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From a reader:
Hi AK, can I have your opinion on Fortune Reit at current price?
Sent from my iPad
My reply:
I was never interested in this REIT very much because it was listed in HK$.
I guess you are interested in Fortune REIT because its unit price plunged and closed at HK$5.60 a unit recently?
Looking at the numbers, an estimated annual DPU of 36c means a yield of 6.43%. This is in HK$ terms. What we get in S$ terms will depend on the exchange rate at your point of entry and also at the point when the distributions are made. Messy.
The REIT is trading at a significant discount to its NAV of HK$10.26 a unit. Gearing ratio at 32.7%. All this information, we can get from its presentation slides for year ended 31 Dec 2013.
Interest cover ratio has been declining.
We could see some form of equity fund raising soon since the REIT does not have a credit rating and could not exceed 35% in gearing.
Technically, unit price is resting on immediate support now and if that should break, the next support is at HK$5.30. The downtrend is pretty strong.
I won't say whether you should buy or sell this REIT now. You decide.
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