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.

Asia’s leading multi-asset exchange

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

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

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

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




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





RESULTS





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


















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