Accordia Golf Trust’s negatives are mostly priced in after fiscal full year earnings came in below expectations on a mix of one-off costs and bad weather, KGI said in a note last week.
It noted that full-year distribution per unit (DPU) fell 36 percent on-year to 3.85 Singapore cents, compared with KGI’s estimate for 4.95 Singapore cents.
On top of bad weather hurting visitor totals, the earnings were hit by an “unusually large” amount of membership deposit repayments at 1.937 billion yen, up two-fold from the average annually, as well as an upfront 383 million yen payment to extend term loans, KGI said.
But it said those negatives were mostly priced in after the unit price’s retreat since November.
“Trends remain favourable as the number of plays per player has continued to increase. Furthermore, Japan’s tourism sector is set to get a massive boost,” KGI said. “Two of the three biggest sporting events in the world [are] to be held in the country – the Rugby World Cup 2019 (the first time to be held in Asia) and the Tokyo 2020 Olympics. We believe the inclusion of golf in the Olympics may attract younger players and benefit AGT.”
Meetings with local management have also indicated that smaller and independently run golf courses are closing down, with nine closing in five years around its Kasumi Golf Course, leaving only 12 courses, KGI said, adding that indicated the largest operators, such as Accordia, may eventually increase their market share.
KGI cut its target price to S$0.70 from S$0.78, but kept a Buy call.
The trust ended Friday at S$0.61, up 0.83 percent.