CapitaMalls Asia

[freedom]

I don't really believe that the liquidity profile of CMA is that good. for reason, its most equity is in the form of Joint Venture and Associates. What makes it worse is that its Joint Venture and Associates are all high geared.


a better understanding of CMA's debt-to-equity ratio probably should add the corresponding asset and debt in its joint venture and associates back to CMA's balance sheet and let's see how strong its balance sheet is again.

also, don't forget its huge capex in China for all its recent acquisitions.

Its not clear from the documents just how liable CMA is for debt incurred in its subsidiaries and JCEs and associates. I assume, however, that if it were liable (not non-recourse), the'd have to list it as a liability in their balance sheet.

They do have 53 million of income from their fund management business - more than enough to cover interest payments.

It is also not clear how much CAPEX they have to incur going forward on commited projects vs what they've already paid. Do you have the numbers or a reference?

according to interview with CEO of CMA last year, they intended to invest up to 2 billion a year. what is 53 million to 2 billion?

don't forget they got other bank loan and bond, as well. 53 million is not only for interest payment of this bond.

just imagine, if CapitaMall Trust were to do an equity fund raising, what would happen to CMA and Capitaland? probably both CMA and Capitaland need to do their own right issue to fund CapitaMall's right issue (CMA's right issue for Capitaland), the 2009 could play all over again....

CapitaMall has gearing of 38.4, one of the highest among SREITs.

[yeokiwi]

The market has spoken. The placement (presumably to sophisticated investors) was more than 2 times oversubscribed, leading the issuer to expand the placement offer to 180 million. DBS was offering the placement to me and I was too slow to take it up. At the very least I could have stagged it. Well cest la vie...

Well, you still have another chance at ATM.

There is no evidence that CMA cannot service the bond nor roll over the bond in the forseeable future.
At 3.8% or 4.15% coupon rate coupled with the strength of the S$, the CMA bond will be quite appealing to foreign investors.

Since inflation is nowhere to be seen in US, low interest rate is likely to continue.

[mrEngineer]

Its not clear from the documents just how liable CMA is for debt incurred in its subsidiaries and JCEs and associates. I assume, however, that if it were liable (not non-recourse), the'd have to list it as a liability in their balance sheet.

They do have 53 million of income from their fund management business - more than enough to cover interest payments.

It is also not clear how much CAPEX they have to incur going forward on commited projects vs what they've already paid. Do you have the numbers or a reference?

according to interview with CEO of CMA last year, they intended to invest up to 2 billion a year. what is 53 million to 2 billion?

don't forget they got other bank loan and bond, as well. 53 million is not only for interest payment of this bond.

just imagine, if CapitaMall Trust were to do an equity fund raising, what would happen to CMA and Capitaland? probably both CMA and Capitaland need to do their own right issue to fund CapitaMall's right issue (CMA's right issue for Capitaland), the 2009 could play all over again....

CapitaMall has gearing of 38.4, one of the highest among SREITs.

I agree with freedom on the point that JV may be hiding debt from balance sheet easily due to accounting standards if they are in at least 50-50 arrangement and if CMA are the partial guarantors of the debt if their JV partners vanish into thin air.

Also, that statement is by the CEO is really mindblowing when you compare a CAPEX of 2 billion and 180mil bond fund raising. Although it is hard to believe that local state owned companies are possibly fraudalent, this point is quite pretty hard to swallow.

[KopiKat]

according to interview with CEO of CMA last year, they intended to invest up to 2 billion a year. what is 53 million to 2 billion?

don't forget they got other bank loan and bond, as well. 53 million is not only for interest payment of this bond.

Their larger income comes from the dividend from their stakes in CMT, CRCT, CMMT,.. which comes to just more than $100M/yr. CMT contributes the bulk, aro' $56M for last year. That should be more than enough to pay for their other bond interests.

just imagine, if CapitaMall Trust were to do an equity fund raising, what would happen to CMA and Capitaland? probably both CMA and Capitaland need to do their own right issue to fund CapitaMall's right issue (CMA's right issue for Capitaland), the 2009 could play all over again....

CapitaMall has gearing of 38.4, one of the highest among SREITs.

When CMT needs to issue rights, it's most likely to do an acquisition. This acquisition is likely going to come from their sponsor ie. CMA. So, hey presto! CMA need not do any rights issue of their own ie. money left their left pocket to pay for new rights but a lot more goes into their right pocket from selling one of their 'incubated' asset at 'Market Valuation' (perhaps like KREIT saga, their child begged and pestered them to sell even)!

Hey! I'm also not a fan of Capitaland's model of pyramid building. Am in this thread more cos' of the potential kopi $$ mentioned by 'yeokiwi' for this Bond issue.

[yeokiwi]

Hey! I'm also not a fan of Capitaland's model of pyramid building. Am in this thread more cos' of the potential kopi $$ mentioned by 'yeokiwi' for this Bond issue.

I think I have to upgrade it to Ang Bao money now looking at the placement response.

[CalvinPassiveIncome]

The market has spoken. The placement (presumably to sophisticated investors) was more than 2 times oversubscribed, leading the issuer to expand the placement offer to 180 million. DBS was offering the placement to me and I was too slow to take it up. At the very least I could have stagged it. Well cest la vie...

Well, you still have another chance at ATM.

