02-01-2011, 04:46 PM
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02-01-2011, 04:46 PM
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The Business Trust asset class has been hugely unpopular among local investors due to its poor operating record during the credit crunch in 2009. I have compiled a list of business trust and how their share prices have performed since IPO. Let’s see whether anything surprising pops up !
I have made the following assumptions – 1) Unit-holders participated in all rights and public equity fund raising exercises. 2) FSLT and RMT IPO prices are quoted in US$ since their DPU is declared in US$. Ascendas India Trust IPO Price: $1.18 (IPO’ed in 2H 07) Current Price: $0.925 Dividends Declared: $0.2454 Net Loss: $0.0096 Net Loss Percentage: 0.81% CitySpring IPO Price: $0.89 (IPO’ed in early 2007) IPO Price after adjusting for 1 for 1 rights @ $0.48: $0.685 Dividends Declared: $0.1583 (pre rights) & $0.0525 (post rights) Dividends Declared adjusting for rights: $0.13165 Current Price: $0.575 Net Gain: $0.02165 Net Gain Percentage: 3.16% First Ship Lease Trust IPO Price: US$0.98 Dividends Declared: US$0.2977 Current Price: US$0.3682 (using current exchange rate) Net Loss: US$0.314 Net Loss Percentage: 32.0% India Bulls Properties Investment Trust IPO Price: $1.00 (June 2008) IPO Price after adjusting for 53 for 100 rights @ $0.16: $0.709 Dividends Declared: 0 Current Price: $0.27 Net Loss: $0.439 Net Loss Percentage: 61.9% K-Green Trust IPO Price: $1.11 (based on 1st day closing price in June 2010) Dividends Declared: 0 Current Price: $1.08 Net Loss: $0.03 Net Loss Percentage: 2.7% Pacific Shipping Trust IPO Price: US$0.45 (IPO’ed in 2H 2006) IPO Price Adjusting for offer of 3 for 4 @ USD 0.365: US$0.414 Dividends Declared: US$0.099253 (pre rights) & US$0.07533 (post rights) Dividends Declared (adjusting for rights): US$0.132046 Current Price: US$0.38 Net Gain: US$0.098046 Net Gain Percentage: 23.7% Rickmers Maritime Trust IPO Price: US$1.00 Current Price: US$0.318 (current exchange rate) Dividends Declared: US$0.20154 Net Loss: US$0.48046 Net Loss Percentage: 48.0% Treasury China Trust IPO Price: $1.76 (based on 1st day closing price) Dividends Declared: $0.025 Current Price: $1.87 Net Gain: $0.135 Net Gain Percentage: 7.7% MIIF IPO Price: $1.00 (2005) Current Price: $0.595 Dividends Declared: $0.334 Net Loss: $0.071 Net Loss Percentage: 7.1% Global Investment Limited IPO Price: $1.06 Dividends Declared: $0.252 Current Price: $0.215 Net Loss: $0.593 Net Loss Percentage: 55.9% Top 3 Gainers 1) Pacific Shipping Trust with 23.7% gain over the past 4.5 years 2) Treasury China Trust with 7.7% gain over the past 0.5 years 3) Cityspring with 3.2% gain over the past 4 years. Top 3 Losers 1) Indiabulls Properties Trust with 61.9% loss over the past 2.5 years 2) Global Investment Limited with 55.9% loss over the past 3.5 years 3) Rickmers Maritime Trust with 48% loss over the past 3.5 years I was quite surprised with the data collected. I had expected the Ai-Trust to out-perform its peers since its assets are freehold property land and its gearing remains low. I did not expect PST to out-perform its fellow peers by such a large margin since it was the smallest business trust there. But even then a 23% gain over 4.5 years, isn't very impressive either ! TCT gains has been impressive over the past few months as more and more market players began to noticed it and the quality of its assets. It spiked after making the 2 recent acquisitions in December. The data clearly showed one thing – with the exception of PST, the gainers made single digit gain over a few years which is pretty poor. Singapore Government bonds held over the same duration would have made better gains with lesser risk. Moreover, the Top 3 Losers started out brightly – Indiabulls had given distribution forecast yield while RMT and GIL paid handsome dividends until the credit crunch derailed them. In other words, prospective shareholders cannot afford to use past performance to determine whether a Trust measures up. Instead, he has to examine whether can the Trust continue to operate as a going concern with stable distributions even if a recession were to occur. Unfortunately, this is easier said than done. Quite a number of biz trust were listed in 2007 and 2008 period which co-incidentally (maybe not) was the period of extreme bullishness. Don’t fall for the projected yield in the IPO Prospectus, be wary of the future and keep an eye on the capital structure ! Its quite ironic that a 1.5% Fixed Deposit out-performed all but 2 business trust ! That's over 80% of them !!! It is also very important to understand the businesses which your biz trust is under-taking. A leasing business is generally easy to grasp but many failed to question why did some of these trust had a 100% cash payout policy. Development business and investments in exotic assets (like private infrastructure or loans) requires some innate understanding of how these assets functions. It is best to avoid investing in anything which you may not fully grasp. Personally, even till today, I still don't quite grasp the majority of GIL's assets since I lack the knowledge. I do expect more business trust to be listed if the market conditions continue to be good. So let's be vigilant and share about any potential disasters which may occur for any newly listed business trust. (Vested in PST) PS: Please voice out any mistakes in the figures. Thanks
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
06-01-2011, 11:06 PM
Good information by Nick........
