SGX:SK6U

Stock Analysis Report

Executive Summary

SPH REIT is a Singapore-based real estate investment trust established principally to invest in a portfolio of income-producing real estate primarily for retail purposes in Asia-Pacific, as well as real estate-related assets.

Rewards

Trading at 36.2% below its fair value

Earnings grew by 11.4% over the past year

Risk Analysis

Earnings are forecast to decline by an average of -0.2% per year for the next 3 years

Dividend of 5.28% is not well covered by earnings



Snowflake Analysis

Proven track record and slightly overvalued.

Share Price & News

How has SPH REIT's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SK6U has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0%

SK6U

1.8%

SG REITs

1.4%

SG Market


1 Year Return

3.9%

SK6U

14.1%

SG REITs

-2.4%

SG Market

Return vs Industry: SK6U underperformed the SG REITs industry which returned 14.4% over the past year.

Return vs Market: SK6U exceeded the SG Market which returned -1.8% over the past year.


Shareholder returns

SK6UIndustryMarket
7 Day0%1.8%1.4%
30 Day-3.6%-0.6%-2.9%
90 Day-4.5%3.7%-1.1%
1 Year9.4%3.9%20.8%14.1%1.5%-2.4%
3 Year29.0%9.8%50.9%25.3%9.7%-1.9%
5 Year33.3%1.4%59.7%15.3%9.5%-8.9%

Price Volatility Vs. Market

How volatile is SPH REIT's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is SPH REIT undervalued compared to its fair value and its price relative to the market?

36.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SK6U (SGD1.06) is trading below our estimate of fair value (SGD1.66)

Significantly Below Fair Value: SK6U is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SK6U is poor value based on its PE Ratio (18x) compared to the REITs industry average (14.8x).

PE vs Market: SK6U is poor value based on its PE Ratio (18x) compared to the SG market (13.3x).


Price to Earnings Growth Ratio

PEG Ratio: SK6U's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: SK6U is overvalued based on its PB Ratio (1x) compared to the SG REITs industry average (1x).


Next Steps

Future Growth

How is SPH REIT forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

-0.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SK6U's earnings are forecast to decline over the next 3 years (-0.2% per year).

Earnings vs Market: SK6U's earnings are forecast to decline over the next 3 years (-0.2% per year).

High Growth Earnings: SK6U's earnings are forecast to decline over the next 3 years.

Revenue vs Market: SK6U's revenue (2.1% per year) is forecast to grow slower than the SG market (5.2% per year).

High Growth Revenue: SK6U's revenue (2.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SK6U's Return on Equity is forecast to be low in 3 years time (5.7%).


Next Steps

Past Performance

How has SPH REIT performed over the past 5 years?

-4.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SK6U has high quality earnings.

Growing Profit Margin: SK6U's current net profit margins (65%) are higher than last year (64.6%).


Past Earnings Growth Analysis

Earnings Trend: SK6U's earnings have declined by -4.6% per year over the past 5 years.

Accelerating Growth: SK6U's earnings growth over the past year (11.4%) exceeds its 5-year average (-4.6% per year).

Earnings vs Industry: SK6U earnings growth over the past year (11.4%) exceeded the REITs industry 4.2%.


Return on Equity

High ROE: SK6U's Return on Equity (5.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is SPH REIT's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: SK6U has a high level of physical assets or inventory.

Debt Coverage by Assets: SK6U's debt is not covered by short term assets (assets are 0.4x debt).


Financial Institutions Analysis

Asset Level: SK6U's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if SK6U has a sufficient allowance for bad loans.

Low Risk Liabilities: SK6U reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if SK6U has an acceptable proportion of non-loan assets held.

Low Risk Deposits: SK6U has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if SK6U has an appropriate level of bad loans.


Next Steps

Dividend

What is SPH REIT's current dividend yield, its reliability and sustainability?

5.28%

Current Dividend Yield


Dividend Yield vs Market

company5.3%marketbottom25%2.5%markettop25%5.7%industryaverage5.2%forecastin3Years5.6%

Current dividend yield vs market & industry

Notable Dividend: SK6U's dividend (5.28%) is higher than the bottom 25% of dividend payers in the SG market (2.53%).

High Dividend: SK6U's dividend (5.28%) is low compared to the top 25% of dividend payers in the SG market (5.71%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, SK6U has been paying a dividend for less than 10 years.

