SINGAPORE: SGX broke its mainboard IPO duck this year, welcoming BHG Retail REIT as its first and likely only mainboard listing in 2015 on Friday (Dec 11).
BHG Retail REIT has five retail properties, with another 12 in the pipeline, all located in China. It is the first REIT backed by a Chinese-based group to be listed in Singapore.
BHG Retail REIT's five retail properties are in key cities Beijing, Chengdu, Dalian, Hefei and Xining.
Said BHG Retail Trust Management CEO Chan Iz Lynn: "We have properties which are mature, ready to be listed and we also have some very strong cornerstones that are ready to invest as well as other investors both in Singapore and internationally. (There) will never be a perfect timing but all these have come into place so this is where we are."
"Most importantly, China is still growing and is still a strong economy that's important to note. The middle class is also growing so with that, consumerism and domestic consumption is actually on the increase so which means that there is a very strong need for a product that is a community mall. (In) Singapore we call it a suburban mall, located near where they work live and play. These are the malls which actually serve them, they go there to watch movies, go supermarketing, buy their food, go for English classes, entertainment, you name it. This is a one-stop shop and that is the positioning we have for all our malls in the IPO portfolio," she added.
In its debut on Friday, the counter traded within a tight range - both opening and closing at 80 cents a share, which is its IPO price.
Almost 24 million shares changed hands, making it one of the top five counters in trade on Friday in terms of volume.
While the IPO was fully subscribed, there are already similar REITs listed in Singapore, such as the CapitaLand Retail China Trust, which made its debut in 2006.
Said Mr Ernest Lim, Remisier, CIMB Securities: "In terms of the valuations, I believe that it's not extremely compelling versus its closest listed peer on SGX which is CapitaRetail China Trust. BHG trades at 6.3 per cent at the FY16 distribution yield and 1x price to book. This is compared to CapitaRetail, 7.4 per cent distribution yield and 0.9x price to book. In terms of valuations it's not extremely attractive," he said.
"Furthermore, CapitaRetail has a longer listing track record of around nine years and it also has a strong sponsor. So between the two, I would think that BHG Retail may not be that appealing versus the CapitaRetail China trust," he added.
BHG Retail REIT raised S$394.2 million from the IPO, including units issued to strategic investors, the IPO sponsor, and cornerstone investors.