Analysis: Capitaland

https://www.reitas.sg/reit-basics/reit-glossary/ (TIL there's a REIT glossary)

Question: What is the difference between Capitaland and Capitaland Mall Trust?

Question: Merger between Capitaland Mall Trust and Capitaland Commercial Trust?

Resource: https://blog.seedly.sg/capitaland-mall-trust-capitaland-commercial-trust-merger

Merger: Capitaland Mall Trust acquiring all of Capitaland Commercial Trust by way of a trust scheme of arrangement, to form Capitaland Integrated Commercial Trust.

Expected to be completed by June 2020. 

Capitaland Commercial Trust owns 10 commercial properties in SG and Germany.

Capitaland Limited will retain its sponsor stake of around 29.1% in the merged REIT. 

Benefits:

- CMT include office properties and integrated developments. 

Eg: Raffles City, CapitaString, Plaza Singapura, Funan. office (38%), retail (33%), integrated devs (29%)

- take on larger projects, eg overseas ones. 

- Increase dpu

Question: What does Capitaland Commercial Trust do?

They are a REIT that manages office properties.

1. Capital Tower, a Grade A office tower
2. Asia Square Tower 2, a Grade A office tower
3. Six Battery Road, a Grade A office tower
4. One George Street (50% interest), a Grade A office tower
5. Raffles City Singapore (60% interest via the RCS Trust), an integrated development with an office tower, a shopping mall and two hotels and a convention centre
6. CapitaGreen, a Grade A office tower
7. 21 Collyer Quay, a prime office building
8. CapitaSpring (45% interest), an integrated development with an office tower, serviced residence, ancillary retail and a food centre, to be completed in 1H 2021

CCT also holds a commercial property strategically located in Frankurt, Germany's prime Central Business District.

1. Gallileo (94.9% interest), a Grade A commercial building with ancillary retail and a 4-storey heritage building for office use.
2. Main Airport Center (94.9% interest), a freehold multi-tenanted office building comprising 11 storeys and two basement levels located in the vicinity of Frankfurt airport, Germany.

TODO: read up about Capitaland's financials

https://reit-tirement.blogspot.com/2020/07/capitaland-retail-china-trust-analysis.html

Summary of this article: https://reit-tirement.blogspot.com/2020/07/capitaland-mall-trust-analysis-26-july.html

Div yield: 4.61%

NAV: $2.011

Price / NAV: $0.98

NAV dropped around 4.5% from previous quarter. TTM dividend yield also dropped, expected as DPU drops. 

Occupancy drops slightly to 97.7%

Highest least expiry increased to 33.3%. WALE reduced to 2 years. 

Debt:

• Gearing ratio increased to 34.4%, it's still healthy. (ratio of a REIT’s debt to its total deposited property value. In Singapore, S-REITs have a gearing limit of 45%.)
• Cost of debt: reduced to 3.1% (interest expense of debt incurred)
• Fixed rate debt increases slightly to 51.5%, unsecured debt remains t 100%. 
• Interest cover ratio reduced to 4.3x, but still healthy and higher than SREITs median level. 
• Weighted Average Debt Expiry is long at 4.5 years. Highest debt maturity of 18.9% will be expiring in 2023. 

Diversification:

• No changes in diversification profile. 

Key financial metrics:

• Property yield drops to 5%. 

The sponsor and REIT manager holds significant shares. However, directors of REIT manager shareholding is low. 

DPU is affected by COVID, else it's on a slight uptrend for the past 5 years. NAV/unit is on uptrend, only dropped in 2020. 

Distribution margin more or less maintain throughout past 5 years. 

