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

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2>
<h3>
<a href="https://www.smartkarma.com/entities/starhill-global-reit" target="_blank" data-smartkarma-citation="entities:10791" rel="noopener">Starhill Global REIT (SGREIT SP)</a> – Starting FY22E on a high note (BUY; TP S$0.71/Unit)</h3>
2H21 Revenue/NPI have recovered to 90%/88% of 2H19’s. Recent resurgence of Covid-19 cases could weigh against rental reversions and demand further rental assistance. However, SGREIT’s resilient occupancy and master lease structure should offer DPU support. Reiterate BUY with higher TP $0.71/unit, as we rollover our valuations to FY22E. Faster than expected reopening of SG economy and tourism revival would be potential re-rating catalyst in FY22E.
<ul>
<li>Positive surprise with rental rebates reversals and lower expenses. 2H21 revenue and NPI increased 10.5% and 20.2% YoY to S$92.9m and S$69.8m, respectively, mainly due to lower rental assistance and stronger AUD. FY21 revenue and NPI grew 0.3% and 2.0% YoY to S$181.3m and S$134.7m, respectively. S$3.2m of rental rebates reversals from Ngee Ann City and AUS assets were offset by higher rental rebates given to Wisma Atria tenants in 2H21. Overall, rental assistance amounted to c.S$9.6m in FY21 (vs. S$17m in FY20). Combined with adjustment to reflect timing difference of property tax refunds in SG, the absence of S$3.7m one-off capital allowance claim in 2H20, and release of S$4.6m deferred FY20 DI, 2H21 DPU was 195.7% higher at S$2.07c, bringing FY21 DPU 33.4% YoY higher to S$3.95c. The S$7.7m retained FY20 DI has been fully been released with S$0.14c in 1H21 and S$0.21c in 2H21. Excluding the deferred FY20 DI, DPU increased 77.1% and 8.8% YoY in 2H21 and FY21, respectively. FY21 revenue, NPI and DPU exceeded our full-year forecasts by 3.7%, 5.4%, and 12.1%, respectively</li>
<li>Sales has yet to recover to pre-Covid level but occupancies offer silver linings. Pressure at WA (Retail) persists with lower occupancy, lower rent and higher OpEx in 2H21. FY21 rent reversion for Retail came in at -11% vs. Office at -6%. Nonetheless, we take comfort in the resilient portfolio occupancy at 96.7% and committed SG Retail occupancy at 99.3%, supported by new tenant demand. With 15.1% of GRI is due for expiry in FY22E (of which, 11.6% are Retail leases and 3.6% are Office leases), mgmt. expects rent reversion, particularly for Retail’s, to be slight negative, alongside further rental rebates and lease restructuring in view of the renewed movement restrictions in SG and AUS</li>
<li>Reiterate BUY with higher TP of S$0.71/unit, as we roll over our valuations to FY22E. 36.1% gearing level would provide SGREIT financial flexibility in executing its long[1]term strategy to diversify into assets that generate stable cash flows and offers attractive yields. Mgmt. targets to acquire offi ce properties in key gateway cities in SG, AUS and JP, thus bringing revenue mix of Retail vs. Office to 50:50 (currently at 86:14) over the next 3-5 years. Potential launches of travel bubble, further easing of safe distancing measures, and greater proportion of workers returning to office should expedite SGREIT’s recovery in FY22E.</li>
</ul>

Singapore

Starhill Global REIT (SGREIT SP) – Starting FY22E on a high note (BUY; TP S$0.71/Unit)
2H21 Revenue/NPI have recovered to 90%/88% of 2H19’s. Recent resurgence of Covid-19 cases could weigh against rental reversions and demand further rental assistance. However, SGREIT’s resilient occupancy and master lease structure should offer DPU support. Reiterate BUY with higher TP $0.71/unit, as we rollover our valuations to FY22E. Faster than expected reopening of SG economy and tourism revival would be potential re-rating catalyst in FY22E.

