EC World REIT

EC World REIT: Review, Assets, Financial Performance & Growth Prospects

Singapore-based EC World Real Estate Investment Trust (REIT) is an established investment company with a diverse portfolio of income-producing real estate properties. With a special focus on the People’s Republic of China (the “PRC), the company continues to attract investors with its high dividend from logistics-focused assets. EC World real estate investment trust also has a stable and consistent occupancy rate. Read also Review on the 10 Best REITs Singapore and Why They Are Popular (2021).

Profile

EC World real estate development trust was established in 2015 to invest primarily in real estate to be used for supply chain management, ecommerce, and specialised logistics. As of 2019, the company had eight quality properties located in the most prominent ecommerce centres.

In 2016, the company was listed on the Singapore Exchange Securities Trading Limited (SGX: BWCU). EC World REIT is sponsored by Forchn Holdings Group Co., Ltd., a conglomerate with healthcare, supply chain, intelligent manufacturing, finance, and other sectors.

 

Assets

Property Property Type Location NLA Committed Occupancy Valuation (SGD’ mil)
Chongxian Port Investment Port Hangzhou City 112,726 sq m 100% 458
Chongxian Port Logistics Warehouse Hangzhou City 125,826 sq m 100% 175
Fu Zhuo Industrial Port Hangzhou City

 

7,128 sq m

 

100% 24
Stage 1 Properties of Bei Gang Logistics ECommerce Property Hangzhou City 120,449 sq m 100% 257
Fu Heng Warehouse ECommerce Property Hangzhou City 94,287 sq m 100% 123
Hengde Logistics Large-scale Specialised Logistics Hangzhou City 237,066 sq m 100% 289
Wuhan Meiluote ECommerce Warehouse Wuhan 48,695 sq m 88.7% 37
Fuzhou ECommerce ECommerce Logistics Hangzhou City 214,284 sq m 100% 261

 

The EC World real estate investment trust management, announced the above independent valuations for all the eight properties as of 31 December 2020. EC World real estate investment trust line of quality properties is located in the largest ecommerce regions in the Yangtze River Delta, Hangzhou, and Wuhan.

While one property is in Wuhan, the other seven are located in Hangzhou. EC World’s line of properties has an aggregate NLA of 960,461 sq m and a total appraised value of SGD 1,624 million.

 

Total Portfolio Occupancy Performance

Property Occupancy Rate Lease Term Escalation Rate
  FY18 FY19 FY20    
Chongxian Port Investment 100% 100% 100% Master Lease (1 Jan 2021 to 31 Dec 2024) 2.0% per annum
Chongxian Port Logistics 100% 100% 100% Multiple Tenancies 10.0% per annum
Fu Zhuo Industrial 100% 100% 100% 26 April 2020 to 25 April 2021

 

8 Oct 2014 to 7 Oct 2029

No Escalation

 

 

 

7.5% every three years

Stage 1 Properties of Bei Gang Logistics 100% 100% 100% Master Lease (1 Nov 2020 to 31 Oct 2024) 1.0% per annum
Fu Heng Warehouse 100% 100% 100% Master Lease (1 Jan to 31 Dec 2024) 2.0% per annum
Hengde Logistics 100% 100% 100% 5 Oct 2020 to 31 Dec 2023

 

9 May 2016 to 8 May 2021

No Escalation
Wuhan Meiluote 88.7% 99.4% 86.5% Multiple Tenancies Up to 5.0% per annum
Fuzhou ECommerce n.a 100% 100% 8 Aug 2019 to 8 Aug 2024 2.25% per annum

 

Over the years, the EC World real estate investment trust properties have had a stable occupancy rate. Out of the 8 properties, 7 have had a 100% rate.

The uncertainty in the COVID-19 pandemic in late FY19 and FY20 affected the Wuhan Meiluote’s occupancy rate, which declined from 99.4% to 86.5%. This rate is projected to be stable in the next few years, especially since most leases are set to expire from 2023 to 2029.

The EC World Real Estate Investment trust rental escalation is also very promising. Six properties have a rental escalation that comes with the lease agreement. Therefore, based on the management data, a stable occupancy rate means that the company would still grow organically.

 

Gross Revenue and Net Property Income

Amount in SDG 000s FY18 FY19 FY20
Revenue 96,229 99,128 109,726
Net Property Income 87,336 89,737 100,307

 

EC World real estate investment trust’s financial performance is steadily growing. The 2020 financial year has the highest earnings, with both revenue and net property income increasing.

This improvement is because of the steady occupancy rate and the acquisition of a new property, Fuzhou ECommerce, in August 2019. Based on all these factors, the property’s overall earnings have significantly improved.

