Morgan Stanley: Seazen Holdings (601155) - Public REIT Listing Approved, Another Milestone in Funding Diversification
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Morgan Stanley sees regulatory approval for Seazen Holdings (601155) to spin off its Nantong and Changzhou shopping malls into a public REIT listed on the Shanghai Stock Exchange, valued at an estimated RMB1.54 billion, as another milestone in funding diversification. Seazen will remain the malls' operator and consolidate the REIT with a 34% stake; estimated net cash proceeds after debt are around RMB600 million. The two malls earned net profit of RMB77 million in 2024 and RMB109 million in 2025 (including revaluation gains), implying potential 2026-27 distribution yields of 5-6%. The spin-off should broaden funding channels, further improve liquidity, and unlock mature investment-property value for capital recycling. Morgan Stanley reiterates Seazen as its top China property pick, expecting rental growth to accelerate as more malls open and supporting a potential dividend resumption this year. ModelWare net profit rises from RMB614 million (2025) to RMB1,163 million (2026), RMB1,415 million (2027) and RMB2,243 million (2028), with EPS of RMB0.27/0.52/0.63/0.99 and P/BV of 0.5x/0.4x/0.4x/0.4x. 2026E NAV is RMB29.38 per share, comprising development properties of RMB13.98 (DCF, 8.9% WACC), investment properties of RMB36.51 (6-8% cap rates), less net debt of RMB21.10, discounted 40% under the developer scorecard. Downside risks: faster development-margin compression, weaker recurring-income growth, slower mall divestments; upside: stronger contract sales, new IP launches, faster land acquisition.