SINGAPORE (June 17): The earlier-than-expected reopening of phase 2 that will take place this Friday (June 19) came as a “positive surprise” for the retail sector, according to DBS analyst Derek Tan and the Singapore research team.
In a note dated June 16, Tan writes that shopper traffic this weekend will be “key” following some 2.5 months of Singaporeans remaining at home during the circuit breaker measures from April to June.
During this phase, over 90% of retail tenants in malls will resume operations.
Majority of trade sectors will also be allowed to reopen including those within the fashion, healthcare, fitness, and education industries. Dining-in, as well as social gatherings, will be allowed, with a maximum of up to five per group or table.
“The food & beverage, and beauty & health trade sectors will likely lead demand recovery as consumers are allowed to dine-in at F&B outlets, while adhering to crowd density measures,” says Tan.
Anticipating a positive response on retail REITs, Tan and the team have maintained their “buy” calls on retail REITs.
Frasers Centrepoint Trust (FCT), CapitaLand Mall Trust (CMT), and Lendlease Global Commercial REIT (LREIT) have been identified as the brokerage’s top picks, with target prices of $2.65, $2.15, and 85 cents, respectively.
Units in Frasers Centrepoint Trust closed 3 cents higher, or 1.2% up, at $2.47; units in CapitaLand Mall Trust closed 1 cent lower, or 0.5% down, at $2.14; units in Lendlease Global Commercial REIT closed 1.5 cents higher, or 2.1% up, at 74.5 cents on Wednesday.
