EC World Reit    Last:0.28   -

Hidden Gem of e-Commerce REIT related to Alibaba

https://www.theguardian.com/world/2020/jan/23/coronavirus-panic-and-anger-in-wuhan-as-china-orders-city-into-lockdown

 

Wuhan virus impacted operation ?

laksaman57      ( Date: 03-Dec-2019 20:05) Posted: " .....ECW completed its maiden acquisition of Wuhan Meiluote, bringing the total number of assets in its portfolio to seven. Wuhan Meiluote is a set of e-commerce properties located in Wuhan which is currently leased out to two of China&rsquo s e-commerce giants, JD and Dang Dang." laksaman57      ( Date: 03-Dec-2019 17:22) Posted: https://www.asiaone.com/digital/chinese-online-retailers-scramble-open-more-physical-stores " After experimenting with these products, consumers can scan a quick response code to buy and have items delivered to their homes by JD Logistics, the logistics arm of JD, usually within 24 hours or they can complete their purchase on-site and carry home in-stock products immediately. More than 30,000 customers had visited the store as of 12 am on Nov 11, with sales revenue surpassing 10 million yuan ($1.4 million) within an hour of the store opening, according to JD."

 

" .....ECW completed its maiden acquisition of Wuhan Meiluote, bringing the total number of assets in its portfolio to seven. Wuhan Meiluote is a set of e-commerce properties located in Wuhan which is currently leased out to two of China&rsquo s e-commerce giants, JD and Dang Dang."

laksaman57      ( Date: 03-Dec-2019 17:22) Posted: https://www.asiaone.com/digital/chinese-online-retailers-scramble-open-more-physical-stores " After experimenting with these products, consumers can scan a quick response code to buy and have items delivered to their homes by JD Logistics, the logistics arm of JD, usually within 24 hours or they can complete their purchase on-site and carry home in-stock products immediately. More than 30,000 customers had visited the store as of 12 am on Nov 11, with sales revenue surpassing 10 million yuan ($1.4 million) within an hour of the store opening, according to JD."

 

Agreed on this very important point. The thing abt ec World is,... I don' t know why,.. they keep getting hit by the exchange rate issue. Iread in their financial statements that they did do hedging, butstill their dpu in SGD keeps dropping yoy in spite of their distributable income and ' associated dpu' in RMB keeps growing.

If we look at Sasseur REIT, the hedging they have performed is effective.

chubbybastard      ( Date: 13-Nov-2019 11:06) Posted: That is not the concern. Even with 90% div, the yields are still solid. My fear is the continued devaluation of the chinese yuan against SGD which will wipe out all profits in the medium term at least  Calmroom      ( Date: 10-Nov-2019 22:46) Posted: This reit was listed in 2016. Worried mgmt could guide to cut payout from current 100% to a more normal 90% just like other reits quite soon. If this happens, could share price adjust to abt 0.66 to restore an 8% yield? I also like this reit but understand it cannot keep paying out 100% as dividends forever.

 

https://www.asiaone.com/digital/chinese-online-retailers-scramble-open-more-physical-stores

 

That is not the concern. Even with 90% div, the yields are still solid. My fear is the continued devaluation of the chinese yuan against SGD which will wipe out all profits in the medium term at least 

Calmroom      ( Date: 10-Nov-2019 22:46) Posted: This reit was listed in 2016. Worried mgmt could guide to cut payout from current 100% to a more normal 90% just like other reits quite soon. If this happens, could share price adjust to abt 0.66 to restore an 8% yield? I also like this reit but understand it cannot keep paying out 100% as dividends forever.

 

E-commerce growing. Good for EC World
Retail shopping drying. BHG retail latest dpu clashed 35%.
https://www.reitsweek.com/2019/11/bhg-retail-reit-reports-35-fall-in-dpu-for-3q-2019.html

 

Next few weeks, EC World warehouses will be dealing with huge surge in volume from 11.11 deliveries. Thats why i think their specialised logistics with automation designed for ecommerce will do well. Its not easy to just move to another logistics provider. You cannot just setup another empty warehouse, throw in lots of manpower, track millions of individual parcels, etc. The tenants will be sticky to EC World for the watehouse services.