There is no evidence that CMA cannot service the bond nor roll over the bond in the forseeable future.
At 3.8% or 4.15% coupon rate coupled with the strength of the S$, the CMA bond will be quite appealing to foreign investors.

Since inflation is nowhere to be seen in US, low interest rate is likely to continue.

I agree that the yield is not bad for the current low interest rates environment. While US is unlikely to raise interest rates in the near future, 5-10 years is a long time and such long tenure bonds can be negatively affected by rising interest rates. It is important to note that interest rates are at one of the lowest in history. I have also written a post about the bond issues.

http://www.investinpassiveincome.com/cap...at-3-8-pa/

Calvin

[yeokiwi]

The market has spoken. The placement (presumably to sophisticated investors) was more than 2 times oversubscribed, leading the issuer to expand the placement offer to 180 million. DBS was offering the placement to me and I was too slow to take it up. At the very least I could have stagged it. Well cest la vie...

Well, you still have another chance at ATM.

There is no evidence that CMA cannot service the bond nor roll over the bond in the forseeable future.
At 3.8% or 4.15% coupon rate coupled with the strength of the S$, the CMA bond will be quite appealing to foreign investors.

Since inflation is nowhere to be seen in US, low interest rate is likely to continue.

I agree that the yield is not bad for the current low interest rates environment. While US is unlikely to raise interest rates in the near future, 5-10 years is a long time and such long tenure bonds can be negatively affected by rising interest rates. It is important to note that interest rates are at one of the lowest in history. I have also written a post about the bond issues.

http://www.investinpassiveincome.com/cap...at-3-8-pa/

Calvin

The considerations for not subscribing, stag and holding on for long term investment are different.
It depends on what you are going for.

Everything comes right down to probability. If the probability of winning is in your favor, why not?
I suppose most of us buy undervalued stocks because they offer a high probability of a positive return in the future.

So, if an investor thinks that this issue has a high probability of selling at the same offer price or even lower, the right thing to do is to avoid it.
But, by not even considering the probability of positive or negative return, does it make you a better investor?

At least, after the assessment, you have the excitement of finding out whether you are right or wrong ..

[KopiKat]

The market has spoken. The placement (presumably to sophisticated investors) was more than 2 times oversubscribed, leading the issuer to expand the placement offer to 180 million. DBS was offering the placement to me and I was too slow to take it up. At the very least I could have stagged it. Well cest la vie...

Well, you still have another chance at ATM.

There is no evidence that CMA cannot service the bond nor roll over the bond in the forseeable future.
At 3.8% or 4.15% coupon rate coupled with the strength of the S$, the CMA bond will be quite appealing to foreign investors.

Since inflation is nowhere to be seen in US, low interest rate is likely to continue.

I agree that the yield is not bad for the current low interest rates environment. While US is unlikely to raise interest rates in the near future, 5-10 years is a long time and such long tenure bonds can be negatively affected by rising interest rates. It is important to note that interest rates are at one of the lowest in history. I have also written a post about the bond issues.

http://www.investinpassiveincome.com/cap...at-3-8-pa/

Calvin

The considerations for not subscribing, stag and holding on for long term investment are different.
It depends on what you are going for.

Everything comes right down to probability. If the probability of winning is in your favor, why not?
I suppose most of us buy undervalued stocks because they offer a high probability of a positive return in the future.

So, if an investor thinks that this issue has a high probability of selling at the same offer price or even lower, the right thing to do is to avoid it.
But, by not even considering the probability of positive or negative return, does it make you a better investor?

At least, after the assessment, you have the excitement of finding out whether you are right or wrong ..

Ah... I seldom see anyone posting about 'probabilities' in this value forum. 'Probabilities' is the same as 'odds', which is a term commonly used by gamblers or traders. I don't dare to use this term here for fear of being branded as one

Again, it triggers a Warren Buffett quote in my head,

Buffett on Bridge
The approach and strategies are very similar in that you gather all the information you can and then keep adding to that base of information as things develop. You do whatever the probabilities indicated based on the knowledge that you have at that time, but you are always willing to modify your behaviour or your approach as you get new information. In bridge, you behave in a way that gets the best from your partner. And in business, you behave in the way that gets the best from your managers and your employees.

I also just noticed your CMA Bond 'Upgrade' from Kopi-$$ to Ang-Pow $$. Unfortunately, I've 'spent' most of my free cash this week on a 6%++ stock. Let me dig and consolidate what I have over the weekends to see whether I have enough to apply and make some good probability 'Ang-Pow $$$'.

[corydorus]

Investment is all about probabilities IMPO.

[Temperament]

Yes! All is about probabilities. You may know "everything" about a company now. The next moment may be a "Black Swan" market (like Sept 11 2001) or a Sar Market. Even if there is no Black Swan, who can guarantee tomorrow or anytime down the the road the company you know so well yesterday will be the same or better the next moment or next day. All it takes is popping out some high level management has been cooking the books for years. Besides a company and businesses may change every second to minutes; nobody really can predict what is going to happen next. The most recent example is Olympus of Japan. i think even WB has his mistakes even though he may be the NO.1 Investors of all times. That's why we can not put all our money in one company, no matter how "solid" the company is . Which i always dream to do. For better or for worse it will solve my financial problem once and for all. Isn't it?
Ha! Ha!