<Results First Take> Net property income recovery in line but DPU misses estimates
- FY21 NPI grows 14.9% y-o-y to S$41.8m, meeting our forecasts
- However, FY21 DPU totalled 2.17 Scts, somewhat lower than forecasts owing to higher tax outflows
- Key positive: portfolio committed occupancy rises to 97.0% as at end-2021 as all portfolio malls saw improvements
- Key negative: 100% of borrowings are due to mature in FY22, refinancing uncertainties exist
- We currently have a HOLD call with a TP of S$0.57
S$m | 2H21 | 2H20 | y-o-y | 1H21 | h-o-h |
Revenue | 36.3 | 32.8 | 10.8% | 34.3 | 5.7% |
Net Property Income | 21.2 | 19.9 | 6.6% | 20.6 | 2.7% |
DPU | 1.05 | 1.06 | -0.9% | 1.12 | -6.3% |
Occupancy | 97.0% | 93.5% | 3.5ppt | 93.0% | 4.0ppt |
WALE (by GRI) | 3.6 | 3.8 | 2.2 | 3.8 | 2.2 |
Gearing | 34.1% | 35.7% | -1.6ppt | 34.9% | -0.8ppt |
Occupancy | |||||
Beijing Wanliu | 96.1% | 92.7% | 3.4ppt | 94.4% | 1.7ppt |
Chengdu Konggang | 98.0% | 96.4% | 1.6ppt | 92.5% | 5.5ppt |
Hefei Mengchenglu | 91.3% | 81.7% | 9.6ppt | 80.8% | 10.5ppt |
Hefei Changjiangxilu | 98.2% | 92.4% | 5.8ppt | 92.5% | 5.7ppt |
Xining Huayuan | 100.0% | 100.0% | 0.0ppt | 100.0% | 0.0ppt |
Dalian Jinsanjiao | 100.0% | 100.0% | 0.0ppt | 100.0% | 0.0ppt |
What’s New
2H21 revenue and NPI rises to S$36.3m (+10.8% y-o-y, +5.7% h-o-h) and S$21.2m (+6.6% y-o-y, +2.7% h-o-h) respectively as committed portfolio occupancies continue to improve. Notably, Hefei Mengchenglu’s committed occupancy jumped 10.5ppt h-o-h as the AEI at the property gradually completed. However, 2H21 DPU was lower at 1.05 Scts (-0.9% y-o-y, -6.3% h-o-h) largely due to higher taxes incurred in the half-year.
Our View
Rise in portfolio committed occupancies is a good sign. The improvement in occupancies across the portfolio is a positive sign that things are returning to normal in China. That said, rental reversions were not disclosed which could potentially point to less than stellar rates. Importantly, FY22 is the year in which all of BHG REIT’s borrowings will mature. Uncertainty over China’s real estate sector may create difficulties in refinancing (as seen at Dasin Retail Trust) and we continue to watch for developments on this front.
We currently have a HOLD call with a TP of S$0.57. More updates after the management meeting.