Annualize 1.81 X 4Q= 7.24 cents per annuam. Wah! Very good dividend stock with now 1.92 cents dpu this second quarter. Amit, its price tomorrow up min 2 cents. How to go down to below 90 cents. Dreaming!
WILL yields of Malaysian real estate investment trusts (REITS) come under pressure because of lower rents and rising interest rates? That depends on how the data is interpreted. There is some evidence that rentals of properties ranging from offices to factories are being renewed at lower rates as leases end although at the beginning of the year, the expectation was for an average 6.3% yield for the year.
REITS experts say the total returns should be calculated on their unit price gains together with the yield. For July, local REITS had an average yield of 5.801% versus 5.507% in January.
Conventional wisdom says that when interest rates rise, this is usually bad for REITS. This is because REITS pile on debt as they acquire assets, so when interest rates rise, their ability to service debt comes under pressure as they also have to pay 90% of their earnings as dividend.
But if interest rates are rising because of a growing economy, this may not necessarily affect REITS negatively because businesses will expand, offices will be rented out and people will spend their money. There is speculation that Bank Negara may have to raise the overnight policy rate some time next year on demand-pull inflation stemming from rising consumer sentiment.
Detractors, who believe that the economic outlook is still uncertain, say consumer sentiment is still down although the first quarter’s unexpected 5.6% growth spurt was in part supported by private consumption. Economists expect the second quarter’s economic data to show growth above 5% after the surge in exports in recent months.
Most Malaysian REITS, because they own malls and offices, have been affected, to a degree, by the glut in office space or the downcast consumer sentiment. There is still reason to be cautious with local REITS, and this can be seen from their unit price performance, which has been mixed on a year-to-date and one-year basis reflecting the local business conditions and consumer sentiments.
What is keeping select REIT unit prices up and performing better than the benchmark FBM KLCI could be the drop in the yield of benchmark 10-year Malaysian Government Securities, which stood at 3.976 from 4.463% at the end of November. This could have driven some investor interest back to Reits, which offer better yields. Indeed, Kenanga Research actually upgraded Reits to “overweight” from “neutral” in June.
Ultimately, REITS are about their underlying assets, which is property, where these are located and how well they are managed. If a particular REIT’s assets fulfill all three factors, there is no reason that yield cannot sustain even with all the daunting challenges.
The Company sells some (not many), not the boss. The boss is one of the shareholders in the Company. It could be the Company decision. Sometime, comany needs cash. Sometimes they want to see market liquilities. Like even CIMB chairman sold some CIMB shares before, but business progress.
Given the continued strong performance in the second quarter of 2017, the Malaysian economy recorded a strong growth of 5.7% in fi rst half of 2017. At this point, compared to the beginning of the year, there are considerable improvements in the operating environment of the economy. Looking ahead, it is likely for the Malaysian economy to expand by more than 4.8% for the whole year of 2017. Leading indicators such as the Department of Statistics Malaysia’s composite leading index, MIER Business Conditions Index and MIER Consumer Sentiments Index, suggest continued expansion of the domestic economy.
Amit, depending on how much money shortinvestor. If he only has RM100k, then i guess is too much, but if he has RM1mil, I guess is acceptable. Do you think so?
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Amit Khindriya
739 posts
Posted by Amit Khindriya > 2017-07-18 22:19 | Report Abuse
Keep bullet....89 comin.