- August 11, 2021
We published a research report on Yuexiu REIT (405.HK) on the back of its recent annual results announcement.
Key Highlights:
We recommend Yuexiu REIT as one of our top picks of the property sector, as the stock offers an attractive risk-reward of 7.1% div yield with a Beta of 0.75. 1H21 DPU grew 12.3% YoY and interest savings from its recently refinanced USD bond will further drive its 2H21E dist. income growth, in our view. Reiterate Buy.
- We estimate that the REIT will benefit from the full six months’ interest savings impact during 2H21E through its USD bond refinancing which was completed in 1H21.
- We also believe that management will take advantage of the low interest cost environment and actively seek for asset acquisition opportunities in 2H21E to drive long term growth of its portfolio.
- We believe any value-accretive acquisition will also help to offset the structural challenges that White Horse Building is currently facing.
- Yuexiu REIT announced its 1H21 results, with revenues growing by 6.1% YoY to RMB881.7m, and implies 41% of our full-year estimate.
- Net Property Income dropped 2.3% YoY during 1H21, mainly dragged by weaker-than-expected rental revenues from White Horse Building (-13.6% YoY) and GZ IFC Office (-2% YoY) due to the sluggish macroeconomic environment amid COVID-19, in our view.
- The 1H21 DPU reached HK$0.1233/unit (up 12.3% YoY), representing 42% of our full year 2021E DPU estimate.
