs on SGX, at least five have 100% of their assets located in China. They are CapitaLand Retail China Trust, Sasseur REIT, Dasin Retail Trust, EC World REIT and BHG Retail REIT. Together the five REITs have a combined market capitalisation of more than S$3 billion and their portfolios span retail and logistics property segments. Refer to the SGX Research SREITs &amp; Property Trusts Chartbook - December 2020 for more information on the Singapore REITs sector.

 

CapitaLand Retail China Trust 


For the quarter ended 30 September 2020, CRCT had an aggregate leverage ratio of 34.7%, compared with 33.6% as at 30 June 2020
	
Interest cover was 3.7 times, compared with 4.0 times for the previous period
	

	Disciplined Portfolio Reconstitution - Create Value
	
Increase diversification of revenue stream
		Expand footprint into targeted growth cities
		Engage Sponsor’s pipeline and third-party vendors
	

	Disciplined Portfolio Reconstitution - Unlock Value
	
Monetise older assets and acquire newer assets with higher growth potential
		Decrease exposure to lower growth and non-core malls
	

	Drive Organic Growth and Innovative Value Enhancement - Extract Value
	
Drive operational excellence, continuous AEI and space optimisation
	

	Forging Ahead on Strong Foundation
	
Resilient and quality portfolio that focuses on offering lifestyle essentials and necessities to densely populated vicinity
		Experienced ground team with strong domain knowledge to capture new business trends
	

	CRCT to tap on the strength and depth of CapitaLand’s expertise and network to enter into new asset classes
	CapitaLand Group has in-depth local market knowledge across China; full spectrum of real estate capabilities and resources
	CRCT will be the dedicated S-REIT for CapitaLand Group’s non-lodging China business with acquisition pipeline access to CapitaLand’s China’s assets

Click here for full business update. On 17 November, CRCT launched an equity fundraising to finance part of its proposed purchase of interests in business parks and a Guangzhou mall as part of its Disciplined Portfolio Reconstitution strategy to unlock value for unitholders. For fundraising details click here and results click here.

 

Sasseur REIT


For the quarter ended 30 September 2020, Sasseur REIT’s portfolio of four outlet malls in China has reported distributable income of S$21.2 million, a 16.9% increase from S$18.2 million in 2Q 2020
	The portfolio delivered robust sales growth in 3Q 2020 as shown in its higher EMA Rental Income due to a 30.3% higher variable rental income of RMB 50.2 million as compared to RMB 38.5 million in 2Q 2020
	The REIT declared a distribution per unit (DPU) of 1.764 cents for 3Q 2020, 16.7% higher than 2Q 2020
	Sasseur REIT’s portfolio occupancy rate for 3Q 2020 remained stable at 93.1%
	To-date, its strong sales performance – 56.4% growth from 1Q to 2Q and 32.9% growth from 2Q to 3Q this year – has demonstrated the resilience of its outlet mall sector, which is underpinned by the Sasseur group’s operational expertise, and deep knowledge of the China consumer preferences and behaviour
	The REIT manager remains upbeat that the retail outlet industry will strengthen as China’s economic prospects improve
	Sasseur REIT believes that it is a role model of China’s “internal circulation” domestic economy
	
Its customer base comprises predominantly domestic Chinese consumers, hence global travel restrictions have no impact
		China is also likely to be the only economy to reach pre-crisis level by the end of 2020
		China’s growing middle class is expected to play a pivotal role in fuelling the country’s economic recovery
		Stronger domestic demand and increased localisation in some affected industries will mitigate the impact from the problems of the external economy
		This strategy, officially called “dual circulation”, will be the basis for China’s formulation of its 14th five-year plan
	


Click here for full results release.

 

Dasin Retail Trust 


Investment and Growth Strategy
	
Investment Regions – China including Hong Kong and Macau with focus on the Greater Bay Area (GBA)
		Asset Class – Retail malls, to position and target more diversified and higher income segments
	

	Financial Requirements – Improve overall portfolio yield with long-term growth potential
	Extensive ROFR Pipeline Spanning Two Cities
	
Nine completed ROFR properties and six ROFR properties under development
		ROFR projects are located in the core of the GBA
		The Trust’s investment portfolio would be approximately 1.9 times that of the current if all the completed ROFR projects were to be included in the Trust
	

	Outlook for Greater Bay Area
	
Comprises nine cities in Guangdong Province (Shenzhen, Guangzhou, Foshan, Dongguan, Zhuhai, Zhongshan, Huizhou, Zhaoqing and Jiangmen) and two special administrative regions (Hong Kong and Macau)
		Population is estimated to grow by 43% to 100 million over the next 15 years
		Well-placed to emerge as the world’s largest bay area economy
		New blueprint unveiled at the 40th anniversary celebration of Shenzhen becoming China’s first-ever special economic zone
		Shenzhen is tasked with enriching the new practice of one country, two systems
		Aims to turn Hong Kong, Macau, Shenzhen and eight other Guangdong cities into a technology and finance powerhouse rivalling California’s Silicon Valley by 2035
		PBOC, CBIRC, CSRC and SAFE have jointly issued a total of 26 specific measures to promote trade and investments in the GBA
	

	Uncertainties are expected in the short term, and the business environment for the trust remains challenging
	The trust’s existing lease structures are highly resistant; will continue to optimise the tenant mix
	Experienced ground staff who are knowledgeable and sensitive to retail trends
	Healthy financial position and strong operational capabilities
	Strict cost controls and risk management strategies

Click here for full business update.

