Thailand Company Focus Crystal Retail Growth Leasehold Property Fund Bloomberg: CRYSTAL TB | Reuters: CRYSTALu.BK Refer to important disclosures at the end of this report DBS Group Research . Equity 8 Oct 2019
BUY Solid high yields play (Initiating Coverage) • A retail property fund that aims to convert into a REIT, Last Traded Price ( 7 Oct 2019): Bt9.70 (SET : 1,613.71) backed by a 179% increase in fund size to Bt11.3bn Price Target 12-mth: Bt10.80 (11% upside) • Initial investment in two projects of Bt4bn and investing in
eight more projects of Bt7.3bn by end-4Q19, giving a DPU Potential Catalyst: New assets acquisition, rental reversion, occupancy accretion of Bt0.02 rates • Well-diversified portfolio in prime suburban areas with Analyst excellent tenant mix and growth potential Thailand Research Team +662 857 7823; [email protected] Nantika WIANGPHOEM, CFA +66 28577836 [email protected] • Initiating coverage with BUY rating and DCF-based TP of
Bt10.80, with a yield of 7.5% in FY20F and IRR of 8% Exciting conversion. Crystal Retail Growth Leasehold Property Fund Price Relative (CRYSTAL) is in the midst of converting into Bualuang K.E. Retail Real Estate Investment Trust (BKER). It had initially invested in two projects – the Crystal and the Crystal Design Center – worth Bt4bn with an NLA of 42,967 sqm. It is in the process of acquiring new assets (eight projects) of Bt7.3bn with an NLA of 96,366 sqm. This will enlarge the asset size by 179% to Bt11.3bn, with a total NLA of 139,333 sqm (100% leasehold). After the conversion, BKER will be jointly managed by co-REIT managers (K.E. Group and BBLAM). It will be able to gear up to 35% TAV and raise capital, providing it with opportunities to acquire new assets from various sponsors, Forecasts and Valuation FY Dec (Btm) 2017A 2018A 2019F 2020F including K.E. Group and the other existing sponsors. Gross Revenue 380 377 381 1,536 Net Property Inc 337 331 335 976 Differentiating with submarket position and diverse tenant mix. Total Return 291 288 290 634 BKER’s assets comprise community malls with high occupancy Distribution Inc 296 265 276 631 located in the prime suburban areas of Bangkok. As the REIT will EPU (Bt) 0.74 0.73 0.74 0.73 EPU Gth (%) nm (4) 62 (2) focus on the lifestyle experiences of customers in each asset, its DPU (Bt) 0.76 0.68 0.71 0.73 tenants mix will be determined discreetly and designed to meet DPU Gth (%) nm (11) 4 3 customers’ shopping preferences and behaviour. This would help NAV per shr (Bt) 10.7 10.5 10.4 10.1 PE (X) 20.4 21.2 13.1 13.3 differentiate BKER’s assets from other retails REITs, make its Distribution Yield (%) 7.8 7.0 7.3 7.5 operations more resilient, and give it a competitive edge during P/NAV (x) 0.9 0.9 0.9 1.0 times of economic uncertainties. Aggregate Leverage (%) 0.0 0.0 0.0 25.4 Valuation: ROAE (%) N/A 4.3 7.1 9.9 Our TP of Bt10.80 for BKER is based on DCF (WACC: 5.8%).
Key Risks to Our View: Consensus DPU (Bt): N/A N/A N/A Other Broker Recs: B: 0 S: 0 H: 0 A sluggish economy, digital disruption and new supply could weigh on BKER’s occupancy and rental reversion, thus affecting ICB Industry : Real Estate its earnings and distribution. ICB Sector: Equity Real Estate Investment (REITs) Principal Business: Retail REIT At A Glance Issued Capital (m shrs) 390 Mkt. Cap (Btm/US$m) 3,783 / 124 Major Shareholders (%) Source of all dataon this page: Company, DBSVTH, Bloomberg Finance L.P. Benchakij Pattana Co Ltd 20.7 Thailand Social Security Office 19.3 Kiat Sahamitr Co Ltd 10.0 Free Float (%) 40.8 3m Avg. Daily Val (US$m) 0.06
ed: CK/ sa: PY, CS Company Focus Crystal Retail Growth Leasehold Property Fund
SWOT Analysis
Strengths Weakness • Prime location: BKER’s assets are located in high-traffic • Rental reversion: As BKER’s assets come with high areas, i.e. residential areas of Bangkok. The assets come with occupancy rates, rental reversion should be a potential key transport systems and sizeable parking areas that help catalyst for its future earnings. The retail sector is currently provide customers with convenient accessibility. in a recovery stage from sluggish growth in the last couple of years. Nonetheless, we see benefits in BKER’s strategy of • Submarket differentiation: BKER’s retail assets are varied asset re-tenanting in sustaining its operations. (i.e. shopping centres, specialty malls, and community malls) and located mostly in the prime suburban areas of Bangkok. • Fund/REIT size: CRYSTAL’s fund size is relatively small Their focus on customers’ wellness and lifestyle would help (with a total fund size of Bt4bn. This can result in low trading differentiate BKER’s assets from other retails REITs and gives it liquidity and make it less attractive to large institutional a competitive edge. investors.
• Diverse tenant mix: BKER will focus on tenants with However, after its new asset acquisitions, BKER will experience in the retail arena with the utlimate aim of creating potentially be the 2nd largest REIT in terms of total asset value a diverse tenant mix. A suitable mix of tenants would help (TAV) in the retail REIT space in Thailand. Thus, we believe enhance customer experiences, boost shopper traffic, and this transaction would help enhance BKER’s liquidity and its lessen its reliance on any one particular achor tenant. attractiveness to institutional investors.
• High occupancy: The majority of BKER assets are located in prime suburban areas with high occupancy rate. This is due to consistently high shopper traffic and robust demand in the the residential and neighbouring areas for each of its assets. This can help cushion BKER against a sluggish economy.
• Experienced co-REIT and property managers: K.E. REIT Management (a subsidiary of K.E. Group) and BBL Asset Management (BBLAM) will be the co-REIT managers and K.E. Group will be main BKER’s property manager. K.E. Group and BBLAM boast high levels of experience and expertise in direct retail real estate and finance, respectively.
Opportunities Threats • New asset acquisitions: BKER currently has more than 37 • Economic volatility: Any negative developments arising properties in the pipeline for potential future acquisitions. from economic weakness may erode BKER’s revenue and Furthermore, there are ample acquisition candidates from earnings, thus weighing on its DPU. small- and medium- sized developers that wouuld give BKER the opportunity to enlarge its asset size. • Digital disruption: The advent of e-commerce has become a major threat to the retail business. However, BKER’s • Growth strategy: New supply will be limited in the medium strategy of adapting to customers’ changing lifestyles and tolong term due to the high barriers to entry for the retail preferences could allow the REIT to offer a unique customer business (i.e. scarcity of land and high land price in prime experience that would help attract/maintain shopper traffic locations). This should help stabilise the occupancy rate and at its malls. enable BKER to pursue positive rental reversions going forward.
Source: Company, DBSVTH
Page 2
Company Focus Crystal Retail Growth Leasehold Property Fund
Business overview
Conversion to REIT by end-2019. CRYSTAL Retail Growth BKER: Investment portfolio by assets value Leasehold Property Fund (CRYSTAL) is in the process of converting into Bualuang K.E. Retail Leasehold Real Estate Investment Trust (BKER), after its shareholders gave their approval at an annual general meeting on 30 April 2019. Initial assets , The new shares to be issued for the conversion are 36% Bt11,340m 390,000,000 units. The swap ratio for CRYSTAL to BKER New assets , shares is 1:1. The conversion is expected to be completed by 64% end-2019, running in parallel with its new asset acquisitions.
Note that the conversion may or may not subject to taxes as BKER will be the 1st property fund converting into a REIT after the conversion tax exemption period (the REIT manager is currently seeking the opinion of the Revenue Department, as Source: Company, DBSVTH the tax structure has yet to be finalised). BKER: Investment portfolio by NLA
Investment portfolio of up to Bt11.4bn. BKER will invest in a The Sammakorn The Sammakorn total 10 projects at the maximum acquisition value of Ratchapruek, 3% Place Rangsit, 2% Bt11,387m, which represents 6.7% premium the lower The Amorini, 4% appraised value by two independent appraisers. The I'm Park, 5% The Crystal Design The Scene , 5% Center The total NLA shall be 139,333 sqm. The top three largest (CDC), 26% assets by area are 1) the Crystal Design Center with 36,103 The Sammakorn Place Ramkhanhaeng sqm, 2) the Crystal Ekkamai-Ramindra with 30,778 sqm, and (West), 7% 139,333sqm 3) the Crystal Ratchapruek with 24,436 sqm, accounting for The Plearnary, 26%, 22%, and 18% of the total NLA, respectively. The Crystal 8% Ekkamai- The Crystal Ramindra, BKER has diverse tenants mix focusing on customers’ lifestyle Ratchapruek 22% and experiences; thus, its top three tenants by total NLA as of , 18% end-2Q19 are in Food & Beverage (19%), Home Decoration (18%), and Lifestyle (15%). Source: Company, DBSVTH Our assumption. We estimated BKER’s total investment portfolio to be Bt11,340m include the two initial assets of c.Bt4,055m – the Crystal (Ekkamai-Ramindra) and the Crystal Design Center – and the new assets of c.Bt7,285m. Note that the new asset acquisitions include the expanded areas, the lease extension of the initial assets, and eight new projects.
