+ 1H23 outlet sales up 20.5% (RMB2.5Bn) and reached all-time high since listing. Performance was better than expected as Q2 is usually muted due to seasonality. Hefei outlet saw a 50.2% surge in sales YoY as Shanghai’s COVID lockdown imposed a negative impact in 1H22. Sales of Chongqing Liangjiang increased 20.3% YoY. The trend is expected to continue and deliver a stronger 2H23 performance since the Mega Anniversary Sales is slated in 3Q and festival sales in 4Q.
+ The portfolio occupancy achieved a record high of 97.2% (+0.6% YoY). Chongqing Liangjiang reached 100% occupancy, while the other 3 outlets remained stable above 95%. SASSR is actively replacing non-performing tenants and introducing new F&B offerings, capitalising on Kunming city’s recovery in F&B sales (+12.3% YoY sales growth) in 1H23. The newly signed tenants, KFC and Erlanggang Chongqing Hotpot, are based 100% on sales turnover. Chongqing Bishan Outlet’s sales growth of 8.2% YoY was disrupted by rebalancing of trade mix. Constraints expected to be resolved in 3Q23.
– Depreciation of RMB and raising offshore interest rate were the main headwinds. Renminbi weakened by 8.7% YoY against Singapore dollar. SASSR has been hedging its revenue for 3-6 months and realised exchange gain of S$1.3m. Additionally, higher finance costs (+0.9% YoY to 5.8%, S$2.7m) due to higher interest rates on the offshore loans also added pressure to the bottom line. Offshore loans accounts for 46.4% of the total borrowing and 77% is hedged in fixed rate. We expect Singapore dollar to stay strong against RMB in 2H23 and offshore loan continues to rise.