Accordia Golf Trust - CIMB Research 2017-04-06: Will the game change?

Accordia Golf Trust - CIMB Research 2017-04-06: Will the game change? ACCORDIA GOLF TRUST ADQU.SI

Accordia Golf Trust - Will the game change?

  • We visited six of Accordia Golf Trust (AGT)’s golf courses in Tokyo over the weekend.
  • Bloomberg consensus puts forward dividend yield at 9.0% and forward P/BV at 0.78x.
  • Post MBK’s acquisition of sponsor, Accordia Golf, management will seek a meeting with MBK to understand the strategy going forward. Status quo for the moment.
  • Dividends are derived in yen and paid in Singapore dollars. The company does not hedge the exchange rate.



Visited six golf courses in Tokyo 

  • Over the weekend, AGT hosted seven analysts and two investors for a tour of six of their golf courses in Tokyo, Japan. The key concerns raised were 
    1. valuation of the golf courses; 
    2. pricing trends; 
    3. player visitor-ship numbers; 
    4. what steps can be taken to raise revenue; 
    5. acquisition pipeline and 
    6. possible impact on AGT from MBK’s (private equity outfit) acquisition of Accordia Golf Co (AGT’s sponsor).


Management comments 

  • According to management, there is limited room to raise prices due to competition where these six golf courses are situated. However, management has successfully lowered operating costs by training its workers to multi-task and by implementing self-service check in/check out for the players, leading to lower staffing needs.


Acquisition pipeline 

  • Management is also working hard on the acquisition pipeline as they are cognisant that the market is eagerly anticipating such inorganic growth. On this front, AGT has been in discussion with its bankers to gain their support for any potential acquisitions.
  • Management highlighted that a challenge in obtaining financing is that all the current bankers must agree to any financing requirement.


MBK Partners Group 

  • MBK Partners Group is a private equity firm that specialises in the East Asia region and proactively supports the management of corporations which they invest in so as to maximise their corporate value. 
  • As at Jan 17, MBK has successfully acquired Accordia Golf Co. AGT management will provide an update at a later date after they have conducted meetings with MBK. 
  • For the moment, management guidance is status quo.


The six golf courses 

  • The six golf courses we visited were in the Greater Tokyo region which accounts for 49% of the total group portfolio value as at 31 Dec 2015. These six courses accounted for 12% of the value of the Greater Tokyo golf courses. 
  • The average utilisation rate of these six courses in FY3/16A was 78%. 
  • We note that Chichibu Kokusai Country Club had the lowest utilisation rate of 70.4% (FY3/16A) and was incidentally, also the oldest of the six courses we visited.


Valuations 

  • Based on Bloomberg data, there are two brokers covering AGT with a consensus average target price of S$0.83. 
  • On Bloomberg consensus, AGT is trading at FY3/17F P/BV of 0.78x with an average dividend yield of 9.1% in FY3/17F-FY3/19F.



NOT RATED
Target Price: N/A


William TNG CFA CIMB Research | http://research.itradecimb.com/ 2017-04-06
CIMB Research SGX Stock Analyst Report NOT RATED Maintain NOT RATED 99998.000 Same 99998.000



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