SirBahamut

巴哈姆特 | Tech and REIT specialist

    • SirBahamutSirBahamut
      ·12:36

      BYD issue Profit Alert! Best NEV OEM in China?

      $BYD COMPANY(01211)$  BYD issued a preliminary profit alert yesterday after the market closed for FY22/4Q22, showing strong results that beat consensus estimates again! The preliminary earnings for FY2022 were between RMB 16bn to 17bn, which is 12% to 19% higher than consensus. The implied 4Q22 earnings were RMB 6.7bn to 7.7bn, representing a 17% to 35% quarter-over-quarter increase. In my view, BYD remains the most promising automaker among China's OEMs! BYD sold ~1.86 million NEVs in 2022, a three-fold increase from the previous year’s volume, with an equal split between BEVs and PHEVs. BYD expects to sell 3 million units of its NEV in 2023, with a current order backlog of 450-500k units. Major new models for 2023 include Ocean (Jan), Frigate PHEV SUV (Apr), Seagull BEV sedan (Jul), Destroyer 07 PHEV sedan (3Q), Landing Ship PHEV MPV (4Q). BYD's market leadership and market share position, through its competitive product pipeline, will likely result in potential growth in sales. As BYD begins exporting select NEV products to Europe, the company's overseas markets are seen as a long-term opportunity. However, initial overseas sales are expected to be limited in comparison to the company's domestic business. With the uncertain geopolitics, BYD is not actively preparing business development plan in the US at the moment. BYD aims 150k300k NEV sales to overseas, 5-10% of its total sales target in 2023. In the battery business, BYD is expected to expand its customer portfolio to include major OEMs such as Toyota and Changan Automobile in China starting from the first quarter of 2023. This expansion is seen as another potential source of growth for the company's share price and earnings. Moreover, BYD is also working on its BYD battery business spin-off via a IPO, which is another great catalyst for the shareholders! Despite increasing macroeconomic challenges, I remain quite confident in BYD’s growth prospects, driven by its technology leadership, favorable new product lineup and expanding presence in overseas markets. However, as per the same issue as Tesla, valuation is not cheap at all, with a forward PE multiple of more than 40x currently. As always, do proper due diligence and understand the investment thesis and valuation before entering! @TigerStars @Daily_Discussion 
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      BYD issue Profit Alert! Best NEV OEM in China?
    • SirBahamutSirBahamut
      ·01-30 13:41