Probably the sponsor will build or acquire more warehouses, setup the logistics, and acquire such tenants, then sell into the REIT. With the sale, sponsor gets capital available to acquire more logistics assets. That is what REIT sponsors meant by capital recycling. Tenants will need more of such unique logistic as ecommerce grows. REIT unitholders are interested in the regular payout that REIT structure provides. So a win-win for all parties.

laksaman57      ( Date: 11-Nov-2019 21:53) Posted: https://www.scmp.com/tech/e-commerce/article/3037137/chinese-consumers-spend-us1-billion-first-minute-alibabas-singles "Chinese consumers break last year?s Singles? Day record with 213.5 billion yuan in 16.5 hours"

 

https://www.scmp.com/tech/e-commerce/article/3037137/chinese-consumers-spend-us1-billion-first-minute-alibabas-singles

"Chinese consumers break last year?s Singles? Day record with 213.5 billion yuan in 16.5 hours"

 

If the distributable income has risen by 10% from 2016 till 2019, then even if the payout ratio is reduced to 90%, the dpu can be maintained if the number of units has not grown drastically.

Calmroom      ( Date: 10-Nov-2019 22:46) Posted: This reit was listed in 2016. Worried mgmt could guide to cut payout from current 100% to a more normal 90% just like other reits quite soon. If this happens, could share price adjust to abt 0.66 to restore an 8% yield? I also like this reit but understand it cannot keep paying out 100% as dividends forever.

 

This reit was listed in 2016. Worried mgmt could guide to cut payout from current 100%
to a more normal 90% just like other reits quite soon. If this happens, could share price
adjust to abt 0.66 to restore an 8% yield? I also like this reit but understand it
cannot keep paying out 100% as dividends forever. 

 

Tq bro,... Actually, the 2.25% rental increase is quite rare there. I recalle seeing in the new lease agmts in the beginning of this year saying many of the leases renewed would not have rental increase for the first 2 to 3 years, but subsequently, may have something like this 2.25% increase from the 4th year onwards. Very limited positive rental reversion here.

If the property expenses or interest cost gets jacked-up after the first year, it will hit our net property income and/or our distributable income. This may translate into lower dpu.

cmengchan      ( Date: 10-Nov-2019 01:47) Posted: Stated in their presentation slides... rents increases 2.25% annually. Average lease duration committed is now 4.8 years.  Improve WALE (by Gross Revenue) from 1.8 years as at 31 March 2019 to 4.8 years (post transaction and taking into account the New Approved Master Lease Agreements)  Embedded organic growth with annual rental escalation of 2.25%  Provides income viability and stability with predictable cash flow chengwh1      ( Date: 10-Nov-2019 00:25) Posted: Actually,.. a lowered dpu amt in SGD can happen for years, and knowing the RMB, this can be depressed, whether ' intentionally' , or due to mkt forces. It' s good to know there is a fixed component to the rental that needs to be paid by the tenants. Where is the information to this, bro ? Can you kindly point out to me where to read pls

 

Stated in their presentation slides... rents increases 2.25% annually. Average lease duration committed is now 4.8 years.

 Improve WALE (by Gross Revenue) from 1.8 years as at 31 March 2019 to 4.8 years (post transaction and taking into account the New Approved Master Lease Agreements)
 Embedded organic growth with annual rental escalation of 2.25%
 Provides income viability and stability with predictable cash flow

chengwh1      ( Date: 10-Nov-2019 00:25) Posted: Actually,.. a lowered dpu amt in SGD can happen for years, and knowing the RMB, this can be depressed, whether ' intentionally' , or due to mkt forces. It' s good to know there is a fixed component to the rental that needs to be paid by the tenants. Where is the information to this, bro ? Can you kindly point out to me where to read pls? cmengchan      ( Date: 09-Nov-2019 20:41) Posted: I don't think its operations are affected by the trade wars. Ec World serves 100% domestic market. Key impact will be the Yuan currency weakening and probably some weakness in domestic spending due to trade war uncertainties. However their rental is fixed already even if the tenants business decreases. DPU downside protected, but will not enjoy much DPU upside either. So, I believe their DPU will be relatively stable for next few years. I think of EC World more like bonds with fixed coupon payouts

 

Actually,.. a lowered dpu amt in SGD can happen for years, and knowing the RMB, this can be depressed, whether ' intentionally' , or due to mkt forces.

