The brokerage understands that all of CRCT’s 13 retail malls in China have since reopened, including Minzhongleyuan, which is situated in Wuhan City.
It points out that currently, about 89% of stores by net lettable area have reopened on a portfolio-wide basis.
“CRCT’s retail malls that are strategically located near strong residential catchment areas, with tenants serving the daily needs of shoppers, will likely be in a prime spot to benefit from the relaxed measures,” DBS analyst Derek Tan writes in a note dated April 13.
According to DBS, CRCT is a good proxy for retail sales growth across Tier 1 cities in China.
In particular, about 60% of CRCT’s net property income is derived from Beijing, with well-located assets that are dominant malls in their respective submarkets.
DBS notes that the temporary dip in tenant sales during this disruptive period should not have a material impact given that only about 3% to 5% of rental revenue is tied to tenant sales on a portfolio basis.
As such, the medium-term growth remains intact as pro-stability policies and measures implemented by the government will continue to bode well for China’s domestic consumption.
“They will likely fuel domestic retail consumption [growth] at a mid-single-digit level going forward,” says Tan.
DBS maintains its “buy” rating for the trust with a lower target price of $1.55 from $1.75 previously.
As at 11.20 am, CRCT was up 2 cents or 1.5% at $1.34, with some 2.1 million units changed hands.
