My simplify Mapletree Greater China Trust (MGCCT) Review
Note: The below is my personal review, please ensure you do your own homework.
1. Gearing around 39.9%
The debt need to watch will be those that mature in March 2018, 2019 and
2020 as it is about 29%, 16% and 16% of the total debt.
Based on the trend of issuance of the bond the average interest rate
might be going up to 3.5% from the current 2.9% this is basically an increase about
60bps. With the guidance provided, the dividend we should expect it to drop
around 0.035 cents and this translate about 0.4% drop.
2. Lease Expiry
For FY16/17, The management has managed
to have positive rental revision, the next risk will come when MGCCT need to
secure the renewal with no change or positive rental revision in FY17/18 as
this is the first bulk (36.5%) of the lease will expired and follow by FY18/19
of 23.5% expiry.
For FY16/17, the concern here is
for
·
Festival Walk where it is account 21% and with
the retail market challenge and new office supply.
·
Gateway Plaza where the vacancy rate in Beijing
is climbing
3. Price to Book Value
Based
on 95 cents and Net Asset of $1.19 this translate MGCCT is currently on
discount of 20%
4. Future Acquisition
There is a potential acquisition in 2018 on-ward as the sponsor new
office building will be ready, depend on when it will dump into MGCCT.
5. Dividend Yield
Based on 95 cents, it is currently yielding about 7.5%.
The dividend has been growing from 6.2 cents in 2014 to 7.2 cents in
2015. With uncertainty in retail market and office supply in Hong Kong and
Beijing plus the cost of borrowing likely to increase in the future, I will
just assume there is no growth in dividend.
6. REIT Manager Fees
REIT
Manager performance fees is based on a performance fee of 25.0% of the
difference in DPU of financial year with the DPU in the preceding financial
year multiplied by the weighted average number of Units in issue for such
financial year.
7. Risk
·
The gearing is pretty on high end for my risk
appetite
·
Interest Rate hike
·
Retail challenge in Hong Kong
·
New supply in Hong Kong and Beijing
8. VAT and Property Tax Implementation – Clarified with MGCCT
Sandhill Plaza is not subjected to change in the property tax as of now.
Sandhill Plaza is an onshore entity hence the applicable VAT is 5%
Gateway Plaza is impacted with the property tax changes and currently
applying 11% VAT
1H FY16/17 Revenue is already reported net of VAT
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