      Intel: Horrible performance and guidance

      $Advanced Micro Devices(AMD)$  $Intel(INTC)$  Intel's 4th quarter results fell short of expectations, with the company reporting weak performance in both PCs and Data Centers. The forward guidance also reflected ongoing pressures in these areas, and there were almost no positive highlights. Additionally, Intel did not provide guidance beyond the first quarter, which is unusual as the company typically offers full-year guidance at this time. This is partly attributed to the company's expectation of a significant decline in inventory at its customers ‘end in the first quarter, but management stated that they expect a recovery in the second half of 2023. The main focus of the earnings release was the $11 billion revenue guidance. Despite already lowered expectations, Intel failed to meet guidance for the second quarter in a row. To mitigate the impact on its bottom line, Intel has implemented a $3 billion spending reduction plan and extended the depreciation period of its equipment from 5 to 8 years. This move has raised suspicions that it may be a way to financially engineer results and this is a pretty egregious accounting lever to pull to improve gross margins. The company has been struggling in recent quarters, with EPS missed Wall Street consensus and its own guidance. The forwards earnings visibility remained very low. Unfortunately, the bad timing also coincides with Intel’s significant investment in foundry, which requires a significant increase in capital expenditures to taking advantage of a near once in a lifetime opportunity of subsidy offered by global governments now. The worst part is that Intel is still levering up to pay dividend even though they are incurring huge negative free cash flow. In 2022, Intel had a negative free cash flow of around $9.4 billion. They are paying out around $6 billion per year in dividends. They had roughly $11 billion in cash left at the end of the year, which they expect to quickly spend this coming year. This is a significant deviation from their original plan, which was to spend around $1.5 billion this year, and reach breakeven on free cash flow for 2023 and 2024. However, with the high dividend payments, they will now burn through their cash balance at a faster rate. Intel’s weakness has been greatly bolstered by micro-based challenges like AMD share gains, as well as macro-based headwinds, especially with the PC market weakening. Surprisingly, other industry’s peers such as Lam Research, KLA Corporation and Advanced Semiconductor Materials Lithography (ASML) all seemed to fare better than Intel. My hope is that AMD will fare much better on Tuesday’s earnings release. @Daily_Discussion @TigerStars 
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      Intel: Horrible performance and guidance
    • SirBahamutSirBahamut
      ·01-29 13:01
      My favourite CNY goodie is pineapple tarts! Pineapple tarts are a popular Chinese New Year goodie. They are small, bite-sized pastries filled with a sweet and tangy pineapple filling. They are often served as a snack or a dessert during the Chinese New Year celebration and are a must-have for many families during this time! In addition to being a delicious Chinese New Year treat, pineapple tarts are also said to have an auspicious meaning. The word for pineapple in Chinese, "ong lai" sounds similar to the phrase "prosperity is coming," which is why they are often given as gifts during the Chinese New Year. Additionally, the golden color of the tarts is associated with wealth and good luck, making them a symbol of good fortune and success in the new year!
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    • SirBahamutSirBahamut
      ·01-27

      Frasers Centrepoint Trust: Fortifying its Reign as the King of Suburban Mall with NEX acquisition!

      $FRASERS CENTREPOINT TRUST(J69U.SI)$ FCT and FPL announced last night that they will be jointly acquiring a 50% stake in Nex, a suburban retail mall located in Serangoon, Singapore, for a consideration of S$652.5m from Mercatus. The agreed property value for the 100% stake is S$2,077.8m. After the acquisition, FCT and FPL will hold 25.5% and 24.5% stake in the mall, respectively. Source: FCT This acquisition will add another trophy asset to FCT’s portfolio, similar to other premier FCT-owned malls such as Northpoint City and Waterway Point! The transaction will solidify FCT's position as the leading player in the suburban retail mall market in Singapore and establish it as the largest owner of suburban retail shopping space in the country. NEX is directly integrated with the Serangoon Bus Interchange and the Serangoon MRT station that serves as an interchange station for the North East Line and the Circle Line. Source: FCT The mall, which is the largest in Northeast Singapore and one of the largest suburban retail malls in Singapore, has a committed occupancy of 99.9% and key tenants include Fairprice Xtra, Isetan, Food Junction, Shaw Theatres, H&M, Food Republic, & Joy Japanese Food Street. The deal is also expected to be accretive to FCT's DPU, and will be fully funded through cash and debt with the support of the sponsor, with FCT's pro-forma FY22 leverage rising to 38.5% from 33.0%. It is also expected that the market's concerns over a potential equity fundraising by FCT will finally be put to rest. Source: FCT FCT disclosed that the entry yield for NEX is high 4% level, similar to the recent acquisition such as Link REIT’s acquisition of Jurong Point. However, NEX mall is superior in terms of asset quality, footprint, and longevity of returns, as well as having a longer land lease of 85 years. The mall's growth potential is further strengthened by the increasing residential population in the Serangoon area, both in private and public housing. The acquisition price per square foot is also reasonable when compared to peer malls in close proximity to MRT stations and interchanges. The long-term success of the acquisition will depend on FCT's ability to enhance the mall's tenant mix and potential opportunities for additional enhancements through asset enhancement initiatives. Source: FCT Overall, I am very excited about this deal for FCT as NEX mall is a highly strategic fit with FCT's existing portfolio of Northeast suburban malls! Other updates on FCT’s 1Q23 performance FCT plans to undertake an AEI (Asset Enhancement Initiative) at Tampines One, with an expected return on investment of 8% on the enhancement component. The AEI will include the addition of new space, which is already over 70% pre-committed, and the transfer of NLA from M&E spaces and lower-yielding floors to B1, L1, and L2. The AEI is set to begin in the second quarter of 2023 and be completed in the third quarter of 2024, with the mall continuing to operate during this time. Moreover, FCT’s Retail occupancies have continued to improve, reaching 98.4% in the first quarter of 2023, driven by higher occupancies at Changi City Point and Century Square. However, finance costs rose 50 bps to 3.5% in the first quarter of 2023, with gearing rising to 33.9%. Higher cost will be expected in FY2023, largely due to 21% of outstanding debt being due for refinancing in 2023, and the expiration of energy hedges in the second half of the year. Conclusion The market has responded positively to FCT's announcement this morning. It appears that retail REITs are becoming an attractive investment option post-pandemic. Nonetheless, as always, it is important to conduct thorough research and due diligence before making any investment decisions! @TigerStars @Daily_Discussion 
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      Frasers Centrepoint Trust: Fortifying its Reign as the King of Suburban Mall with NEX acquisition!
    • SirBahamutSirBahamut
      ·01-26

