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

CapitaLand Ascendas REIT / Equity Bottom-Up

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    <div class='content-caption'>REIT Watch</div>
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<p>Prices and rentals of Singapore industrial spaces continued to rise in the first quarter of 2022, despite a dip in the overall occupancy rate, according to the quarterly market report published by JTC.</p>

<p>In Q1 2022, the overall occupancy rate fell to 89.8 per cent, a drop of 0.4 percentage points compared to the previous quarter, due to new completions picking up significantly, and increase in supply exceeding new demand.</p>

<p>Despite the drop in occupancy, price and rental indices of all industrial space rose by 2.1 per cent and 1.0 per cent respectively compared to the previous quarter.<br><br>
SGX lists 8 industrial S-Reits, of which 6 have exposure to Singapore-based industrial assets.</p>

<p>These 6 trusts are AIMS Apac Reit, Ascendas Reit, ESR-Logos Reit, Mapletree Industrial Trust, Mapletree Logistics Trust and Sabana Industrial Reit. Assets of Daiwa House Logistics Trust and EC World Reit are based in Japan and China respectively.</p>

<p>AIMS Apac Reit reported higher FY22 gross revenue and net property income (NPI) of S$142.4 million and S$103.2 million, rising 16.1 per cent and 17.9 per cent year on year respectively.<br><br>
The improved performance was mainly attributed to contributions from recently acquired assets as well as higher rental and recoveries for several Singapore assets.<br><br>
Ascendas Reit’s March 2022 occupancy rate of 90.0 per cent for its Singapore portfolio was 0.2 per cent lower compared to a quarter ago, but 3.1 per cent higher than a year ago.<br><br>
The Reit recorded an average portfolio rent reversion of 3.9 per cent for Singapore leases renewed in Q1 2022 and expects rental reversion across its overall portfolio for FY22 to be in the positive low single-digit range in view of current market uncertainties.<br><br>
ESR-Logos Reit (E-LOG) started trading on May 5, following the successful merger of ESR-Reit and ARA Logos Logistics Trust.<br><br>
The Reit’s asset portfolio is valued at S$5.5 billion across Singapore and Australia and it intends to actively leverage on the initial sponsor pipeline of approximately US$2 billion of visible and executable pipeline across key gateway markets in the Asia-Pacific.<br><br>
Mapletree Industrial Trust (MIT) announced FY21/22 distribution per unit (DPU) of 13.8 cents, an increase of 10.0 per cent year on year.<br><br>
MIT reported higher average overall portfolio occupancy for Q4 FY21/22 compared to the previous quarter, mainly due to improved occupancy of the Singapore portfolio especially among business park buildings and flatted factories.<br><br>
Mapletree Logistics Trust’s (MLT) FY21/22 amount distributable to unitholders grew 17.3 per cent year on year to S$390.7 million, while DPU rose 5.5 per cent to 8.787 cents.<br><br>
MLT observed that the leasing market in Singapore remains stable with demand boosted by e-commerce growth and business inventory stockpiling.<br><br>
Sabana Industrial Reit, in its Q1 2022 business update, reported healthy occupancy of 85.2 per cent and positive rental reversion of 4.0 per cent.<br><br>
The Reit noted that this is the 8th quarter in the past 9 quarters where positive reversion was achieved.<br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/tenant-sales-back-at-pre-covid-levels-for-retail-s-reits"> </a><a href="https://www.businesstimes.com.sg/companies-markets/industrial-s-reits-report-positive-rental-reversions">read </a>the original version.</em></strong></p>
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    REIT Watch


Prices and rentals of Singapore industrial spaces continued to rise in the first quarter of 2022, despite a dip in the overall occupancy rate, according to the quarterly market report published by JTC.

In Q1 2022, the overall occupancy rate fell to 89.8 per cent, a drop of 0.4 percentage points compared to the previous quarter, due to new completions picking up significantly, and increase in supply exceeding new demand.

Despite the drop in occupancy, price and rental indices of all industrial space rose by 2.1 per cent and 1.0 per cent respectively compared to the previous quarter.  
SGX lists 8 industrial S-Reits, of which 6 have exposure to Singapore-based industrial assets.

