Any source for the following statement? As I know AEON has had this intention for the longest time but nothing materialized so far. "....AEON will soon inject all its shopping malls into a new REIT listing..."
Travestor, that was my own forecast from deep research and my contacts. The benefits of injecting the AEON malls into a REIT are so huge that it is a no brainer for AEON to do it sooner or later. I am making a reasonable forecast that it will happen within this year for the reasons I stated in my 2nd article on AEON published yesterday.
GLNT, I expect people to be skeptical of the idea I put forth in my article. What I did was just to share the huge benefits of doing the corporate exercise, and with good reasoning I was making a forecast that it will happen within this year. There is a difference between speculating and making a reasonable forecast. Traders speculate on all sorts of things eg. government to bail out Sapura Energy, Serba Dinamik will get away from court charges, steel prices will shoot up further etc.
Value investors do not speculate but make reasonable forecasts. I calculated the odds of it happening vs the risk of putting my money in AEON at current prices, and I found that the downside is very low but upside is very huge. I am very confident that I will make good money from investing in AEON in coming months, with or without the corporate exercise as its business fundamentals are strong and rebounding fast.
In fact, I recommended this stock when its share price was off its peak and the share price continued sliding down. I have not benefited from the share price movements. You can see that some party is trying to push up the share price to as high as RM1.69 before the Mar qtrly result was out to entice retailers to chase it betting on a good quarterly result. Now some parties are trying to press down the share price to below RM1.50 on grounds that the Mar qtrly result was disappointing. These parties are trying to press down the share price to give impression that no corporate exercise is forthcoming in order for them to collect more mother shares and call warrants at low prices. Who is doing speculative and manipulative actions here?
@dragon 328...totally agree about market being a place for speculation. If not what the heck are we even here? Anybody who sells you the idea of a sure thing well....
What I have done is to share my honest opinion on this stock and its huge potential. Now that someone is pressing down the share price is really good for me to add even more at low prices. I do not want to speculate on why these people are so desperately selling down the share, nor when AEON will inject its malls into a REIT, but rather just buy on what I believe in based on its current form of business fundamentals and strong cash flows. When the corporate exercise comes, then I know I will make a lot of money.
I like your attention to detail and would love to read more of your articles. You are not a fan of Technical Analysis? seems like you are a pure fundamentalist?
skoh888, thanks for your support. Yes the articles are a bit long as there is too much to share as background info in the first place. I would like to give readers a full picture of the company in terms of its financials, assets, business segments and prospects. In the case of AEON, the financials are a bit unique and tricky. It took me quite some time and hard work to dissect its financials into the 2 business segments: (1) retailing and (2) property management services, and then to make a reasonable projection of its cashflows for each of the segments.
You will notice from AEON quarterly reports and Annual Reports that the company itself was not able to clearly seggregate the costs for each of these segments, hence some Unallocated Expenses and a huge lease liabilities payment. So in order for AEON to inject its malls into a REIT, it will need to first sort out the allocation of these Unallocated Expenses and lease liabilities payments, in order to maximise the cashflows and profits at the REIT and minimise profits at the holding company level to minimise income tax payment (as a REIT does not pay income tax but the holding company pays higher than usual income tax rates).
I do look at technical charts mainly to get a sense of a good timing of entry into a stock or when to take profit for shorter term trades, but I rely more on fundamental analysis to gauge if I buy a stock or not.
I am not good at technical analysis, often got it all wrong. Just like in the case of AEON, one would have expected it to go further after it breached resistance of RM1.65 to close at RM1.66 last Wednesday if he/she looked at the technical chart, but it went down the next day and dropped over 10% in the next few days. It is hence risky to purely look at the chart to chase a stock as some operator will crash you down, as they have better technical chartists to manipulate the movements of the stocks.
I pay attention to details as I have been trained in my corporate life then. And I believe one should really study the company aspects well especially its financials in order to have a good understanding of what happened in the company past quarter and to have reasonable confidence to project what will come next.
