Added a little at SGD1.75.
On Economic Moat:
This is a Retail REIT owning suburban malls.
In a country like Singapore where the favourite pastime is shopping, I am expecting this type of REIT to be quite stable & predictable over the long term.
Northpoint and Causeway Point, which are the main assets of this REIT, are quite strategically located in the North without any other significant malls nearby to challenge their positions.
On Margin of Safety:
Its NAV is currently estimated at 1.77, hence it is almost at fair value with minimal margin of safety.
However I see myself paying for quality.
I like its excellent track record in increasing its DPU steadily over time.
There could be further DPU growth in view of some rental renewal after AEI and the possible injection of Changi City Point in the not too distant future.
Dividend: Current dividend yield is about 6.3% which meets my expectations.
Debt: Gearing is less than 30%, effective interest rate less than 3% and interest coverage ratio more than 6 times, it sounds reasonable to me. This is important, especially with the impending rise in interest rate due to QE tapering (which I suppose is a question of when not if), I need to be assured that the interest rate hike will not "kill" this REIT.
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