      Is the Chio “Bull” coming back to the Chinese market?

      $Alibaba(BABA)$  Chio "bull" (bu) analyzing stocks Firstly HAPPY CNY to all Tiger Readers! Hope you had a great lunar holiday the past few days! The Chio “Bull” (chio bu) is back in Hong Kong! Over the past few days, the rally in the China/HK market has been unstoppable. Global investment funds have been flowing back into Hong Kong stocks as a number of policy changes have improved the outlook for China's economic growth. The Chinese economy is also showing signs of improvement and looks promising in a global environment of slower growth in 2023, leading to renewed optimism for China concept stocks. China began dismantling its controls to prevent the spread of mild and asymptomatic Covid infections on November 11th. In the following weeks, mandatory restrictions on internal mobility were largely lifted. Initially, most analysts believed that China would remove its Covid restrictions gradually, but the reality has been the opposite. Among large countries, none have removed Covid restrictions as completely or as rapidly as China. Previous experience from other countries suggests that consumption will return to pre-pandemic levels. With rapid reopening, rising household income, lifted restrictions on leisure activities, and improved consumer confidence, consumer spending is expected to drive the economy in 2023. Additionally, the use of savings accumulated during the zero-Covid period will further boost spending. The service sector is expected to see the greatest benefit from this increase in consumption. The government's commitment to improving infrastructure remains strong, and with increased fiscal support, infrastructure investment is expected to be the second driver of economic growth. The negative impact of weak exports on manufacturing will be limited, as policy support, improved margins, and the recovery of domestic demand will boost manufacturing activity. The government's approach to the property market has also changed, reducing the risk of developer defaults, but it is unlikely that there will be a significant improvement in the market due to weak demand. While there may be some negative effects on the economy in Q1 2023, a sustained recovery is anticipated to begin in Q2. I think its worthwhile to start bargain-hunting now (if you haven’t yet) while the valuation is still reasonable before the “Chio Bull” takes off. @TigerStars @Daily_Discussion 
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      Is the Chio “Bull” coming back to the Chinese market?
    • SirBahamutSirBahamut
      ·01-23

      Sabana Reit gets partial takeover offer! My thoughts and analysis.

