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Sabana REIT's lesson and Wilmar's interim dividend.

Thursday, August 12, 2021

A few years ago, I blogged about lessons from my journey as an investor with Sabana REIT.

One of the things I said was:

"I remember UOB KayHian was particularly bullish in 2013 and had a target price of $1.30 for Sabana REIT. By that time, I had turned cautious although I was enjoying a distribution yield on cost of between 10.3% to 11.1%..."

History with Sabana REIT.

In a nutshell, no one cares more about our money than we do and we must always do our due diligence.

Sabana REIT is pretty generous in dishing out lessons and last year saw ESR-REIT making a low ball offer for Sabana REIT which resulted in a fight led by activist investors to scuttle the proposed deal.

I wrote a piece on why the proposed deal was a bad one for Sabana REIT.

Not only did it grossly undervalued Sabana REIT, "Sabana REIT's investors would eventually have to help bear the cost of the mistake that was the merger of ESR-REIT and VIT." 


Anyone who said anything to the contrary was either misinformed or malicious.

In a recent article in The Business Times, the writer's one liner summed it up well.

"If the proposed merger of Sabana Reit and ESR-Reit last year demonstrated anything, it is that IDs cannot always be relied upon to act in the interest of unitholders."

The Business Times.

I am sure Sabana REIT is worth more today and will probably be worth more in the future as it continues to unlock value in its portfolio.

Of course, a rising tide will lift all boats too and Sabana REIT will be a beneficiary.

Recently, I also replied to comments from some readers on Wilmar's declining share price.

I actually increased exposure to Wilmar, adding on weakness in its share price, averaging up.

I believe that Mr. Market is undervaluing Wilmar even at today's price.

"Wilmar reports higher 1HFY2021 earnings on better selling prices and volumes; to pay interim dividend of 5 cents." 


The cyclical component of Wilmar's business will do well just like other cyclical businesses as the economy recovers.

However, Wilmar is much more than that.

I said this in a blog about Wilmar before:

"There are not many companies in the world like Wilmar when it comes to agricultural products and their distribution. 

"Wilmar has amazing breadth and depth of operations. 

"Its distribution network is extensive, established and still growing."

I said that investors in Wilmar must be of the patient variety and I still feel that way.

While I wait for Mr. Market to pay what is Wilmar's true value, I am happy to be paid while waiting.

Will Mr. Market pay Wilmar's true value and if it does happen, when?

Your guess is as good as mine, of course.

Related posts:
1. Wilmar was $7.11 a share.
"It may move up toward its real worth today, next week, or next year. It may trade sideways for five years and then quadruple in price. There is simply no way to know when a particular stock will appreciate, or if, in fact, it will."


Krishna said...

Hello AK,

Many thanks for your insights on Sabana and Wilmar.

You see that Wilmar share price is undervalued today because:
1) its subsidiary in China YKA holdings market cap is 3 times as of Wilmar
2) potential ipo of its subsidiary in India (Adani - Wilmar)
3) expect Capex to taper off in the near future and company can conserve cash

These are the points that gives you conviction to invest in Wilmar.
Can we say that?

Thanks for your feedback!


AK71 said...

Hi Krishna,

You have raised valid reasons for believing that Mr. Market is undervaluing Wilmar.

I also like that insiders are eating their own pudding. :)

Betta man said...

Hi AK,

what do you think of this rights issue by King Wan Corp ? Thanks!

AK71 said...

Hi Betta man,

Unfortunately, King Wan Corp has not been able to do better after so many years.

Increasingly, it looks like a lemon to me.

Purpose of the rights issue is "to strengthen the Group’s financial position and capital

My smallish investment in King Wan Corp is now worth an insignificant three digit number and I have already written it off.

Mei said...


Any comments on ESR reit?


AK71 said...

Hi Mei,

I don't have a good impression of ESR REIT.

Glad that I exited when I did but I could be wrong, of course. ;)

1. Merger of ESR REIT and VIVA Industrial Trust.
2. When would I invest in ESR REIT again?

SgFire said...

Hi ak

That was

AK71 said...

Hi SgFire,

You are Mei?

