SINGAPORE (Nov 13): Maybank Kim Eng is maintaining “buy” on Sasseur REIT with an unchanged 90-cent price target after the REIT manager on Monday declared higher-than-forecast DPU of 1.542 cents, outpacing the research house’s 3-40% growth forecasts for its four outlet malls.
Looking ahead, the research house expects the REIT’s strong growth sales momentum in 3Q18 to pick up into its seasonally-strongest 4Q going forward.
“We see steady improvement in occupancies on the back of stronger tenant sales growth,” says analyst Chua Su Tye in a Tuesday report.
Noting that 3Q marks a seasonally strong quarter for Sasseur REIT’s portfolio sales, Chua says he expects the momentum to pick up even further in 4Q to achieve 30% of full-year sales forecasts.
“All four outlet malls reported stronger performance ahead of its IPO projections. These were helped by successful anniversary activities in Sep 2018, which achieved first-day record sales growth of between +44% YoY to +139% YoY for the outlets,” observes Chua of the trust’s latest set of 3Q18 results.
“3Q18 DPU would have met 25.7% of our FY18 estimate provided for by the entrusted management agreement (EMA) structure resulting in an annualised DPU yield of 8.9%,” he adds.
Chua also likes Sasseur REIT for its strengthening management track record, where the REIT manager continues to identify opportunities to implement its ‘1+N’ super outlet business model – ‘1’ representing the REIT’s outlets, and ‘N’ representing complementary ecosystem and lifestyle concepts – into other third-party performing malls.
“As such, the Changsha outlet is targeted to open in 4Q, and it’s amongst others in an expanding portfolio that could add to its medium-term ROFR pipeline,” says the analyst.
As at 11.46am, units in Sasseur REIT are trading 0.74% higher at 68 cents to imply a FY18E yield of 8%.