Valuation:

- Fundamental intrinsic value: $2.40

- Relative valuation - div yield = $2.05

Price/NAV: 2.19

Checklist: Reading financial statements

Adapted from: https://blog.seedly.sg/reading-sgx-listed-company-annual-report?utm_source=Seedly+App+Users&utm_campaign=0abed8365e-EMAIL_CAMPAIGN_2020_05_13&utm_medium=email&utm_term=0_9f30d18883-0abed8365e-182589729&mc_cid=0abed8365e&mc_eid=37fd9664c9

Chairman/CEO statements:

• Don't take them at face value. Check if the financials match what they are saying
• If a mistake was made, the statement should acknowledge it instead of sweeping it under the carpet.
• Look out for companies skimpy on the performance details -> yellow flags
• Read past 5 years of chairman statements to look out for consistency and check that the plans put out are on track
• If plans are shelved, did management provide a valid reason for the change?
• Check for a change in tone of statements

Operations Review:

• Understand the firm and how it makes money
• If you dk how the company makes money, pass on the company

Board of directors and key management:

Corporate governance report:

• Are leaders overly compensated: compare remuneration with revenue

Report of the Directors, Statement of Directors and Independent Auditors’ Report

• check if the independent auditors have given the company a clean bill of health
• check that the auditors are not changed frequently

Financial Statements:

• Income statement: shows how much a company has made/lost
• Balance sheet: company's assets, liabilities, shareholders' equity
• Cash flow statement: shows company's ability to generate cash to fund its operations

Statistics of Shareholders, Notice of Annual General Meeting (AGM) and Proxy Form

• Look out for high insider ownership
• 
  

Chairman/CEO statements:

Financial highlights:

Article: How to Research a stock with Simply Wall

Part 1

1. Value
1. Are you paying a fair price for the stock? 
2. Is the company undervalued compared to others in the same industry?
3. Use DCF, PE, PB and PEG ratios and compare inside industry and market
2. Future performance
1. How will the business perform in 3 years?
2. How effective will it be in using shareholders' money to create profit?
3. Past performance
1. Is the current drop in earnings a one-off thing?
2. Has the company been effectively utilising its resources to create profit?
3. Metrics: EPS growth, return on equity, return on capital, return on assets
4. Financial health
1. Is the level of debt dangerous to the stability of the company?
2. Can it meet its short term commitments?
3. Are the interest payments well covered by earnings?
5. Dividends
1. How does the annual yield compare to market?
2. Can the company afford to keep paying the current level of dividend in the next 3 years?
6. Management
1. Does the CEO and the board have enough experience to manage the company?
2. Are company insiders selling?

These metrics are represented visually by the Snowflake. 

Part 2

Find new ideas with Grid Views

Part 3

Are you too focused on one industry?

How much has your portfolio returned?

What makes up your portfolio and what are their returns?

What Snowflake shape does your portfolio have?

Is your portfolio undervalued?

How much will it grow next year?

Part 4

How to create your own screener: define the snowflake shape you are interested in by pulling the points. 

Choose from sectors and industries

Choose from company metrics

Trading Journal: Keppel DC Reit

Bought 500 shares of Keppel DC REIT.

Reasons:

• Good prospects 
• Glanced at the numbers, consistent revenue growth and a healthy debt/equity ratio
• Interest coverage ratio much higher than average: 13.3x

Analysis: Keppel DC Reit

Keppel DC Reit: price history - steady rise
What it does: rents land to data centers in Singapore and other countries.
Prospects: good because of Singapore's digitization --> more data centers needed.

Revenue growth/profits:

Dividends:
Dividend yield currently around 3%.
Cash flow to dividends: 155,274 / (126,541) + (2,553)
Debt:
Current ratio > 1

Competitors:
So far it is the only DC REIT in SG.

Cash flow:
seems like most of the cash flow comes from financing/investments into the company.

Target:
Buy half of it at current price
Buy rest of it when price drops below 2.40.
Allocate 4k in total to buy it.

REITs WatchList - Revised Feb 2020

Previously, this was my watchlist:

• Fortune REIT
• Capitaland Mall Trust (will buy more)
• Frasers Centrepoint Trust
• Mapletree North Asia Commercial Trust

Now, since I've bought MNACT, and with the situation in Hong Kong now, I will not invest in HK related entities for now. 

Now, this is my watchlist

• Capitaland Mall Trust (will buy more)
•  Frasers Centerpoint Trust
• Keppel DC REIT

Trading Journal: Sold SPDR STI ETF

Why I sold:

• Price have not moved much since, while the dividends are okay, I'll rather plow the investments into specific companies in the ETF
• STI ETF is actually not a very good investment, because the weightage leans towards the financial industry.