Page 3
Company Focus Crystal Retail Growth Leasehold Property Fund
Initial assets of Bt4bn. CRYSTAL has initially invested in the currently has more than 270 retail stores in Crystal (Ekkamai-Ramindra) and the Crystal Design Center that operation. have net asset value of Bt4,070m (as of end-2Q19) and NLA of 42,967 sqm (100% leasehold). Its OR stood at 94% with an ARR of Bt653/sqm/month as of 6M19. This mall’s asset value 1) The Crystal is located on 64/98-99 Praditmanutham was Bt2,426m as of end-2Q19. Its appraised value by Road, Lat Phrao sub-district, Lat Phrao district, KTAC Appraisal and Service Co., Ltd for BKER’s Bangkok. CRYSTAL has invested in the leasehold maximum investment is up to Bt2,510m. Asset right of the Crystal’s land and building, with an NLA Sponsor. K.E. Group. of 13,118 sqm (as of end-2Q19). The remaining lease period is 23.4 years, expiring on 23 Jun 2043. Performance: The Crystal Design Center (CDC)
st It is the 1 community mall on Praditmanutham Road, 1,600 120% and adopts the California Contemporary concept. It 97% 97% 91% 94% comes with convenient road access from the CBD 1,200 area via the Ekkamai-Ramindra Expressway. The mall 80%
currently has more than 220 retail stores in 800 operation. 40% 400 705 687 Its OR stood at 96%, with an ARR of 614 653
Bt947/sqm/month as of 6M19. The Crystal’s asset - 0% value was Bt1,556m as of end-2Q19. Its appraised 2016 2017 2018 6M19 value by Ktac Appraisal and Service Co., Ltd. for ARR (Bt/sqm/month) OR (%) BKER’s maximum investment is up to Bt1,592m. Source: Company, DBSVTH Asset Sponsor. K.E. Group. New assets (1st investment) of c.Bt7.3bn. The total asset value Performance: The Crystal (Ekkamai-Ramindra) of its new investments with a total NLA of 96,366 sqm 1,600 120% (+124% NLA from initial assets) shall not exceed Bt7,285m 97% 96% 98% 96% (100% leasehold). The new assets comprise the expanded 1,200 areas and lease extension of its two initial assets, and eight 80% new assets, as follows: 800
40% 1,015 948 947 400 909 I) Initial assets of c.Bt2.6bn comprise investments in the expanded areas and the lease extension of the Crystal - 0% (Ekkamai-Ramindra) and the Crystal Design Center at 2016 2017 2018 6M19 appraised values of c.Bt2.2bn and c.Bt0.4bn, ARR (Bt/sqm/month) OR (%) respectively. Source: Company, DBSVTH
BKER will invest in i) the 30-year leasehold right of the 2) The Crystal Design Center is located on 1420-1 initial assets’ expanded area with an asset value of up to Praditmanutham Road, Klong Chan sub-district, Bang c.Bt2,180m, and ii) the extended lease period of each Kapi district, Bangkok. CRYSTAL has invested in the asset from 23.4 years to 30 years (expiring on 23 Jun leasehold right of the Crystal Design Center’s land 2049 with an asset value of up to c.Bt435m, as follows: and building, with an NLA of 29,849 sqm as of end-
2Q19. The remaining lease period is 23.7 years, The Crystal (Ekkamai-Ramindra)’s expanded expiring on 23 Jun 2043. Note that BKER’s area with an NLA of 17,660 sqm (+135% from investment will exclude some buildings (K.E. office, current NLA) at a value of up to c.Bt1,165m Convention hall, SCG, CDC ballroom, etc.). with a lease extension value of up to c.Bt180m.
This would result in total NLA (including The Crystal Design Center is located in the largest existing area) of 24,436 sqm. Its current OR design district in Southeast Asia, offering a host of stood at 98% with an ARR of home decorative, furniture, and design products, etc. Bt661/sqm/month as of 6M19. It comes with convenient road access from the CBD area via the Ekkamai-Ramindra Expressway. The mall
Page 4
Company Focus Crystal Retail Growth Leasehold Property Fund
Performance: The Crystal (Ekkamai-Ramindra) - Tenants mix: The Crystal Design Center – additional combined area
1,600 120% 98% 98% 98% 98% Vacants, 2%
1,200 80% Others, 11% 800 Lifestyle, 9% Home 40% decoration, 400 661 674 688 701 39%
- 0% 6M19 2020F 2021F 2022F ARR (Bt/sqm/month) OR (%) Source: Company, DBSVTH Supermarket, 39%
Tenants mix: The Crystal (Ekkamai-Ramindra) – additional area Source: Company, DBSVTH
Vacants, 3% II) New assets (eight projects) of c.Bt4.7bn. BKER will invest in eight new assets, with a total NLA of 72,510 sqm at a value of up to c.Bt4,670m, as follows: Others, 19% Lifestyle, 41% 3) The Crystal SB Ratchapruek is located on 555/9 Moo1 Ratchapruek Road, Bang Kanoon sub-district, Bang
Food & Kluay district, Nonthaburi province. BKER will invest Beverage, in the 23.4-year leasehold right of the Crystal SB 18% Ratchapruek, with an NLA of 24,436 sqm (not Fashion, including the SB showroom). 19%
It is a community mall jointly operated by K.E. Group Source: Company, DBSVTH and S.B. Group, and adopts the California Contemporary concept. It currently operates more The Crystal Design Center’s expanded area with than 200 retail stores with SF Cinema, Gourmet an NLA of 6,254 sqm (+21% from current NLA) Market and Fitness First among its anchor tenants. at a value of up to c.Bt1,015m, with a lease extension value of up to c.Bt255m. This would As of 6M19, its OR stood at 95% with an ARR of result in total NLA (including existing area) of Bt574/sqm/month. Its appraised value by KTAC 36,103 sqm. Its current OR stood at 94% with Appraisal and Service Co., Ltd and Edmund Tie & an ARR of Bt640/sqm/month as of 6M19. Company Co., Ltd. for BKER’s maximum investment is up to Bt1,710m. Assets sponsor. K.E. Group and Performance: The Crystal Design Center - combined S.B. Group.
1,600 120% 94% 94% 94% 94% 1,200 80%
800
40% 400 621 627 633 640
- 0% 6M19 2020F 2021F 2022F ARR (Bt/sqm/month) OR (%) Source: Company, DBSVTH
Page 5
Company Focus Crystal Retail Growth Leasehold Property Fund
Performance: The Crystal SB Ratchapruek Performance: The Amorini Mall
1,600 120% 1,600 120% 98% 98% 99% 97% 94% 93% 93% 95% 1,200 1,200 80% 80%
800 800
40% 40% 400 400 574 543 512 509 393 369 355 354 - 0% - 0% 2016 2017 2018 6M19 2016 2017 2018 6M19 ARR (Bt/sqm/month) OR (%) ARR (Bt/sqm/month) OR (%) Source: Company, DBSVTH Source: Company, DBSVTH
Tenants mix: The Crystal SB Ratchapruek Tenants mix: The Amorini Mall
Vacants, 4% Vacants, 4%
Food & Beverage, Others, 19% 23% Lifestyle, Food & 27% Beverage, Health & 42% Health & Beauty, 6% Beauty, 13% Supermarket, 29% Others, 33%
Source: Company, DBSVTH Source: Company, DBSVTH
4) The Amorini Mall is located on 1 Suan Siam Road, 5) The I’m Park @ Chula is located on 353 Chareon Khan Na Yao sub-district, Khan Na Yao district, Maung Road, Wang Mai sub-district, Pathumwan Bangkok. BKER will invest in the 30-year leasehold district, Bangkok. BKER will invest in the 14.9-year right of the Amorini, with an NLA of 5,092 sqm. leasehold right of the I’m Park, with an NLA of 6,572 sqm (excluding some areas on the underground floor It is a neighbourhood mall, with its blue & white with an NLA of 3,683 sqm). colours taking a page out of the Santorini, Greece concept. It will come with convenient rail access, It is a community mall located in the centre of CBD, thanks to its proximity to Nopparat Rajathanee MRT next to Chulalongkorn University and residence (i.e. Station (which is part of the Metro Pink Line slated to CU Terrace and CU i-House). It provides one-stop commence operations in 2021). It currently operates services and acts as a buffet hub to attract university more than 30 retail stores. students and office workers. It has convenient public transportation connections, thanks to its proximity to As of 6M19, its OR stood at 97% with an ARR of MRT and BTS (sky-train) stations. Bt354/sqm/month. Its appraised value by KTAC Appraisal and Service Co., Ltd and Edmund Tie & As of 6M19, its OR stood at 94% with an ARR of Company Co., Ltd. for BKER’s maximum investment Bt666/sqm/month. Its appraised value by KTAC is up to Bt320m. Asset sponsor. AMR Development Appraisal and Service Co., Ltd and Edmund Tie & Co., Ltd. Company for BKER’s maximum investment is up to Bt310m. Asset sponsor. Grand Uniland Co., Ltd.