 

EC World REIT


3QFY20 gross revenue and net property income increased 10.8% and 14.0% YoY respectively mainly due to contribution from Fuzhou E-commerce which was acquired in August 2019 and organic rental escalations
	Total amount available for distribution grew 3.5% YoY to S$12.3 million, attributed to higher revenue offset by higher finance cost due to larger loan quantum
	Distribution to unitholders of S$11.2 million, 5.9% lower than 3QFY19 mainly due to 9% retention of total amount available for distribution
	Resilient portfolio performance with only 3.8% of net lettable area due for renewal for rest of financial year
	The macroeconomic situation continues to be dependent on the sustainability of the COVID-19 epidemic control globally as well as geo-political climate
	The Manager continues to maintain a stable capital structure with no refinancing requirement in the near term
	The Manager will continue to actively explore and diversify sources of funding as well as hedging instruments to optimise ECW REIT’s capital structure

Click here for full results release.

 

BHG Retail REIT


Gearing of 35.7 % with interest coverage ratio of 2.4x
	Above 80% of borrowings are denominated in Singapore dollars and US dollars
	
About 60% of offshore loans hedged via interest rate swaps
	

	Notwithstanding the near-term uncertainties and headwinds from COVID-19, the Manager remains focused and committed to proactively manage the existing portfolio, as well as to pursue growth
	Proactive Asset Management – Reinforce community positioning of its malls
	
Build firm partnerships with tenants, and demonstrate proactive tenant management
		Tap on the Sponsor's (Beijing Hualian Department Store Co., Ltd.) and Beijing Hualian Group's retail network and experience
	

	Proactive Asset Enhancement – Achieve better efficiency or higher rental potential
	
Upgrade existing facilities and reconfigure existing spaces
	

	Pursue Acquisition Growth – Continue to explore acquisition opportunities in both right of first refusal and third party quality income-producing retail properties
	China’s Outlook – According to the International Monetary Fund, which is forecasting a 1.9% GDP growth for China in 2020, the nation is the only major economy that is expected to grow this year
	
Notwithstanding the gradual recovery, the government has rolled out a raft of measures including more fiscal spending, tax relief and cuts in lending rates and banks’ reserve requirements to revive the coronavirus-hit economy and support employment
	


Click here for full business update.



Highlights of SGX’s Five China-Focused REITs

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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.
<h2>Dasin Retail Trust</h2>
<h3>An exposure to the massive potential of the Greater Bay Area</h3>
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We initiate coverage on Dasin Retail Trust (SGX:CEDU), a retail property trust whose malls are located in the Greater Bay Area (GBA) – the rising powerhouse in the southern region of China.
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Analyst: Yeo Hui Shi | Published on 10 Dec 2020
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<ul>
<li>Dasin Retail Trust (DRT) (SGX:CEDU) is the only China retail property trust listed on SGX that provides direct exposure to the Greater Bay Area (GBA).</li>
<li>Supported by a development plan outlined by the Chinese government, the GBA can potentially become the world’s largest bay area economy by 2035. Its development will help to raise population size and disposable income, which we believe will support the retail sales of DRT in the longer term.</li>
<li>With online retailing growing at a rapid pace in China, DRT has been striving to meet the changing consumer demands through its online-to-offline (O2O) business model. It will also continue to optimise its tenant mix by introducing more experiential trades and defensive retail offerings.</li>
<li>With a large pipeline of assets from its Sponsor, Zhongshan Dasin Real Estate Co. Ltd, we note that DRT is well-positioned for inorganic growth. We think that its gearing ratio is likely to be kept below 40%, with future acquisitions likely financed using a mix of debt and private placement. &nbsp;</li>
<li>Using a dividend discount model, we value Dasin Retail Trust at a target price of SGD 0.85. Coupled with the distribution yields of 7.2% for both 2021E and 2022E, the potential total return is 24.8% based on the closing price of SGD 0.77 on 10 December 2020.</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.
Dasin Retail Trust
An exposure to the massive potential of the Greater Bay Area



We initiate coverage on Dasin Retail Trust (SGX:CEDU), a retail property trust whose malls are located in the Greater Bay Area (GBA) – the rising powerhouse in the southern region of China.

Analyst: Yeo Hui Shi | Published on 10 Dec 2020






Dasin Retail Trust (DRT) (SGX:CEDU) is the only China retail property trust listed on SGX that provides direct exposure to the Greater Bay Area (GBA).
Supported by a development plan outlined by the Chinese government, the GBA can potentially become the world’s largest bay area economy by 2035. Its development will help to raise population size and disposable income, which we believe will support the retail sales of DRT in the longer term.
With online retailing growing at a rapid pace in China, DRT has been striving to meet the changing consumer demands through its online-to-offline (O2O) business model. It will also continue to optimise its tenant mix by introducing more experiential trades and defensive retail offerings.
With a large pipeline of assets from its Sponsor, Zhongshan Dasin Real Estate Co. Ltd, we note that DRT is well-positioned for inorganic growth. We think that its gearing ratio is likely to be kept below 40%, with future acquisitions likely financed using a mix of debt and private placement. &nbsp;
Using a dividend discount model, we value Dasin Retail Trust at a target price of SGD 0.85. Coupled with the distribution yields of 7.2% for both 2021E and 2022E, the potential total return is 24.8% based on the closing price of SGD 0.77 on 10 December 2020.











(Non-SGX Report) Dasin Retail Trust: An Exposure to the Massive Potential of the Greater Bay Area

