Accordia Golf Trust - CGS-CIMB Research 2019-04-05: Driving Forward

ACCORDIA GOLF TRUST (SGX:ADQU)

Accordia Golf Trust - Driving Forward

We visited 5 of Accordia Golf Trust’s golf courses in Tokyo over 1-2 Apr 2019.
As at 2 Apr 2019, Bloomberg consensus projects Accordia Golf Trust to record FY3/20F dividend yield of 9.0%, with FY20F P/BV of 0.65x.
Following the refinancing of Accordia Golf Trust's debts to just two lenders, Aozora Bank Ltd and Orix Corporation, management is now focusing on acquisitions.
Management highlighted the possible need to raise capital via sources such as debt and/or equity if suitable acquisition targets are available.

Over 1-2 Apr, ACCORDIA GOLF TRUST (SGX:ADQU) hosted a tour of 5 of its golf courses in Tokyo, Japan for six analysts and four investors. Two of the golf courses we visited were located in the Greater Tokyo region, while the remaining three were located in what Accordia Golf Trust classifies as the "other region" (Shizuoka prefecture).
The Daiatsugi Golf Club (comprising two golf courses) accounted for 20% of the total valuation of Accordia Golf Trust's golf courses in the Greater Tokyo Region as at end-Dec 2017 (based on company estimates).
The three golf courses we visited in the other region accounted for 32% of the total valuation of its golf courses in the other region at end-Dec 2017 (based on company estimates).

On 24 Jul 2018, Accordia Golf Trust refinanced its debts and reduced the number of its lenders to just two – Aozora Bank Ltd (8304 JP, Not Rated) and Orix Corporation (8591 JP). Management believes this would expedite its ability to raise debt funding if the need arises.
On 14 Nov 2018, Orix Group announced that it would transfer its 39 golf courses to Accordia Golf Co (Accordia Golf Trust’s sponsor), making Accordia Golf Co the largest golf course operator in Japan. Accordia Golf Trust’s management is keen to expand its golf course portfolio and plans to explore various funding sources such as debt and/or equity if suitable candidates for acquisition arise.
Accordia Golf Trust is looking at acquiring yield-accretive golf courses. Currently, Accordia Golf Trust has the right of first refusal and call option over its sponsor's pipeline of golf courses and driving ranges. At the same time, Accordia Golf Trust intends to review its portfolio of golf courses and may divest non-performing golf courses (if there are opportunities to do so) if Accordia Golf Trust is not able to improve their performance. Management cited the example of golf courses being converted into solar farms in Japan.
A key change after MBK Partners’ acquired Accordia Golf Co in Mar 2017 is the latter's willingness to approve prudent capex to improve the performance of its golf courses, management said.

Based on Bloomberg data as at 2 Apr 2019, there are two brokers covering Accordia Golf Trust with buy calls and a Target Price of S$061-0.73. Based on Bloomberg consensus estimates, Accordia Golf Trust is trading at a FY3/20F P/BV of 0.65x and a dividend yield of 9.0%.

William TNG CFA CGS-CIMB Research | https://research.itradecimb.com/ 2019-04-05

SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998.000 SAME 99998.000