mgt gab event6.18bL-R: Johnny Tng, CFO | Goh Toh Sim, CEO | Li Jinbo, Head of Investments, Asset Management and Investor Relations. Photo: GCP GlobalEC WORLD REIT has reported a 9.0% y-o-y growth in distribution per unit (DPU) for 3Q18.

The DPU of 1.57 cents translates into a yield of 8.7%

This is based on an annualized DPU of 4.609 cents for 9M2018 and the REIT's closing price of S$0.705 on 30 September 2018.

EC World REIT

Unit price: 
70.5c

Target: 
82c

Source: Phillip Securities Research

The REIT's asset portfolio is unaffected by the current macroeconomic uncertainties, and has a committed occupancy of 99.2%. The weighted average underlying end-tenant occupancy was 96.9%.

 
In a nutshell:

3Q18
S$'000

3Q17
S$'000

Change
%

 Change factors

Gross Revenue

23,891

23,866

0.1

Net Property Income

22,199

22,086

0.5

Growth mainly due to contribution of newly acquired Wuhan Meiluote and partially offset by a weaker RMB in 3Q18.

Distributable Income

12.414

11,281

10.0

Due to the higher NPI, absence of withholding tax for distribution in 3Q18 as well as lower trust expenses.

DPU (cents)

1.570

1.440

9.0

 

“EC World REIT’s assets are generally unaffected as the tenants within the portfolio serve primarily the domestic China market focused on domestic consumption. As such, we do not expect the ongoing global uncertainty to have material negative impact on the operation of our assets.”

-- Goh Toh Sim,
Executive Director and CEO of the Manager

Excluding the withholding tax impact incurred in 3Q17, the 3Q18 DPU grew 2.3% year-on-year.

After turning down its Sponsor's offer to sell an asset recently, the REIT Manager is actively pursuing high quality and yield-accretive investment opportunities in China and Southeast Asia.

As at 30 September 2018, the REIT’s aggregate leverage remains at 30.7%.

This provides the REIT with available debt headroom for growth and future acquisitions.

The blended annualized running interest rate for its loans was 4.4%.


The REIT's port logistics assets are located along the largest inland port (Chongxian Port) in Hangzhou which only handles domestic business with no international trade exposure.

Similarly, the REIT's e-commerce and specialized logistics assets are focused on the domestic logistic sector and will continue to benefit from the strong economic growth of Hangzhou and Wuhan (both outperforming national averages).


In order to protect the unitholders from the fluctuations of currency movement, the Manager adopts a prudent FX strategy to hedge majority of projected distributions every quarter on a 6-month rolling basis. The strategy is implemented through entering into a put spread options structure.

Furthermore, the interest exposure of its offshore SGD loans continues to be fully hedged through an interest rate swap.

Hangzhou’s GDP grew 7.3% y-o-y in first nine months of 2018, surpassing the national average by 0.5%. The e-commerce sector grew 15.0%, contributing to 23% of GDP.

Total retail sales of consumer goods increased 9.6% to RMB410.1 billion, while online retail sales increased 23.2% to RMB340 billion.

Wuhan continued on its 7th quarter of economic growth with GDP registering 8.3%6 growth. Total retail sales grew 10.4% for the first nine months of 2018 to RMB486.3 billion with online retail sales increasing 34.6% to RMB40.8 billion.

For the Powerpoint materials, click here.
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