Saturday, September 8, 2012

Higher yields make Ascendas attractive bet

Ascendas Hospitality Trust is a real estate company. It is mostly into commercial real estate business. It offers business space solutions to corporations, research organization and local enterprises in Asia. The trust was started in 2001 from Singapore. Over the year it has its sub-offices in India, Singapore, China, Malaysia, South Korea, Japan, the Philippines and Vietnam. The trust has assets worth over S$1 billion with 10 hotels across the six cities.  The Trust did its debut entry this year in the Singapore exchange. This is the first company to be listing this year. The Trust has a total of 49.8 million square feet space to manage. The total asset for management by 2011 is S$11.1 billion. By 2011 the Trust has a total profit of S$225.2 million.

Current Scenario:  Ascendas Hospitality Trust has received a very strong demand from public offerings. For subscription itself a total of 437 million stapled securities were offered at S$0.88 each. While closing the offerings in July, the valid applications received were 17,000 for 485 million stapled securities. 355 million stapled securities were offered for investors outside of US.  On the day of opening itself the stapled securities managed between 89.5 cents to 87 cents, but finally ended with 88 cents. It was in the top of the trading lists with 61.2 million units shifting with a value of $53.9 million. The trust is looking to grow its acquisitions to increase its asset value. 

Future Scope: Ascendas Hospitality trust believes in acquisition growth. Sources claim that with the increase in acquisitions growth, it would enhance returns to stapled security holders and also would improve the capital growth with more future income. Measures are being taken to improve the operational performance and this would maximize the value and cash flow from the assets. Near to 75.9% of the total initial portfolio value along with 90% and 90.3% of the trust’s gross revenue for the forecast period of 2013 and for year 2014 are from the Hotels under management contracts. The trust gets its revenues from these hotels. Thus, the Hotels under management contracts offer investors an opportunity to have greater exposure to the upside from their operations.

The Trust has an asset in Australia which would contribute nearly 78.1% and 73.7% total revenue growth and total income between 2013 -2014. From the listing date to 2014 the trust plans to distribute 100% of its distributable income. The dividend yield of 7.9% for FY13 is compelling to investors who prefer dividend plays especially in the period of low interest rate and high inflation environment. Investors would be assured with 90% payout ratio on distributable incomes.

Conclusion: The yields of the company are high. The investors would consider the trust for investments based on its yields rather than its capital. We would suggest keeping an eye on Ascendas Hospitality trust as it has both yielded and capital appreciation. You never know what could work so keep researching and get the best out of it.

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