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Friday, May 14, 2021

EC World REIT Review @ 14 May 2021

Basic Profile & Key Statistics

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

Performance Highlight

Gross revenue, NPI, distribution to unitholders and DPU increased YoY by 30.9%, 20.9%, 32.9% and 39.6% respectively mainly due to the absence of one-off rental rebates given to tenants in 1Q20 and strengthening of RMB.
There is an incident of displacement and collapse of a berth at Chongxian Port Investment on 30 April. The manager would provide further updates in due time.

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 43.58%
  • REIT manager's shareholding is slightly low at 0.86%
  • Directors of REIT manager's shareholding is high at 43.74%

Lease Profile

  • Occupancy is high at 99.1%
  • All income is received in RMB
  • WALE is short at 3.1 years
  • Highest lease expiry within 5 years is high at 74.3% which falls beyond 2024
  • Weighted average land lease expiry is short at 36.75 years

Debt Profile

  • Gearing ratio is moderate at 38.3%
  • Cost of debt is high at 4.1%
  • Fixed rate debt % is low at 60.1%
  • All debts are secured debts
  • WADM is short at 1.4 years
  • Highest debt maturity within 5 years is high at 82.9% which falls in 2022
  • Interest coverage ratio is low at 2.8 times

Diversification Profile

  • Top geographical contribution is high at 98.3%
  • Top property contribution is high at 27.2%
  • Top 5 properties contribution is high at 87.5%
  • 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 6.6% 
  • Management fees over distribution is low at 11.7% in which unitholders receive S$ 8.55 for every dollar paid 
  • Distribution on capital is moderate at 3.3%
  • Distribution margin is low at 39.5%

Trends

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

Relative Valuation

  • Dividend Yield - Latest 4 quarters DPU @ 5.733 cents / average yield @ 8.11% = S$ 0.705
  • Price/NAV - NAV @ S$ 0.91 x average P/NAV @ 0.82 = S$ 0.745


Author's Opinion

 Favorable Less Favorable
High REIT Sponsor's ShareholdingAll Income in RMB
High Directors of REIT Manager's ShareholdingShort WALE
High OccupancyConcentrated Lease Expiry
High Property YieldShort Weighted Average Land Lease Expiry
Competitive Management FeesHigh 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 10 Tenants Contributions
 Low Distribution Margin
 Interest Coverage Ratio Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend

ECW performance has improved as compared to the previous quarter partially due to the strengthening of RMB. It has been consecutive 4 quarters for management to retain 10% of distributable income, so moving forward, likely this would be a new norm for ECW.


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

REIT-TIREMENT Patreon - Support as a Patron and get SREITs Dashboard PDF or Data Excel

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

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 and 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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