These 6 trusts are AIMS Apac Reit, Ascendas Reit, ESR-Logos Reit, Mapletree Industrial Trust, Mapletree Logistics Trust and Sabana Industrial Reit. Assets of Daiwa House Logistics Trust and EC World Reit are based in Japan and China respectively.

AIMS Apac Reit reported higher FY22 gross revenue and net property income (NPI) of S$142.4 million and S$103.2 million, rising 16.1 per cent and 17.9 per cent year on year respectively.  
The improved performance was mainly attributed to contributions from recently acquired assets as well as higher rental and recoveries for several Singapore assets.  
Ascendas Reit’s March 2022 occupancy rate of 90.0 per cent for its Singapore portfolio was 0.2 per cent lower compared to a quarter ago, but 3.1 per cent higher than a year ago.  
The Reit recorded an average portfolio rent reversion of 3.9 per cent for Singapore leases renewed in Q1 2022 and expects rental reversion across its overall portfolio for FY22 to be in the positive low single-digit range in view of current market uncertainties.  
ESR-Logos Reit (E-LOG) started trading on May 5, following the successful merger of ESR-Reit and ARA Logos Logistics Trust.  
The Reit’s asset portfolio is valued at S$5.5 billion across Singapore and Australia and it intends to actively leverage on the initial sponsor pipeline of approximately US$2 billion of visible and executable pipeline across key gateway markets in the Asia-Pacific.  
Mapletree Industrial Trust (MIT) announced FY21/22 distribution per unit (DPU) of 13.8 cents, an increase of 10.0 per cent year on year.  
MIT reported higher average overall portfolio occupancy for Q4 FY21/22 compared to the previous quarter, mainly due to improved occupancy of the Singapore portfolio especially among business park buildings and flatted factories.  
Mapletree Logistics Trust’s (MLT) FY21/22 amount distributable to unitholders grew 17.3 per cent year on year to S$390.7 million, while DPU rose 5.5 per cent to 8.787 cents.  
MLT observed that the leasing market in Singapore remains stable with demand boosted by e-commerce growth and business inventory stockpiling.  
Sabana Industrial Reit, in its Q1 2022 business update, reported healthy occupancy of 85.2 per cent and positive rental reversion of 4.0 per cent.  
The Reit noted that this is the 8th quarter in the past 9 quarters where positive reversion was achieved.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Industrial S-Reits report positive rental reversions

Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Headquartered in Singapore, SooChow CSSD Capital Markets (Asia) is an investment bank focusing on emerging growth companies across Asia, providing a full suite of investment banking services, including corporate finance, mergers and acquisitions advisory, equity capital markets, institutional equities sales and trading and equities research.

SooChow CSSD Capital Markets (Asia)

<div><div><div><div><ul><li>1Q22 DPU below expectation: 1Q22 revenue and NPI rose by 4.4% and 7.4% YoY (0.7% and 3.2% QoQ) to S$32.2m and S$29.7m, respectively, largely due to RMB appreciation and step-up rents.</li></ul><div><div><div><div><ul><li>+ve revenue growth across three segments: On a QoQ basis, revenues from all three segments – Port Logistics, Specialized Logistics and E-Commerce Logistics have reported +ve growth, largely due to step-up rents and strengthening RMB.</li></ul><div><div><div><div><ul><li>Refinancing completion as a near-term catalyst: Mgmt. believes that it is very close to complete the refinancing exercise of its offshore facilities (~S$423m or 66% of total loans in FY22E), which will expire by end of May22.</li></ul></div></div></div></div></div></div></div></div></div></div></div></div>

1Q22 DPU below expectation: 1Q22 revenue and NPI rose by 4.4% and 7.4% YoY (0.7% and 3.2% QoQ) to S$32.2m and S$29.7m, respectively, largely due to RMB appreciation and step-up rents.+ve revenue growth across three segments: On a QoQ basis, revenues from all three segments – Port Logistics, Specialized Logistics and E-Commerce Logistics have reported +ve growth, largely due to step-up rents and strengthening RMB.Refinancing completion as a near-term catalyst: Mgmt. believes that it is very close to complete the refinancing exercise of its offshore facilities (~S$423m or 66% of total loans in FY22E), which will expire by end of May22.