Quick common for businesses to under perform fixed interest account........(especially when it fails....)
06-01-2011, 11:38 PM
(06-01-2011, 10:31 PM)Nick Wrote: The Business Trust asset class has been hugely unpopular among local investors due to its poor operating record during the credit crunch in 2009. I have compiled a list of business trust and how their share prices have performed since IPO... Nice compilation. I see something else from these data but I guess it's nothing novel. IPOs are priced high. I am also guessing from my stomach that if we did similar compilation on stocks (i.e. using IPO prices as the starting point), the result will not be too far off. (06-01-2011, 11:38 PM)cif5000 Wrote:(06-01-2011, 10:31 PM)Nick Wrote: The Business Trust asset class has been hugely unpopular among local investors due to its poor operating record during the credit crunch in 2009. I have compiled a list of business trust and how their share prices have performed since IPO... Yes very true. Most of these trusts would have been decent investments if purchased in 1H 2009. If I have time, I will attempt to compile a list of data for REITs. What else did you see from these data ? Please share hehe Thanks Newborn1000 for the compliment
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
07-01-2011, 09:01 AM
(06-01-2011, 10:31 PM)Nick Wrote: The Business Trust asset class has been hugely unpopular among local investors due to its poor operating record during the credit crunch in 2009 Nice compilation. Thanks. I am not a favorite of business trust as I have this nagging question as to why the owners want to put their business as a business trust if the business is so good and not run it like a business going concern. Business trust adds another layer of management cost to a stand alone business. Your data goes to show that it is overvalued and the owners wants to bail out.
07-01-2011, 02:50 PM
That's hard work Nick. Looking forward to see the list for Reits too.
Thanks for your effort btw. For TCT and KGT, I have a feeling we haven't seen long enough of a listing history yet for the percentage to be representative. Probably need to wait another year or two.
Hi Blackjack,
Thanks for commenting on the data compiled. I hope I got my figures right ! KGT has been trading at very narrow range. Personally, I am not impressed with its 100% cash payout policy which leaves it with no room to replenish its assets with the BOT lease expires. TCT is an interesting stock considering its sharp discount to its book value despite holding on to prime assets in Beijing and Shanghai. It has been trading at sharp discount from its 'IPO' price for a long time till the recent acquisitions were made which caused the price to sky-rocket from 1.50ish to over 1.80 within days ! So you are right that it isn't representative yet due to its short listing history. I am quite mixed on TCT prospect - part of me is quite certain that the discount to its NAV will decline with time while another part of me screams out IndiaBulls Indiabulls !!! The Management is quite focused on trimming down this gap in unit price judging by its recent comments. Makes sense...you can't raise much equity if unit price is trading at such levels !
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
08-01-2011, 01:39 AM
One thing i noticed though, is that KGT has a net loss, but it's highlighted in green. Just a bit misleading, is all.
08-01-2011, 02:01 AM
(08-01-2011, 01:39 AM)Jon-san Wrote: One thing i noticed though, is that KGT has a net loss, but it's highlighted in green. Just a bit misleading, is all. Ok corrected. Careless mistake from me hehe
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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