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An eye on Accordia Golf Trust, Croesus Retail Trust and Saizen REIT: 8.1 magnitude earthquake in Japan and the Yen.

Tuesday, June 2, 2015

On Vesak Day, a huge undersea earthquake was reported 874 kilometers from Tokyo. The epicentre was deep in the Pacific Ocean. Seismologists warned that another quake could be coming. See report here: Japan Today.

Expecting some negative reaction from Mr. Market, I looked at the prices of Accordia Golf Trust, Croesus Retail Trust and Saizen REIT this morning. Of the three, the unit price of Accordia Golf Trust retreated by almost 10%. It was a big decline but it probably had to do with the fact that the counter went XD as well.

Accordia Golf Trust announced their maiden DPU of 5.71c for the 8 months period since its date of listing. This included non-recurring gains. Based on the regular operation of the golf courses under management, it was estimated that full year DPU could come in at 6.23c. However, this was based on an exchange rate of S$1 to JPY 88.4. This was a couple of months ago.

Of course, the JPY has weakened significantly since then. The rate is now S$1 to JPY 92. This rate was last seen in late 2014 and could be the reason for the particular weakness in Accordia Golf Trust when the unit prices of both Croesus Retail Trust and Saizen REIT held up rather well. Accordia Golf Trust is, after all, the only one of the three that does not hedge currency risk and we must rightly expect DPU to reduce in S$ terms, therefore.

If we expect the DPU to reduce proportionally, we might see a revised full year DPU of 5.91c. Buying more at 71c to 72c a unit today means a distribution yield of 8.2% to 8.32%. If we need a minimum yield of 8% to make the investment worthwhile for us, then, based on the current weaker exchange rate, all else remaining equal, we should be able to accept a unit price of up to 74c or so. Coincidentally, this was the entry price of my current long position too.

Further weakness in the JPY cannot be discounted but I have made a case before on why I think the JPY's biggest declines are probably behind us. Getting into Accordia Golf Trust at its IPO was a bad idea for various reasons. At current prices, I believe that the business trust presents a decent enough investment for the income investor.

See an article in NextInsight on Accordia Golf Trust: here.

Related posts:
1. Accordia Golf Trust: Yield of 12.16%?
2. Croesus Retail Trust: ONE's MALL.
3. Saizen REIT: Deeply undervalued.


E H said...

874km south of Tokyo. Not 874m.

AK71 said...

Hi EH,

Oops... Thanks. Correction made. :)

blazingruby60 said...

hi AK
Would u know how many times does Accordia distributes dividend each year?

AK71 said...

Hi blazingruby,

If I remember correctly, income distributions are supposed to happen half yearly.

AK71 said...

Japanese Finance Minister Taro Aso on Tuesday refrained from commenting on renewed weakness in the yen, after issuing a warning last week about its slide.

Asked on Tuesday about how the yen continued to decline even after his warning, Aso said: "As a finance minister, I do not comment on currency moves ... Back then, I only said the moves were rough."

"I will only repeat the same thing, which is that we must continue to watch currency moves carefully," he told a news conference after a regular cabinet meeting.

Japan's export-reliant economy has historically suffered from a strong yen, so many policymakers have welcomed limited yen declines.

But some economics and politicians have begun to worry about the drawbacks, such as boosting import costs and eroding consumers' purchasing power, which could outweigh benefits to exporters.


seefei said...

read their financial report (page 12, report dd 15 sept 2014), was surprised to find their play fee is only S$65. it is more like Malaysia type of fee. singapore and shanghai is much more expensive, at least double that.

AK71 said...

Hi seefei,

The cheap Yen is making golfing (and lots of stuff) in Japan rather attractive. I know one of their strategies is to attract tourists from China and Korea to golf in Japan. When I found out that a friend's dad went to Japan on a golfing tour recently, I was surprised and encouraged. :)

I believe that there is much room for improvement and it depends on how competent the management is. Being the market leader in Japan with a proven track record, I have confidence that Accordia will deliver over time, conditions permitting. Crossing fingers. ;)

Daryl said...
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AK71 said...

Hi Daryl,

That would have been a price that I would not buy at but if it is any consolation, its IPO was at $0.97 a share.

