Accordia Golf Trust - CIMB Securities 2016-07-12: Tailwind from stronger yen

Accordia Golf Trust - CIMB Securities 2016-07-12: Tailwind from stronger yen ACCORDIA GOLF TRUST ADQU.SI 

Accordia Golf Trust - Tailwind from stronger yen

  • Accordia Golf Trust AGT’s sponsor is the top golf course operator in Japan and has injected 89 golf courses into AGT.
  • Bloomberg consensus puts forward dividend yield at 11.6% and forward P/BV at 0.64x.
  • Loan-to-valuation ratio of 28.8%. Management targeting accretive acquisitions from sponsor.
  • Targeting ¥50bn worth of acquisitions by end-Mar 17.
  • Dividends are derived in yen and paid in S$. Company does not hedge exchange rate.

Ended FY3/16 on a high note

  • We visited AGT recently for an update post its first full-year results (IPO was in July 2014). AGT’s full year DPU was 6.63 Scts. 
  • A warmer winter and favourable weather conditions offset the lower visitorship to its golf courses in 2Q due to the longer rainy season. 
  • Demand from its senior customer base was steady. Utilisation rate for its golf courses was around 78% in FY3/16. Visitorship at 5.81m was also the highest in 6 years.

Attractive yield, trades below book value

  • Based on Bloomberg consensus expectations, AGT trades at a forward dividend yield of 11.6% and a forward P/BV of 0.64x. 
  • Dividend payouts are in yen and are converted into S$ at the exchange rate on the payment date. 
  • After due consideration, AGT opines 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 operator in Japan and has a stabilised portfolio of some 26 golf courses available for acquisition. AGT’s target is to acquire 50bn yen 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 has been in ongoing 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 JPY. 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.


  • Other than the exchange rate translation risk from yen into S$ for the dividend distributions, other 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. 
  • We note that there has been some progress on risk number 2.
  • Not Rated. 

William TNG CFA CIMB Securities | http://research.itradecimb.com/ 2016-07-13
CIMB Securities SGX Stock Analyst Report NOT RATED Maintain NOT RATED 99998 Same 99998