SgFire said...

I was the one who ask u abt wilmar

AK71 said...

Hi SgFire,

Ah, thanks for jogging my memory. ;p

DS said...

Hi AK,

Able to talk to yourself on the recent news that Adani Wilmar IPO was placed on hold? Do you think this is a major setback per se (like Del Monte's failed IPO in the Philippines) and will have ramifications on the price? Or as Krishna and yourself mentioned above, there are still a lot of things going for Wilmar?

Thanks! :)

PL said...

Hi AK,

May I ask whether you intend to subscribe to SMM rights or do you intend to sell some of your SMM shares?

I have 27,000 SMM shares and have absolutely no idea what to do with them.

Appreciate your comments.

Thank you

PL said...

Good morning AK,

Do you think a giant Like SMM could possibly be delisted. The price of the rights have fallen to almost half the price of the issue price.

May I have your thoughts on SMM.

Thank you


AK71 said...

Hi PL,

You might have missed this blog where I shared my thoughts on SMM:
2Q 2021 passive income.

I don't like the rights issue.

AK71 said...

Hi DS,

If the IPO does not happen, Wilmar's business goes on like before.

If it does happen, then, we see more value being unlocked.

Not a big deal for the patient investor. :)

PL said...

Hi aK,

Many thanks for your response. I sold off my shares this morning.

AK71 said...

Hi PL,

If an investment cannot deliver what we need it to deliver, then, cutting it loose is probably a logical thing to do.

Chasingdreams said...

Hi ak,

Can you talk to yourself about AA reit and their recent perpetual bond. Will you subscribe

AK71 said...

Hi sugarhoney,

I have published my reply as a blog:
AIMS APAC REIT and perpetual bonds.

David said...

Hi AK,
Good Day.
Thank you for the info on Wilmar.
Its trading ~$4.2 now, near 1yr low of $4.04.
Will try to buy below $4.2.

Hope booming of commodity will help Wilmar.
It seems that all the assets Wilmar has is > then $4.2 Per Share.
It Wilmar is able to 'unlock' those assets, e.g. listing of subsidary in India[though been delayed], Cargill buying 50% in a Wilmar chocolate unit etc.

Best Regards

AK71 said...

Hi David,

Mr. Market is undervaluing Wilmar.

The patient investor will be rewarded. ;)

David said...

Thanks, AK.
Though some said Wilmar business can be very complex & 'difficult' to analyse.
But Wilmar seems cover all the process from raw materials to the final products.

Maybe market thinks that after Wilmar has paid out the special dividend due to IPO of its China subsidy, it will take some time for Wilmar to give out goodies again:-)

Best Rgds

AK71 said...

Hi David,

Wilmar is a giant of a business conglomerate and Mr. Market probably applies a conglomerate discount for the reason you mentioned.

Much value is hidden and people are not able to fully appreciate conglomerates.

For those who primarily invest for income, Wilmar's free cash flow as well as their ability and willingness to pay decent dividends is the primary consideration while waiting for value to be unlocked.

Of course, for those who have the time and inclination, trading around a core position can be very rewarding too.

We must all have our own plan. :)

David said...

Thanks, AK.
Yes, we must have our own plan that suit our individual situation..

Best Rgds

AK71 said...

Hi David,

Indeed so.

Good luck to all of us. :)

Chasingdreams said...

Thank you for the post :)

AK71 said...

Hi sugarhoney,

Just talking to myself, as usual. ;p

AK71 said...

Sabana REIT has reported that its occupancy rate has increased in 3QFY2021 to its highest level since 2018, at 85.3%

The REIT says excluding 1 Tuas Avenue 4, which is held for divestment, portfolio occupancy would have been 88.3%.

Meanwhile, occupancy for multi-tenanted properties stood at 90.7%, the highest in nearly eight years.

It renewed 59,729 sq ft of leases with positive rental reversion, standing at +7.8% for 3QFY2021, and rental reversion averaged +11% for the first nine months of 2021.

“This is the sixth time we have achieved positive reversion in the past seven quarters,” Sabana REIT said in an investor presentation.

Full article: The EDGE, 21 Oct 2021.

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