Category: MapleTree

Buy @ $0.71 and $0.705. Results were out on Sunday. Yield @ 11.574%, but will be adjusted to 6.614% due to dilution of current 3-for-4 rights issue @ $0.73. I plan to give up the rights unless mkt price goes above $0.73. Will also likely sell in short term. Seller code ’84’ – UBS 😀

Correction (24-Jul-08)
Yield due to dilution of 3-for-4 Rights Shares is recalculated using the info from the Rights Circular,

For Q308, assuming the new shares are issued in mid-Q308, we’ll only see half the dilution impact. My est. based on 73cts, yield will be worst case,

Q308 – 9.53% (DPU 1.74ct)
Q408 – 7.89% (DPU 1.44ct – as per circular)

But, I’m expecting better DPU than that, at least 5% more, based on MLT’s track record.

Based on the above estimates, the yield is still pretty good in spite of the dilution from the rights issue. I have therefore decided to hold on to my shares for longer term but will consider to sell if prices moves up a lot such that projected yield drops towards 7%.

Notes :
1) In the circular, DPU 1.44ct used Q1 DPU 1.9ct as reference. Q2 DPU 2.04ct is higher, so the projected DPU 1.44ct will likely be higher.

2) Q308 DPU may be lower than my estimate due to the underwriting expenses for the rights issues. If that’s the case, Q408 DPU may be correspondingly higher.

Current Shares vs New Shares
On 24-Jul-08, Mapletree did an SGX Annc that they’ll take up all rights that are not subscribed. My est. on the share price before it becomes feasible to exercise the rights @ $0.73,

Rights Price + Q208 Div + 0.5 * Q308 Div – Brokerage
= $0.73 + 2.04ct + 0.5 * 2.04ct – 0.3ct
= $0.755 (round down to nearest 0.5ct)

Here, I assume that,

– New shares issued in mid-Q3 ie mid-Aug ie. only qualifies for div from mid-Aug
– Q308 Div for old shares will match Q208 DPU up till time of new share issue

The above will also be useful to decide on the right price differential between MLT or MLT A (rights shares) should I decide to buy the shares.

The SGX Annc by Mapletree is positive as the risk of dumping by the underwriters who’d have been forced to take up all unsubscribed rights (share price was below $0.73 on last day of cri), is now eliminated. I’m now even considering to collect more shares if prices should fall (max price to buy would be $0.755 based on above calculations). I’ll unlikely subscribe for the rights.

Note that the risk is still high that the share price will still drop, esp. after xd, based on the recent record of new shares issues – KREIT, CRCT, AllCo,…..

Contra off @ $0.935 in the morning. Yield 4.364% at this price which is below my tgt of 4.5%. Also sold off my IPO ones in the afternoon @ $0.96. Not hldg any more MapleTree.

Try to buy again when price drops. Tgt below $0.905 which is 4.5% yield. May not reach this kind of price anymore as Temasek linked REITs, CCT and CMT are below 4.5% yield.

Buy @ $0.885 for yield of 4.61%. Try to catch those who shorted, see whether T+3+2 (3 or 4-Aug)can make some money. If not, then hold as I hv some from IPO @ $0.68, so average cost is $0.84.

In the mid term, price may drop but I’ll likely buy more. Even tho’ the yield @ 4.61% is not that good, MapleTree hv plans to acquire more property assets fm its parent within the next 6mths to 1yr (if they can get a waiver fm MAS. If not, worst case, 1 yr). Assuming it doubles its asset base (base is small, so easy to double) and at the same yield of 6%, we get an average of 5.31% (ave of 6% + 4.61%), which is not too bad after all. Further, as an exisitng shareholder, I may get preference for any new share issues, which is usually at 1:10 allotment (not fantastic but still better than IPO balloting where you may get none).

Disclaimer : The above is my opinion only. Do not rely on it for your investment decisions.