Challenger Technologies Delisting

Challenger Technologies Logo

It has almost been four years since I did a analysis on Challenger Technologies (Read more: My Personal Analysis of Challenger Technologies). This week, Challenger Technologies announced that it intend to delist from the SGX with Digileap Capital making a cash exit offer of all shares at an exit offer price of S$0.56 per share.

In their announcement which you can find on SGX, Challenger Technologies highlighted that the exit offer price of S$0.56 in cash per share represents an opportunity for shareholders to realize their entire investment in Challenger, which may otherwise be difficult due to the low trading liquidity of the shares.

The exit offer price of S$0.56 in cash per share represents a premium of approximately 15.1% over the volume weighted average price (“VWAP”) of S$0.487 for the 12-month period up to and including the Last Full Market Day.

One of the reasons given for delisting Challenger Technologies is that the company has not carried out any exercise to raise cash funding on the SGX-ST since 2007. Challenger is unlikely to require access to Singapore capital markets to finance its operations in the foreseeable future. The delisting will eliminate the costs of compliance with the listing rules and regulations, thereby allowing Challenger to focus its resources on its business operations.

Challenger Technologies mentioned that they are facing challenges due to weak retail sentiment and industry disruption. Changes to the business may need to be implemented and dividends could be affected during such time.

Even though I no longer held shares of Challenger Technologies, my personal opinion is that the above two reasons are strong enough to support the delisting. Another deep value stock is going to dissapear from the SGX.

VICOM Declares Special Dividend

VICOM has announced their FY18 full year results on 11th February 2019. I do not own VICOM in my stock portfolio, however I have previously added VICOM to my wife’s stock portfolio as the stock price of VICOM is fairly stable and requires little monitoring. If you did not know, VICOM is a subsidiary of ComfortDelgro.  VICOM currently makes up 11 percent of my wife’s entire stock portfolio.

The financial results was a piece of good news as a final dividend of 23.17 cents and special dividend of 8.62 cents was declared. Based on the current share price of S$6.28, this translates to a dividend yield of 5.06%.

The Group’s operating profit of $39.7 million for 2018 was $9.2 million or 30.3% higher than 2017. VICOM’s cash flow remains strong as the net cash outflow in 2018 was $3.4 million after dividend payments.

FY18 Full Year Financial Results

VICOM’s total revenue of $100.1 million for 2018 was $3.0 million or 3.1% higher than 2017 due to higher business volumes.

There is a one off other income of $7.7 million for 2018 which was derived from gain on the Surrender of Lease of the Property at 18 Teban Gardens Crescent to Jurong Town Corporation less provision for relocation costs to the new building.

31 Dec 2018 31 Dec 2017 31 Dec 2016
Revenue ($mil) 100.1 97.0 101.2
Operating Profit ($mil) 39.7 30.5 32.4
Profit Before Tax ($mil) 41.1 32.0 34.0
Profit After Tax & Non-controlling interests 34.7 26.5 28.2
Earnings per share (cents) 39.15 29.90 31.77

Frasers Logistics and Industrial Trust Declares Lower DPU in Singapore Cents

Frasers Logistics and Industrial Trust announced their 1QFY19 financial results on 24th January 2019. The manager has declared a Distribution Per Unit (“DPU”) of 1.78 cents. This was a 1.1% decline as compared to 1.80 cents in 1QFY18. If we looked at the Distribution Per Unit (“DPU”) in Australian cents, the Distribution Per Unit (“DPU”) was 1.81 cents as compared to 1.70 cents in 1QFY18.

The reason for lower Distribution Per Unit (“DPU”) in Singapore cents was because of a lower average hedged rate for 1QFY2019 at A$1.00 :S$0.9820. Foreign exchange risk is one key risk when investing in Frasers Logistics and Industrial Trust and I am fully aware of this risk prior to investing.

Two leases in Victoria, Australia were renewed during the quarter. The two leases will have annual fixed rental increases of 3.0% and 3.5% respectively which benefit Frasers Logistics and Industrial Trust in the long run.

Occupancy

Frasers Logistics and Industrial Trust’s portfolio remained at near full occupancy of 99.6%, with a weighted average lease expiry (“WALE”) by gross rental income (“GRI”) of 6.71 years.

Debt

Frasers Logistics and Industrial Trust’s aggregate leverage was 35.6%.

1QFY19 Financial Results

1QFY19
(A$’000)
1QFY18
(A$’000)
Change
Gross Revenue 59,524 42,430 40.3%
Net Property Income 48,930 33,391 46.5%
Distributable Income 36,698 25,854 41.9%
Distribution Per Unit (“DPU”) (Australian cents) 1.81 1.70 6.5%
Distribution Per Unit (“DPU”) (Singapore cents) 1.78 1.80 (1.1)%

In 2018, Frasers Logistics and Industrial Trust has been very active in divesting and new acquisitions. You can read more of them here:

Frasers Logistics and Industrial Trust Divests 80 Hartley Street Asset

Frasers Logistics and Industrial Trust Divests Lot 102 Coghlan Road In South Australia

Frasers Logistics and Industrial Trust Acquires NSW Property and QLD Property