Thursday, July 23, 2015

Accordia Golf Trust- Did I miss the boat?

After B and AK talk about it, I decide to look at it again.

I want to answer 2 questions.

1) Is golf operations earning power predictable or stable?

2) What is  the structure of the trust, is "dumping" evident.

To establish the earning powers of golf business, I look at the numbers of Accordia Golf, the parent of the trust. The numbers look quite good, with dip in 2009 and 2011 due to GFC and 2011 earthquake. Yet profits are resilient. I like.

I dig deeper, wanting to know if the numbers are due to organic and inorganic growth.

There are 2 sides to this.

While no. of golf courses increased  from 2009- 2011

in 123, 130 and 138

Revenue is relative flat. 

Utilization rate is not a good gauge of  operating numbers. 

As the increase in golfs course and Driving range (2009; 10, 2010; 18, 2011 23) 

Did not lead to spike in revenue.

Although I must give credit to their cost management skills, as expenses remain stable too.

So what gives?

The revenue per golf course is going down.

It is the restaurant segment and driving range that is offsetting the weak numbers.

Given all numbers are in Yen in the parent reporting numbers, there is no currency weaknesses at play here. It is all operating numbers.

But the trust only owned Golf Courses, which revenue generating capabilities has been stagnant at best. But the Driving range which has been is growth strategy as highlighted by the company since 2007, and also a mean to sell  merchandise is not include in the trust

Hence the other growth engines are not at play here with the trust.

No wonder the parent wanted only less than 30% stake in the trust.

They are holding on to their crown jewels.

Also, I tried googling top 100 golf courses in Japan, there are many boasting hosting of International Championship or spectacular views

None can be found in the trust.

With its price at current low, and it's pluses and minuses in operation, is it a good buy.

I would think it is quite a good yield play nonetheless. 

But i feel ok seeing accordia price going up after doing my research.

So I will let the boat go. 

(Added at 2030hrs)

Will I buy? If I am 50% cash, I might nimble. But I have less than that since I have buy back more sembcorp industries.

I believe I might have a cigar puff moment  when they announce quarter result. 

Hope I am right that they will see a spike In QoQ earnings ...


  1. the only person instead of shouting i am buying i am buying but doing the real work.

    1. Hi Kyith,

      Someone analytical as u liking this post is a morale boast to me.

      I have only seen 2 persons writing about accordia trust, and think they are well written...

    2. i wont be writing on this, but its interesting you are the only one looking at the parent and coming up with this conclusion. in the last 3 years since 2011 you can see.... golf courses rising slowly, number of rounds of golf increasing, operating income since 2008 have been around that range, fcf have been inproving though versus net income being sparodic.

      Another observation is, would the NPI of 11% be of any use considering their ROA have been 2-4% for the past 5-6 years?

    3. Shh.. This is embrassing ...
      kyith, actually I stopped learning for a while.

      While I understand NPI, ROA

      I no longer sensitive to what is wrong with Low ROA Versu NPI.

      Just like when value buddies or B start talking about WACC, or some valuation method, I start to see stars.


      Dun tell people

  2. Believe in yourself.

    Don't follow those two, If you follow them long enough, you wud know they make tons of mistakes just like any of us. Both of their style is more like buying at wretched price level. +using technical analysis, sometimes the market timing looks impeccable. No magic. Simply buy at cheap price does not make you value investor. Their strategy is kinda smart coz if price fall, they still have high yield as cushion to break even. AK's biggest advantage is he has huge funds, and loaded reits right after GFC.

    Ask yourself, long term wise, wud you sleep at night sounder with say, singapore shopping mall, or japan golf course?

  3. Haha Richard,

    Buying at wretch price is the Crux of investing. Not many can have the temperament to have money to buy at wretch price.

    Even peterlynch says he only need to be right 6 out of 10.

    If accordia is at 50 cents, without any change in reason, outlook still the same etc. I will buy. Long term or not.

    I have not hold a counter for more than 3 years. The STI index I bought at 2009 was sold at 2012.

    That's why my last post on "convictions"

    I sold half my portfolio.

    But thanks for your encouragement. At current price, I don't think my hands will be itchy.

    I can never be a value investor

  4. Doing homework is nice =)

    An interesting piece I found :

    1. Hey turtle investor,

      Thanks for the link. When accordia has such difference in opinion, one camp will be right and make a lot of money

  5. Hi Silly Investor,

    Are you still tracking this REIT? How do you consider the impact of global financial collapse on the golf business and the downward trend of Japan's labour forces would impact accordia trust?
    Also, the book value of golf courses are obviously over-priced, there is a chance of parent company injecting expensive courses to the trust.
    Yet, considering all the above bad factors, the current mkt cap of JPY45B seems to be attractive.
    What's your idea?

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