      $SABANA SHARI'AH COMPLIANT REIT(M1GU.SI)$  SABANA Industrial Reit’s substantial shareholder Volare Group on Friday (Jan 20) launched a voluntary conditional offer to acquire an additional 10 per cent of Sabana units at S$0.465 per unit. The offer price represents a premium of 9.4 per cent over the volume-weighted average price on Jan 20. Volare, which holds 5.4 per cent of issued units in Sabana, is a Switzerland-incorporated entity with various businesses. The group said it is launching the partial offer to diversify its business away from fossil fuels and build up its real estate portfolio Retail Investors may even tender 100% holding successfully! Even though this is a partial offer to acquire 10% stake from Sabana Reit unitholders, please take note that unitholders are allowed to tender in excess of their 10% stake. In my opinion, there is a good chance you can even offload your full 100% stake if you really want it. Firstly, ESR group and its concert parties (who hold around 20% stake) are highly unlikely to tender any shares as they need to have certain stakes to retain control and function as the REIT manager. If my guess is correct, Quarz Capital, who holds around 11% of Sabana, is also unlikely to tender, even though they said publicly that the offer is "attractive". They previously wanted ESR REIT to acquired Sabana REIT at 60+ cents,so I dont think they will give in at this price so easily. So, if these 2 big unitholders give up their entited offers, retail unitholders' excess application is very likely to fulfill! What game are the big boys playing!? It is quite surprising that Volare are also "eyeing" Sabana REIT and Quarz Capital is so supportive of them! It looks like a stalement for ESR group and the other activist investors. If Volare is succesful, ESR's merger plans will be even harder to pass through in the future. Likewise, if Quarz Capital and Volare wants to kick out ESR as the manager, it will be very hard as well. Overall, I may not know what are these big boy's intention, but it does feel like some big corporate action is underway! @TigerStars @Daily_Discussion 
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      Sabana Reit gets partial takeover offer! My thoughts and analysis.
    • SirBahamutSirBahamut
      ·01-20
      1. I will never invest in companies based on "Greater Fool Theory", where investment is made with the knowledge that the company is not a good business or too overvalued, with the hope that another gullible investor will come along and pay an even higher price. 2. I will never invest in companies that are purely loss-making without a specific strategy to turn profitable or cashflow positive at a target deadline. 3. I will never chase after hot investment trends blindly (such as meme stocks). Just because an investment is popular or has performed well recently, doesn't mean it will continue to do so in the future. 4. I will never put all eggs in one basket. Warren Buffet said "Diversification is protection against ignorance." Oops I gave four.
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    • SirBahamutSirBahamut
      ·01-20