Page 6
Company Focus Crystal Retail Growth Leasehold Property Fund
Performance: The I'm Park@ Chula Performance: The Plearnary Mall
1,600 120% 1,600 120%
92% 94% 89% 86% 89% 86% 1,200 83% 1,200 83% 80% 80%
800 800
40% 40% 400 400 626 692 637 666 458 438 434 394 - 0% - 0% 2016 2017 2018 6M19 2016 2017 2018 6M19 ARR (Bt/sqm/month) OR (%) ARR (Bt/sqm/month) OR (%) Source: Company, DBSVTH Source: Company, DBSVTH
Tenants mix: The I'm Park@ Chula Tenants mix: The Plearnary Mall
Vacants, 5%
Vacants, 10% Food & Beverage, Others, 22% Food & 24% Beverage, 43% Others, 32% Health & Lifestyle, Beauty, 12% 18% Education, 18% Health & Beauty, 16%
Source: Company, DBSVTH Source: Company, DBSVTH
6) The Plearnary Mall is located on 242 244 and 246 7) The Sammakorn Place Ramkhamhaeng (West) is Watcharapol road, Tarang sub-district, Bang Khen located on 86 Ramkhamhaeng Road, Saphan Sung district, Bangkok. BKER will invest in the 30-year sub-district, Saphan Sung district, Bangkok. BKER will leasehold right of the Plearnary, with an NLA of invest in the 30-year leasehold right of the 11,353 sqm. Sammakorn Place Ramkhamhaeng, with an NLA of
10,339 sqm. Note that BKER will only invest in the It is a community mall that can lay claim to the title of West part of the project. being the first experience-centric shopping mall in
Thailand. It has a modern building design and comes It is a community mall that targets a wide range of with a playroom for children. It targets residents in customers, including families with children. It will the area (i.e. Prinsiri Village & Condominium) who come with convenient public transport access, thanks enjoys high purchasing power. to its proximity to Sammakorn MRT Station (which is
part of the Metro Orange Line slated to commence As of 6M19, its OR stood at 83% with an ARR of operations in 2023). It currently operates more than Bt394/sqm/month. Its appraised value by KTAC 50 retail stores. Appraisal and Service Co., Ltd and Edmund Tie &
Company Co., Ltd. for BKER’s maximum investment As of 6M19, its OR stood at 91% with an ARR of is up to Bt700m. Asset sponsor. The Plearnary Mall Bt443/sqm/month. Its appraised value by KTAC Co., Ltd (a subsidiary of Prinsiri Group). Appraisal and Service Co., Ltd and Edmund Tie & Company for BKER’s maximum investment is up to Bt545m. Asset sponsor. The Pure Sammakorn Development Co., Ltd. (a subsidiary of Sammakorn PCL.).
Page 7
Company Focus Crystal Retail Growth Leasehold Property Fund
Performance: The Sammakorn Place Ramkhamhaeng Performance: The Sammakorn Place Rangsit (West) 1,600 120% 1,600 120% 90% 84% 85% 88% 91% 1,200 84% 84% 84% 1,200 80% 80% 800 800 40% 40% 400 400 498 515 511 515 449 471 477 443 - 0% - 0% 2016 2017 2018 6M19 2016 2017 2018 6M19 ARR (Bt/sqm/month) OR (%) ARR (Bt/sqm/month) OR (%) Source: Company, DBSVTH Source: Company, DBSVTH
Tenants mix: The Sammakorn Place Ramkhamhaeng (West) Tenants mix: The Sammakorn Place Rangsit
Vacants, Vacants, 11% Health & 8% Beauty, 17% Supermarket, 28%
Supermarket Others, 31% , 16% Others, 34%
Lifestyle, Food & 17% Office, 22% Beverage, 16%
Source: Company, DBSVTH Source: Company, DBSVTH
8) The Sammakorn Place Rangsit is located on 819/1-3 9) The Sammakorn Place Ratchapruek is located 62/26- Rangsit-Nakhon Nayok Road, Prachathipatai sub- 32 Ratchapruek Road, Om Kret sub-district, Pak Kret district, Thanyaburi district, Pathumthani province. district, Nonthaburi province. BKER will invest in the BKER will invest in the 30-year leasehold right of 30-year leasehold right of the Sammakorn Place Sammakorn Place Rangsit, with and NLA of 3,413 Ratchapruek, with an NLA of 4,585 sqm, at a value sqm. Note that BKER will not invest in the Esso gas of up to Bt330m. station.
It is a neighbourhood mall that targets residential It is a neighbourhood mall that targets residential customers living in the Ratchapruek area which is customers living in the Rangsit-Pathumthani area. It is surrounded by villages and communities. It is a located in the same area as the Esso gas station and a convenient lifestyle-oriented shopping mall with local Revenue Department office (which is one of its spacious areas. tenants). This, coupled with the 24-hr MaxValue
Supermarket, could help boost the traffic at this As of 6M19, its OR stood at 94% with an ARR of property. Bt479/sqm/month. Its appraised value by KTAC
Appraisal and Service Co., Ltd and Edmund Tie & As of 6M19, its OR stood at 90% with an ARR of Company Co., Ltd. for BKER’s maximum investment Bt515/sqm/month. Its appraised value by KTAC is up to Bt330m. Asset sponsor. The Pure Sammakorn Appraisal and Service Co., Ltd and Edmund Tie & Development Co., Ltd. (a subsidiary of Sammakorn Company Co., Ltd. for BKER’s maximum investment is up to Bt230m. Asset sponsor. The Pure Sammakorn PCL.). Development Co., Ltd. (a subsidiary of Sammakorn
PCL.).
Page 8
Company Focus Crystal Retail Growth Leasehold Property Fund
Performance: The Sammakorn Place Ratchapruek Performance: The Scene Town in Town
1,600 120% 1,600 120% 97% 98% 94% 93% 92% 91% 93% 87% 1,200 1,200 80% 80%
800 800
40% 40% 400 400 623 618 617 645 489 483 481 479 - 0% - 0% 2016 2017 2018 6M19 2016 2017 2018 6M19 ARR (Bt/sqm/month) OR (%) ARR (Bt/sqm/month) OR (%) Source: Company, DBSVTH Source: Company, DBSVTH
Tenants mix: The Sammakorn Place Ratchapruek Tenants mix: The Scene Town in Town
Vacants, Supermarket, Vacants, 7% 8% 12% Supermarket, Others, 19% 32% Others, 22% Food & Beverage, Health & 39% Beauty, 11% Health & Food & Beauty, 19% Beverage, 31%
Source: Company, DBSVTH Source: Company, DBSVTH
New asset funding. CRYSTAL has appointed Baker Tilly 10) The Scene Town in Town is located on 1323 Soi Lat Corporate Advisory Services (Thailand) Co., Ltd. as a financial Phrao 94 (Panchamitra), Plubpla sub-district, advisory for its new asset acquisitions. It will raise capital by Wangthonglang district, Bangkok. BKER will invest in issuing new shares not exceeding 506,600,000 units to acquire the 25.3-year leasehold right of the Scene Town in the new assets, which will be offered to the following parties: Town, with an NLA of 6,662 sqm.
i) About 50% or more of total newly issued units It is a community mall located in the area called (excluding the newly issued units for conversion) shall be town-in-town, which is expanding to become a new offered to existing shareholders (Rights Offering) business area of Bangkok with home office buildings, ii) About 10% of total newly issued units (excluding the and organising and production houses. It is a mall newly issued units for conversion) shall be offered to with a new and modern C-shaped design with an in- related parties of the REIT (i.e. assets sponsors, lessee, door courtyard in the centre for holding events. sub-lessor and their affiliates).
iii) The remaining units after (i) and (ii) shall be offered to As of 6M19, its OR stood at 87% with an ARR of the public (Public Offering). Bt645/sqm/month. Its appraised value by KTAC Appraisal and Service Co., Ltd and Edmund Tie & In our model, we assume that BKER will raise additional capital Company Co., Ltd. for BKER’s maximum investment of Bt4,525m by issuing 476.3m new shares at Bt9.50, as well is up to Bt525m. Asset sponsor. The Fahbundarnsup as take on additional debts of Bt2,875m for its new asset Co., Ltd. acquisitions. Note that the capital-raising exercise will cover the issuance costs and up-front interest payments for BKER’s new shares and additional loans respectively.
