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Key Updates from EC World Real Estate Investment Trust’s Latest Results

Last Friday, EC World Real Estate Investment Trust (SGX: BWCU) or EC World REIT reported its 2019 first-quarter earnings update.  As a quick introduction, EC World REIT is the first Chinese specialised logistics and e-commerce logistics REIT that was listed here in Singapore in July 2016. It owns properties mainly used for e-commerce, supply-chain management and logistics.

Here, let’s look at eight things that investors should know about its latest results.

  1. Gross revenue for the reporting quarter came in 0.3% lower year-on-year to S$23.9 million while net property income (NPI) fell by 1.4% year-on-year to S$21.2 million.
  2. However, the REIT’s distribution per unit (DPU) was up by 2.2% as compared to last year to 1.501 cents.
  3. Based on EC World REIT’s annualised DPU of 6.004 cents and its closing unit price of S$0.78 (as of writing), the REIT has a trailing distribution yield of 7.7%.
  4. As of 31 March 2019, the REIT’s gearing stood at 31.3%, which is a safe distance from the regulatory ceiling of 45%.
  5. The REIT’s portfolio had a committed occupancy rate of 99.97% at the end of the quarter.
  6. The weighted average lease expiry (by gross rental income) was at 4.7 years, as of 31 March 2019.
  7. The REIT proposed the acquisition of Fuzhou E-Commerce, a 214,284 sqm integrated e-commerce logistics asset in Hangzhou, for a purchase price of RMB1.1 billion (S$223.6 million).
  8. Here’s the latest outlook provided by the REIT:

“In 1Q2019, the Chinese Gross Domestic Product (“GDP”) expanded 6.4% year-on-year. Total retail sales of consumer goods grew by 9.3% with online retail sales increasing by 15.3%. The GDP of Hangzhou and Wuhan, where EC World REIT’s assets are located, outperformed the national GDP registering a 7.5% and 8.1% y-o-y growth respectively. In Hangzhou, consumption and e-commerce continue to thrive with total retail sales of consumer goods increasing 9.0% to RMB138.2 billion while online retail sales surged 48.4% y-o-y.

China’s economic growth has also been supported by expansive monetary and fiscal measures implemented earlier in the year. Aided by increased infrastructure spending, the China’s official manufacturing purchasing managers’ index (PMI) rose to 50.5 in March 2019, the strongest growth since June 2018. At the recent second Belt and Road Forum, the Chinese government stated that China would further open up, lower tariffs, increase imports, strengthen intellectual property protection.

The Manager will continue its disciplined investment strategy approach to pursue attractive yield-accretive investments, in China and in fast growing markets in Southeast Asia.”

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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.