Perennial China Retail Trust.

Perennial China Retail Trust (PCRT) is focused specifically on shopping malls but with a China focus. Although I am not usually interested in IPOs, I am curious about this one since I have vested interest in CapitaMalls Asia which has a large exposure in China.

PCRT has two objectives:
1. Provide unitholders with long-term capital growth from a steady growth in net asset value (NAV).
2. Provide unitholders with regular distributions from the income of its completed and stabilised assets.

PCRT will have an initial portfolio which includes:
1. 50% stake in Red Star Macalline Global Home Furniture Lifestyle Mall, Shenyang.
2. 50% stake in Shenyang Longemont Shopping Mall, Shenyang.
3. 100% stake in Foshan Yicui Shijia Shopping Mall, Foshan.
4. 100% stake in Chengdu Qingyang Guanghua Shopping Mall, Chengdu.

Only Red Star Macalline Global Home Furniture Lifestyle Mall, Shenyang, which was completed on 30 Sep 2010 is income contributing at listing date. The rest of the initial portfolio is expected to be completed from 3Q 2010 to 2Q 2014. If we are investing for income, this is not very reassuring.

However, PCRT has zero debt. This is attractive and also important as it would seek NAV growth through acquisitions. It has at least S$3.0 billion of pipeline projects in prime high-speed railway commercial development projects. Zero debt would probably mean that it would not have to be overly reliant on equity fund raising in the form of share placements and rights issues, at least in the early days.


PCRT's IPO has a price range of 70c to 76c and would raise between S$785,187,000 and S$852,580,000.

PCRT's forecast distributions (representing at least 90% of PCRT's distributable income):
2011's DPU 3.71c, representing a yield of 4.88% to 5.3%.
2012's DPU 3.86c, representing a yield of 5.07% to 5.51%.
Distributions are made half yearly.

From 2013, PCRT will distribute at least 50% of its distributable income. This might or might not mean a lower DPU since the rest of its initial portfolio would be contributing to distributable income by then with the exception of one property.

NAV per unit at date of listing is estimated at 67c.

Up till this point, there is little to interest me in the IPO. A distribution yield of 4.88% to 5.51% in the years 2011 to 2012 also does not provide enough compensation for the risks which investors are being asked to bear, in my opinion.

How does PCRT compare to CapitaRetail China Trust (CRCT)? Here are the numbers, as of 31 March 2011:
NAV/unit: $1.10
Gearing: 32.6%
Annualised DPU: 8.6c
Last done price: $1.26 which means a distribution yield of 6.83%.

With zero gearing, could PCRT do better than CRCT in future? Will the management be able to execute its future plans successfully? Forecasts are easy to make but whether the numbers would be realised is something else.

If PCRT's unit price were to fall to a much lower value and, in the process, offer a much higher distribution yield to compensate for the perceived risks, I could be interested then. Not now.

See PCRT's prospectus here.
See CRCT's 1Q 2011 presentation here.

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Perennial seeks to raise $843m in Singapore IPO: Update
Thursday, 19 May 2011

© 2011 - The Edge Singapore

Golden Agriculture, Sabana REIT and AIMS AMP Capital Industrial REIT.

This is going to be a very quick post. Well, I hope it would be anyway as I am really tired today from work, mostly housework. All the housewives and maids have my deepest respect.

Golden Agriculture

Golden Agriculture provided some excitement today as patience finally paid off. A wickless white candle was formed on the back of much increased volume, breaking resistance provided by the 20d, 50d and 200d MAs in the process.

Immediate resistance is found at 70.5c as provided by the declining 100dMA. The strong buy up momentum today could probably spill over to the next session. We could see 70.5c tested and even broken. If it were to break, we could see the next resistance at 72c tested.

72c was a resistance level tested many times in the first half of April last month and it even broke briefly. Could we see price forming a higher high this time? Well, the upward trending channel suggests that this is a possibility but taking some profit at resistance can't be wrong either.

Sabana REIT

My thesis that Sabana REIT is going through a basing process could be right after all. The Stochastics is turning up from oversold territory while the MACD has turned up to close the distance with the signal line in negative territory.

So, no matter whether we believe Sabana REIT's unit price is range bound or trending down, support is obvious and downside is pretty limited for now.

90c remains the support to watch while continuing upward movement in price could see gap closed at 93c  and that would be the resistance to watch.

AIMS AMP Capital Industrial REIT

High volume white candle day. If we believe that price action saw the formation of a reverse head and shoulders pattern earlier in the year from February to April, we could see price going higher as the neckline at 21c has, once again, been overcome.

Could we see price breaking out of the downtrend this time round? Resistance at 21.5c remains rather formidable as it is provided by the 200dEMA and this was what prevented the unit price from moving higher in the second half of April last month. We shall have to wait and see. Good luck to fellow unitholders.

Well, this effort at a quick post took me almost an hour. I failed in my attempt. ;)

Related posts:
Golden Agriculture: Eyeing 96c per share.
Sabana REIT: Still waiting for a 10% yield?
AIMS AMP Capital Industrial REIT: 4Q FY2011.