EC World REIT - One-Off Event Impacted DPU

Thematic (Sector/Industry)

<ul><li><a href="https://www.smartkarma.com/entities/lhn-ltd" target="_blank" data-smartkarma-citation="entities:27234" rel="noopener">LHN Ltd (LHN SP)</a> 1H22 PATMI +117.4% YoY; More Co-living properties will be launched in 2H22</li><li><a href="https://www.smartkarma.com/entities/ec-world-reit" target="_blank" data-smartkarma-citation="entities:22842" rel="noopener">EC World Reit (ECWREIT SP)</a> 1Q22 DPU -9.7% YoY; Timing difference in pre-termination compensation received</li><li><a href="https://www.smartkarma.com/entities/oue-commercial-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:912" rel="noopener">OUE Commercial REIT (OUECT SP)</a> 1Q22 Business Updates – RevPAR recovery appears slow and Commercial occupancy remains flattish at low 90%</li></ul>

LHN Ltd (LHN SP) 1H22 PATMI +117.4% YoY; More Co-living properties will be launched in 2H22EC World Reit (ECWREIT SP) 1Q22 DPU -9.7% YoY; Timing difference in pre-termination compensation receivedOUE Commercial REIT (OUECT SP) 1Q22 Business Updates – RevPAR recovery appears slow and Commercial occupancy remains flattish at low 90%

ASEAN Builder's Scoop (13May22) - LHN Co-Living Bearing Fruits

<ul><li><a href="https://www.smartkarma.com/entities/ec-world-reit" target="_blank" data-smartkarma-citation="entities:22842" rel="noopener">EC World Reit (ECWREIT SP)</a> in final stages of refinancing negotiations</li><li><a href="https://www.smartkarma.com/entities/frasers-hospitality-trust" target="_blank" data-smartkarma-citation="entities:913" rel="noopener">Frasers Hospitality Trust (FHT SP)</a> exploring strategic options to enhance and unlock value</li><li><a href="https://www.smartkarma.com/entities/guocoland-ltd" target="_blank" data-smartkarma-citation="entities:17467" rel="noopener">GuocoLand (GUOL SP)</a> Midtown Modern penthouse fetches new price high of S$4,278psf</li></ul>

EC World Reit (ECWREIT SP) in final stages of refinancing negotiationsFrasers Hospitality Trust (FHT SP) exploring strategic options to enhance and unlock valueGuocoLand (GUOL SP) Midtown Modern penthouse fetches new price high of S$4,278psf

ASEAN Builder's Scoop (8Apr22) - ECWREIT Final Stages of Refinancing

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    <div class='content-caption'>Five trusts with 100% assets in China</div>
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<p>Listed on SGX are 4 S-Reits and 1 property trust with pure exposure to China. These trusts have assets across sub-sectors such as retail malls, logistics and industrial, and office and business parks based in China.</p>

<p>All 5 trusts have recorded stronger rental income and declared increases in distributions made to unitholders for full year 2021. Common themes across their full-year earnings were resilient portfolio occupancy rates, recovery in shopper footfalls and tenant sales, and contributions from acquisitions despite recent Covid-19 resurgences.<br><br>
CapitaLand China Trust (CLCT), which is diversified across 11 retail assets, five business parks and four logistics properties, reported 37.5 per cent higher FY2021 distribution per unit (DPU) and 85.2 per cent higher annual net property income (NPI) for the year. Increases were due to new contributions from its recently acquired logistics and business park portfolios, Rock Square and CapitaMall Nuohemule.<br><br>
CLCT noted better occupancy rate of 96.3 per cent in FY2021, alongside higher tenant sales and shopper traffic of 16.1 per cent and 9.3 per cent respectively despite mall closures and restrictions due to sporadic Covid-19 outbreaks.</p>

<p>Beyond retail malls, CLCT now has a combined 21.9 per cent exposure to new economy assets through its business park and logistics portfolio which registered 7.0 per cent and 2.7 per cent in rental reversion respectively in FY2021. CLCT is also the first S-Reit to secure a loan linked to the sustainability performance of a China portfolio.<br><br>
Sasseur REIT and its portfolio of four retail outlet malls posted 8.5 per cent growth in DPU and 10.1 per cent growth in entrusted management agreement (EMA) rental income in FY2021, despite COVID-19 disruptions.<br><br>
The Reit saw continued robust consumption trends in the cities where its outlets are located, coupled with intensive promotional efforts with tenants which drove higher sales. Its portfolio occupancy rate rose to 94.5 per cent in Q42021 compared to 93.7 per cent in Q32021. The Reit believes that it will continue to benefit from China's domestic consumption.<br><br>
EC World REIT (ECW) is a specialised logistics and e-commerce logistics REIT with eight properties in Hangzhou and Wuhan. The REIT recorded 12.7 per cent growth in NPI and 16.9 per cent increase in DPU, largely due to the absence of one-off rebates provided to tenants in FY2020. Its portfolio has an occupancy rate of 99.2 per cent as of 31 December 2021 and is diversified across three segments: e-commerce logistics (41.8 per cent of portfolio valuation), port logistics (40.5 per cent), and specialised logistics (17.8 per cent).<br><br>
On Jan 10, 2022, ECW received a formal notice in relation to the compulsory expropriation of Fu Zhuo Industrial and is entitled to receive compensation based on the expropriation valuation. The Reit does not expect the compulsory expropriation to have a material impact on its portfolio and Fu Zhuo Industrial accounts for under 1.5 per cent of its portfolio valuation and 1.6 per cent of its NPI in FY2021.<br><br>
BHG Retail REIT across its six retail malls reported increases of 14.9 per cent in NPI and 11.3 per cent in DPU for FY2021. The REIT noted that its malls continued to see healthy leasing demands with occupancy rate at 97.0 per cent as at 31 December 2021 alongside healthy retention rates. The REIT will remain cautious about risks of COVID-19 resurgence and continues to refresh its malls’ offerings to pursue growth opportunities.<br><br>
Dasin Retail Trust has a portfolio of seven retail malls and registered increases of 10.9 per cent in NPI and 32.5 per cent in DPU for FY2021. It maintains an occupancy rate of 93.9 per cent across a diversified tenant base with no single trade sector contributing over 25.0 per cent of its gross rental income. The Trust Manager also looks to source new expansion opportunities with its new strategic partner and major shareholder Sino-Ocean Capital.<br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/green-shoots-for-retail-and-hospitality-s-reits-amid-new-pandemic-phase"> </a><a href="https://www.businesstimes.com.sg/companies-markets/pure-play-china-s-reits-record-strong-2021-growth-0">read </a>the original version.</em></strong></p>
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    Five trusts with 100% assets in China


Listed on SGX are 4 S-Reits and 1 property trust with pure exposure to China. These trusts have assets across sub-sectors such as retail malls, logistics and industrial, and office and business parks based in China.

All 5 trusts have recorded stronger rental income and declared increases in distributions made to unitholders for full year 2021. Common themes across their full-year earnings were resilient portfolio occupancy rates, recovery in shopper footfalls and tenant sales, and contributions from acquisitions despite recent Covid-19 resurgences.  
CapitaLand China Trust (CLCT), which is diversified across 11 retail assets, five business parks and four logistics properties, reported 37.5 per cent higher FY2021 distribution per unit (DPU) and 85.2 per cent higher annual net property income (NPI) for the year. Increases were due to new contributions from its recently acquired logistics and business park portfolios, Rock Square and CapitaMall Nuohemule.  
CLCT noted better occupancy rate of 96.3 per cent in FY2021, alongside higher tenant sales and shopper traffic of 16.1 per cent and 9.3 per cent respectively despite mall closures and restrictions due to sporadic Covid-19 outbreaks.

