DBS analyst TP $0.90.
 

Maintain BUY TP revised to S$0.90. Sasseur REIT may be one of
the first retail REITs to post a y-o-y growth in DPU at an 8% y-oy increase in the quarter, which should bode well with investors.
This is by virtue of the escalation that is built into the EMA
rental structure and strong recovery in tenant sales to c.90% of
pre-COVID levels. Sasseur REIT currently trades at an attractive
forward yield of 8.2% with further DPU upside from higher
variable EMA rents which we have not priced into our current
estimates.

Tenant sales normalisation to pose upside to variable rents.
Fixed EMA rents, which escalated at c.3% per annum, made up
67% of total rents for the quarter. Variable rents that are tied
to tenant sales, while still at a c.10% y-o-y decline, may see
upside from seasonally stronger 4Q20 sales numbers for Sasseur
REIT. Tenant sales improved 33% q-o-q to RMB1,111m in the
quarter. We think that Sasseur REIT is on track to exceed our
tenant sales estimates (15% y-o-y dip in FY20), supported by
strong pent-up demand and diversion of outbound travel
expense towards retail expenditure for the average Chinese
consumer.
Valuation:
We maintain our BUY recommendation with a revised DCFbased TP of S$0.90 after rolling forward valuations into FY21. 

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