Positive surprise with rental rebates reversals and lower expenses. 2H21 revenue and NPI increased 10.5% and 20.2% YoY to S$92.9m and S$69.8m, respectively, mainly due to lower rental assistance and stronger AUD. FY21 revenue and NPI grew 0.3% and 2.0% YoY to S$181.3m and S$134.7m, respectively. S$3.2m of rental rebates reversals from Ngee Ann City and AUS assets were offset by higher rental rebates given to Wisma Atria tenants in 2H21. Overall, rental assistance amounted to c.S$9.6m in FY21 (vs. S$17m in FY20). Combined with adjustment to reflect timing difference of property tax refunds in SG, the absence of S$3.7m one-off capital allowance claim in 2H20, and release of S$4.6m deferred FY20 DI, 2H21 DPU was 195.7% higher at S$2.07c, bringing FY21 DPU 33.4% YoY higher to S$3.95c. The S$7.7m retained FY20 DI has been fully been released with S$0.14c in 1H21 and S$0.21c in 2H21. Excluding the deferred FY20 DI, DPU increased 77.1% and 8.8% YoY in 2H21 and FY21, respectively. FY21 revenue, NPI and DPU exceeded our full-year forecasts by 3.7%, 5.4%, and 12.1%, respectively
Sales has yet to recover to pre-Covid level but occupancies offer silver linings. Pressure at WA (Retail) persists with lower occupancy, lower rent and higher OpEx in 2H21. FY21 rent reversion for Retail came in at -11% vs. Office at -6%. Nonetheless, we take comfort in the resilient portfolio occupancy at 96.7% and committed SG Retail occupancy at 99.3%, supported by new tenant demand. With 15.1% of GRI is due for expiry in FY22E (of which, 11.6% are Retail leases and 3.6% are Office leases), mgmt. expects rent reversion, particularly for Retail’s, to be slight negative, alongside further rental rebates and lease restructuring in view of the renewed movement restrictions in SG and AUS
Reiterate BUY with higher TP of S$0.71/unit, as we roll over our valuations to FY22E. 36.1% gearing level would provide SGREIT financial flexibility in executing its long[1]term strategy to diversify into assets that generate stable cash flows and offers attractive yields. Mgmt. targets to acquire offi ce properties in key gateway cities in SG, AUS and JP, thus bringing revenue mix of Retail vs. Office to 50:50 (currently at 86:14) over the next 3-5 years. Potential launches of travel bubble, further easing of safe distancing measures, and greater proportion of workers returning to office should expedite SGREIT’s recovery in FY22E.


ASEAN Builder's Scoop (06Aug21) - SGREIT Starting FY22E on a High Note

<h2>Singapore</h2>
<h3>SREITs results in a glance (see detailed spreadsheet and calendar attached)</h3>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 98.1pt;">
 
