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Accordia Golf Trust and lower DPU.

Friday, May 26, 2017

Hey AK, what do you make of Accordia Golf Trust latest results? Looks pretty dismal, all important numbers are down. Any positives to it at all?

eh... you say leh?

From the numbers I don't see anything good. But management says that tourism may have a positive impact in mid to long term
And they said there was bad weather, maybe the weather might improve. That's about all the good I could see from the report

I would ask if the dip in results is due to something more enduring.
If so, the decline would become a trend.

True. But difficult to say how much is due to earthquake and bad weather. And how much due to fundamentals. 

You will have to make a judgement call 😉

I have small position only so I think I'll hold for now , at least the dividend is good

If we are investing for income and if we got in at a lower price, this fits. 🙂

...unfavorable conditions during the year resulting in lesser operating days as
compared to previous year:
• 1H FY16/17: Earthquake in Kyushu (April 2016); Typhoon (August and September 2016);
Heavier rains (June 2016)
• 2H FY16/17: More snowfalls (February 2017)

See presentation:

When we invest in Accordia Golf Trust, we have to be prepared for some possible fluctuation in revenue and I said this in 2015 too:


AK71 said...

Some might not know this while some might have forgotten. I started my relationship with Accordia Golf Trust as a trader. As an investment for income, my initial purchase was at 74c a share. Of course, I bought more as its price declined later on.

Accordia Golf Trust: 12% yield?

"Some might remember that I mentioned 74c in a blog post in July when I wondered at what price was Accordia Golf Trust a buy. The IPO price of 97c a unit was unpalatable to me for various reasons although the Trust promised a 7% distribution yield. I said then that 74c a unit seemed like a more reasonable price to pay for the Trust."

Capricon said...

Personally I am skeptical on the golf course business... Holding myself till it was below 50cts, bought some at 49cts as I am still not convinced of the business but thought some risk is worthwhile for the 10% yield.

I appreciate much now that: "all investments are good at the right price"

Looking back, I should have bought more at 49cts... :)

Kevin said...

Went for this event and the management said adding of more golf courses to its portfolio are on the cards to enhance growth.

AK71 said...

Hi Capricon,

For sure, all investments are good at the right price. ;)

AK71 said...

Hi Kevin,

They have the debt headroom to do this too. Fully debt funded, any acquisition in the near future will most probably be DPU accretive. :)

Kevin said...

Hi AK,

I agree too as I believe interest rates in Japan will continue to stay low and there's room for debt with its low LTV.

I also do hope the trustee-manager will do its due diligence and not overpay for any golf courses from its sponsor or third party sellers for its own benefit.

With the passing of the long-awaited integrated resorts bill last December, I foresee that it will bring additional vibrancy to the golf scene(if the weather holds up). :P

AK71 said...

Hi Kevin,

I believe there are more good things to look forward to as investors in Accordia Golf Trust. Of course, nothing is 100% and we are not just talking about the weather. ;p

l'etudiante said...

Hi AK,

was looking through the financial info of AGT and can't help but notice a really low current ratio at 0.4. reading its statements and it says that its due to" reclassification of non-current borrowings from financial institutions to current liability". What do you make of this? is this a source for concern? thanks!

AK71 said...

Hi l'etudiante,

They have debt due in August and, hence, the reclassification.

With negative interest rate and ample money supply in Japan, I feel that AGT should not have an issue refinancing the loan.

lim wee ee said...

Btw I thought 3.59c represents a 90% payout as compared to last year which was 100%.
If it is the case then the difference is not so much year to year.

AK71 said...

Hi Wee Ee,

At this point, I am not too worried. Nothing unexpected. :)

betta man said...

For the latest 1H results, DPU dropped by a whopping 32.7%. According to AGT, this was influenced by a large repayment of membership deposit. I feel rather uneasy about it. What's your opinion ?

Adrian Ong said...

Any concern about the latest sharp drop in DPU? I think fundamentally nothing changed in the business and the drop is caused by payment of deposits by members. Or did I left anything out. My concern more is alignment of management to unit holders as this drop was unexpected.

AK71 said...

See this blog:
Accordia Golf Trust DPU plunged 32.7%.

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