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 <img src='https://api2.sgx.com/sites/default/files/2020-09/Dasin-CEO.jpeg' alt='Dasin-CEO' />
 </figure>
 <div class='content-caption'>Dasin-CEO</div>
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Wang Qiu’s unassuming appearance belies a spirit of quiet determination and true grit – qualities that have seen the engineer by training through a two decade-long career spanning the construction engineering and real estate sectors. 
“Through life’s journey, you will face many challenges. The key is not to shy away from difficulties, but find ways to overcome them,” said Liaoning-born Wang, Chief Executive Officer of the trustee-manager of SGX-listed Dasin Retail Trust. 
“There’s always a solution to every problem.” 
A Bachelor of Construction Engineering graduate from China’s Harbin Engineering University, Wang began her career in 1999 with Zhongshan Sheng Xing Co Ltd, a curtain wall manufacturing business within the Zhongshan Dasin Holdings group of companies, which is the Sponsor of Dasin Retail Trust. 
It proved to be a high-intensity, high-pressure job with a steep learning curve. 
“I spent 10 years in that role. Of the 365 days in each year, there were 10 days when we had a break for the Lunar New Year holidays. For the remaining 355 days, I was constantly in battle mode – dealing with precise manufacturing requirements, coordinating complex work plans, managing tight timelines and responding to emergencies at any hour,” she recalled. 
Those experiences honed Wang’s attention to detail, resilience and focus. “I learnt what it meant to get the job done, regardless of the project’s complexity or the issues that emerged,” she added. 
Between 2011 and February 2020, Wang went on to hold various appointments within the Sponsor’s group of companies, including Secretary to the Board of Directors and General Manager of the company’s Risk Management division. 
Between October 2014 and January 2017, she spearheaded the project team behind Dasin Retail Trust’s initial public offering, and in March this year, assumed the role of CEO of the trustee-manager of the trust. 
Listed on SGX Mainboard in January 2017, Dasin Retail Trust is the only China retail property trust providing direct exposure to the fast-growing Guangdong-Hong Kong-Macau Greater Bay Area. 
Its principal mandate is to invest in, own or develop land, uncompleted developments and income-producing real estate in the Greater China region, used primarily for retail purposes, as well as real estate-related assets, with a focus on retail malls. Dasin’s portfolio comprises seven retail malls strategically located in Foshan, Zhuhai and Zhongshan cities in China. 
Dasin is managed by Dasin Retail Trust Management Pte Ltd. Its Sponsor – Zhongshan Dasin Real Estate Co Ltd – is focused on the development and management of real estate, including retail malls, hotels, educational facilities and residential properties. 
The Sponsor has been involved in the construction and development of various real estate projects in the Greater Bay Area. It has also established itself as one of the leading, award-winning developers in Zhongshan over the past two decades. Persistence Pays Off 
In July, Dasin Retail Trust announced it had completed the acquisition of Shunde Metro Mall in Foshan city and Tanbei Metro Mall in Zhongshan city for an agreed property value of S$375 million. With this acquisition – its second within three years of listing – the trust’s portfolio size has nearly tripled to about 11.7 billion yuan from 4.6 billion yuan. 
Wang attributes the achievement of this significant milestone to her tenacity. “During the pandemic, many have unlocked a range of hidden talents, such as cooking, baking and handicraft, but my main claim to fame was the Shunde-Tanbei acquisition,” she said, half tongue-in-cheek. 
Her persistence ran counter to recommendations from the joint book runners and concerns from management over ongoing market volatility, as well as the impact on valuations and revenues following COVID-19. 
“I didn’t want to postpone the completion of the acquisition. I believe we should focus on what’s in front of us, because what can or will happen in the future is anybody’s guess,” she recalled. 
“Together with my team, we were determined to see it through, regardless of the challenges, and we did.” 
Post-acquisition, the fruits of their labour have been sweet. “As a result of our hard work, we’ve obtained recognition from many external parties, and the team has also gained more confidence to undertake bigger goals.” 
“I used to ponder many “what ifs” when I was younger,” Wang admitted. “Now, I know that life is not only about “possibilities”, but also about making decisions, taking the first step, and completing that journey – with steady determination.” 
And this has just been one of many steps in Dasin’s growth journey – Wang has a personal target to grow the trust’s market capitalisation to S$1 billion within the next three to five years, through a combination of organic growth and acquisitions. And some low-hanging fruit would be the Sponsor’s right-of-first-refusal (ROFR) pipeline of assets. 
Key investment criteria include attractive long-term cash flows, yields above Dasin’s weighted average cost of capital, as well as the potential for net asset growth. Another focus would be tenant mix and occupancy characteristics, as well as properties with longer leases, so as to extend the portfolio’s weighted average lease expiry (WALE). 
“S$1 billion is the starting point for a medium-sized trust,” she pointed out. “Achieving this goal will allow us to better realise the benefits of scale, such as reducing our capital cost and improving operational efficiencies. At the same time, we can attract more attention from institutional investors, or be included as a constituent of key indexes.” Burgeoning Economic Potential 
Dasin Retail Trust’s location within the Greater Bay Area – poised to emerge as the world’s largest bay area economy – also bodes well for its future. 
Two new financial markets – the up-and-coming Guangzhou and Macau bourses – would add to the US$8.8 trillion combined market capitalisation of Hong Kong and Shenzhen, turning the region Asia's largest capital pool, and amplifying the Greater Bay Area's economic potential. 
Planned as the central city within the area under the provincial government’s 2017-2030 plan, Zhongshan is positioned to become a high-end equipment manufacturing hub, as well as a regional technology and biomedical research and development centre. Zhuhai is targeted as a world-class centre of leisure and tourism, with a focus on the general aviation industry. 
Notwithstanding the bright outlook, Dasin Retail Trust’s more immediate challenges include COVID-19 and evolving consumer trends. 
“This year’s economic performance has been impacted by the pandemic and the upcoming US elections, but opportunities still exist in any crisis,” Wang noted. 
“We believe the impact of the outbreak on China’s retail sector will be short-lived.” 
Wang remains “cautiously optimistic” about retail sales when the situation normalises. “Many families who have cancelled travel plans and those emerging from quarantines will be more interested in “experiential” activities, with the pent-up spending driving local consumption,” she noted. 
Dasin has stepped up its events-driven marketing programmes, such as music festivals, cultural exhibitions and sports competitions, which have buoyed footfall in its malls and sparked a rebound in monthly turnover rents. 
“Our turnover rent in June represented more than 90% of average monthly turnover rent in the fourth quarter of 2019, compared with 36% seen in February 2020,” she said. 
“We believe the recovery will continue, and monthly turnover rents will normalise soon.” E-Commerce-Proof 
While Wang acknowledges the threat of e-commerce, she believes Dasin’s malls are well-positioned to serve their densely populated catchment areas, functioning as one-stop centres for the community’s daily needs. 
“Because we have adjusted our operations to accelerate the integration of online and offline into an omni-channel offering, some of our businesses were not only unaffected during the pandemic, they saw significant year-on-year increases in sales,” she added. 
Through proactive asset and lease management, the trust has introduced more experiential trades – including sports, leisure, entertainment – as well as defensive retail offerings – such as supermarkets and home appliance stores – to its malls. 
“Apart from improving shopper traffic, this enhanced tenant mix has increased our resistance to e-commerce, making its impact minimal or almost non-existent.” 
The trust has also set up its own member management system – “Dasin Hui” – a platform that provides comprehensive information on products and services in its malls to enhance the shopping experience. 
“This enables us to draw customers from online channels into physical stores,” Wang noted. 
“We’ve also identified the brands that are more suitable for either e-commerce channels or brick-and-mortar stores, which allows us to better target and pivot the tenant mix.” 
At the same time, Wang is keeping an eye on the sustainability of the trust’s distribution per unit (DPU), with the distribution waiver from major unitholders terminating after 2021. 
“The revenue, net property income and distributable income of our portfolio have grown at a compound annual growth rate of 9.6%, 8.8% and 9.0% respectively since IPO, while the acquisitions of Doumen Metro Mall, Shunde Metro Mall and Tanbei Metro Mall have further accelerated DPU growth,” she pointed out. 
This has narrowed the gap between Dasin Retail Trust’s core DPU and the DPU with distribution waiver. 
“Going forward, we will continue to deliver competitive DPUs to our investors through organic growth, including rental adjustments, rental reversions and asset enhancement initiatives, as well as inorganic growth, via accretive acquisitions.” 
And when this 43-year-old mother is not managing the operations of the trust, she can be found with her son, 14, and daughter, seven. Ensuring they grow up with the right values is a priority. 
“I want my children to face challenges with courage, and be able to solve their problems through determination and persistence – these are important touchstones,” Wang said. 
“Last but not least, they must remember that great things are never achieved alone – they are carried out by a team of people – so they must never be afraid to ask for help,” she added. 
“Team members can open up fresh perspectives, which in turn lead to new and innovative solutions to problems.” 
 