All investments are good at the right price. All else being equal, another 5% decline from the current price could see me accumulating more aggressively. ;)

Daryl said...
This comment has been removed by the author.
AK71 said...

Hi Daryl,

Sounds like you have a plan. Good on you. ;)

Good luck to us all. :)

AK71 said...

Goldman Sachs GSIP Master Company (Ireland) Limited:
Purchased on March 24 of 600,000 units at 75 cents each. This increased its direct holdings to 77.461 million units or 7.05% of the issued capital. The group purchased filing on February 17 761,000 units at 76.3 cents each. In November 2014, one million units at 79.3 cents each which raised its interest to 5.05%. Overall, Goldman Sachs GSIP's stake is up by 40% since that initial filing in November 2014.

Goldman Sachs Group:
Purchased on February 23 of one million units at an estimated price of 76.5 cents, increasing its deemed stake to 110.439 million units or 10.05%. They previously reported an initial filing in September 2014 of 13 million units via off-market trade at an undisclosed price, which raised its interest by 26% to 5.81%. Overall, Goldman Sachs Group's stake is up by 73% since that initial filing in September 2014.

Morgan Stanley:
Purchased on February 18 of 984,000 units at an estimated price of 76.5 cents each, increasing its deemed holdings to 88.415 million units or 8.04%. The group previously purchased 18.2 million units from October 24 to December 19 2014 at estimated prices of 85 cents to 78 cents each.

Daryl said...
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Daryl said...
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AK71 said...

World Golf Report 2015. A first-of-its-kind study, the report provides an in-depth global retail market summary based upon geography, size and economic significance of the $8.7 Billion Worldwide Golf Equipment Market.

Highlighting the study, data concludes that the world’s five largest golf markets represent over 80% of total equipment sales. Nearly 20 additional countries/regions account for the remaining world golf market, including Mexico, China, Germany, Australia and the Caribbean among others.

Among the unique findings for specific markets, individual product categories (i.e. clubs, balls, apparel, etc.) and other global trends, include:

The Top 5 World Golf Markets: #1 United States; #2 Japan; #3 South Korea; #4 United Kingdom; #5 Canada.

China (including Hong Kong and Macau) is the 6th largest golf equipment market but is continually influenced by government regulation.

The US and Japan control over 65% of the world golf equipment market.

Golf Datatech-Yano Research Institute Ltd. January 28, 2015

little toy brush said...

my friend asked me to do a little research on accordia golf too... Goldman Sach dumped their 45% stake in the parent company Accordia Golf Co Ltd (Tokyo) in 2011.


they probably have profited before and are simply trying to provide market support?

AK71 said...


Accordia Golf Trust's IPO was to monetise Goldman Sach's investment too, no doubt. At 97c a unit at IPO, it was a very good deal for the sellers.

I try to bear in mind what Warren Buffett said about IPOs and also what Peter Lynch said about how insiders could sell for myriad reasons but they would buy because of one reason. :)

AK71 said...

Accordia Golf Trust: Added to my long position at 70.5c a unit. :)

AK71 said...

"The yen is unlikely to fall further on a real effective exchange rate basis because it is already "very weak", Bank of Japan Governor Haruhiko Kuroda said on Wednesday in remarks that rescued the currency from a near 13-year low against the dollar.

"The yen JPY= jumped to 122.98 per dollar after Kuroda's comments, having struck 125.86 on Friday - its weakest since June 2002 - after strong U.S. jobs data raised prospects for an increase in U.S. interest rates.

"Speaking to Japanese lawmakers, Kuroda also said the dollar was not bound to rise against the yen if the Federal Reserve raises interest rates as traders may have already priced into the market the possibility of a rate hike.

"The BOJ governor's comments playing down the possibility of further yen declines reflect some policymakers' concerns that an excessively weak yen could raise import prices too quickly or become a source of trade friction."


Daryl said...
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Daryl said...
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AK71 said...

Hi Daryl,

And I am waiting to buy more at 68.5c next. ;p

betta man said...

Nibbled at $0.69 this morning. Keeping fingers crossed.

AK71 said...

Hi betta man,

That sounds like a good entry price to me. Good luck to us all. ;)

Daryl said...
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Daryl said...
This comment has been removed by the author.
AK71 said...

