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Reits分析：新加坡丰树泛亚商业信托N2IU

懒胡涂 joined discussion · Aug 7, 2024 20:25

新交所交易代码：N2IU $Mapletree PanAsia Com Tr (N2IU.SG)$

English: Mapletree Pan Asia Commercial Trust

Chinese name: "丰树泛亚商业信托"

1. Introduction

Mapletree Pan Asia Commercial Trust (Frasers Centrepoint Trust) is a well-known real estate investment trust (REIT) in Singapore.The trust was established in 2006 with the aim of investing in commercial properties in Singapore and providing stable returns to investors through rental income and capital appreciation.The investment portfolio of Mapletree Pan Asia Commercial Trust primarily focuses on the retail and commercial property sectors, including shopping centers, retail shops, office buildings, and other commercial properties.

The trust's objective is to own high-quality properties located in convenient transportation and high footfall areas to ensure stable rental income and potential for capital appreciation.

AsReal Estate Investment Trust (REITs)The operation model of Mapletree PanAsia Commercial Trust is to collect funds from investors to purchase and hold commercial properties, and achieve investment returns through rental income and asset appreciation. The trust usually distributes profits to investors regularly, which come from rental income and asset appreciation of the commercial properties it holds.

The management team of Mapletree PanAsia Commercial Trust is dedicated to effectively managing its investment portfolio, enhancing the value of assets, and seeking opportunities to increase investor returns. The trust is listed on the Singapore Stock Exchange and regulated by the Singapore regulatory authority.

II. Brief Historical Review

Mapletree PanAsia Commercial Trust was formed by the merger of two trusts, namely Mapletree Commercial Trust and Mapletree Anson Commercial Trust.

Its predecessor, Mapletree Commercial Trust, only held 5 properties in Singapore. $FTSE Singapore Straits Time Index (.STI.SG)$They are VivoCity (landmark, gateway to Sentosa), Mapletree Business City (MBC), mTower, Mapletree Anson,Bank of America HarbourFront ("BOAHF"). As shown in the figure below:

After the merger, Singapore's properties account for about 60% of the total value, attracting many properties from Mainland China, Hong Kong, Japan, and South Korea. These properties vary in quality, but overall, the quality of local properties in Singapore is higher. After the pandemic, the popularity of these properties has recovered, and some have even exceeded pre-pandemic levels, such as VIVO-City (which is now packed with people).

It would be a good thing if the management company sells off properties with average quality in the future.

III. Overview of Properties

When investing in REITs, it is crucial to understand the quality of the properties they hold.

(PS: Before the merger, Hootoo only needed to focus on five properties in Singapore. After the merger, Hootoo has to look at properties all over Mainland China, Hong Kong, Japan, and South Korea. This has increased the workload significantly. Of course, when I say "look," it doesn't mean physically visiting them every day, but rather conducting extensive research and analysis.)

The following is an overview of property valuations:

For more specific property introductions, please refer to the financial reports. I won't post them here. Below, I will only discuss my own understanding.

Vivo-City is valued at 3.3 billion and contributes 25.8% to net income from assets.

Festival Walk is valued at over 4 billion dollars and contributes 17% to net income from assets (Festival Walk is also known as the Gateway in Hong Kong).

Hang Seng Index $Hang Seng Index (800000.HK)$

The difference in the quality of the properties is quite obvious. From the perspective of future business prospects, the outlook for Vivo-City is brighter. Festival Walk is clearly falling behind. However, it is worth mentioning that N2IU's valuation is not well regarded, and this is somewhat reflected in its stock price as well.

It is a good thing that the market offers such a cheap price. In the past three years, N2IU has shown exceptional stability despite high interest rates, taking steady steps forward. With the current interest rate cut, future performance is expected to further improve.

IV. Basic Data

The most important aspect of REITs is the quality of the properties (this determines whether dividends can be stable and whether they can grow). Next, it is important to have a good understanding of the accounting data.

Let's start by looking at the two most important core data points:One is whether the assets are discounted or not. The other is how much the dividend is.

i. Are the assets discounted? It has been discounted by 30%. The total valuation of N2IU's assets is about 16 billion new coins, with a net asset value of 9.4 billion new coins, and the current market value is 6.6 billion. The price-to-book ratio is 0.7.

ii. How much is the dividend? It is 7.2%. Based on the dividend for the fiscal year 2023, the current dividend yield of the shares is 7.2%.

One thing to note here is that the 7.2% dividend yield has some "water" in it.

This year's dividend rate exceeds the net income of the fiscal year 2023. Because within the 7.2%, around 0.7% comes from a large amount of cash accumulated during the pandemic. After the pandemic passed, the company felt safe to distribute it.

A friend asked about this. Why did they accumulate so much cash during the pandemic?! From 2020 to 2021, when the pandemic was severe, Singapore also strictly controlled people's movements. The malls were empty. However, because most of the rental contracts were long-term, the rental income was not significantly affected. Some shops and small companies closed down in the meantime. I think the company must have been scared at that time, thinking that when the businesses collapse, they will collapse too. So, they hoarded the money and dared not distribute it. In the fiscal year 2021, they accumulated 200 million new coins in cash but did not dare to pay dividends. They were preparing to hold onto the money for a rainy day.

In 2022, the assets of Pan-Asia were internally integrated, so there have been significant changes in the financial report since the year 2023. The total share capital has increased significantly. Total revenue, net income, and liabilities have all changed dramatically. These are normal changes brought about by the merger.

The "water" is not much. Looking at the performance of 2024 and the future prospects, future dividends should be sustainable.

5. Major financial indicators

The main financial indicators are as follows:

When looking at reits, I like to first exclude the changes in fair value of assets.

Although from an accounting perspective, this valuation method is allowed or commonly used, including changes in fair value of assets in net income is not reliable. So when you look at the net income of reits during the epidemic period, it is very volatile and not informative. Moreover, these companies have a lot of leeway in their operations. Valuation can vary significantly.

The future increase in fair value of assets can be seen as an additional reward.

I think the valuation of N2IU is relatively reasonable.

The net change in fair value of investment properties represents the change in fair value of assets: over 40 million.

Without considering the change in fair value of assets, the key is to look at: Profit before tax and fair value change in investment properties and share of profit of a joint venture. The total is 0.43 billion (SGD).

In theory, the amount of money that can be distributed is about the same, considering other income and deducting taxes. If the distribution profit of 0.43 billion / the market cap of 6.6 billion = 6.5%.

That's why there is some 'room for maneuver' in the previous 7.2%.

Summary:

N2IU owns high-quality real estate assets, a robust management team, and stable cash flow. And now the price is running at a low level, similar to the market cap five years ago. As market interest rates continue to decline, performance is expected to further improve. This year, the dividend yield of 7% is highly likely to be maintained, with the possibility of continuing to maintain and break through in the future.

It's hard to find competitors globally when looking at such outstanding Reits.

As the US stock market enters a correction period and the Federal Reserve begins a countdown to interest rate cuts, an excellent Reits is at the bottom of the price. It can be said to be a very good investment opportunity.

Of course, investing in Reits is different from investing in stocks, with different intentions and target rates of return. When making decisions, everyone needs to consider their own opportunity cost.

---------------Disclaimer---------------

Risk Disclaimer: Investment involves risks, please be cautious when entering the market. The above only represents personal opinions and does not constitute investment trades.

This article is a summary of personal experience and thoughts. The content is for reference only and does not constitute investment advice for any individuals or institutions. You are responsible for your own gains and losses. I hope the ideas are helpful to you and welcome everyone to exchange thoughts.

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