Page 9
Company Focus Crystal Retail Growth Leasehold Property Fund
CRYSTAL, as a property fund, relies solely on cash funding BKER: Portfolio funding assumption (with no leverage). As a REIT, BKER is granted a total credit line of Bt4,505m, and we anticipate the REIT to draw down loans of Bt2,875m for its upcoming new asset acquisitions (1st 25% Debt/TAV investment) and the rest for its working capital and future investments. Debt This implies that BKER would have a gearing ratio of 25% debt 25% to TAV (vs. the REIT’s maximum gearing ratio of 35%), giving BKER sufficient debt headroom to acquire new assets in the Bt11,340m future (BKER currently has identified 37 potential assets in its pipeline). Equity 75%
Source: Company, DBSVTH
BKER: Asset Details
Appraisers Premium/ Max. (Discount) Lease over the Investment Project NLA sqm acquisition period lower value appraised value KTAC ETC Initial assets The Crystal Design Center - existing 23.7 29,849 2,510 N/A 2,510 N/A investment The Crystal (Ekkamai-Ramindra) - existing 23.7 13,118 1,592 N/A 1,592 N/A Total 23.7 42,967 4,102 4,102 The Crystal Design Center - new 30 6,254 994 960 1,015 5.7% Lease extension - - 279 240 255 6.3% The Crystal (Ekkamai-Ramindra) - new 30 17,660 1,102 1,100 1,165 5.9% Lease extension - - 185 170 180 5.9% The Crystal SB Ratchapruek 23.4 24,436 1,646 1,620 1,710 5.6%
New assets The Plearnary mall 30 11,353 650 670 700 7.7% (1st investment) The Sammakorn Place Ramkhanhaeng (West) 30 10,339 518 506 545 7.7% The Scene Town in Town 25.3 6,662 497 490 525 7.1% The I'm Park @ Chula 14.9 6,572 286 295 310 8.4% The Amorini Mall 30 5,092 298 291 320 10% The Sammakorn Ratchapruek 30 4,585 301 313 330 9.6% The Sammakorn Place Rangsit 30 3,413 218 211 230 9.0% Total 28.3 139,333 6,974 6,866 7,285 6.7%
Source: Company, DBSVTH
Page 10
Company Focus Crystal Retail Growth Leasehold Property Fund
The Crystal Ekkamai-Ramindra The Crystal Design Center
The Crystal Ratchapruek The Amorini Mall
The I’m Park @ Chula The Plearnary Mall
Source: Company, DBSVTH
Page 11
Company Focus Crystal Retail Growth Leasehold Property Fund
The Sammakorn Place Ramkamhaeng (West) The Sammakorn Place Rangsit
The Sammakorn Place Ratchapruek The Scene Town in Town
Source: Company, DBSVTH
Page 12
Company Focus Crystal Retail Growth Leasehold Property Fund
Investment Summary
Our DCF-based valuation TP of Bt10.80. We value BKER using this would also help boost the shopper traffic to BKER’s assets DCF-based valuation method (WACC: 5.8%) at Bt10.80. This by attracting other groups of customers in the neighbourhood. implies a potential upside of 11% for its current price of Bt9.60 and total returns of 19%. BKER: Assets type Type of asset BKER's Project Offering attractive yields. BKER offers attractive yields of 7.3% Specialty mall The Crystal Design Centre The Crystal (Ekkamai-Ramindra) in FY19F and 7.5% in 2020F, with an IRR of 8%. This provides Shopping center a decent premium over Thailand’s 10-year, 20-year, and 30- The Crystal SB Ratchapruek year government bond yields of 1.5%, 1.7%, and 1.8%, The Plearnary The Sammakorn Place Ramkhanhaeng (West) respectively. Community mall The Scene Town in Town
BKER: CRYTAL’s VS 10-year Govt Bond’s yield The I'm Park @ Chula The Amorini Mall % CRYSTAL's Yield Neighborhood mall The Sammakorn Ratchapruek 10 10-Year Govt Bond Yield The Sammakorn Place Rangsit 8 Source: Company, DBSVTH 6 Diverse tenant mix. BKER’s shopping centres and community 4 malls have a more diverse tenant mix and a higher proportion 2 of experience-centric retailers and restaurants than department
- stores and other enclosed malls (that focus more on shops selling products, i.e. fashion outlets and apparel retailers).
01-May-… 01-May-… 01-May-… 01-May-…
01-May-… This arises from the property manager’s ability to customise its
01-Jan-15 01-Jan-16 01-Jan-17 01-Jan-18 01-Jan-19
01-Sep-16 01-Sep-17 01-Sep-18 01-Sep-19 01-Sep-15 tenant mix via re-tenanting to create the right proportion of Source: Company, DBSVTH tenant types, in line with the targeted customers’ preferences. The property manager could also re-zone, re-decorate and re- Assets in prime locations. BKER’s assets are located in high- arrange a property’s layout to attract more customers. traffic areas, i.e. dense residential areas of Bangkok. The assets also come with convenient access for personal vehicles, thanks BKER’s property managers are focusing on building the right to their large parking spaces. Their accessibility can be further proportion of tenant type for each of its assets. The focus is enhanced by their proximity to other key public transportation more on meeting the lifestyle and experience needs of the systems, i.e. the nearby BTS (sky-train) and MRT (metro) customers and they have been filling each property with the stations currently under construction are expected to following key tenants – well-known restaurants, supermarkets commence operations in 2022-2023. This would provide and fitness franchises, including a number of global retail public transportation convenience and accessibility for BKER’s chains, e.g. Starbucks. malls. BKER: Tenants mix by NLA Differentiated by tenant selection. BKER’s assets consist of
retails properties in various types and sizes, i.e. shopping Vacant, centres, specialty malls, community malls, and neighbourhood 5% Food & Beverage , Others , 12% malls. These malls focus on offering a variety of wellness 19% services and lifestyle experiences to customers. Education , 5%
The tenants will undergo a discreet selection process by the Fashion , 6% 139,333sqm Home Decoration , REIT manager to match the concept/theme of BKER’s each Supermarket, 18% specific asset and to create a customer-friendly environment 10% within that mall. The selected tenants typically include a mix of Health & Lifestyle, restaurants, retail stores, fitness centres, and beauty clinics. Beauty, 11% 15%
This would allow BKER to meet its customers’ preference and Source: Company, DBSVTH differentiate its assets from other retail properties. Moreover,
Page 13
Company Focus Crystal Retail Growth Leasehold Property Fund
Its top three tenants by total NLA as of end-2Q19 are in Food BKER: OR (%) assumptions by asset 2025F- 2040F & Beverage (19%), Home Decoration (18%), and Lifestyle 2020F-2024F (15%). This would help BKER to create another level of 2039F* onwards** The Crystal (Ekamai- 98% 98% 95% experience for its customers and boost shopper traffic for each Ramindra) property. Moreover, this would allow BKER to reduce its The Crystal Design 94% 94% 90% reliance on anchor tenants. Center (CDC) The Crystal Ratchapruek 94%-96% 94% 94% Events to provide supplemental income. Besides the main retail The Amorini Mall 97% 96% 95% business, BKER’s assets could generate event income to The I'm Park@ Chula 95% 90% N/A supplement its rental income. Event income includes fees for The Plearnary Mall 82%-90% 90% 90% The Sammakorn Place 90%-93% 93% 90% indoor/outdoor events, i.e. marketing campaigns, kiosks, Ramkhamhaeng parking spaces, etc. Such event income is slated to account for The Sammakorn Place 95% 93% 90% 8-9% of BKER’s total revenue throughout the whole lease Rangsit The Sammakorn Place period. 94%-95% 95% 90% Ratchapruek The Scene Town in BKER: Revenue proportion in FY20F 95% 95% 95% Town * The I'm Park lease expiry in 2034 **The Crystal Ratchapruek expiry in 2043 and the Scene Town in Town expiry in 2044 Source: DBSVTH Utility income Rising rental reversion. We anticipate the ARR growth for 32% BKER’s assets to remain flat in the short term due to the Rental current sluggish economic situation and digital disruption i.e. income 60% e-commerce business and online shopping etc. for the retail industry. Nonetheless, we expect retail sales to pick up in the Events income medium term as there will be limited future new supply in the 8% retail market. The new retail assets will be concentrated in the CBD areas (vs. BKER’s asset locations in prime non-CBD or Note: % of total revenue of c.Bt1,536 in FY20F Source: Company, DBSVTH suburban areas).
