Accordia Golf Trust upgraded to Buy by Daiwa as negative overhangs ease

Novelty Japan pens at DaisoNovelty Japan pens at Daiso

Daiwa upgraded Accordia Golf Trust to Buy from Outperform, saying its negative overhangs have eased and earnings are set to improve ahead.

“With the most pressing negative factors (major debt refinancing uncertainty and unforeseen membership deposit repayments in 2018) appearing to us to now be resolved or whose risks have been substantially mitigated, we upgrade our rating,” Daiwa said in a note this week.

The investment bank said that Accordia Golf Trust’s fiscal first quarter operating profit ame in only 3 percent lower than its forecast despite bad weather in May and the Osaka earthquake in June.

Accordia Golf Trust reported on Monday that its fiscal first quarter net profit fell 2.4 percent on-year to 2.391 billion Japanese yen, or around S$29.82 million or US$21.66 million, as its courses saw fewer visitors.

Daiwa pointed to an “encouraging trend” in revenue per golfer, which was up 1.6 percent on-year in the quarter.

While the distribution was 11 percent below its forecast, Daiwa noted that was due to 452 million Japanese yen being set aside to re-finance its entire debt on 1 August to a new five-year facility on slightly better terms.

It lowered its fiscal 2019 distribution per unit (DPU) forecast by 5 percent to 4.04 Singapore cents on the slight on-year deterioration in operating days per golf course, utilization rate and visitors amid poor weather conditions in the first four months of the fiscal year.

But for fiscal 2020, it raised its DPU forecast by 15 percent to 5.4 Singapore cents on the absence of upfront loan refinancing fees after the new facility was reached, which was a year ahead of schedule.

Daiwa raised its target price on Accordia Golf Trust to S$0.71 from S$0.70.

The unit was down 0.87 percent at S$0.57 at 10:15 A.M. SGT on Thursday.

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