• 1Q21 revenue in line, at 24.7% of our FY21e estimate. Revenue was lifted by a recovery in variable rents, an absence of rebates and contributions from Shunde Metro Mall and Tanbei Metro Mall, both acquired in July 2020. Same-store revenue now at 94% of 1Q19 levels.
• Occupancy dipped QoQ from 96.4% to 96.1% following non-renewals. Lower leases were signed in the quarter due to backend-loaded FY21 expiries. Lease terms unchanged.
• Maintain ACCUMULATE and DDM TP (COE 8.12%) of S$0.82. No change in estimates. Dasin is tracking our recovery forecasts. Current price implies dividend yields of 6.7%.

The Positive

+ 1Q21 revenue grew 87.4% YoY (Fig 1). About 51.0ppts of the growth stemmed from a recovery in variable rents and an absence of rebates. The remaining 36.4ppts were contributed by Shunde Metro Mall and Tanbei Metro Mall, which were acquired in July 2020. China’s 1Q21 total retail sales grew by 33.9% YoY. The recovery, though, was uneven among the trade sectors. 1Q21 same-store revenue was at 94% of 1Q19 pre-pandemic levels (Figure 2). This was a shade below 4Q20 revenue, which had recovered to 95.8% of 4Q19 levels.

The Negatives

– Occupancy dipped QoQ from 96.4% to 96.1%. This was mainly attributed to a 1.7ppt decline at Shunde Metro Mall and 1.0ppt drop at Ocean Metro Mall. Shunde’s occupancy was lower following an 800 sq m non-renewal from a tenant in the entertainment trade. This was filled in April 2021. Occupancy at Tanbei Metro Mall fell 2.7ppts following a 240 sq m non-renewal by a tenant in the education trade. However, this mall is small, accounting for only 1.4% of revenue. Occupancy fluctuated between -0.1ppt and +0.5ppt for the remaining four malls.

– Lower leasing volume in 1Q21, as FY21 expiries are backend-loaded. Leasing terms were largely unchanged, with tenants signing 1-2-year terms. Demand from F&B tenants had normalised. However, demand from fashion and services remained weak. Signing rents were flat YoY. Reversions were not disclosed, though we estimate negative single-digit reversions from pre-pandemic levels, in line with market rental trends.

Source: Phillip Capital Research - 20 May 2021