A Quick Take on the recent results of some companies I own

Quite a number of my holdings released results over the past two weeks. The companies are
Starhub, AIMSAMPIREIT, Saizen REIT, Silverlake, new purchase GLP, CitySpring, Starhill, CCT, K-Green, First REIT, GRP, ST Engg

Time is really tight for me, with family commitments due to Chinese New Year, with my recent take up of being a trainer for a sec sch's Junior Physics Olympiad team and the long hours spent on preparation of materials, with my continuous authoring of my planned A level physics guidebook, and with my engineer work.

I took a quick look at the recent results, and but I know time doesn't allow me to do and post a detailed analysis on each and every counter. The main thing I garnered was buying cheap defensive blue chips giving good dividends in a recession seldom go wrong.

My comments collated over the last few weeks:

1) Starhub
Overall, the results are in line with expectations. Dividends remain at 5c for this stable defensive counter, and intends to remain the same for FY2011.

This is one counter where I had been truly successful by being contrarian. Most of my purchases were done when they announced a loss of EPL contract to Singtel. I still remember that was the time where many analysts were calling for SELL because of the EPL loss.

Starhub was distributing 4.5cts dividends per quarter at that time, and on the following quarter, started distributing 5cts per quarter. The analysts that were calling for SELL immediately decry that this is not sustainable, and maintained SELL.

Saizen REIT@valuebuddies

The following is a compilation of forum posts mostly by d.o.g., a respected forumer on valuebuddies forum, on Saizen REIT.

In general, he isn't too optimistic about it. On a sidenote, I'm much more optimistic, and have taken the opportunity to add another 40 lots of Saizen at $0.155 during last week's selldown.

This less optimistic and very very well written and thought out post serves to act as an alternative viewpoint.

Considerations on Saizen REIT

Caelitus of CNA forums has kindly formed some questions for me to refine my thought processes regarding Saizen. I appreciate that a lot, and I'm posting his questions, and my answers here as a reference.

From Caelitus:
I will write candidly. From what I know, you have 40 lots of the share and 60 lots of the warrant. This is over and above your existing holdings which remain unknown to me. If you were to load more of the mother share, your exposure to this counter is increased compared to that of one where you converted your warrants. The latter brings the amount you committed to the warrants to earn the dividends (productive, de-risking).

Question yourself.
1. What are your rules on risk optimisation?
2. What percentage does Saizen form as a part of your portfolio?
3. As Saizen is focused on the Japanese residential market for 2nd tier cities, what are the opportunities and threats ahead? Deflation, diminishing population, portfolio of freehold properties available for redevelopment?
4. What is the opportunity cost? What about your other targets for dividend play or capital gain? We can look forward to future distributions but Saizen is not bounded by any regulation to distribute 90% of their income. Note the huge bank of warrants which has a very dilutive effect.

Saizen REIT 3Q2010 results

I have to say that their report is very clear, completed with a nice content page and explanation of the results, which was within expectations. Some summary of their results:

1) All CMBS loans except the mega YK Shintoku loan has been repaid via either bank borrowings or cash. As for the YK Shintoku loan, the loan servicer is still in process of formulating  acourse of action.

2) Saizen has commenced accumulating cash in May 2010 for resumption of distribution. Good news!

3) On top of the JPY 1 billion loan of YK JOF mentioned in my earlier post on Saizen, another JPY 2 billion loan for YK Shinzan has been drawn successfully.

4) YK Shintoku's CMBS defaulted loan remains at JPY 7.7 billion

Saizen REIT Analysis Part 2

Saizen's Debts

As of now, debts have been repaid (the CMBS loans) for YK Shinzan, YK Kokkei and YK Shingen. For YK Keizan, it is expected to be finished in payments by Apr 2010. The main worry is the defaulted loan of nearly 7 billion yen in YK Shintoku, although it appears to be much less of a concern now as refinancing seems more and more viable.

As of 2Q2010, Saizen has about 15.5 bil of debts and 42 bil in property, giving us a 36.9% gearing at the moment. This has reduced a lot, and is starting to look more favourably to me than before.

My initial thoughts on Saizen REIT

Saizen REIT Initial Analysis

After some calculations last night, I discovered that their net income from operations per annum is only about 2+ cents per share if none of the warrants are exercised, and 1.55 cts per share if all the warrants are exercised.

Let's take an average of 1.8 cts if half the warrants are exercised. This gives us an net income from operations of 10.9% on the unit price.

A distribution of say 90% will give about 9.8% dividend yield! Sounds exciting? Let's see: