Perennial China Retail Trust

Perennial China Retail Trust: Possible play in the future? Following CMA’s run-up.

Recall Kim Eng’s selling pts today on CMA, citing that as more of grp’s malls become stabilized, expect CMA’s earnings to grow at 18% CAGR over the next five years, adding that CMA’s exposure to China is often misunderstood as China has always been a medium- to long-term objective, considering that most of its malls there are still not completed or stabilised, as was communicated during its IPO.

Add that overtime, the value proposition of its China portfolio will become more evident and compelling as more malls contribute more meaningfully to its NPI. CMA’s current share price suggests that the market has written off its China exposure.

Note that the above catalysts sounds similar for Perennial Trust, which has been trying to expand its asset base at an attractive price vs latest valuations by other retail landlords and also strengthen its retail presence and build its tenant network in Chengdu.

Post acquisition, Chengdu will account for about 41% of grp’s attributable GFA. DBSV also believe that investors will be able to enjoy a strong total return derived from NAV growth as well as yield when its malls are gradually developed and ramped up. At the current share price, the market is valuing PCRT’s existing portfolio at below replacement cost, at Rmb6,320psm. DBSV has TP of $0.84.

Also recall that Wilmar’s CEO Kuok Khoon Hong (director of PCRT), had actively accumulated the stock in open mkt from $0.52 down to $0.39 few mths ago, his last purchase was around $0.46, while notahle investors like Alan Wang are stake holders in PCRT.