Accordia Golf Trust (AGT) announced its maiden results post-IPO this morning before market opened. We attended the analyst briefing and these are the key takeaways:

No forex hedging in place as yet – Management is currently in discussion as to whether to implement forex (SGD/JPY) hedging strategies going forward. There is no forex hedging at the moment. Latest results: Available DPU per unit (JPY) is in line with forecasts (+1.1%), but when converted to SGD, is down 9.6% vs forecast.

Offered discounts to draw visitors – Discounts were offered to draw visitors in the previous quarter, but actual number of visitors is still down 0.7% vs IPO forecast, due to bad weather in 3 out of 5 months from Aug-14 to Dec-14. January-15 visitor figures are not published with the results, but management guided that the numbers were slightly disappointing.

High average utilisation rate vs national average – AGT attained utilisation rate of 75.9% overall for FY13. The second biggest golf operator in Japan, PGM Group, has a slightly lower utilisation rate. National average is less than 50%.

2 tier golf course market in Japan: Metropolitan and Rural – Generally, metropolitan golf courses are more resilient as the shrinking golf population affects rural areas harder, as people continually move from rural to urban areas for better job opportunities etc. ~70% of AGT’s portfolio is located in the 3 largest metropolitan areas in Japan.

Higher playing fees in neighbouring countries driving visitors to Japan – Management guided that playing fees in neighbouring Korea and China can be up to 3x higher than in Japan, and this is helping drive avid golfers to Japan.

Investment Action

No stock rating or price target provided, as we do not have coverage on AGT.

Source: Phillip Securities Research - 13 Feb 2015