Once you have done your homework, you will have greater confidence in what you invest in and make better decision to make the right move. Like in the case of AEON, I am adding it while some party presses it down, as I believe that it will rebound once this party exhausts its selling. A deeply undervalued stock will not stay low for too long. A good example was BJFood. When I first recommended it, it was trading at RM2.00 level and got pressed down to as low as RM1.81 in the following weeks, but after that what happened everybody knows. The share price has more than doubled up to as high as RM4.80. People were skeptical of my recommendation then as BJFood was reporting dismayed net profit pressed down by high depreciation charges and continued losses in Kenny Rogers. But once Starbucks sales increased after MCO and Kenny Rogers turned around, you can see that net profit jumped by bounds after deducting off fixed depreciation charges. For instance, Q3FY2022 Q3FY2021 Revenue RM246m RM182m +35% EBITDA RM83m RM 56m +48% depreciation (30m) (30m) EBIT RM 52m RM 26m +>100%
You can see that though revenue increased by 35% only but EBIT jumped over 100% as depreciation charge is fixed (or small increased). AEON will be a similar case like BJFood but a few times larger as its non-cash depreciation charge for the property management segment is almost RM350 million a year.
Now what if AEON revenue increases by 28% in next 3 years (8% growth p.a.) to RM4,660m by FY2025 as what I forecast in my 2nd article? EBITDA will increase by 28% to RM935m, EBIT will increase 80% to RM470m and pretax profit will jump 177% to RM363m. The compounding effect is amazing.
Travesor, nobody knows when AEON will inject its malls into a REIT, not even its CEO and management. It is dictated by the major shareholder depending on a number of factors - their expansion plan over next 3 years, the capital market conditions, the confidence of the investment banker to solicit interests from cornerstone investors, the proposed valuation, etc. My advice is that do not speculate on the timing but just accumulate while it is low now. Even though it does not materialise this year, the share price will still go up on improving business outlook.
Why there are so many people lose money in the stock market is because they speculate rather than invest properly. 9 out of 10 retailers who chased Serba Dinamik high to 18 sen after it resumed trading have lost money and I bet none of them understood what really happened inside the company.
If you have done your homework and are confident with the company prospects, you will make money sooner or later. Buy low and sell high. Buy when shorter term traders or speculative parties sell it, and sell it when retailers chase it high like in the case of BJFood.
Thanks dragon328 for your efforts of sharing knowledge. It is really up to the reader to digest, analyze, and make own decision. I am still digesting your sharing. :-)
If AEON goes ahead with the REIT, "Assuming AEON Bhd sold a 30-49% stake in an IPO of AEON REIT...", so how would AEON shareholders be getting free REIT shares? Wouldn't they need to subscribe to the IPO and pay for it since AEON is selling an x% stake in an IPO?
Travestor, the title was a little misleading. It was meant to say that if AEON injects all its malls into a REIT, the REIT will be worth RM10 billion and AEON will be worth RM12.1 billion in sum-of-parts valuation. Compared to its current market capitalisation of RM2.1 billion, essentially AEON shareholders are getting the new REIT shares for free through indirect holdings of AEON Bhd.
AEON shareholders will not be getting the new REIT shares directly but will get windfall dividends from the listing proceeds and through AEON still holding majority stakes in the REIT. Assuming AEON lists up 30% stakes of the REIT in the IPO and hold 70% majority, then AEON will be receiving RM3.0 billion of cash from listing proceeds and its 70% stakes in the REIT will be worth RM7.0 billion. If AEON sells 49% stakes in the REIT listing, then it will receive cash proceeds of RM4.9 billion while its 51% stakes in the REIT will be worth RM5.1 billion. I was assuming that AEON would list up 45% stakes and receive cash proceeds of RM4.5 billion, and assumed that AEON would use RM300m to reduce borrowings and the rest RM4.2 billion to be distributed as special dividend of RM3.00 per share.
You should check in on some of those fields below.
Title
Category
Comment
Confirmation
Click Confirm to delete this Forum Thread and all the associated comments.
Report Abuse
Please Sign In to report this post as abuse.
Market Buzz
No result.
Featured Posts
MQ Trader
Introducing MY's First IPO Fund for Sophisticated Investors!
MQ Chat
New Update. Discover investment communities that resonate with your ideas
MQ Trader
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
0:17
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 3163 views | 3 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Travestor
1,001 posts
Posted by Travestor > 2022-05-25 09:16 | Report Abuse
Any source for the following statement? As I know AEON has had this intention for the longest time but nothing materialized so far.
"....AEON will soon inject all its shopping malls into a new REIT listing..."