Asked on 18 Dec 2019
Discuss anything about share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell this stock. Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment.
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Top Contributor (Dec)
Answered on 19 Dec 2019
I am vested in this counter. Wanted to have some exposure to the Japanese market and the assets held are kinda unique here.
Distribution returns are kinda fickle as its highly dependent on weather and number of players. This is reflected in the price movement as well.
Thanks to some recent news about a possible acquisition, the price has moved up somewhat. Will wait and see what is going on before making further transactions.
From the cashflow statement for FY2018, AGT gave out JPY$3.4 Billion in Dividends. With the recent release of dividends which is about 2% lower, one can reasonably expect another JPY$3.3- 3.4 billion in dividends provided to investors. However, the question begs- Is the Dividends Sustainable?
In terms of Cashflow wise, it does seems sustainable because AGT is producing about JPY$10 billion in operating cashflow annually before working capital changes, with CAPEX in the past 5 years averaging in JPY$1.5 billion as well as income and interest expenses totalling to JPY$2 billion. It does shows that JPY$3.4billion of dividends (or 3.77 Singapore Cents is sustainable).
Again cashflow depends on the industry outlook and if AGT business does deteriorate by 40% resulting in a similar in cashflow generated, I do expect dividends to be slightly cut
Higher Leverage Ratio
AGT's leverage ratio has slightly climbed over the past few year and now stands at a 30.4% loan to value ratio. This is a rise from its 29% when I last looked at it. The slightly elevated ratio is similar to the levels that are deployed by our local REITS currently.
Sharing my analysis of the recently announced non-binding proposal from AGT's Sponsor to buy out AGT's golf courses here for your critique and information.