Fortune REIT remains unshaken by proposed Park’N Shop boycott

It's business as usual.

According to OCBC Investment Research, the media has reported that a group has called for the boycott of Park’N Shop supermarket chain, which is part of Li Kashing’s Hutchison Whampoa Ltd, in support of dock workers who are striking for better work conditions. 

Here's more:

The workers are employed by Hongkong International Terminals (HIT) either directly or through contractors. HIT is a subsidiary of Hutchison Port Holdings Trust, which is owned by Hutchison Whampoa Ltd.  

Park’N Shop is FRT’s top tenant, accounting for 8.0% of the REIT’s total gross rental income in Dec 2012. According to FRT management, the incident is not affecting FRT malls. Businesses are running as usual and impact to the sales of the Park’n Shop outlets in FRT’s malls has not been seen.

Good HK retail sales
The growth in HK’s retail sales has picked up significantly since 4Q12. Combining the first two months of 2013 to eliminate distortions from the timing of Chinese New Year, retail sales climbed up 15.8% in value and 15.5% in volume.

According to a government official, the generally stable labour market conditions and vibrant tourism should continue to lend support to retail business in the near term, although there are still notable headwinds on the external front. 

Provisional statistics from the HK Tourism
Board indicate that the tourism expenditure associated with inbound tourism grew 16.5% YoY in 2012 to HK$306.5b. In contrast, Singapore’ retail sales fell 2.0% YoY in Jan 2013, and tourism receipts grew by only 3% YoY to S$23b in 2012.

Robust retail sales will continue to underpin the growth in retail rents throughout HK.