Cheong partially and Swissco entirely this week. See my earlier blog “Why
I divested Nam Cheong and Swissco this week?” With the
available funds / profits, I added 8 lots of ARA Asset Management (ARA) and a
further 1 lot of Coca Cola Amatil (CCA). For recommendation on CCA, please
refer to my earlier blog “Golden Opportunity to own a part of Coca Cola
Company – Coca Cola Amatil.”
great companies in the coming weeks. For now, I will focus on ARA Asset Management Ltd analysis and why I think that ARA fit the bill as
one of the great companies.
Management Limited (SGX: D1R) “ARA” is an investment holding company. It operates
in four segments:
which include provision of fund management services to real estate investment
- Private real estate funds, which include provision of fund management services
to private real estate funds and specialist equity funds.
estate management services, which include provision of property management
services and convention and exhibition services.
- Investment holding, which include investing in a portfolio of listed securities
in REITs and a real estate fund manager.
depicts ARA’s business portfolio extracted from ARA Latest 1Q14 presentation results ending
Mar 2014. It also includes a recent S$708.6 million acquisition of Macquarie Real Estate
Korea Limited (renamed as ARA Korea Limited) in Apr 2014, a real estate
management company based in Seoul. With the acquisition, ARA has two
additional privately-held REITs in South Korea.
owned mainly by CEO and founder, John Lim holding 19% stake and his strategic
investor partners namely SGX listed Straits
Trading Company and Hong Kong Cheung Kong Investment Company Limited
with 20% and 8% stake respectively. Among institutional investors, Matthews
International Capital Management LLC has the biggest ownership of ARA with a
10% stake in the company.
- Price S$1.72 ; Mkt Cap S$1.45B
- PE 19.3 (base on FY13 EPS 89.1c)
/ PE 20.3 (base on annualized 1Q EPS of 21.1)
- PB 5.2 (base on FY13 NAV of 32.84c)
/ PB 5.0 (base on 1Q14 NAV of 34.51c)
- Dividend Yield is very stable at ~5c for
past five years. This translate to 2.9% yield at current price of 1.72.
- ARA has healthy cash and equiv
- No net Debt, since cash exceeds
total liabilities of 38.7mil.
- Only debt is 4.8mil
- ROE 26.8% ; ROA 24.2%
Latest 1Q2014 Results,
- Total quarterly revenue increase by 18% to S$38.2mil yoy.
- Net Profit rise 6% to S$17.8mil yoy.
- Its recurrent management fees also increase by 11% yoy to S$29.7 mil.
- Net Profit grows steadily from 36.7mil in
2008 to 74.3mil in 2013.
- AUM rise from 11.7b in 2008 to 25.5b in 2013.
“ARA is well-positioned to
pursue further growth opportunities, as the combined partnership of Cheung Kong
and Straits Trading, both well-reputed as premier business groups in Asia, will
underpin our expanded business network reach in the Asia-Pacific region.” –
John Lim CEO ARA.
grow the business year after year, even in times of crisis – SARs and GFC. Furthermore, ARA has a
multi-revenue generating business model that collects steady multiple streams
of income from REITs, Property and Fund managements. Backed by Lee Ka-Shing
Cheung Kong Holdings and one of Singapore oldest companies, Straits Trading
Company, I envisage more growth in years to come even albeit the rising interest
span 14 cities in the Asia-Pacific, across Singapore, Hong Kong, China,
Malaysia, Australia and South Korea within a short 10 years or so.
better to buy a wonderful company at a fair price than a fair company at a
wonderful price.” – Warren Buffett