Tuesday, September 18, 2012

Analysts are positive on Ascott REIT

Ascott Residence Trust is a real estate investment trust. The company was founded in November 2005 and has its headquarters in Singapore. It generally operates for serviced residence real estate. The Trust primarily invests in income-producing real estate related assets and real estate which are mostly used for rental housing properties and serviced residences. The trust has its assets mostly in Europe and Asia Pacific. To brief the locations out, they are Singapore, China, Australia, France, Belgium, Indonesia, Germany, Spain, Japan, Vietnam, Philippines and United Kingdom. The company’s asset value has increased to about S$2.71 billion since it was listed in the Singapore exchange way back in 2006. It has 64 properties with 6,431 units in 23 cities across 12 countries. The company is currently worth around S$2.81 billion. 

Current Scenario: Ascott Residence Trust has a market capital of US$ 1.2 billion as of April 2012 and an average daily turnover of US$ 1.03 million. It has a share value of $1.19 SGD. Last year, the total net operating revenue increased with 54.87% which was from S$ 43,464 thousands to 67,314 thousands. Similarly, even the operating results increased from S$ 17,498 thousands to S$ 29,390 thousands. This was 67.98 % change. The return on net income also increased from 1.28 % to 1.16% and the total asset was accounted to be from 0.63% to 0.60%. The net sales increased from 24.07% to 24.48%. The total liabilities were 89.49%. The current assets went from 0.19 to 0.31. With the 2012 Olympics in London the Q3 profit has increased. The average occupancy of UK assets has boosted to 85%. The three week event has increased the room rates by 0.25% YoY.  

Over the years the Trust has been able to increase revenues from $207.2 million to $288.7 million. The interesting thing is that the company has been able to bring down the cost of goods sold from 15.97% to 10.82%. This boosted their growth from $156.1 million to $180.3 million. 

Future Scope: Despite the different economic conditions, Ascott Residence trust’s geographically different portfolios which have exposure to different kinds of economic styles always provided a stable income. Going further we could see that the serviced residences and the assets which are given for lease provide support for stable income. The trust actively manages their assets by regular renovation or up gradation which is openly accepted by the customers and helps the trust to maintain a brand name. The trust focuses on income generating acquisitions in several countries. This would help them in identifying potential assets which would help them in operating and exploring opportunities in new places. 

Conclusion: Forecasting analyst based on the trust’s assets have predicted that the market in Singapore would improve a lot by year 2017 which would undoubtedly prove to be lucky for Ascott Residence Trust. Over the last one year the trust’s stock has done exceptionally well when compared to similar trusts in the market. It has made its investors wealthier by 33% due to the stock price increase from S$0.93 to S$1.24. Overall rating to this trust would be a positive rating as they maintain their numbers and are expected to reach a price of S$1.30 in the future.

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