What Lockdown? Strong December Half From Shopping Centres Australasia; FVE Up 9%

Shopping Centres Australasia, or SCA, delivered a strong first-half result, and we increase our fair value estimate by 9% to AUD 2.55 per unit. The main driver of our increased valuation is the remarkable defensiveness of SCA’s convenience assets, proven by their performance through lockdowns. We think SCA can, and will, run higher gearing toward the midpoint of its target range of 30%-40% net debt/assets, holding more assets in its portfolio and thereby generating a higher earnings yield over time.