SINGAPORE (July 1): The manager of Accordia Golf Trust (AGT) says the business is likely to experience a potentially “long-drawn recovery process” from the Covid-19 outbreak, says CGS-CIMB analyst William Tng in a non-rated report dated June 29.

“The manager has guided that it will continue to streamline the group’s cost structure to align with the new norm and establish stringent health and safety protocols to restore consumer confidence and employee safety,” Tng adds.

The news comes as the Trust reported earnings of JPY1.7 billion ($22.0 million) for FY20 in June, which came despite poor weather conditions – particularly Typhoon Hagibis in Japan in October 2019 – as well as the Covid-19 outbreak in March 2020.

On Nov 28, 2019, AGT announced that it entered into a non-binding proposal from Accordia Golf that may or may not lead to a divestment in AGT’s interests in all its golf courses.

The divestment consideration at the time, was said to be at JPY63.2 billion.

On June 29, AGT announced that that it has entered into a conditional agreement to fully divest its interests in its 88 Japan golf courses to Accordia Golf for a total cash consideration of JPY 61.8 billion ($804.1 million).

See: Accordia Golf Trust fully divests interests in Japan golf courses for $804.1 mil

The consideration translates into an implied purchase consideration of 73.2 cents per unit.

The team at Lim & Tan Securities feels the offer is “reasonable” given that the implied purchase consideration represents a 5% premium to AGT’s adjusted net asset value (NAV) per unit of 69.6 cents.

In the foreseeable future, the team also believes the offer by Accordia Golf is “palatable” due to the negative short-term outlook on Japan’s golfing industry, which was affected by Covid-19 fears, and dwindling visitor numbers.

“As stated in their announcement, unitholders would stand to retrieve total distributions of around JPY60bln should this offer go through, which we calculate to be around 70.7 cents per unit assuming an exchange rate of SGD/JPY at 77.0,” the team says.

“Additionally, as AGT intends to undertake a voluntary winding up of its listing status should this deal go through, we therefore note that there could yet be another round of cash distribution to unitholders should AGT be eventually delisted,” it adds.

AGT is currently trading at 0.86x FY20 P/BV, with a FY20 dividend yield of 6.72%. Its market cap is at $703 million, with a price-to-earnings ratio (P/E ratio) of 32x, price-to-book ratio (P/B ratio) at 0.88x, and a loan-to-value ratio at 31%.

AGT’s FY20 distribution per unit of 4.3 cents (excluding the supplemental distribution) equates to a yield of 6.7%.

As at 4.09pm, units in Accordia Golf Trust were changing hands 1 cent higher, or 1.5% up, at 69.5 cents.