 

Distribution Per Unit (DPU)

SGD (cents) FY18 FY19 FY20
DPU 6.179 6.047   5.359

 

Before you invest in these properties, you need to consider the distribution per unit. AS INDICATED ABOVE IN SINGAPORE CENTS, the DPU for EC World real estate investment trust has been on the decline from FY18 through to FY20. This decline is due to rental rebates that were offered to tenants in FY20. An analysis of this financial data shows a 7.4% yield for investors.

 

Growth Prospects

EC World Real Estate Investment Trust’s growth strategy is focused on acquiring high yield investments in the eCommerce logistics sector to improve earnings. Their recent acquisition in 2019, the Fuzhou eCommerce property, is an integrated e-Commerce logistics asset that contributed to the FY20 revenue. This new property increased its real estate asset holdings by 19.2%.

EC World Real Estate Investment Trust has the highest number of e-Commerce logistics assets among all other retail estate investment trusts in Singapore.

SGX: BWCU has a current unit price of SGD 0.820. Earlier in the year, the management had announced a potential takeover offer and interest in all of its properties. EC World REIT is ideal for this investment due to its logistics portfolio and high FY2021 dividend forecast of 7.6 %.

In addition, the forecasts for FY2021-2023 distribution per unit have been increased by 1-3% by fine-tuning the occupancy predictions and interest cost. The cost of equity assumption has also been reduced to 8.8%.

 

Debt Balance

By the end of 2020, SGX: BWCU had borrowed SGD 683 million. This amount is below the allowed limit of 50% because it translates to a gearing level of 38.1%. Because of this, the company has an allowance for debt which would help them acquire more assets and boost their initiatives more to help them grow their real estate assets.

 

Our Verdict

Based on our analysis, EC World Real Estate Investment Trust is a fairly good choice for an investment. By focusing on logistics and e-Commerce, they can take advantage of the growth of the retail industry in Singapore and China. Their build-in rental reversion and occupancy rate have been stable, which is good for security and investment.

Among all other REIT companies, it also has the largest sets of investments, which according to financial data, is contributing to increased revenue. However, there’s concern about the declining distribution per unit in the past year. Their industry focus is also risky because they depend on a few major tenants. Therefore, if one pulls out, their earnings could drop significantly.

 

FAQs

1. Who Owns EC World Real Investment Trust?

The top 25 shareholders own about 73.09% of the real estate firm. Forchn Holdings Group Co Ltd has the largest equity at 42.67%, while Sunkits Resources Limited is at 10.09%, and Fosun International Holdings Ltd., at a 9.16% equity stake, to make up the top three. The SGX: BWCU has had several transactions by organizations or insiders working here.

Private organizations have a 61.9% stake; the general public shares are at 26.9%. Individual insiders own 8.9%, while institutions hold 2.2%.

2. How Has the COVID-19 Pandmic Affected EC World?

7 out of 8 properties have had a 100% occupancy rate since the 2018 financial year. Only the Wuhan Meiluote’s had a slight decline in occupancy. This rate is fair considering the uncertainty and impact of the COVID-19 pandemic. This data is reassuring for potential investors because it indicates that EC World still has high earnings.

In addition, the one-off rental rebates given to tenants to mitigate the adverse impact of the COVID-19 situation contributed to more earnings.

Despite being in the real estate industry, EC World is in the specialised logistics and eCommerce sector. Unlike other businesses in the same industry, they don’t depend on human traffic. Therefore, they are less affected and can maintain a consistent occupancy rate.

3. What’s The EC World Share Price?

EC World is also registered in Singapore exchange securities trading. If you want to invest in the SGX: BWCU, the share price is very stable. Currently, EC World has a dividend yield estimate of 7.6%. Over the past five years, the price has had very low volatility, making it a good choice for investors.

 

Final Thoughts

  • The Ec World focus on specialised logistics and e-commerce has positively contributed to increased earnings and revenue.
  • Based on the financial data, the growth prospects are promising.
  • The EC World properties have a 100% occupancy rate, which is advantageous to the management and shareholders.
  • The share price of the BWCU is less volatile, making it a good choice for investors. You can access the shares via the Singapore exchange securities trading platform.
  • Among all other firms in the same industry, EC World has the top clusters of properties.

When investing, it takes more than just diligence in understanding why a certain REIT is popular. You also need to compare which gives you the most value out of your hard-earned money. And if you need extra capital to fund your investment, Instant Loan provides up to three free loan quotes from the best financial institutions in the country. Just click and simply fill-out our form. Read also How To Start Your Investment in Singapore.

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