Another week with quarter results aplenty. In this post, I will talk about
- Capitaland China Trust
- Capitaland Ascendas Reit
- Parkwaylife Reit
- Raffles Medical Group
- The Hour Glass
Capitaland China Trust provides a Q3 update with 9M revenue up by 7.0% and net property income up by 7.5%. No information on distributed income or DPU for the quarter. I have to look back at their 1H report to figure out how they did in Q3 and estimate the DPU for the quarter.
Comparing the figures from the two presentations, the following should be their Q3 figures.
|Q3 2021||Q3 2022||% Change|
|Gross Revenue (RMB million)||473.8||488.3||+3.1%|
|Net Property Income (RMB million)||317.7||312.5||-1.6%|
So despite the positive rental revision of 4.9% for retail segment and 5.6% for new economy segment, the NPI has dropped slightly for the quarter. Average cost of debt has increased from 2.71% in June to 2.81% in this quarter and should continue to move upwards in the coming few quarters. ASSUMING Q4 has a similar performance as Q3 and DPU varies approximately proportionally to NPI as that in 1H, I am estimating a DPU of 3.6 to 4.1 cents for second half of 2022 if management does not retain more amount of distributed income. So at current price of 97 cents, annualised yield is 7.4% to 8.5%.
While the current yield continues to look attractive and I don’t think it is all doom and gloom for China, the uncertainties going forward and availability of other opportunities resulted in me reducing my stake in CLCT. I retain half my position in the counter and will continue to monitor how things work out in the coming year.
Another Capitaland sponsored Reit that reported is Capitaland Ascendas Reit. Unfortunately, no information with regards to revenue and income is provided. Occupancy increases from 94.0% to 94.5% with rental reversion up by 5.4%. So it is likely that revenue for the quarterly is higher but it’s hard to infer for net property income and DPU with average cost of debt up from 2.1% to 2.2%. Given its diverse number of properties, I am expecting a stable quarter going forward with DPU going to be slightly lower or at most flat. That will give a yield of about 6% at current price.
Parkwaylife Reit revenue decreased slightly by 1.3% with net property income inches up by 0.1%. It is a stable performance amid the current headwind. With average cost of debt at only 0.72%, they should be able to sustain their performance as it officially enters the renewal term.
The Pro Forma DPU at the end of Year 4 is 18.26 cents which gives a forward yield of 4.5% at current price. Yes, T-bills latest yield is already 4.2% but would such high interest rate stays for 3 to 4 years? No one knows, so I do not mind having a portion of my investment in Parkwaylife Reit that has been well managed over the years.
Beyond the Reits
Raffles Medical continues her strong momentum for the year with revenue up by 6.2% and net profit up by 62.1% for the quarter. Tailwind comes from patients returning for treatment at RafflesHospital but headwind is increasing inflation might dampen demand for high end health care services. I believe the momentum will carry on to the last quarter and EPS for the year should hit at least 6.4 cents. Based on dividend policy and previous years dividend, I am expecting a dividend of at least 3 cents.
The Hour Glass’s 1H revenue increased by 18% and EPS up by 41%. With the good results, the group maintain their interim dividend of 2 cents. Similarly, the company highlighted that the continued geopolitical tension and increasing negative economy may adversely affect demand. It is definitely a near term risk but I think it should continue to do well for the 2H and should be able to maintain its year end dividend.
Similar to UOB and DBS, OCBC reported a strong quarter. Net interest income is up by a whooping 44% while non-interest income only drop by 4%. This impact increases its net profit by 31% for the quarter compared to a year ago. The momentum should continue into Q4 and this should be a record year. I am expecting a similar dividend for the year and hopefully the group can declare a special dividend.
Venture reported a solid quarter with revenue up by 32.8% and EPS up by 26.5%. The company sees growth in all sectors for the quarter but highlighted the continued uncertainties might affect its science and technology segment beyond the current financial year.. With such good results, it should be a record year for Venture. Annualising its EPS of 93.2 cents of 9 months, it will report an EPS of around $1.24. At current price of $16.13, its PE is at only 13x which is reasonable for a stable company. It should also be able to at least maintain its year end dividend, giving it a current yield of 4.6%. A special dividend will be a bonus.
AEM did not disappoint by reporting a strong growth for the quarter. However, the growth came from a comparison of a weaker 2021 results. Nonetheless, it is a record 9M figures for the company’s history. Surprisingly the company maintains its full year revenue guidance of 820M to 850M which translates to only a 70M to 100M Q4 revenue, which is much lower than the 227M in 2021 Q4. However, AEM is often conservative in its estimate and hopefully it can give a pleasant surprise next year. In any case, its estimated revenue CAGR from 2016 to 2022 is about 51%. Crazily high and I don’t think that will be sustained going forward. A 15%-20% CAGR for the next 3-5 years will be a very strong achievement.
Valuation wise, assuming an EPS of about 42 cents, market is only pricing it at a PE of 8x based on current price of $3.35. Even if it is going to grow at 15% going forward, PEG will be only 0.5. The only caveat to the number is do not expect linear growth. Due to the nature of their business, the growth will come sporadic. Hopefully, the growing recurring demand will mitigate the volatility going forward.
Beyond Retis, I am happy with the results produced by the above companies. Except for CLCT which I sold half my holdings, I will continue to hold the rest of my stake of the above companies.