We believe that event revenue is another type of income that We therefore see opportunities for BKER to ratchet up its could grow along with rising customer traffic in each location. rental reversion. Furthermore, we believe BKER’s shopping Thus, this could work in BKER’s favour as steady demand and centres, specialty malls and community malls are less affected traffic levels for each of its assets would help support the by the digital disruption impacts. This is due to their prime growth of its supplemental revenue. locations in the suburban areas that can help ensure constant demand from nearby customers. High OR by submarket positioning. Based on historical data, BKER: ARR growth (%) assumptions by asset community malls stand a better chance in maintaining their 2020F- 2025F- 2040F 2024F 2039F* onwards** high occupancy rates compared to other types of malls, such as The Crystal (Ekamai- 2% 2% 1% enclosed malls, on-site retail outlets, and department stores. Ramindra) As the majority of BKER’s assets are located in suburban areas The Crystal Design Center 1% 1% 1% of Bangkok, they are more likely to maintain high occupancy (CDC) rates compared to those in the city centre, downtown and The Crystal Ratchapruek 2%-3% 2% 1% The Amorini Mall 1% 1% 1% midtown. Recall that BKER’s customers are mostly residents The I'm Park@ Chula 0%-1% 1% N/A who live in the vicinity, coupled with some office workers in the The Plearnary Mall 0%-1% 1% 1% immediate and neighbourhood areas that can help sustain the The Sammakorn Place 1% 1% 1% demand for each of its malls. Ramkhamhaeng The Sammakorn Place 1% 1% 1% Moreover, the bulk of BKER’s customers also command Rangsit The Sammakorn Place moderate to high purchasing power. This would help ensure 0%-1% 1% 1% Ratchapruek resilient demand for the tenants of its malls even when the The Scene Town in Town 3% 3% 3% economy is sluggish, thus resulting in stable revenue and * The I'm Park lease expiry in 2034 earnings for BKER at all times. **The Crystal Ratchapruek expiry in 2043 and the Scene Town in Town expiry in 2044 Source: DBSVTH
Page 14
Company Focus Crystal Retail Growth Leasehold Property Fund
New asset pipeline and strategic investments. BKER currently BKER: Portfolio performance as of 6M19 has more than 37 properties in its pipeline for potential future 1,600 120% acquisitions (excluding the upcoming asset acquisitions in 2019). BKER’s property managers have established the 92% 93% 93% 94% 1,200 following criteria in selecting assets for investment, both in 80% Thailand and overseas: 800 i) Location in prime and strong submarket areas (with high 40% 400 accessibility and traffic flow) 593 563 584 578 ii) Well-performing assets with high occupancy/rental rates - 0% iii) NLA of more than 5,000 sqm (with parking space and 2016 2017 2018 6M19 convenience) ARR (Bt/sqm/month) OR (%) iv) Assets with established tenants and healthy retail sales Source: Company, DBSVTH v) Asset location in catchment areas with robust retail BKER: Total leasable retail area in Bangkok as of 2Q19 demand and customers boasting moderate to high purchasing power
Growth strategy. BKER’s property managers aim to grow the REIT’s size organically as well as inorganically. Currently, the tenants incur relatively low costs (at discounted rental rates) Major Small and developers medium size due to the oversupply in the market, coupled with a sluggish 46% developers* economy. 54%
However, there will be limited new supply in the medium to long term due to the high barriers to entry for the retail business (i.e. scarcity of land for development and high land values in prime areas). The new supply will be mostly located in *BKER’s assets make up 3% in 54% of small and medium size the CBD area while BKER’s assets are in prime suburban areas. developers This should allow BKER to pursue rental reversion Source: CBRE, DBSVTH opportunities, as it is expected to enjoy solid occupancy rates Highly experienced co-REIT and property managers. BKER’s over time. assets will be co-managed by K.E. RM and BBLAM that can
offer expertise and experience in their areas of specialty, i.e. Furthermore, there is the potential for similar assets to emerge retail real estate and finance management, respectively. in the future, i.e. other developers do harbour plans to develop lifestyle centres and specialty malls (mostly small and medium- Both of them adopt the REIT management policy of proactively scale ones). These small and medium-scale assets account for investing in prime and well-performing assets (in terms of both c.54% (including BKER’s assets that make up 3%) of the total operational and financial aspects). Therefore, we believe the leasable retail space in Bangkok, while the remaining c.46% two REIT managers will enjoy ample synergies (capacity and are large-scale malls owned by major entities. This provides capability) in their collaboration for managing BKER’s BKER the opportunity to acquire such niche assets to enlarge investment assets. its asset size in the future.
BKER has also minimised any potential conflict of interest and maximize transparency by aligning the interests of management with unitholders. This will be achieved by the establishment of a joint investment committee that is responsible for key matters such as 1) governing REIT’s management policy and investment strategy, 2) approving investments in new projects, and 3) supervising the asset and risk management plan, etc.
Page 15
Company Focus Crystal Retail Growth Leasehold Property Fund
Industry Outlook – Retail Sector
High occupancy maintained and sales surged. In 2Q19, the Industry: Retail market – new supply
total retail space supply stood at 7.72m sqm (+3.5% y-o-y, (sqm) flat q-o-q). The occupancy rate (OR) of the overall retail sector
has been on the rise since hitting a trough of 92.7% at end- 2022 563,337 2015. The OR stood at 94.2% in 2Q19, rising from 93.7% in 2Q18 and 93.6% in 1Q19. This was mainly due to the new 2021 66,178 retail space entering the market with nearly full occupancy.
2020 140,760 This implies that there are retailers that still see the need for physical stores rather than putting their business fully online. Given the fact that physical stores provide a vastly superior 2019 336,062 customer experience, consistent demand is expected for each 0 100,000 200,000 300,000 400,000 500,000 600,000 of BKER’s assets. Source: CBRE, DBSVTH
Industry: Retail market - demand & supply Trend. The retail sector is currently in the repositioning phase sqm 9,000,000 100% via renovating, re-tenanting and re-zoning spaces to provide 8,000,000 98% retail experiences and services that cater to the changing 7,000,000 96% lifestyles and preferences of consumers. In the meantime, the 6,000,000 94% retail sector is also constantly adapting its business models in 92% 5,000,000 line with the digitalisation trend, i.e. online marketing, 90% 4,000,000 88% advertising and sale. 3,000,000 86% 2,000,000 84% The physical retail channel also leverages promotions or 1,000,000 82% discounts offered by online channels and delivery platforms,
- 80% and digital banking. Furthermore, each individual retail store
2000 2005 2011 2016 2001 2002 2003 2004 2006 2007 2008 2009 2010 2012 2013 2014 2015 2017 2018 2Q19 is differentiating itself from others by creating specific marketing/sale campaigns, i.e. offering on-top and after- sale Supply (Sqm) Demand (Sqm) Occupancy (RHS) services to its customers.
Source: CBRE, DBSVTH Outlook. Going forward, we believe the physical retail sector
will operate hand in hand with the digital platforms, thus Lower new supply. There are 22 new projects with a total offsetting any adverse impact of digital disruption. We expect NLA of 336,062 sqm to be launched in 2019. Of the 22, ten Thailand’s retail sector to reach such a stage in the short to projects with a total NLA of 147,043 sqm – including the medium term, thus boosting BKER’s rental reversion, Market Bangkok by Platinum Group, Donki Mall, the Hyatt occupancy, and ultimately earnings. Regency Bangkok, MS Siam Tower, Marketplace Dusit, 101
The Third Place (Whizdom 101), Baan KamPu, and Cosmo Furthermore, there will be less new supply for the retail Bazaar – were launched in 1Q19 and Bambini Villa and People property market in the upcoming years (what more with new Park – were launched in 2Q19. supply being concentrated in the CBD area). We therefore
expect the competition for the existing retail players to ease, Nonetheless, only 17 new retail projects with a total NLA of which will bode well for their earnings stability and growth c.770,275 sqm are slated to be launched over 2020-2022 potential. (including mixed-use projects). Therefore, we can expect new
supply of retail space to taper off in the next few years. We
believe this would give rise to opportunities for existing retails to raise their rental rates.
Page 16
Company Focus Crystal Retail Growth Leasehold Property Fund
Valuation & Peers Comparison
DCF- valuation of Bt10.80 per share. Our DCF valuation arrives FY20F DPU accretion. We anticipate BKER’s earnings to grow at a target price of Bt10.80 for CRYSTAL. The REIT’s potential from Bt290m with a DPU of Bt0.71 (excluding the new assets upside of 11% to the current share price and expected yield of to be acquired and new shares to be issued) to Bt631m with a 7.3% in FY19F and 7.5% in FY20F offer total potential returns DPU of Bt0.73 (including the new assets and new shares). This of 21%. Our DCF model is based on a WACC of 5.8%, provides a summary of the DPU accretion for BKER post-new assuming cost of debt of 4.5% and cost of equity of 6.2%. We asset acquisitions. assume OR and ARR growth for each of BKER’s asset based on its locations, traffic, and competition (see Key Assumptions CAPEX reserves. We have already factored in CAPEX reserves table on the next page). for renovations and annual maintenance costs. We assume that BKER has allocated CAPEX reserves of Bt16m in FY20F, based
on proforma numbers, as some of the assets have already New asset acquisition in 4Q19. We expect CRYSTAL to undergone renovations prior to BKER’s planned acquisition. complete its new asset acquisitions by end-4Q19, with revenue Going forward, we assume that its annual CAPEX reserves will contribution from these new assets to filter through from 1Q20 be 3% p.a. of its net investment income from FY21-FY49 onwards. In our forecast, we assume that the new assets of (throughout BKER’s lease period). Bt7,285m [according to Critical Factors section of initiation report] will be funded by capital raising and additional debts. Recommend BUY. BKER offers generous distribution yields of 7.3% in FY19F, and 7.5% in FY20F-FY21F, with an IRR of 8%.
