OVERVIEW:
ARA is an integrated real estate fund manager in Asia Pacific region. It has built a diverse suite of real estate investment trusts (REITS) and private real estate funds that are invested in office, retail, logistics/industrial, hospitality and residential sectors. The income is generated by earning in percentage of assets value it manages. Its REITS portfolio is listed below:
HIGHLIGHTS:
[1] Its latest result saw FY2015 net profit reached $72m which is up 16% year on year, after taking out one off gain in FY2014. 56% of revenue is generated from recurrent management fees which grew 3% year on year.
[2] Total borrowing is around $150K, which represents low gearing ratio at 3%. It is having cash at $76m now.
[3] Asset under management (AUM) hit $29.8b with annual growth at $2b. The increased AUM will underpin steady growth in revenues and profit in 2016.
INVESTMENT THEMES:
[1] Current valuation is considered pretty attractive for ARA since 2012. Its PE fell below 13 and dividend hit beyond 4%.
[2] In 2015, ARA has raised its private fund size with additional USD2b to invest in various properties in Singapore, Malaysia and Korea. These should drive the growth of its earning in 2016.
[3] Fee revenues from its REITs, private funds are mainly recurring in nature and offer income visibility. Based on SOTP valuation, the counter shall be valued ~ 1.5
PRICE TREND:
The counter is trading with CD (Cum Dividend) now. EX (Exclusive of Dividend) date falls on 21 April. Shall price drop on EX, it might hit next support ~1.015 which represents attractive 5% yield.
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