OVERVIEW:
The local company started its business in optical storage media industry and listed on SGX in 1995. Following a reverse acquisition exercise in 2011, it successfully diversified into the accommodation business. As at March 2015, its portfolio consists of 14 operational accommodation assets totaling 45,662 beds. 9 of them are worker accommodation assets in Singapore and Malaysia. The rest are student accommodation assets in Australia and UK. It develops, owns and operates these dormitory assets.
HIGHLIGHTS:
(1) Latest financial results saw net profit from core business on 1H2015 surged 45% to $19mil year on year. This was mainly due to expansion into student accommodation in UK, coupled with increase of bed capacity in local worker accommodation.
(2) On July, 4th local worker dormitory will be completed. Further expansion of bed capacity in Malaysia will be completed on 4Q2015. The counter expects to increase 80% of bed capacity in its overall portfolio by end of 2017.
(3) In view of strong and stable financial performance, the management decided to pay dividend on half year basis to reward shareholders.
INVESTMENT THEMES:
(1) Throughout past 4 years, the counter has been showing its growth in revenue, earning as well as total asset. In business prospect, further more income could be expected up to next two years. Looking at current P/E ~ 3.2x, price has entered attractive range. Expected dividend yield will be 2.5 ~ 4%
(2) The counter business operation is highly recurring from rental income. Most broker firms derived target price > $0.65 for the counter based on DCF model.
(3) The counter issued $65mil fixed rates notes in Jul 15. With the fund coupled with existing cash balance of $81mil, management indicated ambition for further strategical investment thus creating more value to shareholders.
ENTRY PRICE:
Accumulate the counter amid recent market sell down.
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