</td>
<td style="width: 98.1pt;">
SGREIT
</td>
<td style="width: 98.1pt;">
CDREIT
</td>
<td style="width: 98.1pt;">
FEHT
</td>
<td style="width: 98.1pt;">
OUECT
</td>
<td style="width: 98.1pt;">
FIRT
</td>
<td style="width: 98.15pt;">
FHT
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
Period
</td>
<td style="width: 98.1pt;">
2H21
</td>
<td style="width: 98.1pt;">
1H21
</td>
<td style="width: 98.1pt;">
1H21
</td>
<td style="width: 98.1pt;">
1H21
</td>
<td style="width: 98.1pt;">
1H21
</td>
<td style="width: 98.15pt;">
9M21
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
Gross Revenue (S$ m)
</td>
<td style="width: 98.1pt;">
92.9 (10.5% YoY)
</td>
<td style="width: 98.1pt;">
66.2 (27.2% YoY)
</td>
<td style="width: 98.1pt;">
41.6 (-6.1% YoY)
</td>
<td style="width: 98.1pt;">
133.5 (-6% YoY)
</td>
<td style="width: 98.1pt;">
38.9 (+0.9% YoY)
</td>
<td style="width: 98.15pt;">
NA
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
NPI (S$ m)
</td>
<td style="width: 98.1pt;">
69.8 (20.2% YoY)
</td>
<td style="width: 98.1pt;">
37.0 (24.4% YoY)
</td>
<td style="width: 98.1pt;">
36.2 (-6.2% YoY)
</td>
<td style="width: 98.1pt;">
109 (-3.1% YoY)
</td>
<td style="width: 98.1pt;">
37.6 (+0.2% YoY)
</td>
<td style="width: 98.15pt;">
NA
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
DPU (S$ c)
</td>
<td style="width: 98.1pt;">
2.07 (195.7% YoY)
</td>
<td style="width: 98.1pt;">
1.22 (-19.2% YoY)
</td>
<td style="width: 98.1pt;">
1.1 (+6.8% YoY)
</td>
<td style="width: 98.1pt;">
1.23 (+23% YoY)
</td>
<td style="width: 98.1pt;">
1.3 (-43.5% YoY)
</td>
<td style="width: 98.15pt;">
NA
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
NAV per Unit (S$)
</td>
<td style="width: 98.1pt;">
0.81
</td>
<td style="width: 98.1pt;">
1.29
</td>
<td style="width: 98.1pt;">
0.7912
</td>
<td style="width: 98.1pt;">
0.58
</td>
<td style="width: 98.1pt;">
0.3512
</td>
<td style="width: 98.15pt;">
1H21: 0.66
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
P/B (x)
</td>
<td style="width: 98.1pt;">
0.75
</td>
<td style="width: 98.1pt;">
0.95
</td>
<td style="width: 98.1pt;">
0.73
</td>
<td style="width: 98.1pt;">
1.34
</td>
<td style="width: 98.1pt;">
0.75
</td>
<td style="width: 98.15pt;">
0.79
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
Occupancy (%)
</td>
<td style="width: 98.1pt;">
96.7
</td>
<td style="width: 98.1pt;">
5 SG Hotels excl. W Hotel and NCQ: 73.5
6 SG Hotels excl. W Hotel: 70.2
</td>
<td style="width: 98.1pt;">
Hotels : 77.6
Service Residence : 76.2
</td>
<td style="width: 98.1pt;">
91.7 (Commercial)
92.3 (SG Office)
89.6 (Mandarin  Gallery)
</td>
<td style="width: 98.1pt;">
Not Disclosed
</td>
<td style="width: 98.15pt;">
SG: 59.8
AUS: 44.3
UK: 18.8
JP: 31.3
MY: 7.7
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
Reversion (%)
</td>
<td style="width: 98.1pt;">
Not disclosed
</td>
<td style="width: 98.1pt;">
RevPAR (% YoY):
SG: -19.5 (or -9.5 incl. W Hotel)
Maldives: +139.2
NZ: -31.8
Germany: +61.2
Italy: -84.4
JP: -27.9
UK: -21.8
</td>
<td style="width: 98.1pt;">
RevPAR (% YoY):
Hotels: -35.4
Service Residence: -16.9 YoY
</td>
<td style="width: 98.1pt;">
2Q21 Office reversions: -5.7 to +2.2
</td>
<td style="width: 98.1pt;">
Not Disclosed
</td>
<td style="width: 98.15pt;">
RevPAR (% YoY):
SG: -31.4
AUS: -52.3
UK: -68.9
JP: -40.8
MY: -87.7
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
Gearing (%)
</td>
<td style="width: 98.1pt;">
36.1
</td>
<td style="width: 98.1pt;">
39.1
</td>
<td style="width: 98.1pt;">
41.3
</td>
<td style="width: 98.1pt;">
38
</td>
<td style="width: 98.1pt;">
34.7
</td>
<td style="width: 98.15pt;">
42.1
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
Cost of Debt (%)
</td>
<td style="width: 98.1pt;">
3.28
</td>
<td style="width: 98.1pt;">
1.9
</td>
<td style="width: 98.1pt;">
2.1
</td>
<td style="width: 98.1pt;">
3.2
</td>
<td style="width: 98.1pt;">
Not Disclosed
</td>
<td style="width: 98.15pt;">
2.0
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
1 Yr Fwd Yield (%)
</td>
<td style="width: 98.1pt;">
6.9
</td>
<td style="width: 98.1pt;">
4.4
</td>
<td style="width: 98.1pt;">
4.7
</td>
<td style="width: 98.1pt;">
7.4
</td>
<td style="width: 98.1pt;">
9.8 (annualized 1H21)
</td>
<td style="width: 98.15pt;">
3.1
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
Debt Hedged (%)
</td>
<td style="width: 98.1pt;">
91
</td>
<td style="width: 98.1pt;">
63.3
</td>
<td style="width: 98.1pt;">
68.2
</td>
<td style="width: 98.1pt;">
82.2
</td>
<td style="width: 98.1pt;">
Not Disclosed
</td>
<td style="width: 98.15pt;">
77
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
Target Price
</td>
<td style="width: 98.1pt;">
Under Review
</td>
<td style="width: 98.1pt;">
N/A
</td>
<td style="width: 98.1pt;">
N/A
</td>
<td style="width: 98.1pt;">
N/A
</td>
<td style="width: 98.1pt;">
N/A
</td>
<td style="width: 98.15pt;">
N/A
</td>
</tr>
<tr>
<td style="width: 98.1pt;">
Rating
</td>
<td style="width: 98.1pt;">
Under Review
</td>
<td style="width: 98.1pt;">
N/A
</td>
<td style="width: 98.1pt;">
N/A
</td>
<td style="width: 98.1pt;">
N/A
</td>
<td style="width: 98.1pt;">
N/A
</td>
<td style="width: 98.15pt;">
N/A
</td>
</tr>
</tbody>
</table>

