Skip to main content

MNACT - An undervalued gem?

I have been holding MNACT since HK thugs set ablaze the Christmas tree erected within Festival Walk in November 2019. 

Then MNACT was trading at around S$1.20 a piece. Now, it is $1 a share. 

Shortly thereafter, Covid reared its ugly head.  As the Chinese saying goes, Covid is akin to dumping a stone onto a person who has fallen into a well.  Another apt saying might be that when your roof leaks, rain falls every night. 

Considering that it bore the brunt of two severe shocks one after the other, and one of which remains very much in progress, it is probably fair to say, its $1 share price isn't exactly an unmitigated disaster.  Indeed, all things considered, I dare say it is actually pretty decent.  

As many would know, MNACT has the unfortunate distinction of being the only unloved child in the Mapletree family.  Why do I say that? Just look at the price-to-NAV ratios: 

MIT  - 1.7

MCT - 1.27

MLT - 1.68

MNACT - 0.75

Basically, the Market believes in paying a (significant) premium for MIT, MCT, and MLT, and perhaps adding insult to injury, only for anaemic yields of between 3-4%.  

Based on trailing yield, MIT appears to boast the best yield at 4.1% whereas MCT is yielding around 3.5% (yikes).  That is not to say that the valuations are unjustified.  After all, Madam Market knows best.  

However, the contrast simply begs to be examined. The ostracized child of the family, MNACT, has a trailing yield of 6% and is relatively undervalued.  Yet, it seems like no one seems to care for it. 

If you look at MNACT's financial highlights, you will note that its FY2019/20 NPI of 277.5M is coincidentally identical to its FY2015/16 NPI.  In FY15/16, MNACT distributed SGD0.069 per share, whereas SGD 0.061 /share was distributed in FY19/20.  More importantly, its recently completed acquisition in Korea (Pinnacle Gangnam) has yet to provide its maiden contribution to the REIT.  

Accordingly, there is good reason to believe that, barring unforeseen disasters, MNACT's distribution should recover significantly in this FY. 

Hence, I have increased my holdings in MNACT by a little bit. Just a bit.

Of course, many argue that shopping malls are pretty much in the sunset industry and covid has no doubt hastened their demise.  There is probably a kernel of truth in this observation. But as those living near suburban malls would know, malls are far from being dead. Indeed, judging from the daily crowds thronging the heartland malls, one might be forgiven for thinking the entire country has been vaccinated.  Ironically, the covid-spurred WFH trend may have even improved footfall for the shops during weekdays and afternoons.  

To me, it is much too early to call time of death on malls, and by extension, REITs with mall assets. Just my personal opinion. 

As always, do your own due diligence. The above is not intended as advice of any sort. 

Onward to FI my friends!




Comments

Post a Comment

Popular posts from this blog

As a Dividend Investor - I am having fun staying poor

Recently, there was a self-styled "master" who went around dissing dividend investing, saying things like REITS will chibaboom (his words not mine). Ironically, the master also invested into "growth stocks" like BABA and notably SE before its recent implosion.  Masterstrokes indeed. Dividend/income investors have borne the brunt of "have fun staying poor" taunts since the dawn of time.  Previously from the crypto bros and then from the growth investors. This is nothing new.  Every growth investor likes to talk about Tesla. But where are the ARK ETF investors? Where are the NIO bulls? Where are the BABA fanatics? Even a broken clock is right twice a day.   Good luck to those who retired on a portfolio of "growth stocks", hoping to spend 4% annually on an expected annualized portfolio growth rate of 10%.  Without dividends, one would have no choice but to liquidate part of the portfolio for meeting expenditures.  The damage done might never be reco...

FIRE by 2020 has officially failed

Back in 2015, I never thought I would have to work past 2020.   The idea was that I would have accumulated at least 1.7 M by Jan 2021 and would be comfortably returning 110k a year in passive income based on a 6.5% yield.  How laughably naive. The optimism is commendable but misguided.  Covid struck hard.   Several terrible decisions were made. EHT is bankrupt. A 50k write off.  Ouch is right. First REIT is trading around 20% of my cost price. Never again Riady. Never again. Yields have been severely compressed  with "quality" REITS, e.g., MINT, PLife, Ascendas REIT all returning paltry yields of 3-4% or, gasps, less.   With the view of improving portfolio resilience, I made a conscious decision to rebalance my portfolio to go REIT-lite (well, lighter) and increased my holdings in DBS, UOB, OCBC.  The MAS cap on banks' dividends does mean that these companies are returning 3% or less per annum.   Sigh.  All in all, pr...

The FI Checklist

You are on the verge.  So close your ears are tingling with anticipation.  Your fingertips rattle across the keyboard. Your lips purse into a wry smile. You can barely contain the pent-up ecstasy as the words appear on your computer screen: "... I would like to resign my position with effect from.... " WAIT A MINUTE.  I know you have literally waited a decade to type this letter.  But hold your horses first.  Have you done the FI checklist? The FI Checklist 1.  Have you set aside a cash buffer for income tax payments, which will persist for at least one more year in your unemployed life?   Since you would no longer have an active income, it is pertinent that you have set aside sufficient cash reserves to meet your tax obligations. If your passive income level is high enough to cover your expenses plus taxes, good on you. If not, prudence dictates that you ring fence some money for Singapore's most powerful debt collector. ...