It' s good to know there is a fixed component to the rental that needs to be paid by the tenants. Where is the information to this, bro ? Can you kindly point out to me where to read pls?

cmengchan      ( Date: 09-Nov-2019 20:41) Posted: I don't think its operations are affected by the trade wars. Ec World serves 100% domestic market. Key impact will be the Yuan currency weakening and probably some weakness in domestic spending due to trade war uncertainties. However their rental is fixed already even if the tenants business decreases. DPU downside protected, but will not enjoy much DPU upside either. So, I believe their DPU will be relatively stable for next few years. I think of EC World more like bonds with fixed coupon payouts. jamesng      ( Date: 09-Nov-2019 18:17) Posted: Am holding this and adding when price drop. If US China trade war settle, think rmb will climb and share price of this reit will do well....

 

I don't think its operations are affected by the trade wars. Ec World serves 100% domestic market. Key impact will be the Yuan currency weakening and probably some weakness in domestic spending due to trade war uncertainties. However their rental is fixed already even if the tenants business decreases. DPU downside protected, but will not enjoy much DPU upside either. So, I believe their DPU will be relatively stable for next few years. I think of EC World more like bonds with fixed coupon payouts.

jamesng      ( Date: 09-Nov-2019 18:17) Posted: Am holding this and adding when price drop. If US China trade war settle, think rmb will climb and share price of this reit will do well..... cmengchan      ( Date: 09-Nov-2019 16:57) Posted: This article is good. There was a tour and able to see the operations. http://www.probutterfly.com/blog/a-day-visit-to-ec-world-reit-s-properties

 

Should go back up in 4Q 

cmengchan      ( Date: 08-Nov-2019 07:10) Posted: DPU 1.489 cents.

 

This round dpu was lower bcos the contribution from newly acquired Fuzhou E-commerce have not fully flow in. 4Q19 will see its full contribution. Besterest 

chengwh1      ( Date: 09-Nov-2019 13:59) Posted: If we take 1.489c x 4, the result is 5.956c. At 5.956c, the yield at a price of 73c is still at a respectable 8.10%. However, the risks are :- 1) will this ' low estd' dpu be able to hold ? We can se the dpu is on a downtrend as the quarters go by,.. I believe the reason is mainly because of the weak RMB. Sure, there is a technical timing difference issue in the report now, but how much can the dpu recover in the next quarter ? 2) this is a timebomb, at any time if any institution feels the risk is too high, they will sell first. Then we will be caught holding the ' baby in our hands' . I' m really keen to buy this REIT,... frankly I think the mgmt is very help, and very proactive in engaging investors. They even reply investors emails on weekends.   cmengchan      ( Date: 08-Nov-2019 07:10) Posted: DPU 1.489 cents.

 

Am holding this and adding when price drop. If US China trade war settle, think rmb will climb and share price of this reit will do well.....

cmengchan      ( Date: 09-Nov-2019 16:57) Posted: This article is good. There was a tour and able to see the operations. http://www.probutterfly.com/blog/a-day-visit-to-ec-world-reit-s-properties

 

This article is good. There was a tour and able to see the operations.

http://www.probutterfly.com/blog/a-day-visit-to-ec-world-reit-s-properties

 

If we take 1.489c x 4, the result is 5.956c. At 5.956c, the yield at a price of 73c is still at a respectable 8.10%. However, the risks are :-
1) will this ' low estd' dpu be able to hold ? We can se the dpu is on a downtrend as the quarters go by,.. I believe the reason is mainly because of the weak RMB. Sure, there is a technical timing difference issue in the report now, but how much can the dpu recover in the next quarter ?
2) this is a timebomb, at any time if any institution feels the risk is too high, they will sell first. Then we will be caught holding the ' baby in our hands' .

I' m really keen to buy this REIT,... frankly I think the mgmt is very help, and very proactive in engaging investors. They even reply investors emails on weekends.
 

cmengchan      ( Date: 08-Nov-2019 07:10) Posted: DPU 1.489 cents.