Dasin Retail Trust 
Listed on SGX Mainboard in January 2017, Dasin is the only China retail property trust providing direct exposure to the fast-growing Guangdong-Hong Kong-Macau Greater Bay Area. Its principal mandate is to invest in, own or develop land, uncompleted developments and income-producing real estate in Greater China (comprising People’s Republic of China, Hong Kong and Macau), used primarily for retail purposes, as well as real estate-related assets, with an initial focus on retail malls. The portfolio comprises seven retail malls strategically located in Foshan, Zhuhai and Zhongshan cities. 
Dasin Retail Trust is managed by Dasin Retail Trust Management Pte Ltd, and its Sponsor is Zhongshan Dasin Real Estate Co Ltd. The Sponsor Group, established in 2001, is focused on the development and management of real estate, including retail malls, hotels, educational facilities and residential properties. Involved mainly in the construction and development of real estate projects in the Greater Bay Area, the Sponsor has established itself as one of the leading developers in Zhongshan, winning a number of national-level industry awards over the past 19 years. 
The company website is: <a href="http://www.dasintrust.com/">www.dasintrust.com</a> 
Click <a href="https://www.sgx.com/securities/equities/CEDU">here </a>for the company's StockFacts page. 
For the half year ended 30 June 2020 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/MXCOLGHLOLA98KO4/627679_DASINRT-Press%20Release-1H2020_13%20August%202020.pdf">here</a>. 
 

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 <a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10">here</a>.  
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    Dasin-CEO


