Accordia Golf Trust - CIMB Research 2016-09-08: Osaka golf course visit

Accordia Golf Trust - CIMB Research 2016-09-08: Osaka golf course visit ACCORDIA GOLF TRUST ADQU.SI

Accordia Golf Trust - Osaka golf course visit

  • Visit to 4 of AGT’s golf courses in Osaka revealed that weekend utilisation rates at its courses were high. AGT aims to improve weekday utilisation rates.
  • Bloomberg consensus puts forward dividend yield at 10.3% and forward P/BV at 0.68x.
  • Loan-to-valuation ratio of 28.8%. Management targeting accretive acquisitions from sponsor.
  • Still targeting ¥50bn worth of acquisitions by end-Mar 17.
  • Dividends are derived in yen and paid in S$. The company does not hedge exchange rate.


Visited 4 golf courses in Osaka 

  • We visited 4 of AGT’s golf courses in Osaka recently. Of the 4 we visited, Otsu Country Club was the second-most valuable course in its portfolio while the Izumisano Country Club was the fourth-most valuable. 
  • We also saw the same caddy-less play and automated check-in/check-out systems, which are aimed at reducing operating costs, in Osaka that we first saw in a visit in Sep 15 to the Tokyo courses.


Yield of 10.3%; trading below book value 

  • Based on Bloomberg consensus expectations, AGT trades at a forward dividend yield of 10.3% and a forward P/BV of 0.68x. 
  • Dividend payouts are in yen and converted into S$ at the exchange rate on the payment date. 
  • After due consideration, AGT believes that it is better not to hedge the exchange rate exposure at this point in time. Naturally, the strengthening yen provides some translation upside.


Catalyst: accretive acquisitions 

  • AGT’s sponsor is the number one golf course operator in Japan and has a stabilised portfolio of some 26 golf courses available for acquisition. AGT’s target is to acquire ¥50bn worth of golf courses by end-Mar 17. 
  • Its loan-to-valuation (LTV) ratio currently stands at 28.8%. The maximum LTV ratio that AGT can leverage up to is 60.0%. AGT is still in negotiations with its sponsor and the company believes that its ability to conclude some accretive acquisitions could re-rate its share price.


Operates only in Japan 

  • AGT derives all its revenue and expenses in Japan in yen. Its debts are also entirely denominated in yen. About 77% of its debts have been swapped into fixed rates. AGT’s weighted average interest rate is 1.94% per annum. 
  • There are three term loans maturing in Aug 17, Aug 18 and Aug 19, respectively.


Risks 

  • Other than the exchange rate translation risk from yen into S$ for dividend distributions, key risks highlighted by AGT include 
    1. poor weather, which affects revenue, 
    2. ownership, registration and land-related issues, and 
    3. lack of organic growth opportunities.

NOT RATED / Target Price: N/A




William TNG CFA CIMB Research | http://research.itradecimb.com/ 2016-09-08
CIMB Research SGX Stock Analyst Report NOT RATED Maintain NOT RATED 99998.000 Same 99998.000


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