BKER’s FY20F yield is also attractive compared to the average We assume that BKER will issue 476.3m new shares at Bt9.50 retails REIT subsector yields of 4.6% in FY20F, offering a decent to raise proceeds of Bt4,525m (including issuance costs of premium of 3%. Bt111.5m and up-front interest payments of Bt3m, based on BKER’s proforma financial statements), as well as take on BKER: Distribution yields VS peers in FY20F additional debts of Bt2,875m to fund the new asset acquisitions. 10.0%
Total asset value of c.Bt11.3bn. Based on our assumptions that 8.0% 7.5% take into account its REIT conversion and new asset 6.0% acquisitions, we anticipate BKER’s total number of shares to 6.0% 4.9% increase by 122% from 390m (conversion of CRYSTAL’s units 4.6% of shares into BKER’s) to c.866.3m. Its total outstanding debts 4.0% 3.6% are expected at Bt2,875m (with no leverage before the conversion of CRYSTAL to BKER). Its total asset value is 2.0% expected to increase from Bt4,070m (NAV as of 2Q19) to c.Bt11,340m (+179%). 0.0% CRYSTAL FUTUREPF CPNREIT POPF/REIT's TLGF
Note: using last traded price as of 8 Oct 2019 Source: DBSVTH
BKER: New assets funding Pre-transaction (CRYSTAL) Maximum value Post-transaction* (BKER) Total assets value (TAV) (Bt m) 3982* 11,387 c.11,340 New assets (Bt m) 7,285 c.7,285 Debt (Bt m) N/A 2,875 c.2,875 Debt/TAV N/A N/A c.25.4% No. of new shares (m units) 390 506.6 c.866.3 Offering price (Bt/unit) N/A 9.5 (minimum value) N/A
Net Asset Value 4,070 c.8,723 NAV per unit 10.4 c.10.1 *based on DBSVTH’s forecast Source: Company, DBSVTH
Page 17
Company Focus Crystal Retail Growth Leasehold Property Fund
BKER: Key Assumptions FY Dec 2020F-2024F 2025F-2039F* 2040F onwards** The Crystal (Ekamai-Ramindra) OR 98% 98% 95% ADR growth 2% 2% 1% The Crystal Design Center (CDC) OR 94% 94% 90% ADR growth 1% 1% 1% The Crystal Ratchapruek OR 94%-96% 94% 94% ADR growth 2%-3% 2% 1% The Amorini Mall OR 97% 96% 95% ADR growth 1% 1% 1% The I'm Park@ Chula OR 95% 90% N/A ADR growth 0%-1% 1% N/A The Plearnary Mall OR 82%-90% 90% 90% ADR growth 0%-1% 1% 1% The Sammakorn Place Ramkhamhaeng (SPRM) OR 90%-93% 93% 90% ADR growth 1% 1% 1% The Sammakorn Place Rangsit (SPRS) OR 95% 93% 90% ADR growth 1% 1% 1% The Sammakorn Place Ratchapruek (SPRP) OR 94%-95% 95% 90% ADR growth 0%-1% 1% 1% The Scene Town in Town OR 95% 95% 95% ADR growth 3% 3% 3%
* The I'm Park lease expiry in 2034 **The Crystal Ratchapruek expiry in 2043 and the Scene Town in Town expiry in 2044 Source: Company, DBSVTH
Page 18
Company Focus Crystal Retail Growth Leasehold Property Fund
Key Risks
Concerns over I’m Park project. We have conducted site visits to all of BKER’s assets (10 projects). After this tour, we Nonetheless, BKER’s assets are positioned as mid-range to harboured some concerns for the I’m Park asset that comes high-end malls in the prime CBD (I’m Park) and suburban areas with an NLA of 6,572 sqm (accounting for c.5% of BKER’s of Bangkok. Each of its assets offers unique lifestyle-oriented total NLA of 139,333 sqm). The asset’s maximum acquisition experiences to its customers via a carefully selected tenant mix. value stands at c.Bt310m, accounting for 2.7% of BKER’s total Thus, we believe that BKER would be less vulnerable to an asset value (TAV) of Bt11.3bn. uncertain economic environment.
As of 6M19, the asset’s OR stood at 92% with an ARR of Furthermore, the retail sector – encompassing department Bt637/sqm/month. As Samyan Mirttown (an enclosed mall) stores, enclosed malls, shopping centres and community malls opened its doors on 20 Sep 2019, the I’m Park’s shopper traffic – has high barriers to entry. This is due to the fact that retail could be diverted – thus impacting the latter’s OR and ARR. space in prime locations comes with high land prices and such land is mostly occupied by other businesses such as hospitality. However, we believe that the REIT’s strategy of re-tenanting Thus, this would help make the competition among the and matching the tenancy mix with customers’ changing existing retail space players less intense in prime locations, i.e. demand can lend a hand in maintaining the I’m Park’s current CBD and dense residential areas. shopper traffic. Also, the mall has also responded swiftly to lifestyle changes by offering more sports retail outlets to serve Digital disruption. The continued growth of e-commerce and the needs of runners at Chula Park as well as tutoring schools other online businesses could pose a threat to the physical for students, undergraduates, etc. retail business. For example, as online stores and market platforms no longer require physical stores, customer traffic in At the end of the day, given the asset size and value of the I’m shopping centres, community malls, and other retails Park, any setback for the mall’s operations will have a limited properties could decline. impact on BKER. This is due to the mall’s revenue contribution accounting for only 5.5% of the REIT’s total revenue (assuming However, some retail space operators have repositioned revenue of Bt51m in FY20F). The worst-case scenario, we themselves as providers of lifestyle-oriented experiences by assume OR of 50% for the I’m Park; this implies a drop of selecting the right tenants and renovating their buildings Bt0.02 for BKER’s DPU. inside/out. Thus, if their efforts bear fruit, they can attract even more customers, boost demand and shopper traffic, and BKER: Revenue contribution (%) by asset respond to the changing lifestyles and preferences of customers. The Sammakorn Place The Amorini, 2% The Sammakorn Place Ratchapruek, 3% Rangsit, 2% The Plearnary , 5% We believe that BKER’s strategy of re-tenanting and rezoning The I'm Park, 5% The Crystal retail space by focusing more on the food/beverage and (Ekamai- The Sammakorn Place Ramindra), 26% healthcare sectors will help boost its footfall and generate Ramkhamhaeng (West), 5% more sales for its tenants – as these sectors can attract more Bt925m customers living in the immediate neighbourhood and nearby The Scene, 5% areas. The Crystal Ratchapruek , The Crystal 18% Design Center New supply. The upcoming new retail space supply over 2019- (CDC), 28% 2022 will be concentrated in CBD areas; while BKER’s assets are mostly located in prime non-CBD or suburban areas. Thus, Source: Company, DBSVTH we anticipate that BKER will be less impacted by the new supply in terms of customer traffic and occupancy. Economic volatility. Economic uncertainty may take a toll on BKER’s OR and ARR, and this can be detrimental to its income Furthermore, in view of the high occupancy rates that BKER’s and earnings. In the past few years, we have seen the impact assets have enjoyed as well as the abundant experience of its of a sluggish economy on the rental reversions of the retail co-REIT and property managers, we believe that BKER will sector, i.e. low to negative ARR growth. This was mainly due to maintain its competitive edge arising from its submarket the efforts of retail space operators to maintain occupancy by positioning. lowering rental rates to stabilise their income.
Page 19
Company Focus Crystal Retail Growth Leasehold Property Fund
Critical Factors
Conversion to REIT. CRYSTAL is currently in the process of In our estimation, we assume a total new asset value of converting from a property fund into a REIT (i.e. from CRYSTAL c.Bt7,285m (including the lease extension value of the initial to BKER). The new shares to be issued for the conversion are assets of Bt435m). This will enlarge its asset size by 179% from 390m units (involving a share swap ratio of 1:1 for CRYSTAL to Bt4bn to Bt11.3bn. BKER’s NLA will increase by 124% from BKER). The conversion is expected to be completed by end- 42,967 sqm to 139,333 sqm. 2019, running in parallel with its new asset acquisitions. Rental reversion. We anticipate BKER’s ARR growth to BKER will also issue new shares with a ceiling of 506.6m units at accelerate in the short to medium term if and when economic an offer price of no less than Bt9.50 as capital raising for its growth picks up momentum. We have also factored in the retail new asset acquisitions. In our estimation, we assume BKER will sector’s transition phase to adapt to the digitalisation of the issue new shares of 476.3m units at the minimum offer price of retail sales. Bt9.50. We have also baked in the location and quality of each of This will result in a total new share issuance of Bt866.3m units BKER’s assets, on top of the limited new supply in the retail (including the units for conversion). The actual offer price could market. As a result, we expect a more relaxed competition be differed from our assumption at the minimum offer price landscape and more opportunities for BKER to raise its ARR. and this would result in lower number of shares and potential upside to our TP. We have carried out a sensitivity analysis for Furthermore, we have faith in the vast experience and the underlying two key factors – the new assets acquisition specialised expertise of BKER’s REIT and property managers (K.E. value and offer price – as follows: Group and BBLAM) in enhancing BKER’s rental reversion – from flat-to-low to mid-single digit growth in the medium term – in BKER: Target Price Sensitivity analysis view of their strategies and specialties (see Key Assumptions table on ADR growth assumptions on Page 18).
Offering price (Bt per share)
10.8 9.5 9.6 9.7 9.8 9.9 10.0
7,100 11.0 11.1 11.2 11.2 11.3 11.3 Occupancy rate (OR). Our OR assumptions for each of BKER’s 7,150 11.0 11.0 11.1 11.1 11.2 11.3 assets are based on the location, customer traffic and historical (Bt (Bt m) 7,200 10.9 11.0 11.0 11.1 11.1 11.2 New assetNew OR. We have also factored in the annual maintenance and acquisitioncost 7,250 10.8 10.9 10.9 11.0 11.1 11.1 minor renovations needed to maintain the condition of its assets 7,285 10.8 10.8 10.9 10.9 11.0 11.1 in our CAPEX reserve, which can help maintain BKER’s high OR Source: Company, DBSVTH (see Key Assumptions table on OR assumptions on Page 18).
