Scentre Group

SCG Details

Change in Shareholding: Scentre Group (ASX: SCG) is engaged in property investments by owning and operating a portfolio of living centres in New Zealand and Australia. On 13 August 2021, UniSuper Limited, a trustee for UniSuper and UniSuper Management Pty Limited, increased its shareholding from 9.66% to 11.26% SCG.

Dividend Distribution:

• On 10 August 2021, SCG has announced that it will distribute $0.07, payable on 31 August 2021 (Record Date: 16 August 2021) for 1HFY21.
• SCG will declare the 1HFY21 results on 24 August 2021 for the six months ending on 30 June 2021.

Q1FY21 Key Takeaways:

• The company reported YTD21 gross rent collections of $802 million to 30 April 2021, up by 27% YoY.
• The specialty in-store sales were up by 6.3% YoY; however, the Majors’ in-store sales dipped by 0.4% YoY in Q1FY21. At the close of April 2021, the customer visitation at all centres was equivalent to 93% of 2019 levels.
• SCG completed 588 lease deals comprising 236 new merchants and 35 new brands rolled out in Q1FY21.
• The company achieved a robust portfolio occupancy of 98.5% leased at the close of Q1FY21.

 Gross Rent Collections from Jan-April 2021; (Analysis by Kalkine Group)

Key Risks:

• Credit Risk: The management faces an increased level of credit risk on collecting its trade and other receivables outstanding due to COVID-19 and other adverse macro-events.
• Impact of COVID-19: Many of the company’s clients were affected by the COVID-19, which, in turn, has affected SCG’s rental collections and revenue.

Outlook:

• The Group forecasts to distribute a minimum of 14.0 cents per security in FY21 and expects growth in the distribution in the years ahead.
• SCG is progressing well with the $55 million towards development for entertainment, leisure and dining at the Westfield Mt Druitt and expects it to open at the 2021-end.

Valuation Methodology: Price / Earnings Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of SCG gave a negative return of 8.63% in the past nine months and a positive return of 27.63% in the past year. The stock is currently trading closer to its 52-weeks’ average price level band of $1.975 - $3.130. The stock has been valued using a Price to Earnings illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight premium than its peers’ average median, considering the recovery in customer visitation levels, increase specialty in-store sales, and growth expected in the distribution in the years ahead. For the purpose of valuation, few peers like GPT Group Limited (ASX: GPT), Charter Hall Group (ASX: CHC), Shopping Centres Australasia Property Group Re Limited (ASX: SCP) have been considered. Considering the current trading levels, indicative upside in valuation, recovery in customer visitation levels, increase in gross rental collections, higher expected dividend distribution in FY21, valuation, we give a ‘Buy’ rating on the stock at the current market price of $2.540, as on 20 August 2021 3:09 PM, (GMT+10), Sydney, Eastern Australia.  

SCG Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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