Homepage
PR Newswire
07-07-2011, 07:50 AM
Jul 7, 2011
Investors not warming up to business trusts
With some dividend payouts in US$, strong Singdollar is a disincentive
By Goh Eng Yeow, Senior Correspondent
EVEN though investors are paid next to nothing on their bank savings, they are still not warming up to business offers that would have earned them an extremely attractive dividend payout.
At yesterday's closing price of 84.5 US cents, Hong Kong-based Hutchison Port Holdings (HPH) Trust - the largest business trust listed here - is down 16.3 per cent from its IPO price of US$1.01, since it made its trading debut in March.
In contrast, the benchmark Straits Times Index had risen 5.8 per cent over the same period.
Based on its current price, analysts estimate that HPH Trust - controlled by Hong Kong tycoon Li Ka Shing - offers a dividend yield of more than 6 per cent. HPH Trust offers investors direct exposure to the cash flow generated by the port assets it owns.
Still, despite the attractive projected payout, some of them are not exactly bullish on the counter.
UBS Investment Research analysts Robin Xu and Richard Wei noted in a recent report that what may be keeping local investors away is the strong Sing-dollar, since HPH Trust pays out its dividends in US dollars.
Since the listing of HPH Trust in March, the greenback had fallen 4.2 per cent against the Singdollar. So apart from losing part of their investment as a result of the falling share price, investors here would have suffered a foreign exchange loss as well.
'Management attributes part of the reason, other than the fundamentally weakening global economy, for the recent share price correction to Singapore investors finding yield return less attractive on a strong Singdollar,' the report said.
Investors were also turned off by the weak year-to-date container volume experienced by HPH Trust. But the two UBS analysts were hopeful that HPH Trust's fortunes would get a boost from the addition of 'several peak season shipping routes' this month.
'Management is also looking for average selling price improvement each year, as they move from Hong Kong dollar-denominated tariffs towards the yuan,' they added.
Striking an even more bearish note, CLSA analyst Oh Kuan Yu said 'investors are still paying an expensive price for the distribution yield and investors should consider an entry price of 70 US cents'.
The only redeeming feature is possibly a stronger second half, as big manufacturing orders come in for the key buying period between August and October, she added.
Still, apart from HPH Trust, some other business trusts appear to have fallen on hard times too.
CitySpring Infrastructure, which enjoyed a brief spell as a market darling when it was listed in early 2007, plunged 8.3 per cent in the past week alone, after announcing a rights issue to raise $205 million to repay some of its debts. Yesterday, it ended unchanged at 49.5 cents.
Even though the cash call had been anticipated as far back as May, it still failed to sit down well with investors.
Kim Eng analyst Anni Kum, for instance, cut her target price on CitySpring from 54 cents to 46 cents, after taking into account the interest cost savings from the debt reduction and the enlarged unit base of 1.519 billion units.
Among other business trusts, new kid on the block, Perennial China Retail Trust, is down 10 per cent from its IPO price of 70 cents since its listing last month. It ended one cent down at 63 cents yesterday.
With a cache of shopping mall assets in China, its fortunes are closely tied to the Chinese economy, with investors keeping a wary eye on Beijing's ongoing battle to keep prices under control.
engyeow@sph.com.sg
Investors not warming up to business trusts
With some dividend payouts in US$, strong Singdollar is a disincentive
By Goh Eng Yeow, Senior Correspondent
EVEN though investors are paid next to nothing on their bank savings, they are still not warming up to business offers that would have earned them an extremely attractive dividend payout.
At yesterday's closing price of 84.5 US cents, Hong Kong-based Hutchison Port Holdings (HPH) Trust - the largest business trust listed here - is down 16.3 per cent from its IPO price of US$1.01, since it made its trading debut in March.
In contrast, the benchmark Straits Times Index had risen 5.8 per cent over the same period.
Based on its current price, analysts estimate that HPH Trust - controlled by Hong Kong tycoon Li Ka Shing - offers a dividend yield of more than 6 per cent. HPH Trust offers investors direct exposure to the cash flow generated by the port assets it owns.
Still, despite the attractive projected payout, some of them are not exactly bullish on the counter.
UBS Investment Research analysts Robin Xu and Richard Wei noted in a recent report that what may be keeping local investors away is the strong Sing-dollar, since HPH Trust pays out its dividends in US dollars.
Since the listing of HPH Trust in March, the greenback had fallen 4.2 per cent against the Singdollar. So apart from losing part of their investment as a result of the falling share price, investors here would have suffered a foreign exchange loss as well.
'Management attributes part of the reason, other than the fundamentally weakening global economy, for the recent share price correction to Singapore investors finding yield return less attractive on a strong Singdollar,' the report said.
Investors were also turned off by the weak year-to-date container volume experienced by HPH Trust. But the two UBS analysts were hopeful that HPH Trust's fortunes would get a boost from the addition of 'several peak season shipping routes' this month.
'Management is also looking for average selling price improvement each year, as they move from Hong Kong dollar-denominated tariffs towards the yuan,' they added.
Striking an even more bearish note, CLSA analyst Oh Kuan Yu said 'investors are still paying an expensive price for the distribution yield and investors should consider an entry price of 70 US cents'.
The only redeeming feature is possibly a stronger second half, as big manufacturing orders come in for the key buying period between August and October, she added.
Still, apart from HPH Trust, some other business trusts appear to have fallen on hard times too.
CitySpring Infrastructure, which enjoyed a brief spell as a market darling when it was listed in early 2007, plunged 8.3 per cent in the past week alone, after announcing a rights issue to raise $205 million to repay some of its debts. Yesterday, it ended unchanged at 49.5 cents.
Even though the cash call had been anticipated as far back as May, it still failed to sit down well with investors.
Kim Eng analyst Anni Kum, for instance, cut her target price on CitySpring from 54 cents to 46 cents, after taking into account the interest cost savings from the debt reduction and the enlarged unit base of 1.519 billion units.
Among other business trusts, new kid on the block, Perennial China Retail Trust, is down 10 per cent from its IPO price of 70 cents since its listing last month. It ended one cent down at 63 cents yesterday.
With a cache of shopping mall assets in China, its fortunes are closely tied to the Chinese economy, with investors keeping a wary eye on Beijing's ongoing battle to keep prices under control.
engyeow@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