      MLT: Still look positive, but rising cost is a problem

      $MAPLETREE LOGISTICS TRUST(M44U.SI)$  MLT reported its 3Q23 result yesterday after market hours. Result highlights  In 3Q23, MLT reported an 8% and 7.3% year-over-year increase in gross revenue and net property income (NPI) to S$180.2m and S$157.2m respectively, due to contributions from accretive acquisitions, partly offset by weaker currencies, and a slight decline in NPI margin. DPU came in at 2.227 cents, representing a 1.9% increase YoY and a 0.9% decrease QoQ. This brought the 9M23 DPU to 6.743 cents, a 3.4% increase YoY and in line with the company's and market's expectations.  MLT's guidance for FY24 is for borrowing costs to be between 2.9-3.0%, which is higher than its previous estimate of 2.7%. MLT's DPU estimate for FY24 is 3.9% lower than the market consensus. MLT 3Q23 results Asset fundamentals remained very solid The portfolio occupancy improved slightly quarter-over-quarter to 96.9% as of the end of 3Q, led by Singapore, Japan and China, although Hong Kong SAR and South Korea saw a slight dip. Portfolio Occupancy improved Rental reversions in 3Q continue to be positive, albeit at a moderated average of +2.9% compared to +3.5% in 2Q. Above-average reversions came from South Korea, Vietnam, Hong Kong SAR, Singapore and Malaysia. About 7.5% of its rental income is up for renewal in 4QFY23. Management anticipates that rental reversions would likely remain positive, although it may moderate in China as the country slowly emerges from the impact of Covid-19. That said, occupancies in Tier-1 cities are still high, in excess of 95% Additionally, valuations are expected to remain stable by the end of FY23, with cap rate expansion in Australia and Korea offset by strong rental growth and stable cap rates in the company's other markets. Demand for e-commerce may has slowed, but remains positive as some operators have consolidated into core properties. MLT's properties are considered core for these e-commerce companies. Not spared by rising rates and FX headwinds MLT's gearing stood at 37.4% as of the end of 3Q. Management cited that its near-term challenges are higher interest expense and weaker forex compared to Singapore dollar, which could impact MLT's distributable income in the near term. They guided that interest cost could trend higher, by around 10-20bp in 4Q and a further 20-30bp in FY24, compared to its average interest cost of 2.6% at the end of 3Q. Also take note: MLT has a perpetual bond that is due for reset or redemption soon. MLT may choose to refinance its upcoming perpetual bond into debt at 4.3%, which would result in an increase in gearing by 1.4%pts, or reset the bond to ~5%, with the option of calling every six months. In my view, MLT is likely to reset it at 5.3%. Some scope for asset recycling, but limited In terms of inorganic growth, MLT indicated that markets such as Australia and South Korea appear more attractive as transaction cap rates have expanded by 20-50bp. They would look to potentially tap into these opportunities through asset recycling activities and utilizing its debt headroom. They recently announced the divestment of three properties in Singapore and Malaysia for S$37.3m at at 3-4% exit yield.  Overall, MLT plans to sell non-core assets worth S$300mn-400mn and use the proceeds to acquire higher-yielding assets, targeting S$200mn-400mn in acquisitions. Due to the high cost of equity, MLT does not currently have any plans to raise equity to purchase properties. MLT still looks positive MLT has exposure to the growing e-commerce industry. Moreover, around 80% of its portfolio has built-in rental escalations (1-3% per year). MLT will likely be a beneficiary of regional supply chain shifts as companies diversify their exposure to China. However, due to MLT's DPU yield being over 5%, it is now difficult for the company to complete DPU-accretive acquisitions, given the still tight cap rates for logistics assets, which was previously a key share price driver.  With the risk of a YoY decline in FY24 DPU, I am positive but I recommend not to overweight on MLT in your own portfolio. As always, do your proper due diligence andhave adequate risk management! @Daily_Discussion @TigerStars 
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      MLT: Still look positive, but rising cost is a problem
    • SirBahamutSirBahamut
      ·01-20

      Suntec REIT: Hampered by rising borrowing cost

      $SUNTEC REAL ESTATE INV TRUST(T82U.SI)$  Suntec REIT (SUN) reported its 4Q22 result this morning. Suntec REIT's DPU decreased by 4.5% compared to the previous quarter and 12.7% compared to the same quarter the previous year, bringing the full year DPU to 8.884 cents, a 2.5% increase from the previous year. This is relatively in line with street’s expectations. Due to rising financing costs in the fourth quarter and a large portion of debt set to be refinanced in the next fiscal year, it is expected that borrowing costs will continue to increase and DPU may decrease. SUN's interest coverage ratio has also decreased to 2.4x, indicating a lower limit for their debt-to-equity ratio due to MAS regulatory restrictions on gearing. The REIT may need to sell assets or do a dilutive EFR to manage financial risks. SUN has also stated that distributions may be significantly impacted in the near future due to rising rates, currency fluctuations and increased energy costs. Weak earnings outlook Escaped Manulife US REIT’s devaluation fate Luckily, Suntec REIT did not face the same devaluation problem we saw in Manulife US REIT’s devaluation. Overall portfolio valuations remained stable at S$11.8 billion, with increases in valuations for Singapore office, retail, and convention assets offset by revaluation losses in Australia and the UK. As a result, the gearing ratio improved to 42.4%, a decrease of 0.7% from the previous quarter and 1.3% from the previous year. SG asset fundamentas improved Rental reversion for Singapore offices improved by 10.6% in the fourth quarter of 2022, compared to 6.8% for the entire year. The rent for specific buildings such as One Raffles Quay and Marina Bay Financial Center improved by 9.1%. Rental reversion for Suntec Mall also improved by 9.9% in the fourth quarter of 2022 and 4.8% for the full year. The REIT expects that rent for offices will continue to increase, but at a slower pace. Additionally, the company expects slower growth in the tenants’ sales in 2023, with tenant sales levels at 117% of pre-COVID levels in the fourth quarter of 2022. Tenant sales rebounded, but growth capped Financing cost will be a huge drag on DPU All-in FY22 financing costs rose to 2.94% (FY21: 2.35%), with 4Q22 at 3.6%. SUN is the most affected by the rapid rise in floating rates, with a 9.4% impact to DPU for every 100 bps change in floating rates. With almost S$1bn (21%) of debt due for refinancing in FY23, I am pretty sure the impact of higher rates will more than offsetting higher office rents and retail recovery.  Huge refinancing adds to risk Once again, the risk of fire sale or dilutive equity fund raising will continue for Suntec REIT unitholders. Stay safe Tigers! @Daily_Discussion @TigerStars 
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      Suntec REIT: Hampered by rising borrowing cost
    • SirBahamutSirBahamut
      ·01-18

