In late February, Dasin Retail Trust (SGX: CEDU) released its 2017 fourth quarter and full year earnings update.
As a quick introduction, Dasin Retail Trust, which listed on January 2017, is the only property trust listed in Singapore’s stock market that has a direct exposure and focus on retail malls in China’s Pearl River Delta region. The trust’s portfolio currently comprises four malls in Zhongshan City of China’s Guangdong province.
Here are 10 things investors should know about Dasin Retail Trust’s latest results:
1. The REIT’s gross revenue for the whole of 2017 came in at S$57.70 million, 16% higher than the forecast given in its initial public offering (IPO) prospectus. Net property income of S$46.56 million was also better than expected (a difference of 14%).
2. Similarly, the REIT’s distribution per unit (DPU) of 7.16 cents was 6% higher than the forecast of 6.74 cents.
3. Based on Dasin Retail Trust’s 2017 total DPU of 7.16 cents, and its closing unit price of S$0.87 as of 28 March 2018, the REIT has a trailing distribution yield of 8.2%.
4. As of 31 December 2017, the trust’s gearing stood at 30.7%, which is a safe distance from the regulatory ceiling of 45%.
5. The trust’s portfolio had a committed occupancy rate of 100% at end-2017.
6. The weighted average lease to expiry (by gross rental income) was at 3.95 years as of 31 December 2017. 54.6% of the trust’s leases (again, based on rental income) will expire on or before 2020, and the remaining 46.4% of the leases will expire from 2021 onwards.
7. There are 19 properties that Dasin Retail Trust has right of first refusal (ROFR) on. 11 of the 19 properties have been completed, whilst the rest are still under development.
8. The trust acquired Shiqi Metro Mall for RMB1.22 billion in the second half of 2017, which was earlier than forecast. This was an important reason why Dasin Retail Trust’s results were better than projected.
9. In its earnings update, Dasin Retail Trust gave some useful comments on the state of China’s economy and retail environment:
“According to the China’s National Bureau of Statistics, economy grew 6.9% year-on-year to RMB82.7 trillion in 2017. Retail sales increased 10.2% year-on-year to RMB36.6 trillion for 2017. Urban disposable income and expenditure per capita grew 6.5% and 5.4% year-on-year respectively…….
According to the Zhongshan Municipal Bureau of Statistics, Zhongshan’s GDP increased 6.6% year-on-year, reaching RMB345.0 billion for 2017. Consumer spending remains stable with retail sales increasing by 8.6% year-on-year to RMB130.9 billion.”
10. The REIT also provided the following outlook on its business:
“The number of assets under the “Right of First Refusal” stands at 11 completed properties with eight properties under development (including the Purchase Option for Doumen Metro Mall). The Trustee-Manager will undertake a prudent investment approach towards injecting new properties into the portfolio. The acquisition of Shiqi Metro Mall on 19 June 2017 will have a full year revenue contribution in FY2018.”
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.