EC World REIT Review @ 1 April 2021

Basic Profile & Key Statistics

EC World REIT (ECW) is a pure logistics REIT that owns 8 properties in China.

Performance Review

Gross revenue and NPI increased YoY by14.2% and 11.1% respectively mainly due to organic rental escalations and appreciation of RMB against SGD. Distribution to unitholders and DPU decreased YoY by 5% and 5.5% respectively due to higher retention amount for general working capital. 

Related Parties Shareholding

• REIT sponsor's shareholding is high at 44.63%
• REIT manager's shareholding is low at 0.74%
• Directors of REIT manager's shareholding are high at 44.8%

Lease Profile

• Occupancy is high at 99.3%
• All income is received in RMB
• WALE is short at 3.4 years
• Highest lease expiry within 5 years is high at 75.4% which falls in 2024 and beyond, with more than 70% falls in 2024.
• Weighted average land lease expiry is short at 37 years

Debt Profile

• Gearing ratio is moderate at 38.1%
• Cost of debt is high at 4.3%
• Fixed rate debt % is low at 61.5%
• All debts are secured debt
• WADM is low at 1.6 years 
• Highest debt maturity within 5 years is high at 85.3% which falls in 2022
• Interest coverage ratio is low at 2.6 times

Diversification Profile

• Top geographical contribution is high at 98.5%
• Top property contribution is high at 27.3%
• Top 5 properties contribution is high at 87.6%
• Top tenant contribution is high at 36.4% 
• Top 10 tenants contribution is high at 98.3%

Key Financial Metrics

• Property yield is high at 6.2%
• Management fees over distribution is low at 11.5% in which unitholders receive S$ 8.70 for every dollar paid 
• Distribution on capital is moderate at 3.1%
• Distribution margin is low at 39.3% 

Trends

• Flat - Property Yield
• Slight Downtrend - DPU, NAV per Unit
• Downtrend - Interest Coverage Ratio, Distribution on Capital, Distribution Margin

Relative Valuation

• Dividend Yield - Past 4 quarters DPU @ 5.359 cents / average yield @ 8.08% = S$ 0.665
• Price/NAV - NAV @ S$ 0.89 x average P/NAV @ 0.82 = S$ 0.73

Author's Opinion

Favorable	Less Favorable
High Sponsor's Shareholding	Low Manager's Shareholding
High Directors of REIT Manager's Shareholding	All Income in RMB
High Occupancy	Short WALE
High Property Yield	Concentrated Lease Expiry
Competitive Management Fees	Short Weighted Average Land Lease Expiry
	High Cost of Debt
	Low Fixed Rate Debt %
	0% Unsecured Debt
	Short WADM
	Concentrated Debt Maturity
	Low Interest Coverage Ratio
	High Top Geographical Contribution
	High Top Property & Top 5 Properties Contributions
	High Top Tenant & Top Tenants Contributions
	Low Distribution Margin
	Interest Coverage Ratio Downtrend
	Distribution on Capital Downtrend
	Distribution Margin Downtrend

ECW performance has improved slightly as compared to the previous quarter. Note that I have excluded retention in the above analysis. I assume ECW would not distribute this amount because it is mentioned as retained for general working capital purposed in the latest result.

For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a 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.