Thursday, September 4, 2014

[SGX Portfolio] Buy: Perennial China Retail Trust


I just entered a position with Perennial China Retail Trust.

It is currently trading at roughly 28% below it's NAV, I quite like that. Dividends look set to be at least 7%, with further increase in DPU once their projects in construction are completed.

It has a decent gearing of 31%. Not much too I feel, especially since they have been acquiring assets. The downside is that the REIT is mainly under pressure from the negative sentiment of the China property market, as well as investors not wanting to factor in the increased DPU of the future projects. I can understand why, since it is within reasonable possibility that projects overrun or contracting companies go bankrupt. Future external growth looks quite possible since gearing is not too high. This REIT is decently sized and looks to be able to scale up quite well in the future. If it can manage to comfortably manage all of its current assets well for a few years, I would be quite reassured with them.

Other than Perennial CRT, of all the Trusts that I do not own, only Hutchinson Ports looks attractively priced as well.

I will just hold onto to Perennial CRT and collect income from it while waiting for time to pass. My expectations is for this REIT is to effective run its current assets well after they are completed, and then look towards acquiring quality assets. I think having a good track record would definitely help this trust, especially for the long run considering the prospects of a bigger middle-class China. If they can prove themselves worthy over the next few years, I can see how this trust becomes a legitimate player in the future.

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