Excerpts from CGS-CIMB report

Analyst: Lock Mun Yee

Unique e-commerce landlord
■ ECW has exposure to China’s e-commerce and logistics sectors via its portfolio of seven well-located assets.

■ Visible organic revenue growth drivers in the form of inbuilt rental escalations.

■ The stock is trading at 8.8% annualised 9M18 dividend yield.

mgt gab event6.18bL-R: Johnny Tng, CFO | Goh Toh Sim, CEO | Li Jinbo, Head of Investments, Asset Management and Investor Relations. Photo: GCP GlobalExposure to China’s e-commerce and logistics sectors
EC World REIT (ECW) owns seven assets in China (six in Hangzhou, one in Wuhan), valued at S$1.33bn at end-3Q18, spread over 747,173 sq m of net lettable area.

The largest asset by value is the Chongxian Port Investment, accounting for 33% of portfolio AUM and 46.8% of 9M19 net property income. This is followed by Hengde Logistics (22% of AUM) and Phase 1 Beigang Logistics (19% of AUM).

In terms of asset value by trade sector, an estimated 47.6% of portfolio value is derived from port logistics, 30.5% from ecommerce and 21.9% from specialised logistics.

High portfolio occupancy
Portfolio occupancy stands at a high 99.2% and the see-through underlying portfolio occupancy is at 96.9% at end-3Q18.

Three assets – Stage 1 Beigang Logistics, Chongxian Port Investment and Fu Heng are master leased to subsidiaries of Forchn Group Holdings. The remaining four properties – Hengde, Fuzhou Industrial, Wuhan Mei Luo Te, Chongxian Port Logistics are multi-tenanted.

Inbuilt organic growth
According to the company, all of its properties except Wuhan Mei Luo Te have inbuilt rental escalations in their rental structures until 2020-21 or 2029, giving the REIT visible earnings growth.

The master lease assets have inbuilt rental step-ups of 1-4%. As at 3Q18, 37.8% of portfolio gross rental income, 35% of leasable area and 30.5% of valuation comprised e-commerce assets, making ECW uniquely exposed to the ecommerce sector in China. Management indicated that Wuhan Mei Luo Te is underrented.

Strong sponsor
ECW’s sponsor, Forchn Holdings Group (Unlisted), is a diversified enterprise group involved in the real estate, industrial, e-commerce, logistics, finance and health & wellness sectors.

It has a 44.28% stake in ECW as at Mar 2018. The sponsor founded Ruyicang, a leading PRC e-commerce logistics and supply chain management services provider, in 2013 and is a founding shareholder of Alibaba’s logistics platform Cainiao. Forchn’s experience and local knowledge provide strong domain knowledge for ECW.

Trading at a high dividend yield of 8.9% in 9M18
Based on the annualised 9M18 DPU of 4.609 Scts, ECW is trading at 8.9% yield. The stock is also trading at 0.8x 9M18 P/BV.

This represents a 5.42% spread over China’s 10-year government bond yield of 3.38% and 6.4% over the Singapore government bond yield of 2.39%. ECW has been included in the FTSE ST China and FTSE Singapore Shariah indices. Distribution income has been hedged until 1HFY19, according to the company.

 
Full report here


Add comment


Share Prices

Counter NameLastChange
AEM Holdings0.875-0.005
Alliance Mineral0.270-0.005
Anchor Resources0.023-0.001
AusGroup0.034-
Avi-Tech Electronics0.310-
Best World Int.2.4000.050
China Sunsine1.4100.030
DISA Limited0.004-
Federal Int. (2000)0.270-
Food Empire0.5300.010
Geo Energy0.168-0.001
Golden Energy0.230-0.005
GSS Energy0.0980.001
ISDN Holdings0.200-
ISOTeam0.2300.015
KSH Holdings0.510-
Lian Beng Group0.4750.005
Miyoshi0.041-
Nordic Group0.385-0.005
Oxley Holdings0.285-0.005
REX International0.063-0.002
Riverstone1.200-0.010
Roxy-Pacific0.4050.005
Sing Holdings0.390-
Sino Grandness0.128-0.007
Straco Corp.0.715-0.005
Sunningdale Tech1.4600.060
Sunpower Group0.310-0.020
The Trendlines0.101-0.001
Tiong Seng0.280-0.005
Uni-Asia Group1.2000.010
XMH Holdings0.180-
Yangzijiang Shipbldg1.230-0.010

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 2345 guests and no members online