Growing Dividend: SK6U's dividend payments have increased, but the company has only paid a dividend for 6 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (79.4%), SK6U's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SK6U's dividends in 3 years are not forecast to be well covered by earnings (107.8% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

7.1yrs

Average management tenure


CEO

Susan Leng 0

7.1yrs

Tenure

0

Ms. Mee Yin Leng, also known as Susan, has been the Chief Executive Officer of SPH REIT Management Pte Ltd - Manager at SPH REIT since 2013. Prior to joining the Manager, Ms. Leng served as the General Man ...


Leadership Team

NamePositionTenureCompensationOwnership
Mee Yin Leng
Chief Executive Officer of SPH REIT Management Pte Ltd.7.1yrsno data0.019% SGD561.7k
Hsien Yiao Kuah
CFO & Head of Investor Relations of SPH REIT Management Pte Ltd.1.1yrsno datano data
Qinyin Zheng
Investment Manager of SPH REIT Management Pte Ltd7.1yrsno datano data
Wai Pun Lim
Company Secretary of SPH REIT Management Pte. Ltd0yrsno datano data
Ya Li Cher
Company Secretary of SPH REIT Management Pte. Ltd0yrsno datano data

7.1yrs

Average Tenure

Experienced Management: SK6U's management team is seasoned and experienced (7.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
May Ling Lim
Non-Executive & Non-Independent Director of SPH REIT Management Pte. Ltd.6.7yrsS$47.00k0.0073% SGD211.9k
Tit Koon Soon
Non-Executive & Independent Director of SPH REIT Management Pte. Ltd.6.7yrsS$67.00k0.0036% SGD106.1k
Horn Kee Leong
Non-Executive & Independent Chairman of SPH REIT Management Pte. Ltd.7.1yrsS$77.00k0.018% SGD529.9k
Yat Chung Ng
Non-Executive & Non-Independent Director of SPH REIT Management Pte. Ltd.2.5yrsS$47.00kno data
Chay Poh Chia
Non-Executive & Independent Director of SPH REIT Management Pte. Ltd.6.7yrsS$65.00k0.0054% SGD159.0k
Hwee Song Chua
Non-Independent Non-Executive Director of SPH Reit Management Pte Ltd1.3yrsS$35.38kno data
Sheau Farn Hoo
Non-Executive & Independent Director of SPH REIT Management Pte. Ltd.1.4yrsS$55.84kno data

6.7yrs

Average Tenure

61yo

Average Age

Experienced Board: SK6U's board of directors are considered experienced (6.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: SK6U insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

SPH REIT's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: SPH REIT
  • Ticker: SK6U
  • Exchange: SGX
  • Founded: 2013
  • Industry: Retail REITs
  • Sector: Real Estate
  • Market Cap: S$2.923b
  • Shares outstanding: 2.76b
  • Website: https://www.sphreit.com.sg

Location

  • SPH REIT
  • 1000 Toa Payoh North
  • News Centre
  • Singapore
  • 318994
  • Singapore

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SK6USGX (Singapore Exchange)YesTrust UnitsSGSGDJul 2013
50EDB (Deutsche Boerse AG)YesTrust UnitsDEEURJul 2013

Biography

SPH REIT is a Singapore-based real estate investment trust established principally to invest in a portfolio of income-producing real estate primarily for retail purposes in Asia-Pacific, as well as real estate-related assets. SPH REIT has a portfolio of five assets in Singapore and Australia. Its portfolio of properties in Singapore comprises a 99-year leasehold interest in Paragon, a 99-year leasehold interest in The Clementi Mall and a 99-year leasehold interest in The Rail Mall. These Singapore properties have an aggregate net lettable area of approximately 960,000 sq. ft. In Australia, SPH REIT owns an 85% stake in Figtree Grove Shopping Centre, a freehold sub-regional shopping centre in Wollongong, New South Wales, Australia. SPH REIT also owns a 50% stake in Westfield Marion Shopping Centre, the largest regional shopping centre in Adelaide, South Australia. Both Australian properties have an aggregate gross lettable area of approximately 1.7 million sq. ft. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 12:56
End of Day Share Price2020/02/17 00:00
Earnings2019/11/30
Annual Earnings2019/08/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.