Saturday, August 30, 2014

Accordia Golf Trust: Is enough blood already shed?

Was alerted to this counter from AK 71 blog.

He did a quick 1-day trading, and made money. Power. I did a preliminary look at see if warrant further digging and its investment merits.

First, after the sharp fall from its IPO price, yield not including non-recurring item is now 8.4% 

Not bad. But Trusts yield higher than Reits to account for the volatility of business earnings.

Religare yield 9% for hospital properties.

HPHT yield 7.5% for port assets which many believed is at the lower end of the cyclical (Better time to invest) cycle.

APTT yield almost 10% because of the unknown risk of competition due to rezoning.

None of it is a apple to apple comparison. 

But if you ask yourself if you like to own ports, hospitals, cable broadcasting rights or golf courses, which one will you go for?

What I am trying to say is, the quality of assets of various trusts in Singapore is not of lower quality. So, the yield Accordia offered now is reasonable, but not exciting.

So, we need to know if there is high prospect of growth going forward.

1) Parent company and sponsor wanted to get rid of its remaining golf courses by March 2017.

http://www.accordiagolf.co.jp/file/pdf/enir_20140814165830.pdf

It will cost 40 billion yen, Trust has only 14 billion.

Trust has existing 45 billion loans. Gearing is about 35%, gearing will need to increase significantly, but trust has no limit for gearing.

It is quite obvious for the short term, the trust will act as a dumping ground for parents. What can catch a glimpse of the potential growth or lack of.

http://www.accordiagolf.co.jp/file/pdf/enir_20140812120932.pdf

It is obvious the 133 courses included those under the trust.

For its AR 2013,

revenue is

19.5 b for restaurant operations

7.8 b for membership (2014 forecast)

53.7 b for course revenue

Total Revenue is 80 Billion Yen

Assume 10% margin 8 Billion Yen

It is almost a 40% growth in 2 years!

But that is assuming the numbers remain in terms of pricing and visitors. 

Conclusion:

A company worth further study especially if there is more blood in the street.

But right now? No thank you, because the parents seem too eager to dumb assets.

Cheers,

Sillyinvestor

 

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