Singapore
SREITs results in a glance (see detailed spreadsheet and calendar attached)




 


SGREIT


CDREIT


FEHT


OUECT


FIRT


FHT




Period


2H21


1H21


1H21


1H21


1H21


9M21




Gross Revenue (S$ m)


92.9 (10.5% YoY)


66.2 (27.2% YoY)


41.6 (-6.1% YoY)


133.5 (-6% YoY)


38.9 (+0.9% YoY)


NA




NPI (S$ m)


69.8 (20.2% YoY)


37.0 (24.4% YoY)


36.2 (-6.2% YoY)


109 (-3.1% YoY)


37.6 (+0.2% YoY)


NA




DPU (S$ c)


2.07 (195.7% YoY)


1.22 (-19.2% YoY)


1.1 (+6.8% YoY)


1.23 (+23% YoY)


1.3 (-43.5% YoY)


NA




NAV per Unit (S$)


0.81


1.29


0.7912


0.58


0.3512


1H21: 0.66




P/B (x)


0.75


0.95


0.73


1.34


0.75


0.79




Occupancy (%)


96.7


5 SG Hotels excl. W Hotel and NCQ: 73.5
6 SG Hotels excl. W Hotel: 70.2


Hotels : 77.6
Service Residence : 76.2


91.7 (Commercial)
92.3 (SG Office)
89.6 (Mandarin  Gallery)


Not Disclosed


SG: 59.8
AUS: 44.3
UK: 18.8
JP: 31.3
MY: 7.7




Reversion (%)


Not disclosed


RevPAR (% YoY):
SG: -19.5 (or -9.5 incl. W Hotel)
Maldives: +139.2
NZ: -31.8
Germany: +61.2
Italy: -84.4
JP: -27.9
UK: -21.8


RevPAR (% YoY):
Hotels: -35.4
Service Residence: -16.9 YoY


2Q21 Office reversions: -5.7 to +2.2


Not Disclosed


RevPAR (% YoY):
SG: -31.4
AUS: -52.3
UK: -68.9
JP: -40.8
MY: -87.7




Gearing (%)


36.1


39.1


41.3


38


34.7


42.1




Cost of Debt (%)


3.28


1.9


2.1


3.2


Not Disclosed


2.0




1 Yr Fwd Yield (%)


6.9


4.4


4.7


7.4


9.8 (annualized 1H21)


3.1




Debt Hedged (%)


91


63.3


68.2


82.2


Not Disclosed


77




Target Price


Under Review


N/A


N/A


N/A


N/A


N/A




Rating


Under Review


N/A


N/A


N/A


N/A


N/A





ASEAN Builder's Scoop (30Jul21) - SGREIT Solid Set of Results

Singapore

Starhill Global REIT is a real estate investment trust.  The trust invests in retail and office buildings in Singapore and overseas.

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Starhill Global REIT (SGREIT SP)

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ASEAN Builder's Scoop (30Jul21) - SGREIT Solid Set of Results

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