Current Price on 25th Oct 2011 = $0.805
- Current Yield = 7.14%
- Price-to-book Ratio = 0.602
- Assets per unit = $2.715
- Debt per unit = $1.378
- Gearing = 50.8% (considering CPPU as liabilities)
FCOT has reported its full year results which gives very clear indication on its dividend income. It explains why different quarters can have vastly different yields. Therefore from now on, only the full year dividend will be considered for analysis. Anyway, it is giving me $580 in dividends which I thought was quite good.
With 7.14% yield, it has fallen short by quite a bit for my expectations but I am investing in this more for growth than stable yield (which is a deviation from my investment philosophy). Reasons are
1) Refinancing will give substantial savings in borrowing cost and that will boost yield.
2) CPPU - I have assumed that they will not pay the premium for FCOT units so FCOT would need to redeem it. This would increase borrowings again at a lower cost. Rights issue is also possible to remove this rather high cost "borrowing"
3) When FCOT retake management of China Square Central, there will be a rental increase which will boost yield again.
Thus, I am confident that things will work out fine for FCOT with the support of a strong sponsor (F & N). I already have 20,000 shares so I will monitor my investments here.