Religare Institutional Research has issued a ‘Buy’ rating on China-focused EC World REIT, citing promising growth potential, and strong support from sponsor Forchn Holdings Group.

In an investment report published 2 March, Religare also highlighted China’s appetite for electronic commerce, which has grown by 100% since 2013 to reach RMB3.95 trillion (USD435 million) in 2015, as a factor that bodes well for the industrial REIT.

“With vast growth opportunities in China’s e-commerce space and strong government and sponsor support, [EC World REIT] is well positioned for growth”, said Religare.

“A war chest of RMB1.3 billion [assuming 40% leverage]to fund potential acquisitions gives the REIT ample room to deliver yield-accretive inorganic growth, at an estimated 300,000 + square metres over the next 12-18 months”, said Religare, pointing to the right-of-first-refusal (ROFR) pipeline of two properties from Forchn.

“This, along with strong fundamentals, attractive valuations of 0.8x [price/book value] and an attractive [forecasted]FY17 dividend yield of 7.7%, leads us to initiate coverage on the stock with a ‘BUY’ rating and a target price of SGD0.92”, said Religare.

EC World REIT finished the trading day unchanged from its previous close on the Singapore Exchange at SGD0.70.