Wang Qiu’s unassuming appearance belies a spirit of quiet determination and true grit – qualities that have seen the engineer by training through a two decade-long career spanning the construction engineering and real estate sectors.  
“Through life’s journey, you will face many challenges. The key is not to shy away from difficulties, but find ways to overcome them,” said Liaoning-born Wang, Chief Executive Officer of the trustee-manager of SGX-listed Dasin Retail Trust.  
“There’s always a solution to every problem.”  
A Bachelor of Construction Engineering graduate from China’s Harbin Engineering University, Wang began her career in 1999 with Zhongshan Sheng Xing Co Ltd, a curtain wall manufacturing business within the Zhongshan Dasin Holdings group of companies, which is the Sponsor of Dasin Retail Trust.  
It proved to be a high-intensity, high-pressure job with a steep learning curve.  
“I spent 10 years in that role. Of the 365 days in each year, there were 10 days when we had a break for the Lunar New Year holidays. For the remaining 355 days, I was constantly in battle mode – dealing with precise manufacturing requirements, coordinating complex work plans, managing tight timelines and responding to emergencies at any hour,” she recalled.  
Those experiences honed Wang’s attention to detail, resilience and focus. “I learnt what it meant to get the job done, regardless of the project’s complexity or the issues that emerged,” she added.  
Between 2011 and February 2020, Wang went on to hold various appointments within the Sponsor’s group of companies, including Secretary to the Board of Directors and General Manager of the company’s Risk Management division.  
Between October 2014 and January 2017, she spearheaded the project team behind Dasin Retail Trust’s initial public offering, and in March this year, assumed the role of CEO of the trustee-manager of the trust.  
Listed on SGX Mainboard in January 2017, Dasin Retail Trust is the only China retail property trust providing direct exposure to the fast-growing Guangdong-Hong Kong-Macau Greater Bay Area.  
Its principal mandate is to invest in, own or develop land, uncompleted developments and income-producing real estate in the Greater China region, used primarily for retail purposes, as well as real estate-related assets, with a focus on retail malls. Dasin’s portfolio comprises seven retail malls strategically located in Foshan, Zhuhai and Zhongshan cities in China.  
Dasin is managed by Dasin Retail Trust Management Pte Ltd. Its Sponsor – Zhongshan Dasin Real Estate Co Ltd – is focused on the development and management of real estate, including retail malls, hotels, educational facilities and residential properties.  
The Sponsor has been involved in the construction and development of various real estate projects in the Greater Bay Area. It has also established itself as one of the leading, award-winning developers in Zhongshan over the past two decades.  Persistence Pays Off  
In July, Dasin Retail Trust announced it had completed the acquisition of Shunde Metro Mall in Foshan city and Tanbei Metro Mall in Zhongshan city for an agreed property value of S$375 million. With this acquisition – its second within three years of listing – the trust’s portfolio size has nearly tripled to about 11.7 billion yuan from 4.6 billion yuan.  
Wang attributes the achievement of this significant milestone to her tenacity. “During the pandemic, many have unlocked a range of hidden talents, such as cooking, baking and handicraft, but my main claim to fame was the Shunde-Tanbei acquisition,” she said, half tongue-in-cheek.  
Her persistence ran counter to recommendations from the joint book runners and concerns from management over ongoing market volatility, as well as the impact on valuations and revenues following COVID-19.  
“I didn’t want to postpone the completion of the acquisition. I believe we should focus on what’s in front of us, because what can or will happen in the future is anybody’s guess,” she recalled.  
“Together with my team, we were determined to see it through, regardless of the challenges, and we did.”  
Post-acquisition, the fruits of their labour have been sweet. “As a result of our hard work, we’ve obtained recognition from many external parties, and the team has also gained more confidence to undertake bigger goals.”  
“I used to ponder many “what ifs” when I was younger,” Wang admitted. “Now, I know that life is not only about “possibilities”, but also about making decisions, taking the first step, and completing that journey – with steady determination.”  
And this has just been one of many steps in Dasin’s growth journey – Wang has a personal target to grow the trust’s market capitalisation to S$1 billion within the next three to five years, through a combination of organic growth and acquisitions. And some low-hanging fruit would be the Sponsor’s right-of-first-refusal (ROFR) pipeline of assets.  
Key investment criteria include attractive long-term cash flows, yields above Dasin’s weighted average cost of capital, as well as the potential for net asset growth. Another focus would be tenant mix and occupancy characteristics, as well as properties with longer leases, so as to extend the portfolio’s weighted average lease expiry (WALE).  
“S$1 billion is the starting point for a medium-sized trust,” she pointed out. “Achieving this goal will allow us to better realise the benefits of scale, such as reducing our capital cost and improving operational efficiencies. At the same time, we can attract more attention from institutional investors, or be included as a constituent of key indexes.”  Burgeoning Economic Potential  
Dasin Retail Trust’s location within the Greater Bay Area – poised to emerge as the world’s largest bay area economy – also bodes well for its future.  
Two new financial markets – the up-and-coming Guangzhou and Macau bourses – would add to the US$8.8 trillion combined market capitalisation of Hong Kong and Shenzhen, turning the region Asia's largest capital pool, and amplifying the Greater Bay Area's economic potential.  
Planned as the central city within the area under the provincial government’s 2017-2030 plan, Zhongshan is positioned to become a high-end equipment manufacturing hub, as well as a regional technology and biomedical research and development centre. Zhuhai is targeted as a world-class centre of leisure and tourism, with a focus on the general aviation industry.  
Notwithstanding the bright outlook, Dasin Retail Trust’s more immediate challenges include COVID-19 and evolving consumer trends.  
“This year’s economic performance has been impacted by the pandemic and the upcoming US elections, but opportunities still exist in any crisis,” Wang noted.  
“We believe the impact of the outbreak on China’s retail sector will be short-lived.”  
Wang remains “cautiously optimistic” about retail sales when the situation normalises. “Many families who have cancelled travel plans and those emerging from quarantines will be more interested in “experiential” activities, with the pent-up spending driving local consumption,” she noted.  
Dasin has stepped up its events-driven marketing programmes, such as music festivals, cultural exhibitions and sports competitions, which have buoyed footfall in its malls and sparked a rebound in monthly turnover rents.  
“Our turnover rent in June represented more than 90% of average monthly turnover rent in the fourth quarter of 2019, compared with 36% seen in February 2020,” she said.  
“We believe the recovery will continue, and monthly turnover rents will normalise soon.”  E-Commerce-Proof  
While Wang acknowledges the threat of e-commerce, she believes Dasin’s malls are well-positioned to serve their densely populated catchment areas, functioning as one-stop centres for the community’s daily needs.  
“Because we have adjusted our operations to accelerate the integration of online and offline into an omni-channel offering, some of our businesses were not only unaffected during the pandemic, they saw significant year-on-year increases in sales,” she added.  
Through proactive asset and lease management, the trust has introduced more experiential trades – including sports, leisure, entertainment – as well as defensive retail offerings – such as supermarkets and home appliance stores – to its malls.  
“Apart from improving shopper traffic, this enhanced tenant mix has increased our resistance to e-commerce, making its impact minimal or almost non-existent.”  
The trust has also set up its own member management system – “Dasin Hui” – a platform that provides comprehensive information on products and services in its malls to enhance the shopping experience.  
“This enables us to draw customers from online channels into physical stores,” Wang noted.  
“We’ve also identified the brands that are more suitable for either e-commerce channels or brick-and-mortar stores, which allows us to better target and pivot the tenant mix.”  
At the same time, Wang is keeping an eye on the sustainability of the trust’s distribution per unit (DPU), with the distribution waiver from major unitholders terminating after 2021.  
“The revenue, net property income and distributable income of our portfolio have grown at a compound annual growth rate of 9.6%, 8.8% and 9.0% respectively since IPO, while the acquisitions of Doumen Metro Mall, Shunde Metro Mall and Tanbei Metro Mall have further accelerated DPU growth,” she pointed out.  
This has narrowed the gap between Dasin Retail Trust’s core DPU and the DPU with distribution waiver.  
“Going forward, we will continue to deliver competitive DPUs to our investors through organic growth, including rental adjustments, rental reversions and asset enhancement initiatives, as well as inorganic growth, via accretive acquisitions.”  
And when this 43-year-old mother is not managing the operations of the trust, she can be found with her son, 14, and daughter, seven. Ensuring they grow up with the right values is a priority.  
“I want my children to face challenges with courage, and be able to solve their problems through determination and persistence – these are important touchstones,” Wang said.  
“Last but not least, they must remember that great things are never achieved alone – they are carried out by a team of people – so they must never be afraid to ask for help,” she added.  
“Team members can open up fresh perspectives, which in turn lead to new and innovative solutions to problems.” 
 