      SIA: Too much hype and optimism

      $SINGAPORE AIRLINES LTD(C6L.SI)$  Singapore Airlines' (SIA) share price has been trending upward recently due to optimism from China reopening. On January 8th 2023, China announced the reopening of its borders to international arrivals without quarantine, as long as they present a negative PCR test result 48 hours before departure. This move has led to an increase in SIA’s share price in the past week. However, at this price, SIA is no longer attractive, even if 3QFY23 earnings is expected to be strong driven by high passenger demand and a decrease in jet fuel prices. Earnings are expected to normalize in the post-pandemic period after all the hypes from pent-up demand. Passenger traffic growth on track, but traffic boost from China uncertain The growth in passenger traffic has been a key factor in SIA 2QFY23 earnings, and the company is well-positioned to continue to grow its passenger capacity and traffic due to its agility. However, it is uncertain when flights to China will resume due to China's Covid-19 policy. Vulnerable Cargo business  Moreover, there is an increased risk to Singapore Airlines' cargo business due to the possibility of an upcoming recession. The cargo traffic has recorded three consecutive months of YoY declines from June to September 2022. Though the exact geographical breakdown of the cargo route is not known, it is believed that the decline is linked to a softening PMI in the US, which is a proxy for the health of the global economy, and Singapore's manufacturing PMI has also moderated in 2022. According to the Institute for Supply Management's data, the production PMI and new order PMI peaked in mid-2021, followed by a downtrend to 52.3 and 49.2 respectively in October 2022, which is below the healthy threshold of 50. Furthermore, Singapore’s manufacturing PMI has fallen below 50.0 for two consecutive months in September and October 2022, to 49.9 and 49.7 respectively. From mid-2021 to September 2022, the YoY % growth of SIA's cargo traffic has decelerated from 58% to negative 14%. Learn fron Warren Buffett Warren Buffett, a renowned investor and the CEO of Berkshire Hathaway, has been vocal about his dislike for airline stocks. In the past, he has stated that the airline industry is a "death trap" for investors due to its highly cyclical nature, heavy regulation and volatility in fuel prices. Airlines are also susceptible to external events such as natural disasters, terrorist attacks and pandemics, which can greatly disrupt their operations and cause financial losses. Furthermore, the industry is known for intense price competition, which can lead to low profit margins and difficulty in differentiating between companies. I think there is a lot of wisdom that we can learn from him. In conclusion, I do think that the surge in SIAshare price is over-optimistic. As Singaporean, I am proud of our national airline, but as investors I will be very cautious of this company. Do your dd and Stay safe Tigers! @Daily_Discussion @TigerStars 
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      SIA: Too much hype and optimism
       
       
       
       

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