Basic Profile & Key Statistics
EC World REIT (ECW) invests in logistics properties in China, in which 7 properties are in Hangzhou and 1 is in Wuhan.
Lease Profile
Occupancy is high at 98.7%. All of its income is received in RMB, WALE is short at 3.6 years where the highest lease expiry of 73.8% falls in the year 2024 and beyond. From latest annual report, master leases of Fu Heng Warehouse, Stage 1 Bei Gan, Fuzhou E-Commerce and Chongxian Port Investment would be expired in the year 2024. These 4 properties contribute 73.2% gross revenue in 2Q 2020. Weighted average land lease expiry is short at 34.99 years, which is common for China properties.
Debt Profile
Gearing ratio is slightly high at 39.1%. Cost of debt is high at 4.3% despite all debts are secured borrowing. Fixed-rate debt % is low at 62%. Interest cover ratio is low at 2.45 times. WADE is short at 2.12 years where more than 80% would mature in the year 2022.
Diversification Profile
As most of the properties are at Hangzhou, its top geographical contribution is high at 98.3%. Top property contribution, top tenant and top 10 tenants contribution are high at 29.4%, 34.9% and 97.9%.
Key Financial Metrics
Property is high at 6%. ECW retaining S$ 1.23 mils from distribution, therefore affected management fees over distribution, distribution on capital, and distribution margin, the values are 10.8%, 3.3%, and 43% respectively. Without retention, the values would be 10.5%, 3.4%, and 44.2% respectively. Management fee is still competitive which unitholders receive S$ 9.26 for every dollar paid; distribution on capital is moderate and distribution margin is slightly low.
Related Parties Shareholding
As compared to SREITs median, sponsor, manager and directors of REIT manager are holding higher stake.
Trend
Note that the actual 3Q 2016 DPU is 0.991 for the period between 28 July To 30 September 2016, for a fair comparison, I have annualized it to 3 months period to around 1.403 cents. If without rental rebate in 1Q 2020 and retention in 2Q 2020, DPU maintain more or less the same. NAV per unit and distribution margin are on slight downtrend.
Relative Valuation
i) Average Dividend Yield - Average yield at 8.04%, apply the past 4 quarters DPU of 5.543 cents will get S$ 0.69. If we considered without retention for COVID, DPU would be 5.697 cents which translates into S$ 0.71.
ii) Average Price/NAV - Average value is at 0.83, apply the latest NAV of S$ 0.866 will get S$ 0.72.
Author's Opinion
| Favorable | Less Favorable |
|---|---|
| Occupancy | Income Received in RMB |
| Property Yield | WALE |
| Management Fee | Concentraded Lease Expiry |
| Weighted Average Land Lease Expiry | |
| Cost of Debt | |
| Unsecured Debt | |
| Interest Cover Ratio | |
| WADE | |
| Concentraded Debt Maturity | |
| Top Geographical Weightage | |
| Top Property Weightage | |
| Top Tenant & Top 10 Tenants Weightage |
Logistics SREITs have been 1 of the less affected sector during this COVID outbreak. Overall, ECW financial performance is not really affected as it is able to maintain the distributable income given current situation.
The above analysis information is extracted from SREITs Dashboard, you are welcome to use the information there for your analysis. You could also refer SREITs Data for an overview of Singapore REITs. If you like my sharing, please join the Facebook group - REIT Investing Community where you could read, share, and discuss REITs related topics. Please also invite your like-minded friends to the group.
*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.
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