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On and off, I would look at HPH Trust because there seems to be so much interest in this business trust from readers. Anyway, as I invest primarily for income these days, HPH Trust fits into my strategy but is it attractive enough for me?
Before I continue, I will say that I do not like the fact that it is denominated in a foreign currency and in US$ to boot. On my investment journey, I have only once bought a non S$ denominated stock, TCIL, and that was in HK$. It is a bit messy having to take into consideration exchange rates.
These days, with the S$ strengthening against the US$, chances of exchange rate losses are even higher. So, for me to be strongly interested in HPH Trust, there must be a bigger margin of safety. This, fundamentally, would take the form of a higher distribution yield at the most basic level.
HPH Trust released 2011 Interim Financial Results recently and declared a DPU of HK 14.3cents. It has a NAV/unit of HK$ 7.80.
Closing price on 3 August was US 73.5cents.
Now, isn't this one confusing counter? We have to contend with US$ and HK$. Of course, being in Singapore, we have to convert everything to S$. Wah, I am getting a bit giddy already!
US$1.00 = S$1.174
HK$1.00 = S$ 0.15056
(Source: UOB, 4 August 2011)
Unit price:
US 73.5cents = S$ 0.853
DPU:
HK$ 0.143 = S$ 0.0215
Well, let us see if HPH Trust is able to deliver the full year DPU of US 5.9c as per their forecast. This would be a DPU of S$ 0.0693 or a distribution yield of 8.12% at the unit price of US 73.5c.
Then, fundamentally, would I ever be interested in HPH Trust? If it were to offer a 10% distribution yield, why not? That would give me the larger margin of safety I am looking for. Everything else remaining equal, it would mean a unit price of US 59c before I get my feet wet. Wishful thinking? Well, I shall wait and see.
See financial statement here.
Added (1 Feb 17):
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| http://www.hphtrust.com/distribution.html |
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