Beyond retail malls, CLCT now has a combined 21.9 per cent exposure to new economy assets through its business park and logistics portfolio which registered 7.0 per cent and 2.7 per cent in rental reversion respectively in FY2021. CLCT is also the first S-Reit to secure a loan linked to the sustainability performance of a China portfolio.  
Sasseur REIT and its portfolio of four retail outlet malls posted 8.5 per cent growth in DPU and 10.1 per cent growth in entrusted management agreement (EMA) rental income in FY2021, despite COVID-19 disruptions.  
The Reit saw continued robust consumption trends in the cities where its outlets are located, coupled with intensive promotional efforts with tenants which drove higher sales. Its portfolio occupancy rate rose to 94.5 per cent in Q42021 compared to 93.7 per cent in Q32021. The Reit believes that it will continue to benefit from China's domestic consumption.  
EC World REIT (ECW) is a specialised logistics and e-commerce logistics REIT with eight properties in Hangzhou and Wuhan. The REIT recorded 12.7 per cent growth in NPI and 16.9 per cent increase in DPU, largely due to the absence of one-off rebates provided to tenants in FY2020. Its portfolio has an occupancy rate of 99.2 per cent as of 31 December 2021 and is diversified across three segments: e-commerce logistics (41.8 per cent of portfolio valuation), port logistics (40.5 per cent), and specialised logistics (17.8 per cent).  
On Jan 10, 2022, ECW received a formal notice in relation to the compulsory expropriation of Fu Zhuo Industrial and is entitled to receive compensation based on the expropriation valuation. The Reit does not expect the compulsory expropriation to have a material impact on its portfolio and Fu Zhuo Industrial accounts for under 1.5 per cent of its portfolio valuation and 1.6 per cent of its NPI in FY2021.  
BHG Retail REIT across its six retail malls reported increases of 14.9 per cent in NPI and 11.3 per cent in DPU for FY2021. The REIT noted that its malls continued to see healthy leasing demands with occupancy rate at 97.0 per cent as at 31 December 2021 alongside healthy retention rates. The REIT will remain cautious about risks of COVID-19 resurgence and continues to refresh its malls’ offerings to pursue growth opportunities.  
Dasin Retail Trust has a portfolio of seven retail malls and registered increases of 10.9 per cent in NPI and 32.5 per cent in DPU for FY2021. It maintains an occupancy rate of 93.9 per cent across a diversified tenant base with no single trade sector contributing over 25.0 per cent of its gross rental income. The Trust Manager also looks to source new expansion opportunities with its new strategic partner and major shareholder Sino-Ocean Capital.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Pure-play China S-Reits record strong 2021 growth

Singapore

EC World Real Estate Investment Trust (EC World REIT) is the first Chinese specialised logistics and e-commerce logistics REIT listed on SGX-ST. 

It has a portfolio of quality properties located predominantly in one of the largest e-commerce clusters in the Yangtze River Delta which offers investors unique exposure to the logistics and e-commerce sectors in Hangzhou and Wuhan, China.
  
EC World REIT’s investment strategy is to invest principally, directly or indirectly, in a diversified portfolio of income-producing real estate which is used primarily for e-commerce, supply-chain management and logistics purposes, as well as real estate-related assets, with an initial geographical focus on the PRC. 

EC World REIT is listed in several indices. These include the FTSE ASEAN All-Share Index, FTSE ST All-Share Index, FTSE ST China Index and FTSE ST Singapore Shariah Index. For more information, please visit: http://www.ecwreit.com/ 

EC World REIT is managed by EC World Asset Management Pte. Ltd., which is an indirect wholly-owned subsidiary of the Sponsor – Forchn Holdings Group Co., Ltd.

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EC World Reit (ECWREIT SP)

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SCCM Asia Research

REIT Watch - Pure-play China S-Reits record strong 2021 growth

Listed on SGX are 4 S-Reits and 1 property trust with pure exposure to China. These trusts have assets across sub-sectors such...

Singapore Exchange Ltd (SGX)

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