Sabana – What really matters in a REIT (4 step analysis)

How bad can a listed company go??

Listed on 2010 | 21 Industrial Property  – Chemical Warehouse & Logistic / High Tech Industrial / Warehouse logistic / General Industrial |

  1. IDENTIFICATION OF COMPANIES THAT ARE UNDERVALUED.
    • Price to Book Ratio : 0.643
    • Price to Earning Ratio : 6.81 [Rough number through average dividing from its Reit price] – Growing at below industrial standard of 14.172
  2. LEARN ABOUT THEIR NUMBERS
    • Gearing : 73.14% ( Above average reliance on financing for growth)
    • Wale : 2.89 Years ( Not really good compared to Soilbuild at 4.8 years – Same industry)
    • Current Ratio : 0.231 (Inability to pay off short-term debt and long term obligation) – SoilBuild has a higher ratio by 7.2 times
    • Growth Rate :  -8%
    • Cash Flow Per Share : $ -0.1971 (Super bad)
    • Book Value per share: 0.808 (Probably due to the amount of properties that they have)
    • Worst management ability I’ve seen ( Decreasing dividend payout- worst sign | Poor Net income margin over the span of 5 years | Huge financing and investing losses | Crazy high payout ration in 2014?!?! )screen-shot-2016-11-20-at-11-56-29-amscreen-shot-2016-11-20-at-11-56-25-am
  3. Technical Analysis
    Screen Shot 2016-11-20 at 12.15.12 pm.jpg

    Sg.finance – Max Chart

    Market price of this Reit has constantly been dropping since April 2013 till now.  60% drop in market price since its peak – reflecting poor management ability to build demand and improve financial numbers.

    Currently price action (Market price) is consolidating and there are two probable reasons:

    • Sabana or its sponsors are buying back shares ( wasting money) to prevent market price from dropping further
    •  Institutional investors are giving hints for the next market direction
  4. Would I want to invest into it??

Definitely not… looking at how poor their financial numbers are managed and controlled… Imagine your company is making $100 of revenue per share and it has a payout ratio of 130% (which means you are paying your shareholders $130 of revenue per share) – Is it even wise? technically giving out more money than they earn….. As industrial times are bad, I really do hope Sabana are not buying back shares as they should really use the money to improve their management ability.

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