Accordia Golf Tr

The below is the discussion for this counter:
 Quote:
Jeremyowtaip

Hi Sporeshare, I present below the growth of Accordia Golf Trust (AGT) and other salient points about it to see whether this is a safe and attractive investment or not.

AGT according to their website is a business trust which derives income from it's investment in golf courses, driving ranges and golf course related assets in good locations in Japan. They have the vision to venture out to other geographical regions but have yet to do so. The sponsor of AGT is the largest golf course operator in Japan.

I looked at the growth of AGT for the past 3 years (2015 to 2018) since it was public listed only in second half of 2014. For the past 3 years, AGT has grown it's revenue by a CAGR of 0.75%. Operating profit has remained stagnant and not grown over the past 3 years. Profit attributable to unitholders has grown by a CAGR of 1.78%. Profitability wise, it seems that there is not much showing for AGT in terms of growth.

 However, a short 3 years may also not be a good gauge of their growth. Therefore, I think more time is needed to observe them before reaching a fair conclusion on their growth in this aspect of profitability.

Now onto their balance sheet. As of 31 Mar 2018, AGT's current ratio stands at 0.24. 

It's debt to equity ratio stands at 0.54. 

Over the past 3 years, AGT has not grown it's unitholders' equity. 

Unitholders' equity has declined from JPY83,393 million in 2015 to JPY79,802 million in 2018. This means that AGT has not grown the value of the investment capital that unitholders have put up with AGT over the past 3 years and instead AGT has caused the investment value to decline.

 This is due to accumulated losses in the recent two years which has caused the decline in unitholders' equity.

Onto their cashflows, AGT has since it's IPO in late 2014 and thereafter from 2015 onwards which was flushed with cash, saw it's cash level slowly depleting. There was net outflow in cash every year from 2016 to 2018 though not at a fast rate. The cash outflows in distributions to unitholders have declined every year from 2016 (JPY7881 million) to 2018 (JPY4696 million). It seems that AGT has either intentionally or being forced to decrease it's amount of cash distributions to their unitholders due to tight cashflows over the past 3 years.

The unit price of AGT has decreased from it's IPO price of SGD0.97 to current price of SGD0.55. Over the course of about 4 years based on unit price performance alone, AGT has caused the value of an initial unitholder investment in it to be eroded by about 43.3%.

 This translates to a compounded annual loss of about 12.7% over the past 4 years in terms of unit price performance. I doubt the distributions unitholders have collected over the past 3 years can cover the annual loss in value of the unit price over this same period.

Therefore in conclusion, I will not consider AGT to be a safe and attractive investment for a business trust and certainly one that will not fall under my radar. Unless it can prove itself otherwise in future showing improvements over the earlier salient points mentioned then will I take another second look at it.

NAV of 89.8cents.

P/b of 0.6x

DPU of 3.9 cents

Yield is about 7%.

Not a call to buy or sell.

Please do your own due diligence!