Results at a glance
Source: Company, PSR
The Positives
+ NPI margins improved across the board. While revenue declined on the whole, NPI was held up by lower property expenses across all assets, which relate to the lower maintenance, cleaning, advertising and promotion costs. Shiqi Metro Mall, Dasin’s largest contributor by GRI, saw its NPI margin improve to 87% in 1Q19 from 78% in 1Q18.
The Negatives
– Occupancy at Xiaolan Metro Mall fell to 95% from 99.2% in 4Q18. This was due to a new S$1.0mn AEI initiative at Xiaolan Metro Mall, its second biggest contributor by GRI. c.2.5k sqm of GFA on the fifth floor of Xiaolan Metro Mall has been closed for tenant reconfiguration, ahead of the original lease term expiry in 2026. The AEI is expected to complete in 3Q19.
Outlook
While occupancy will be depressed in the near term, favourable renewal and rental escalation rates are progressively expected at Xiaolan Metro Mall once the ongoing AEI is completed. We remain positive on the inorganic growth prospects for Dasin, with its ROFR pipeline of 20 properties spanning four cities – 14 of which have been completed. Doumen Metro Mall and Shunde Metro Mall, both completed in 2018, are possible acquisitions as they would provide Dasin the runway for growth.
Maintain ACCUMULATE with adjusted target price of S$0.94
Our target price of S$0.94 translates to a FY19e yield of 8.4% and a P/NAV of 0.60x.
The report is produced by Phillip Securities Research under the ‘SGX StockFacts Research Programme’ (administered by SGX) and has received monetary compensation for the production of the report from the entity mentioned in the report