Dasin Retail Trust  
Listed on SGX Mainboard in January 2017, Dasin is the only China retail property trust providing direct exposure to the fast-growing Guangdong-Hong Kong-Macau Greater Bay Area. Its principal mandate is to invest in, own or develop land, uncompleted developments and income-producing real estate in Greater China (comprising People’s Republic of China, Hong Kong and Macau), used primarily for retail purposes, as well as real estate-related assets, with an initial focus on retail malls. The portfolio comprises seven retail malls strategically located in Foshan, Zhuhai and Zhongshan cities.  
Dasin Retail Trust is managed by Dasin Retail Trust Management Pte Ltd, and its Sponsor is Zhongshan Dasin Real Estate Co Ltd. The Sponsor Group, established in 2001, is focused on the development and management of real estate, including retail malls, hotels, educational facilities and residential properties. Involved mainly in the construction and development of real estate projects in the Greater Bay Area, the Sponsor has established itself as one of the leading developers in Zhongshan, winning a number of national-level industry awards over the past 19 years.  
The company website is: www.dasintrust.com  
Click here for the company's StockFacts page.  
For the half year 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.  



Dasin Retail Trust Eyes Greater Bay Area Growth





Dasin Retail Trust topped Low Volatility factor exposure rankings of more than 100 actively traded Singapore stocks for the 12 months ending 30 June 2020. The 40 stocks with the highest rankings (i.e. lowest volatility) generated comparatively less declines than the STI over the past three months, 2020 YTD and past three years.   
	 
	
The 40 stocks with the lowest volatility included 19 Real Estate stocks that averaged 8% declines in the 2020 year to 21 Sep, on S$17 million in net institutional inflow. Since the 9 June STI high, the 19 Real Estate stocks averaged a 3% decline, bringing their average three year total return to 5%.  
	 
	Eight Real Estate stocks also made up the 10 of the 40 Low Volatility factor exposure stocks with the highest net institutional inflow proportionate to market capitalisation in the 2020 year to 21 Sep. Together the eight stocks averaged a 2% total return since 9 June, and a 3% total return in the 2020 year to 21 Sep.  

 

As detailed in the recent Factor Investing in Singapore Report by Nicolas Rabener, five classic equity factors that enjoy  broad support from the global research community include Value, Size, Momentum, Low Volatility, and Quality.  
The Factor Investing in Singapore Report (click here for full report), which was completed in collaboration with Singapore Exchange, ranked more than 100 stocks according to the Low Volatility Factor. The five stocks that saw the lowest volatility for the 12 months through to 30 June 2020 included Dasin Retail Trust, Bukit Sembawang Estates, Haw Par Corp, Wing Tai Holdings and Oversea-Chinese Banking Corp Of the five stocks Business Trust Dasin Retail Trust has performed the most defensively with a 1% total return in the 2020 year to 21 September. The industry standard is to take one or three years in price history for gauging the Low Volatility factor.



      
    
    Comparative Total Returns


The Factor Investing in Singapore report also noted that based on long term stock market and economic data in the United States – Low Volatility stocks tended to outperform in both economic slowdowns (along with Momentum and Quality) and economic recessions (along with Quality and Value). Low Volatility stocks were not observed to outperform in recovery and growth phases.  Real Estate Stocks with Low Volatility Draw Institutional Inflows in 2020 YTD    
As many as 19 of the 40 stocks represent the Real Estate sector, which is in-line with the number of Real Estate stocks represented by the group of more than 100 stocks.  
Moreover, as many as eight Real Estate stocks made up the 10 of the 40 Low Volatility factor exposure stocks with the highest net institutional inflow proportionate to market capitalisation in the 2020 year to 21 September. Together the eight stocks averaged a 2% total return since 9 June, and a 3% total return in the 2020 year to 21 September. 




			10 of the 40 stocks with most Low Volatility factor exposure (for 12M ending 30 June 2020) with highest Net Insti Flow proportionate to current market cap
			
			
			Code
			
			
			Mkt Cap (S$M)
			
			
			YTD Total Return %
			
			
			9 June 2020  - 21 Sep 2020 Total Return %
			
			
			Three Year Total Return %
			
			
			Net Insti Inflow YTD (S$M)
			
			
			Net Insti Inflow YTD /Current  Mkt Cap 
			
		


			VENTURE CORP
			
			
			V03
			
			
			5,536
			
			
			23.2
			
			
			24
			
			
			27
			
			
			227.1
			
			
			4.1%
			
		


			ASCENDAS REAL ESTATE INV TRT
			
			
			A17U
			
			
			11,802
			
			
			13.2
			
			
			2
			
			
			49
			
			
			382.1
			
			
			3.2%
			
		


			WING TAI HOLDINGS 
			
			
			W05
			
			
			1,345
			
			
			-13.4
			
			
			-5
			
			
			-12
			
			
			28.2
			
			
			2.1%
			
		


