If Without this divestment gain, NPI is down 8% to 23.7m.
Together with 3rd quarter dpu of 1.41 c nts ,total 3.13 cents has been declared and XD will be on 16 May.
NAV has also rises from 86 to 92 cents.
Not a call to buy or sell.
The recent acquiring of 98.7% stake in KY-Heritage Hotel Dongdaemun for KRW72.1 billion ($89 million).
The 215-room four-star hotel sits on a plot of freehold land in Dongdaemun, a major shopping and tourist seems quite well receive by the market.
The company mentioned that this purchased is dpu accreditative.
With the money gathered from the selling of these 2 hotel properties in China, the company would be able to use part of the proceeds to pay for the new acquistion in Korea. The company may payout some of the gains from this divestment to reward shareholders with a special dividend.
Looking through the Financial results for past few years, the Total Revenue seems to be generally increasing from 214.28m (2013) to 224.43m in 2017.
Net income is not consistence as in 2013 it was generating 16.68m and has been drifted lower to 8.10m in 2017.You may want to look further into the detail for this declining net income figure.
Gearing looks fine which is below 35%.
Average dividend of 5.48 cents.
Yield is about 6.5%
NAV of 85.6 cents.
I have roughly workout the fair value using DDM and derive the value of about 87 cents.
The current price of 81.5 cents may still present a potential upwards of about 6.7% to reach 87 cents.
Perhaps, the capital gain might not be that great! I think investor are purely invest for the constant yearly yield of about 6.5%.
Not a call to buy or sell.
Trade/Invest base on your own decision.
1. Recent sale of China hotel properties at good premium to unlock value for unitholders.
2. NAV per share after divestment of China properties is increased thus leading to an attractive P/B ratio below 1.
3. Some possible ways the trust may utilise the divestment proceeds include paying higher distributions or a one-off special distribution seen as a return of capital to unitholders. Also, the trust may utilise the proceeds to pare down debts and decrease gearing. The trust may also utilise the proceeds for AEIs of existing properties and/or for new acquisitions. Or can channel the proceeds into all of the above mentioned with different weightings for each depending on the manager.
For example, if it chooses to do a new acquisition that is not so attractive as compared to previous China hotel properties it has divested paying too high a price for the new property which has less attractiveness. Then, we ask ourselves this question. Why exit the China hotel properties at a premium only to re-enter another new property with less attractive future prospects? This would be doing one good decision followed by one bad decision to negate the previous good effect.
If it chooses to pare down strategically some of the existing debts to increase the average weighted length of time to debt expiry in view of potential rise in interest rates. Maybe this is a good decision.
If it chooses to reward unitholders with higher one-off distributions, it is a neutral option depending how they do it. If most of the proceeds are used towards rewarding unitholders, it may help to boost their unit price higher on a short term basis when a higher distribution attracts investors to this trust. But when the buffett has already ended, what comes after next? Any more growth? If not, then it is just a short term fever with no longer term positive effects of increasing distribution on a one-off basis.
In conclusion, AHT has done an impressive job with the divestment of the China hotel properties at good premium gains. Let's see how they use the divestment proceeds. I believe this is more important to watch for than the ongoing price movements of this trust. Of course, if the trust proves it can use the proceeds in a very good and sound way, then buying it at the current price now is good. If otherwise, even if one can supposedly get it cheap at less than P/B ratio of 1, think again is it really a great wonderful catch.
Dyodd
Ascendas Hospitality Trust (“A-HTRUST”) was listed in July 2012 as a stapled group comprising Ascendas Hospitality Real Estate Investment Trust (“A-HREIT”) and Ascendas Hospitality Business Trust (“A-HBT”), established with the principal investment strategy of investing, directly or indirectly, in a diversified portfolio of income-producing real estate used predominantly for hospitality purposes, as well as real estate related assets in connection with the foregoing. The asset portfolio comprises 11 quality hotels with over 4,000 rooms geographically diversified across key cities in Australia, China, Japan and Singapore; and located close proximity to central business districts, business precincts, suburban centres, transportation nodes and iconic tourist landmarks. A-HTRUST is managed by Ascendas Hospitality Fund Management Pte. Ltd., the manager of A-HREIT, and Ascendas Hospitality Trust Management Pte. Ltd., the trustee-manager of A-HBT. A-HTRUST is sponsored by Ascendas Land International Pte Ltd, a wholly-owned subsidiary of Ascendas Pte Ltd.
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