gforce2Parkson> If you actually took the time to scan through the Q4 Results, it shows Fair value adjustment of investment properties of (-RM39,933,986). As you know, the market conditions have put a damper on property values, and that is reflected in the revised NAV of the share, and the Q4 Results. It is a paper loss, not a cashflow loss.
Cashflow is stable: this is probably one of the few REITs that has consistently delivered stable dividends of above 10sen Y-o-Y without fail since 2007. (Currently at 10.5 sen for the FY2015.)
Possible concerns: 1. Borrowings have increased due to a property acquisition (Mahkota Parade individual lot). 2. Some Material Litigation regarding Mahkota Parade. 3. Slowing consumer demand in 2016.
Parkson5121 HEKTAR HEKTAR REITS Quarterly Rpt for the Financial Period Ended 31/12/2015 (Amended)
Current Year Quarter Preceding Year Corresponding Quarter Current Year to Date Preceding Year Corresponding Period 31/12/2015 31/12/2014 31/12/2015 31/12/2014 RM '000 RM '000 RM '000 RM '000 1 Revenue 31,931 30,828 125,511 121,991 2 Profit/Loss Before Tax (28,918) 17,576 4,759 50,387 3 Profit/Loss After Tax and Minority Interest (28,918) 17,576 4,759 50,387 4 Net Profit/Loss For The Period (28,918) 17,576 4,759 50,387 5 Basic Earnings/Loss Per Shares (sen) (7.22) 4.39 1.19 12.58 6 Dividend Per Share (sen) 2.70 2.70 10.50 10.50 As At End of Current Quarter As At Preceding Financial Year End 7 Net Tangible Assets Per Share (RM) 1.4586 1.5518
ParksonLoss of 7.22 sen. A loss is still a loss. Why pay RM 1.52 for loss making company? 40 sen is fair value. http://www.bursamalaysia.com/market/listed-companies/company-announcements/5001177
gforce2Parkson> Take a simple analogy: You buy a house for RM1 million, and rent it out at RM60k / year. You do a revaluation of your property the next year, and find that it is only worth RM940k on the open market. But, you're still able to rent it out at RM60k / year.
Do you sell? Is it a loss-making asset? Of course not. On paper, you might have lost money... but it's generating positive rental income every year.
ParksonWhen Festival Mall Melaka open Hektar Mahkota Parade will sink like Titanic ship.
(Page 8) MOVING FORWARD INTO 2016 We expect 2016 to be Hektar REIT’s toughest year over its 10-year history. To reiterate, the oil crisis, the currency crisis, mass layoffs and hike in interest rates from the implementation of Bank Negara’s Basel III are not doing Hektar REIT and retailers any favours. The retail outlook in 2016 is very lacklustre and retailers continue to be skittish. A significant number of our loyal retailers are seeking our support to reduce their rent until the tide is turned. These are not fly-by-night retailers. They have been with us for many years and have never objected to rent increases before. I feel it is now time for us to demonstrate our loyalty to them during this extremely trying period. Bear in mind though, that by acceding to these rent reduction, Hektar REIT may experience dips in revenue in 2016. However, every cloud has a silver lining. We now expect more opportunities for acquisition as we are now in a better position to negotiate with vendors, who we feel are more willing to accept our high-yield requirement.
In the recent 2015 Annual Report, The Chairman/CEO acknowledges the tough economic climate, and cautions investors on possible dips in revenue in 2016. However, he also sees possible opportunities for acquisitions. It is possible that HEKTAR might look to issue new shares in the near future to fund future property acquisitions, as well as reduce gearing levels (currently at 44%).
There are also quite a few property tenancies expiring this year (37% by rental income). So, let's assume a worst case scenario: a negative rental reversion of about 10%, meaning a drop of about 3.7% in revenue, from RM125.5m to RM120.8m (less RM4.7m). 2015 Property expenses: RM49m 2015 Other expenses (manager fees, loan interest, etc) RM32.5m Realised income in 2015 was about RM44.6m, so a drop of RM4.7m means est. realised income of RM39.9m, Divided by 400m shares. Assuming they pay out 95% as dividend, that works out to 9.5 sen per share, which is still a 6.3% DY at the current share price.
Overall, still a decent defensive stock for the medium to long-term. I will probably look to accumulate this stock if it drops below RM1.40
xncziyi44best reits but trouble is lease getting more n more expensive to bussinesses in malls hence many unable to make business viable so many change n disruption in most malls. wonder if reits may suffer so much from these uncertainty. also many malls planning to open soon esp in major towns. would prefer to stay off reits for next few years .happy investings.