			PARKWAYLIFE REAL ESTATE
			
			
			C2PU
			
			
			2,541
			
			
			30.2
			
			
			21
			
			
			81
			
			
			39.9
			
			
			1.6%
			
		


			KEPPEL DC REIT
			
			
			AJBU
			
			
			4,834
			
			
			45.7
			
			
			25
			
			
			163
			
			
			67.7
			
			
			1.4%
			
		


			CAPITALAND COMMERCIAL TRUST
			
			
			C61U
			
			
			6,681
			
			
			-9.6
			
			
			-6
			
			
			20
			
			
			68.3
			
			
			1.0%
			
		


			HONG FOK CORP 
			
			
			H30
			
			
			534
			
			
			-19.1
			
			
			-11
			
			
			-17
			
			
			4.0
			
			
			0.7%
			
		


			KEPPEL REIT
			
			
			K71U
			
			
			3,773
			
			
			-7.1
			
			
			-6
			
			
			9
			
			
			20.8
			
			
			0.6%
			
		


			SINGAPORE TECH ENGINEERING
			
			
			S63
			
			
			10,626
			
			
			-9.4
			
			
			-3
			
			
			11
			
			
			52.2
			
			
			0.5%
			
		


			UOL GROUP 
			
			
			U14
			
			
			5,636
			
			
			-17.7
			
			
			-7
			
			
			-12
			
			
			19.5
			
			
			0.3%
			
		

 Source: SGX StockFacts, Refinitiv and Bloomberg (Data as of 21 September 2020).

 

After the next three stocks recipient to the highest net institutional inflow proportionate to market capitalisation in the 2020 year to 21 September, were all Real Estate stocks as well – PropNex, Dasin Retail Trust and OUE.   Ranking Stocks by Low Volatility Factor Exposure  
The table below provides the list of 40 stocks that were amongst the largest and most traded Singapore stocks that demonstrated Low Volatility exposure for the aforementioned period.




			Stocks with most Low Volatility factor exposure (for 12M ending 30 June 2020)
			
			
			Code
			
			
			Mkt Cap (S$M)
			
			
			YTD Total Return %
			
			
			9 June 2020  - 21 Sep 2020 Total Return %
			
			
			Three Year Total Return %
			
			
			30 Day Volatility %
			
			
			12M Volatility (to 21 Sep) %
			
			
			Net Insti Inflow YTD (S$M)
			
		


			DASIN RETAIL TRUST
			
			
			CEDU
			
			
			617
			
			
			0.7
			
			
			-2
			
			
			22
			
			
			21
			
			
			16
			
			
			1.3
			
		


			BUKIT SEMBAWANG ESTATES
			
			
			B61
			
			
			945
			
			
			-19.7
			
			
			-6
			
			
			-36
			
			
			8
			
			
			17
			
			
			-6.3
			
		


			HAW PAR CORP
			
			
			H02
			
			
			2,057
			
			
			-25.0
			
			
			-12
			
			
			-12
			
			
			18
			
			
			22
			
			
			-40.1
			
		


			WING TAI HOLDINGS
			
			
			W05
			
			
			1,345
			
			
			-13.4
			
			
			-5
			
			
			-12
			
			
			18
			
			
			24
			
			
			28.2
			
		


			OVERSEA-CHINESE BANKING CORP
			
			
			O39
			
			
			37,312
			
			
			-18.9
			
			
			-11
			
			
			-13
			
			
			12
			
			
			25
			
			
			-871.2
			
		


			KOUFU GROUP
			
			
			VL6
			
			
			366
			
			
			-11.7
			
			
			-1
			
			
			13
			
			
			16
			
			
			24
			
			
			-7.6
			
		


			SINGAPORE POST
			
			
			S08
			
			
			1,474
			
			
			-28.4
			
			
			-17
			
			
			-42
			
			
			17
			
			
			26
			
			
			-13.3
			
		


			NETLINK NBN TRUST
			
			
			CJLU
			
			
			3,761
			
			
			4.7
			
			
			-2
			
			
			36
			
			
			8
			
			
			25
			
			
			-12.0
			
		


			UNITED OVERSEAS BANK
			
			
			U11
			
			
			32,053
			
			
			-23.2
			
			
			-10
			
			
			-5
			
			
			12
			
			
			26
			
			
			-1,445.0
			
		


			ASIAN PAY TELEVISION TRUST
			
			
			S7OU
			
			
			226
			
			
			-20.7
			
			
			0
			
			
			-67
			
			
			21
			
			
			25
			
			
			-1.7
			
		


			RAFFLES MEDICAL GROUP
			
			
			BSL
			
			
			1,482
			
			
			-18.6
			
			
			-13
			
			
			-23
			
			
			16
			
			
			27
			
			
			-6.3
			
		


			UOL GROUP
			
			
			U14
			
			
			5,636
			
			
			-17.7
			
			
			-7
			
			
			-12
			
			
			17
			
			
			27
			
			
			19.5
			
		


			SINGAPORE TELECOMMUNICATIONS
			
			
			Z74
			
			
			36,087
			
			
			-32.9
			
			
			-15
			
			
			-30
			
			
			14
			
			
			26
			
			
			-807.6
			
		


			OUE
			
			
			LJ3
			
			
			1,027
			
			
			-20.1
			
			
			-5
			
			
			-32
			
			
			15
			
			
			27
			
			
			2.1
			
		


			DBS GROUP HOLDINGS
			
			
			D05
			
			
			50,757
			
			
			-19.4
			
			
			-12
			
			
			14
			
			
			14
			
			
			28
			
			
			-1,391.5
			
		


			SHENG SIONG GROUP
			
			
			OV8
			
			
			2,466
			
			
			36.4
			
			
			10
			
			
			95
			
			
			25
			
			
			29
			
			
			-14.8
			
		


			PROPNEX
			
			
			OYY
			
			
			216
			
			
			21.6
			
			
			13
			
			
			5
			
			
			32
			
			
			27
			
			
			0.7
			
		


