Saizen REIT

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4 rounds of Buybacks since Sept 25, 2012.

Last Buyback was on Oct 12, 2012, where they bought back 350,000 shares, costing Sin$58,000.

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1Q, 2013

Rev: 10%
Profit After Tax: -16%
NAV: Sin$0.30


http://info.sgx.com/webcoranncatth.nsf/ ... penelement

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MAKING ITS LONG-SOUGHT COMEBACK

We initiate SAIZEN REIT with a BUY and a fair value of S$0.212 based on DDM.

Whetting the appetite of the yield-hungry. Offering a current yield of 7.3%, Saizen REIT not only stands out among its S-REIT peers but also its J-REIT comparables.

We note that Saizen REIT’s unutilized warrant proceeds of around JPY1.4bil is sufficient to offset its loan amortization till end-FY2014.

We believe Saizen REIT faces minimal refinancing risks and have factored in the assumption of a successful refinancing of loans in FY2015F, FY2016F and FY2017F.

7+% yield comes at a bargain price. While Saizen REIT’s 7+% yield is undeniably attractive, more enticing for us is that this is accompanied by its cheap valuations.

Based on its last closing price of S$0.170, Saizen REIT is valued at a massive discount of 40% to its net asset value, which makes it a strong buy.

Starting afresh with a cleaner balance sheet. Saizen REIT’s amortizing loans allow it to lower its interest expenses as it reduces its outstanding loan. Such a feature also provides Saizen REIT with greater flexibility in raising additional borrowings in response to more favourable credit conditions.

Share buy-back to provide some price support. Saizen REIT has renewed its share buy-back mandate on 17th October 2012 to buy-back 10% of its outstanding shares by the next AGM.

Given that Saizen REIT’s shares are trading at a steep discount of 40% to its NAV, a share buy-back would increase its book value per share, providing some price support.


Source: AMFraser

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Vested

Saizen REIT’s TK operator Godo Kaisha (GK) Gyokou has, on 30 November 2012, entered into a sale and purchase agreement for the acquisition of Rise Shinoe (RSO) from an independent party for a cash consideration of JPY 285mil (S$4.2mil). The acquisition was completed on the same day.

RSO is located in the Central Ward of Kumamoto City and is within 10-minutes walk from train and bus networks. RSO was built in June 2003 and comprises 34 residential units and 19 car parking lots. GK Gyokou will have full ownership of the entire building block of RSO and full title of the freehold land.

RSO is currently generating annual revenue and net property income of approximately JPY 27.0 mil (S$0.4 mil) and JPY 19.3 mil (S$0.3 mil) respectively, which are equivalent to about 0.8% of both Saizen REIT’s annual revenue and net property income in the financial year ended 30 June 2012. Currently, 33 out of 34 residential units and all 19 car parking lots are occupied.

The acquisition of RSO is a positive step for Saizen REIT. Noting that Saizen REIT is backed by a cash hoard of JPY4bn (S$59.2mil), we previously highlighted in our initiation report that Saizen has the firepower to engage in yield-accretive acquisitions and initiatives to grow inorganically will only translate into greater momentum in its top-line growth.

While the acquisition of RSO translates into an increased reliance on the city of Kumamoto - the proportion of overall revenue generated from Kumamoto following the acquisition has increased from 17.7% to 18.3% - we view this as a strategic move given RSO's accessibility to transport networks, young building age and high occupancy rate of 98% (by revenue).

Evidently, these characteristics are complementary to the strengths of Saizen REIT's overall portfolio. The acquisition would lower the building age of Saizen REIT's overall portfolio as well as improve its portfolio's average occupancy rates.

According to Saizen REIT’s announcement, the net operating income yield of RSO is around 6.8%, and given that the acquisition is expected to be financed entirely by cash, we believe the acquisition is on a yield-accretive basis. Saizen REIT’s current dividend yield is at 7.3%.

We are currently placing our target price of S$0.212 for Saizen REIT (BUY, S$0.173) under review.


Source: AmFraser

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A well‐diversified geographical footprint.

We visited 6 of Saizen REIT’s rental properties in Fukuoka, Kumamoto and Hiroshima earlier in December and was left with a very positive overall impression.

http://www.remisiers.org/cms_images/res ... 130103.pdf

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DBSV Research issues an Equity Explorer report on Saizen REIT, a niche player in Japan residential real estate, with a fair value of S$0.21.

Saizen REIT strives to create value by investing in smaller-size properties that deliver stable income but are too small for consideration for the larger players.

Saizen REIT will also kickstart its acquisition program in 2013.

At current price, Saizen REIT’s prospective FY13F yield of 6.0% appears fair relative to peers (smaller cap REITs and overseas exposure).


Source: DBS

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Declaration of distribution. Saizen Real Estate Investment Trust (“Saizen REIT”) has declared a distribution of 0.66 Singapore cents (“cents”) per Unit for the six-month financial period ended 31 December 2012 (“YTD Dec 2012”).

This represents increases of 8.2% and 4.8% over the distribution per Unit (“DPU”) for the six-month financial period ended 31 December 2011 (“YTD Dec 2011”) and the six-month financial period ended 30 June 2012 respectively, despite the depreciation of the JPY against the S$ in recent months.

Gross revenue and net property income increased by 10.7% and 13.4% respectively in the
second quarter ended 31 December 2012 (“2Q FY2013”) as compared to the second quarter ended
31 December 2011 (“2Q FY2012”), due mainly to the acquisitions of 7 properties between December
2011 and December 2012.

Saizen REIT has entered into forward contracts to partially hedge the distribution payments for the six-month periods ended 31 December 2012 and 30 June 2013, which are expected to be paid in March 2013 and September 2013, at rates of JPY74.97/S$ and JPY74.86/S$ respectively.

http://info.sgx.com/webcoranncatth.nsf/ ... penelement

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S&P Report

Date: Feb 08, 2013

Source: SGX Research

http://research.sgx.com/

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Valuation and Recommendation.

An accommodating credit environment in Japan will continue to provide credit access for re-gearing to facilitate portfolio expansion, payment of loan amortization, strengthening of loan profile, and in turn, distribution enhancement.

Despite currency risk, active hedging management will offset the negative impact of the weakening yen against the Singapore dollar.

Successful capital management has resulted in higher than expected operational income for distribution. Accordingly, we raise our distribution for FY13 and valuation on Saizen to 21.4Scts (previously 20.0Scts), despite making a conservative assumption of a further 5% depreciation in the yen against the Singapore dollar from current levels.

Backed by a relatively stable portfolio of assets valued at adjusted NAV per unit of 24.0Scts (assuming a further 5% depreciation of yen against the Singapore dollar from current levels), price-to-book ratio (PB) of 0.79x is still low compared to PB of 0.99x of listed peers in Japan.

Forward distribution is expected to remain stable and growing, offering an attractive DPU yield of about 7.0% (FY13F).

Maintain Overweight.

Source: NRA

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vested

Time: 8:58AM
Exchange: SGX
Stock: SaizenREIT(DZ8U)
Signal: Bearish MACD Centerline Crossover
Last Done: $0.186

Source: UOBKH