New asset acquisitions. CRYSTAL is in the process of acquiring new assets with an NLA of 96,366 sqm (100% leasehold). The new assets are as follows: i) The area expansion and lease extension of the two initial assets – the Crystal Ekkamai-Ramindra and the Crystal Design Center ii) The eight new assets – the Crystal SB Ratchapruek, the Amorini Mall, the I’m Park @ Chula, the Plearnary Mall, the Sammakorn Place Ramkamhaeng (West), the Sammakorn Place Rangsit, the Sammakorn Place Ratchapruek, and the Scene Town in Town.
Page 20
Company Focus Crystal Retail Growth Leasehold Property Fund
Company Background
Corporate history. CRYSTAL (a property fund) plans to convert Management and strategy. The REIT’s main goal is to diversify to BKER (a REIT) and acquire new assets in late-4Q19, with a its portfolio by acquiring prime community malls in attractive submarkets. Its strategy will revolve around acquiring new total registered capital of Bt4,080m. The REIT will focus on assets, and constantly renovating and enhancing the quality of investments in various types of leasehold properties, i.e. its existing assets to generate sustainable long-term income community malls, shopping centres, neighbourhood malls and and returns to its unitholders. specialty malls.
Investors Project Owners Institutional (At least 10% of acquisition value for 3 yrs) & Retail Investors
Distributions Funds from Offering Lender Loan Commercial Co-REIT Manager Management Bank services Interest Management fee Bualuang K.E. Retail Leasehold Services Trustee Real Estate Investment Trust Trustee fee Property Property Management Fee Management Operating Income Leasehold Right
K.E.REIT Management Co.,Ltd. (REIT Manager)
Crystal Design The Crystal The Crystal Amorini Plearnary Mall The Scene I’m Park Sammakorn Sammakorn Sammakorn Center Ekkamai- SB Town-in-Town Place Place Place Ramintra Ratchapruek Ramkamhaeng Rangsit Ratchapruek
(West) BKER INVESTMENT PORTFOLIO INVESTMENT BKER
Source: Company, DBSVTH
The REIT managers - A subsidiary of K.E. Group, K.E. REIT Management BBL Asset Management (BBLAM) is a well-diversified was established to manage the group’s commercial investment management company, with more than 26 years of experience in the asset management sector. BBLAM has vast real estate portfolio – specialising in acquisitions, experience in managing several types of assets, such as asset strategy, leasing, marketing, and facilities industrial estates, office buildings, service apartments, management. residential units, and office and retail space.
- K.E. Group invests in as well as operates/develops upscale retail and residential properties in Thailand. Its core portfolio consists of residential real estate (luxury housing estates and condos), commercial real estate (shopping centres and office properties) and other businesses.
Page 21
Company Focus Crystal Retail Growth Leasehold Property Fund
BKER: REIT Summary Crystal Retail Growth Leasehold Property Fund Name (Bualuang K.E. Retail Leasehold Real Estate Investment Trust) CRYSTAL Ticker (BKER) Assets Type Community Malls Ownership Leasehold Sponsors K.E. Group AMR Development Co., Ltd.
Grand Uniland Co.,Ltd.
Prinsiri Group
Pure Sammakorn Development Co., Ltd. (SAMCO Group)
Assets The Crystal (Ekkamai-Ramindra) The Crystal Design Center
The Crystal SB Ratchapruek
The Amorini Mall The I'm Park@Chula
The Sammakorn Place Ramkamhaeng (West)
The Sammakorn Place Ratchapruek
The Plearnary Mall
The Sammakorn Place Rangsit
The Scene Town in Town
REIT Manager K.E. REIT Management Co., Ltd. (KERM) and BBL Asset Management Co., Ltd. (BBLAM) Property Managers K.E. REIT Management Co., Ltd. (KERM) Trustee SCB Asset Management Co., Ltd. (SCBAM) Financial Advisor Bangkok Bank PCL Appraisers KTAC Appraisal and Service Co., Ltd. Edmund Tie & Company Co., Ltd.
Auditor EY Office Limited Asset size Bt11.5bn Borrowings Bt2,875m (for the 1st investment) Dividend payout policy No less than 90% of adjusted net profit
Source: Company, DBSVTH
Page 22
Company Focus
Crystal Retail Growth Leasehold Property Fund
Key Assumptions FY Dec 2017A 2018A 2019F 2020F* 2021F The Crystal (Ekamai-Ramindra) Occupancy rate (OR) 96% 98% 96% 98% 96% ARR (Bt/sqm/month) 909 948 947 674 688 The Crystal Design Center Occupancy rate (OR) 97% 91% 94% 94% 94% ARR (Bt/sqm/month) 614 687 653 627 633 The Crystal SB Ratchapruek Occupancy rate (OR) N/A N/A N/A 96% 96% ARR (Bt/sqm/month) N/A N/A N/A 591 609 The Amorini Mall Occupancy rate (OR) N/A N/A N/A 97% 97% ARR (Bt/sqm/month) N/A N/A N/A 358 361 The I'm Park@ Chula Occupancy rate (OR) N/A N/A N/A 95% 95% ARR (Bt/sqm/month) N/A N/A N/A 666 673 The Plearnary Mall Occupancy rate (OR) N/A N/A N/A 82% 90% ARR (Bt/sqm/month) N/A N/A N/A 394 398 The Sammakorn Place Ramkhamhaeng Occupancy rate (OR) N/A N/A N/A 90% 93% ARR (Bt/sqm/month) N/A N/A N/A 447 452 The Sammakorn Place Rangsit Occupancy rate (OR) N/A N/A N/A 95% 95% ARR (Bt/sqm/month) N/A N/A N/A 520 525 The Sammakorn Place Ratchapruek Occupancy rate (OR) N/A N/A N/A 94% 95% ARR (Bt/sqm/month) N/A N/A N/A 479 484 The Scene Town in Town Occupancy rate (OR) N/A N/A N/A 95% 95% ARR (Bt/sqm/month) N/A N/A N/A 664 684
* Included the extended area of the Crystal (Ekkamai-Ramindra) and the Crystal Design Center Source: Company, DBSVTH
Segmental Breakdown FY Dec 2017A 2018A 2019F 2020F* 2021F Revenues (Btm) The Crystal (Ekamai-Ramindra) 150 149 150 243 248 The Crystal Design Center (CDC) 224 223 226 255 258 The Crystal SB Ratchapruek N/A N/A N/A 167 172 The Amorini Mall N/A N/A N/A 21 21 The I'm Park@ Chula N/A N/A N/A 50 50 The Plearnary Mall N/A N/A N/A 44 49 The Sammakorn Place Ramkhamhaeng N/A N/A N/A 50 52 (SPRM) The Sammakorn Place Rangsit (SPRS) N/A N/A N/A 20 20 The Sammakorn Place Ratchapruek (SPRP) N/A N/A N/A 25 25 The Scene Town in Town N/A N/A N/A 51 52 Total 374 372 376 925 948 * Included the extended area of the Crystal (Ekkamai-Ramindra) and the Crystal Design Center Source: Company, DBSVTH
Page 23
Company Focus Crystal Retail Growth Leasehold Property Fund
Income Statement (Btm) Net Property Income and Margins FY Dec 2017A 2018A 2019F 2020F*
Gross revenue 380 377 381 1,536 Property expenses (43.6) (45.3) (45.8) (560) Net Property Income 337 331 335 976 Other Opg expenses (47.0) (45.6) (46.1) (224) Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 Net Interest (Exp)/Inc 0.56 0.91 0.91 (121) Exceptional Gain/(Loss) (105) (108) 0.0 0.0
Net Income 185 178 290 631 Tax 0.0 0.0 0.0 0.0
Minority Interest 0.0 0.0 0.0 0.0 Preference Dividend 0.0 0.0 0.0 0.0 Net Income After Tax 185 178 290 631 Total Return 291 288 290 634 Non-tax deductible Items 0.0 0.0 0.0 0.0 Net Inc available for Dist. 296 265 276 631 Growth & Ratio Revenue Gth (%) N/A (0.9) 1.0 303.8 N Property Inc Gth (%) nm (1.6) 1.0 191.7 Net Inc Gth (%) nm (3.7) 62.5 117.9 Dist. Payout Ratio (%) 102.0 91.9 95.5 99.7 Net Prop Inc Margins (%) 88.5 88.0 88.0 63.6 Net Income Margins (%) 48.7 47.3 76.1 41.1 Dist to revenue (%) 78.0 70.4 72.6 41.1 Managers & Trustee’s 12.2 9.6 7.9 13.2 fees to sales %) ROAE (%) N/A 4.3 7.1 9.9 ROA (%) N/A 4.2 6.9 7.8 ROCE (%) N/A 6.9 7.1 9.6 Int. Cover (x) NM NM NM 6.2
* Included the extended area of the Crystal (Ekkamai-Ramindra) and the Crystal Design Center Source: Company, DBSVTH
Page 24
Company Focus Crystal Retail Growth Leasehold Property Fund
Quarterly / Interim Income Statement (Btm) Net Property Income and Margins FY Dec 1Q2018 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019
Gross revenue 94.2 91.5 93.0 93.4 93.4 92.9 Property expenses (10.5) (11.1) (12.5) (11.3) (10.9) (10.4) Net Property Income 83.7 80.5 80.6 82.1 82.4 82.5 Other Opng expenses (10.8) (10.9) (10.0) (13.9) (12.4) (14.0) Other Non Opg (Exp)/Inc 0.23 2.17 1.00 1.05 0.39 1.50 Net Interest (Exp)/Inc 0.18 0.16 0.25 0.32 0.43 0.51
Exceptional Gain/(Loss) 17.3 32.0 (107) (50.8) (19.4) (20.1) Net Income 90.6 104 (35.1) 18.8 51.5 50.4 Tax 0.0 0.0 0.0 0.0 0.0 0.0
Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0 Net Income after Tax 90.6 104 (35.1) 18.8 51.5 50.4 Total Return 90.6 104 (35.1) 18.8 51.5 50.4 Non-tax deductible Items 0.0 0.0 0.0 0.0 0.0 0.0 Net Inc available for Dist. 73.3 71.9 71.8 69.6 70.9 70.5 Growth & Ratio Revenue Gth (%) 1 (3) 2 0 0 0 N Property Inc Gth (%) 2 (4) 0 2 0 0 Net Inc Gth (%) 66 15 (134) (153) 174 (2) Net Prop Inc Margin (%) 88.9 87.9 86.6 87.9 88.3 88.8 Dist. Payout Ratio (%) 102.7 98.1 99.4 91.8 90.2 93.5
Source: Company, DBSVTH
Page 25
Company Focus Crystal Retail Growth Leasehold Property Fund
Balance Sheet (Btm) Aggregate Leverage FY Dec 2017A 2018A 2019F 2020F*
Investment Properties 4,112 4,021 3,982 11,340 Other LT Assets 0.0 0.0 0.0 0.0 Cash & ST Invts 194 188 188 442 Inventory 0.0 0.0 0.0 0.0 Debtors 16.3 14.5 15.2 46.1 Other Current Assets 1.32 1.45 1.48 97.6 Total Assets 4,323 4,225 4,187 11,925
ST Debt 0.0 0.0 0.0 0.0
Creditor 10.2 10.4 10.6 41.5
Other Current Liab 123 115 119 286 LT Debt 0.0 0.0 0.0 2,875
Other LT Liabilities 0.0 0.0 0.0 0.0
Unit holders’ funds 4,190 4,099 4,057 8,723 Minority Interests 0.0 0.0 0.0 0.0 Total Funds & Liabilities 4,323 4,225 4,187 11,925
Non-Cash Wkg. Capital (115) (110) (113) (184) Net Cash/(Debt) 194 188 188 (2,433)
Ratio
Current Ratio (x) 1.6 1.6 1.6 1.8 Quick Ratio (x) 1.6 1.6 1.6 1.5 Aggregate Leverage (%) 0.0 0.0 0.0 25.4
* Included the extended area of the Crystal (Ekkamai-Ramindra) and the Crystal Design Center Source: Company, DBSVTH
Page 26
Company Focus Crystal Retail Growth Leasehold Property Fund
Cash Flow Statement (Btm) Distribution Paid / Net Operating CF FY Dec 2017A 2018A 2019F 2020F*
Pre-Tax Income 185 178 290 631 Dep. & Amort. 0.0 0.0 0.0 22.9 Tax Paid 0.0 0.0 0.0 0.0 Associates &JV Inc/(Loss) 0.0 0.0 0.0 0.0 Chg in Wkg.Cap. 4.17 (2.5) 1.73 35.5 Other Operating CF 100 106 1.01 127
Net Operating CF 290 282 292 816 Net Invt in Properties 0.0 0.0 0.0 (16.1) Other Invts (net) 5.35 (3.6) 6.66 (7,358)
New assets acquisition, Invts in Assoc. & JV 0.0 0.0 0.0 0.0 issuance costs, and Div from Assoc. & JVs 0.0 0.0 0.0 0.0 upfront interest payment Other Investing CF 0.0 0.0 0.0 (115)
Net Investing CF 5.35 (3.6) 6.66 (7,489) Distribution Paid (301) (216) (271) (474)
Chg in Gross Debt 0.0 0.0 0.0 2,875 New units issued 0.0 (53.7) (60.4) 4,525
Other Financing CF 0.0 0.0 0.0 0.0 Net Financing CF (301) (270) (331) 6,926 Currency Adjustments 0.0 0.0 0.0 0.0 Chg in Cash (6.2) 8.47 (32.1) 254
Source: Company, DBSVTH
THAI-CAC (as of Nov 2018) n/a Corporate Governance CG Rating (as of Oct 2018) n/a
THAI-CAC is Companies participating in Thailand's Private Sector Score Description Collective Action Coalition Against Corruption programme (Thai CAC) Declared Companies that have declared their intention to join CAC under Thai Institute of Directors (as of May 2018) are categorised into: Certified Companies certified by CAC. Score Range Number of Logo Description Corporate Governance CG Rating is based on Thai Institute of 90-100 Excellent Directors (IOD)’s annual assessment of corporate governance practices 80-89 Very Good of listed companies. The assessment covers 235 criteria in five categories including board responsibilities (35% weighting), disclosure 70-79 Good and transparency (20%), role of stakeholders (20%), equitable treatment of shareholders (10%) and rights of shareholders (15%). 60-69 Satisfactory
The IOD then assigns numbers of logos to each company based on 50-59 Pass their scoring as follows: <50 No logo given N/A
Page 27
Company Focus Crystal Retail Growth Leasehold Property Fund
DBSVTH recommendations are based on an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return, i.e., > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable share price catalysts within this time frame) *Share price appreciation + dividends
Completed Date: 8 Oct 2019 06:10:53 (THA) Dissemination Date: 8 Oct 2019 08:59:57 (THA)
Sources for all charts and tables are DBSVTH unless otherwise specified.
GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Vickers Securities (Thailand) Co Ltd (''DBSVTH''). This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS Vickers Securities (Thailand) Co Ltd (''DBSVTH'').
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Page 28
Company Focus Crystal Retail Growth Leasehold Property Fund
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making.
ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group.
COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS'') or their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 31 Aug 2019 2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.
Compensation for investment banking services: 3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.
Disclosure of previous investment recommendation produced: 4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.
1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.
Page 29
Company Focus Crystal Retail Growth Leasehold Property Fund
RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
Australia This report is being distributed in Australia by DBS Bank Ltd, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial Services Licence no. 475946.
DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws.
Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.
Hong Kong This report has been prepared by an entity(ies) which is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Bank (Hong Kong) Limited, a registered institution registered with the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).
For any query regarding the materials herein, please contact Carol Wu (Reg No. AH8283) at [email protected]
Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.
Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.
Wong Ming Tek, Executive Director, ADBSR
Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report.
Page 30
Company Focus Crystal Retail Growth Leasehold Property Fund
Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.
United This report is produced by DBS Vickers Securities (Thailand) Co Ltd which is regulated by the Securities and Exchange Kingdom Commission, Thailand.
This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom.
In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication.
Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608 - 610, 6th Floor, International Gate Precinct Building 5, PO Box 506538, DIFC, Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated Financial by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the Centre DFSA rulebook) and no other person may act upon it.
United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as Emirates defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent.
United States This report was prepared by DBS Vickers Securities (Thailand) Co Ltd (''DBSVTH''). DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate.
Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
Page 31
Company Focus Crystal Retail Growth Leasehold Property Fund
DBS Regional Research Offices
HONG KONG MALAYSIA SINGAPORE DBS (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd Contact: Carol Wu Contact: Wong Ming Tek (128540 U) Contact: Janice Chua 13th Floor One Island East, 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard, 18 Westlands Road, Capital Square, Marina Bay Financial Centre Tower 3 Quarry Bay, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982 Tel: 852 3668 4181 Kuala Lumpur, Malaysia. Tel: 65 6878 8888 Fax: 852 2521 1812 Tel.: 603 2604 3333 Fax: 65 65353 418 e-mail: [email protected] Fax: 603 2604 3921 e-mail: [email protected] e-mail: [email protected] Company Regn. No. 196800306E
THAILAND INDONESIA DBS Vickers Securities (Thailand) Co Ltd PT DBS Vickers Sekuritas (Indonesia) Contact: Chanpen Sirithanarattanakul Contact: Maynard Priajaya Arif 989 Siam Piwat Tower Building, DBS Bank Tower 9th, 14th-15th Floor Ciputra World 1, 32/F Rama 1 Road, Pathumwan, Jl. Prof. Dr. Satrio Kav. 3-5 Bangkok Thailand 10330 Jakarta 12940, Indonesia Tel. 66 2 857 7831 Tel: 62 21 3003 4900 Fax: 66 2 658 1269 Fax: 6221 3003 4943 e-mail: [email protected] e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand
Page 32