As I have depleted my cash war chest, I am looking to use the remaining funds in SRS for targets that are worth a quick punt and yet can be kept for long term if the punt fail.
I targeted Parkway Life Reit, Capitaland China Retail Trust, Mapletree Nac Trust and IReit. I placed orders for them at 3.37, 1.26, 0.95 and 0.72 respectively. In the end, order got filled for Mapletree Nac Trust and there I have it.
Priced at 0.95, it is at 0.67 of the book value of $1.412. Conservatively, if it is able to pay out DPU of $0.06 for FY2020/21, the yield is above 6%. Undervalued, at relatively attractively yield, backed by strong sponsor and the only Reit with properties all over North Asia, I believe this is a fairly good deal.
However, the downside risks can be attributed to worsening of political tensions in Hong Kong and dent to retail industry caused by the pandemic resulting in higher vacancy and negative rental reversion. In the long run, the retail spending power in China and Hong Kong is still a growing force not to be reckoned with.
Technically, supported by 20 day MA of 0.95 and 100 day MA of 0.93, the downside is limited relative to it possibly clearing the resistance at 1.03 and breakout to greater heights. Hence the risk reward ratio is very attractive.
Every crisis breeds opportunity. We need to seize the opportunities presented during crisis to our advantage. Thanks for reading.
With Love & Peace,
Qiongster
Tq for this post.
ReplyDeleteOn my side, I believed MNACT to be resilient moving fwd with the introduction of the new security law. This law guarantees safety, at the very least, there will not be any acts of damaging the mall anymore. Shoppers going to buy food and groceries at the mall will feel safer going abt their business. This mall, called Festival Walk, is actually a 'heartland' mall, serving the local residents,... and not so much as a tourist-frequented mall, hence, low tourism numbers may not affect this mall.
Risks from the pandemic will still remain though, shopper numbers may be limited due to safe-distancing numbers. As for tenants, if there are shoppers, there will be tenants.
What do you think, Qiongster ?
CK.
The net property income and DPU will take a hit in the following few quarters due to this pandemic. I still believe that malls will still relevant in city life for dining and experiential shopping. When we invest in a Reit, we should consider it as buying a portfolio of properties for mid to long term just like when we invest ib a property, we should not be bothered with short term rental yields or drop in market property value. Since Mapletree NAC Trust is undervalued now, the risk reward is quite attractive and we should not bother about the short term fluctuations and impact. Give it 1 to 2 years and it should recover and do well again I hope and believe.
DeleteFortunately, with the insurance claims, the impact onto the dpu may be not as severe as compared against no-insurance claim reimbursements. Judging by the reasons and the investments thesis that I have mentioned in the above, and looking at how the new security law has had such effects in HK and in its people, I opine that we may not need to wait out one to two years for the dpu to recover.
ReplyDeleteOf course, the above estimation is barring the fact that the pandemic will not get worse from here on.
HK is trying its best to re-open,.. this indeed bodes well for confidence to REIT investors.
Our ideas and trust in this REIT are converging except for the difference in our recovery timelines. I have not cutloss at all in this counter. But neither have I averaged down, for I see better values in other investments.
CK...