Hi Daryl,

I can make a guess why the unit price is going down but it wouldn't be a useful exercise.

At this moment, I can only say that I have the exposure I want to the Trust already. So, for me to add to my exposure, all else being equal, Mr. Market will have to offer a lower price to me.

The paper loss doesn't really concern me if the fundamentals of the investment have not changed. ;)

Daryl said...
This comment has been removed by the author.
AK71 said...

Added to my long position in Accordia Golf Trust at 65.5c today. ;)

Nightmare_Angel said...

nibble abit too at $0.66. :)

Capricon said...

Your TA "reads" a turnaround of accordia ? :)
May be you can share your TA of sembcorp, ST engrg. .. some work to keep you active. :D


AK71 said...

Hi Capricon,

For AGT, I know that it is a decent enough investment for income at the price I got in at and the even lower prices offered by Mr. Market recently made it more attractive. I simply queued at a support I identified. I don't know if price would go lower or higher from here, of course. ;)

As for SembCorp Industries, it is an investment for income and growth. Long term, I believe they will deliver. In the shorter term, they do have challenges and rather difficult ones too. It is obvious that Mr. Market is rather pessimistic and if offered an even lower price, I would be quite tempted to add. ;p

ST Engineering, I like the fundamentals. However, I think I have the exposure I want already. So, in order for me to add, I will need Mr. Market to offer an even lower price to me. $3.00 or less a share, perhaps? ;p

Daryl said...
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Solace said...

Hi Daryl,

My apologies for interrupting.

I find that many common stocks tend to fluctuate 20-30% in any given year.

If i need to lose sleep every time a counter drop 10-20%, my quality of life will be severely affected. If that is the case, my life should be better off if i stay clear the stock market.

I tend to ignore short term fluctuation and look only at what is happening to the business. if indeed the fundamentals of business has deteriorated, it might be wise to reconsider the investment and close the position at a loss when necessary.

If i have invest into a position and a drop in share price worries me, it is also an indication that i have allocated too much money into this counter. A portfolio re sizing might be necessary.

After all, my method is to "only invest what i could afford to lose without the loss having any effect on my daily life in the near future" Quote from Peter Lynch

Daryl said...
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FoodieFC said...


Been eyeing this for sometime. Now thinking of going in. The only thing stopping me now is the exchange rate and the fact that next div is for 4 months as they have already paid out 8 months. But of cos the last point will not really matter if I hold for more than 1 yr to get a decent yield =D

AK71 said...

Hi FoodieFC,

The first income distribution was for the 8 months from listing to the end of the financial year. All future distributions will be for 6 months of income. AGT distributes income twice a year, every half a year. ;)

As for the exchange rate against the S$, I believe that the S$ will weaken in time to come against the US$ too. So, against the JPY, I don't think the S$ is going to strengthen substantially like it did in the recent past. The Japanese are not going to let the JPY become too weak because it would cause problems. Singapore is not going to let the S$ become too strong because that would also cause problems. ;)

Koala said...

Hello Mr. AK!

I have also been looking at AGT for quite some time now and hoping it would dip a little more for me to accumulate :)

Im just wondering how did you derive that the IPO price of 0.97 for AGT is not a value for money and lack in margin of safety?

Peter said...

Hi all,

What is your options if AGT will buy assets from the sponsor in the next three month with funding by either units or debt?

AK71 said...

Hi Koala,

You might want to use the "Search" box found at the top right corner of my blog for my past blog posts on AGT. I think I blogged about AGT's IPO before. ;)

Generally, I stay away from IPOs because I subscribe to Warren Buffett's opinion that IPOs are usually advantageous to the issuers. Why would issuers want to sell at a price that would undervalue their stock? It makes sense that they would try to get as much as they can from investors (i.e. the buyers).

AK71 said...

Hi Peter,

With AGT's gearing at about 30%, I believe that AGT has ample debt headroom to fund acquisition through debt. I think it is unlikely that they would need to do any fund raising through equity. Of course, it depends on the size of the acquisition too. Will have to wait and see.

AK71 said...

Overnight BUY order for Accordia Golf Trust at 62c a unit filled.

Daryl said...
This comment has been removed by the author.

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