PhillipCapital is keeping its “accumulate” rating on Dasin Retail Trust with a lowered target price of 78 cents from 82 cents previously.
On the positive side, the PhillipCapital research team likes the stock for its partnership with Sino-Ocean. “While ARA is a globally renowned real-estate name, a partnership with China-focused Sino-Ocean does have merits like possible synergies in real estate management,” says the team.
See also: Dasin Retail Trust secures extension of loans till Dec this year
Under a recent sales and purchase agreement, the chairman and controlling shareholder of the trustee-manager and Aqua Wealth with a 53% stake in Dasin will sell 70% of the trustee-manager to New Harvest, an affiliate of Sino-Ocean Capital.
Sino-Ocean Capital acquired some 49.7 million units of Dasin on Sept 30, 2019, via its affiliate, Glory Class Ventures. This represents 6.36% of the trust’s current outstanding units. Aqua Wealth has also granted a call option with a one-year validity to New Harvest, allowing it to acquire up to 19.54% of Dasin. Exercise of the option would bring Sino-Ocean’s stake to no more than 26% of Dasin’s total outstanding units. The sale of the 70% stake in the trustee-manager is expected to be completed in August 2021.
Meanwhile, an extension of $516.7 million loan repayment to Dec 19, 2021, could be a small reprieve for the trust. It could help halt a potential 32% slide in YTD share price.
Overall, refinancing of loans on longer terms required to return confidence to unitholders.
Earlier, loan refinancing might have been hampered by potential changes in the trustee-manager’s ownership, which would likely have warranted a reset of Dasin’s credit review process. With Sino-Ocean now holding a 70% interest in the trustee-manager and a potentially higher stake in Dasin, the research team believes that Sino-Ocean could support Dasin by extending intercompany loans or a ROFR pipeline.
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“Outlook for Dasin appears more positive, although we await confirmation from key events such as the refinancing of loans maturing on Dec 19 and Sino-Ocean’s exercise of share options,” says the research team, that prefers Frasers Centrepoint Trust within the sector.
As at 11.30 am, units in Dasin Retail Trust are trading at 52 cents or 0.4 times FY2021 NAV with a distribution yield of 7.4%.
Photo: Dasin Retail Trust
