Key Takeaways From Dasin Retail Trust’s Third Quarter of 2018 Earnings
Listed in 2017, Dasin Retail Trust (SGX: CEDU) owns a portfolio of four shopping malls in China. Last week, the REIT reported its earnings results for the third quarter of 2018. Here are the key takeaways.
1. Gross revenue for the nine-month period was up 37% year-on-year to S$55.1 million.
2. Net property income rose 38% to S$45.7 million
3. Distributable income increased 21% to S$15.8 million, while distribution per unit (DPU) was at 5.38 Singapore cents.
4. For the quarter, revenue was 2.2% higher than forecast on its initial public offering (IPO) prospectus but DPU was 1.1% below the forecast.
5. The REIT’s gearing stood at 32.5%, below the 45% regulatory limit.
6. Its net asset value was S$1.40.
What’s behind the numbers?
The higher gross revenue and net property income for the nine-month period was largely due to the contribution from Shiqi Metro Mall, which was acquired in June 2017. However, the net property income for the third quarter was lower than forecast because of lower net property income earned from the initial portfolio and Shiqi Metro Mall. The trust also suffered from negative foreign exchange movements due to the weakening of the RMB against the Singapore dollar. Year-to-date, the trust lost S$3.9 million from foreign exchange fluctuations.
On a positive note, the trust maintains its healthy financial position with a gearing ratio of 32.5%. This gives it plenty of debt headroom to make acquisitions in the future.
As of the end of the quarter, the trust’s total occupancy rate stood at a healthy 97.6%, with weighted lease expiry averaging at 3.9 years by gross rental income (GRI).
Additionally, 63% of its leases by GRI are on built-in rental escalations which will provide the trust with visible organic rental income growth in the future.
The table below illustrates the lease expiry profile of the trust:
Source: Dasin Retail Trust 2018Q3 Earnings Presentation
What lies ahead?
There are economic tailwinds that could bode well for the Dasin Retail Trust. China’s GDP grew 6.5% in the quarter, with national retail sales up 9.3% for the first nine months of the year. More specifically, Zhongshan City, where Dasin Retail Trust’s four malls are located, experienced GDP growth of 5.9% and retail sales growth of 5.4%.
Dasin Retail Trust could also potentially make more acquisitions with its stable financial position. It has 20 right-of-first-refusal properties from its sponsor, Zhongshan Dasin Real Estate, which includes 12 completed properties and seven properties under development.
At the time of writing, units of Dasin Retail Trust trade at S$0.86 per piece. This gives a price-to-book ratio of 0.58 and a distribution yield of 8.95%.