			KEPPEL CORP
			
			
			BN4
			
			
			7,615
			
			
			-36.6
			
			
			-32
			
			
			-28
			
			
			39
			
			
			31
			
			
			-107.5
			
		


			GUOCOLAND
			
			
			F17
			
			
			1,728
			
			
			-25.5
			
			
			-6
			
			
			-29
			
			
			19
			
			
			29
			
			
			-10.4
			
		


			OLAM INTERNATIONAL
			
			
			O32
			
			
			4,026
			
			
			-26.4
			
			
			-13
			
			
			-28
			
			
			32
			
			
			29
			
			
			-34.2
			
		


			PARKWAYLIFE REAL ESTATE
			
			
			C2PU
			
			
			2,541
			
			
			30.2
			
			
			21
			
			
			81
			
			
			32
			
			
			31
			
			
			39.9
			
		


			HONG FOK CORP
			
			
			H30
			
			
			534
			
			
			-19.1
			
			
			-11
			
			
			-17
			
			
			24
			
			
			30
			
			
			4.0
			
		


			YANLORD LAND GROUP
			
			
			Z25
			
			
			2,163
			
			
			-2.3
			
			
			4
			
			
			-32
			
			
			22
			
			
			29
			
			
			-9.5
			
		


			SPH REIT
			
			
			SK6U
			
			
			2,432
			
			
			-17.0
			
			
			-1
			
			
			2
			
			
			10
			
			
			30
			
			
			-2.0
			
		


			CHIP ENG SENG CORP
			
			
			C29
			
			
			337
			
			
			-25.4
			
			
			-19
			
			
			-34
			
			
			31
			
			
			32
			
			
			-1.7
			
		


			CAPITALAND
			
			
			C31
			
			
			14,021
			
			
			-25.0
			
			
			-11
			
			
			-17
			
			
			14
			
			
			31
			
			
			-132.7
			
		


			FRASERS PROPERTY
			
			
			TQ5
			
			
			3,453
			
			
			-28.7
			
			
			-14
			
			
			-36
			
			
			21
			
			
			31
			
			
			-6.8
			
		


			SINGAPORE TECH ENGINEERING
			
			
			S63
			
			
			10,626
			
			
			-9.4
			
			
			-3
			
			
			11
			
			
			21
			
			
			31
			
			
			52.2
			
		


			KEPPEL INFRASTRUCTURE TRUST
			
			
			A7RU
			
			
			2,720
			
			
			6.5
			
			
			3
			
			
			23
			
			
			10
			
			
			31
			
			
			-2.5
			
		


			STARHUB
			
			
			CC3
			
			
			2,061
			
			
			-13.1
			
			
			-12
			
			
			-44
			
			
			18
			
			
			30
			
			
			-2.9
			
		


			HONGKONG LAND HOLDINGS
			
			
			H78
			
			
			11,829
			
			
			-30.6
			
			
			-15
			
			
			-43
			
			
			25
			
			
			30
			
			
			-125.7
			
		


			ASCENDAS REAL ESTATE INV TRT
			
			
			A17U
			
			
			11,802
			
			
			13.2
			
			
			2
			
			
			49
			
			
			14
			
			
			34
			
			
			382.1
			
		


			KEPPEL DC REIT
			
			
			AJBU
			
			
			4,834
			
			
			45.7
			
			
			25
			
			
			163
			
			
			22
			
			
			33
			
			
			67.7
			
		


			AIMS APAC REIT
			
			
			O5RU
			
			
			841
			
			
			-12.5
			
			
			-3
			
			
			4
			
			
			15
			
			
			34
			
			
			-16.6
			
		


			SINGAPORE AIRLINES
			
			
			C6L
			
			
			10,140
			
			
			-46.3
			
			
			-21
			
			
			-48
			
			
			26
			
			
			35
			
			
			-617.0
			
		


			COMFORTDELGRO CORP
			
			
			C52
			
			
			3,163
			
			
			-36.4
			
			
			-9
			
			
			-16
			
			
			24
			
			
			34
			
			
			-319.7
			
		


			KEPPEL REIT
			
			
			K71U
			
			
			3,773
			
			
			-7.1
			
			
			-6
			
			
			9
			
			
			19
			
			
			34
			
			
			20.8
			
		


			CAPITALAND COMMERCIAL TRUST
			
			
			C61U
			
			
			6,681
			
			
			-9.6
			
			
			-6
			
			
			20
			
			
			23
			
			
			35
			
			
			68.3
			
		


			VENTURE CORP
			
			
			V03
			
			
			5,536
			
			
			23.2
			
			
			24
			
			
			27
			
			
			28
			
			
			33
			
			
			227.1
			
		


			DAIRY FARM INTL HLDGS
			
			
			D01
			
			
			7,187
			
			
			-27.3
			
			
			-22
			
			
			-42
			
			
			24
			
			
			32
			
			
			-61.6
			
		


			Average
			
			
			 
			
			
			 
			
			
			-12
			
			
			-6
			
			
			-3
			
			
			20
			
			
			29
			
			
			 
			
		

 Source: SGX StockFacts, Refinitiv and Bloomberg (Data as of 21 September 2020). Note returns for Koufu Group and PropNex taken from respective IPO dates.

 

In the Spotlight: Factor Investing in Singapore Webinar  As detailed in the recent Factor Investing in Singapore Report by Nicolas Rabener (click here for full report), Low Volatility is one of five common Factors used by modern day analysts to characterise stocks. Nicolas Rabener is the Founder &amp; CEO of FactorResearch. The FactorResearch team provides quantitative solutions for factor investing in equity markets globally.  To watch FactorResearch’s 11 August webinar with the SGX Academy that delved deeper into the performance of classic equity factors in Singapore, such as value, growth, size, momentum, volatility, quality – click here.



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