Who is Dasin Retail Trust ?
Dasin Retail Trust is managed by Dasin Retail Trust Management Pte. Ltd. in its capacity as the Trustee-Manager ("Trustee-Manager"). The Trustee-Manager strives to provide unitholders of Dasin Retail Trust ("Unitholders") with an attractive rate of return on their investments through regular and stable distributions and to achieve long-term sustainable growth in distribution per unit, while maintaining an appropriate capital structure.
The Sponsor of Dasin Retail Trust is Zhongshan Dasin Real Estate Co., Ltd (中山市大信置业有限公司) (the "Sponsor"), one of the leading real estate developers in Zhongshan City, Guangdong Province, with a strong track record as a retail mall operator.
More details of the sponsor can be found here : http://dasintrust.com/sponsor.html
More details of the sponsor can be found here : http://dasintrust.com/sponsor.html
Investment merits:
1) Steep discount to book value.
1) Steep discount to book value.
Currently trading at $0.835 vs Book value of S$1.37 as of 30th Sep 2019.
Price to book is 0.61x. Investors may be wondering why is there is steep discount.
Shortly after listing, Shiqi Metre Mall was injected into Dasin at a discount of 57.8% off its valuation. In the recent injection of Shunde and Tanbei Metro Mall, it was also purchased at a discount of about 25% off its valuation.
Price to book is 0.61x. Investors may be wondering why is there is steep discount.
Shortly after listing, Shiqi Metre Mall was injected into Dasin at a discount of 57.8% off its valuation. In the recent injection of Shunde and Tanbei Metro Mall, it was also purchased at a discount of about 25% off its valuation.
Through the sponsor‘s right of first refusal (“ ROFR ”), Dasin
Retail Trust can acquire high quality properties at the right
time. At the time of listing, the Trust had 15 ROFR assets, and
as at 30 September 2019, the number of ROFR properties
owned by the Trust stood at 18. The Trustee-Manager will
undertake a prudent investment approach to inject these
properties to enhance the portfolio of Dasin Retail Trust.
With this pipeline from the sponsors, i believe the book value will continue to grow.
At this point of time, BHG Trust is trading at 0.87x book value at $0.685, EC World Reit trading at $0.745 , 0.90x book value, and Sasseur Reit is trading at $0.885, 1.05x book value.
If Dasin can trade at valuation close to other China REITs listed in SGX, it will be $1.19 at 0.87x book.
With this pipeline from the sponsors, i believe the book value will continue to grow.
At this point of time, BHG Trust is trading at 0.87x book value at $0.685, EC World Reit trading at $0.745 , 0.90x book value, and Sasseur Reit is trading at $0.885, 1.05x book value.
If Dasin can trade at valuation close to other China REITs listed in SGX, it will be $1.19 at 0.87x book.
2) Headroom to make yield-accretive acquisitions
Gearing is 36.4%, giving the trust giving it headroom to make yield-accretive acquisitions.
Gearing is 36.4%, giving the trust giving it headroom to make yield-accretive acquisitions.
3) Well spread Weighted Average Lease to Expiry
WALE: 7.1 years (by Net Lettable Area) or 4.1 years (by Gross Rental Income)
This give the trust some stability in income moving forward.
4) Potential Gain on disposal if properties is sold at valuation
Should this happen, this will be a great booster to the trust, convert the discount to book value to cash. Shareholders can look forward for a capital distribution should this situation occur.
WALE: 7.1 years (by Net Lettable Area) or 4.1 years (by Gross Rental Income)
This give the trust some stability in income moving forward.
4) Potential Gain on disposal if properties is sold at valuation
Should this happen, this will be a great booster to the trust, convert the discount to book value to cash. Shareholders can look forward for a capital distribution should this situation occur.
Risks
1) Distribution wavier of Shareholder
Major unitholders (Aqua Wealth Holdings Limited and
Bounty Way Investments Limited) will waive a portion of
their entitlement to distributions from Dasin Retail Trust
for the benefit of other unitholders. This is an expression of major unitholders' confidence in long term income growth with a strong alignment of interest
with other unitholder.
The waiver will be 55% ( 2017 ), 48% (2018), 45%(2019), 35%(2020) and 15%(2021) of the units owned by Aqua Wealth Holdings Limited and Bounty Way Investments Limited, not entitled to distribution.
Dasin listed with 4 properties in the portfolio. As of 30th Sep 2019, Dasin will have 7 properties. It seems that every year, there will be 1-2 properties to be injected into Dasin.
Hopefully, the increased distribution can offset the shareholder wavier of distribution in coming years. Otherwise, it will continue to trade at steep discount to book value.
Conclusion:
In my opinion, there is only 1 main driver in investing in Dasin. That is Dasin will trade at higher valuation should (1) a disposal of asset at valuation , (2) distribution payout to catch up the distribution wavier.
At current portfolio, assuming no growth in DPU, the distribution is likely to be 3.3cts in FY2022 without any waiver, or 4% yield on a annual basis.
In my opinion, there is only 1 main driver in investing in Dasin. That is Dasin will trade at higher valuation should (1) a disposal of asset at valuation , (2) distribution payout to catch up the distribution wavier.
At current portfolio, assuming no growth in DPU, the distribution is likely to be 3.3cts in FY2022 without any waiver, or 4% yield on a annual basis.
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