Prior to his retirement, Chan Kit Whye (left) worked more than 30 years as Regional Finance Director, Financial Controller and Manager in a multinational specialty chemical business. He has played an active role in CPA (Australia) Singapore Branch, taking up positions in its Continuing Professional Development and Social Committees. Kit Whye is a Fellow of CPA Australia, CA of Institute of Singapore Chartered Accountants and CA of the Malaysian Institute of Accountants. He holds a BBus(Transport) Degree from RMIT, MAcc Degree from Charles Sturt University and MBA from Durham Business School.
Accordia Golf Trust, the first SGX-listed business trust with golf course assets in Japan, recently traded at 84 cents, down significantly from its IPO price of 97 cents. The stock was listed on 1 Aug this year. The IPO raised gross proceeds of S$758.6 million. At 97 cents, unitholders can expect to receive an annual distribution yield of 9.1% for FY 2015 (ending March 2015) or normalised distribution yield (ie, excluding non-recurring items) of 7.0% for FY 2015.
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I wonder how workable this type of trust is. As a golfer, I am aware that running a golf course is very difficult, and without good maintenance, which is costly, it cannot attract golfers to play.
Also, in Japan, with four seasons, nobody can play golf during winter. Why list in Singapore when the yield is as attractive as claimed? Why not list on the Tokyo Stock Exchange where, in Japan, interest on fixed deposit is negative? I am sure, the Japanese are more willing to invest if the yield as promised is a reality.
This trust is injected with 89 golf courses from across Japan. That is huge. But I am skeptical on the Japanese leadership style and the way its finances are managed.
Look at the golf courses in Malaysia, especially Johor. Sheer lack of maintenance drives golfers away. We need to know the critical success factors of growing this business profitably.
To be successful, meaning attract golfers like us, Japan's golf courses should provide caddies for every 18-hole game, modern buggies with GPS to track distance from the ball to the green, good changing facilities including showers, and toilet amenities.... That is the attraction... in particular, professional caddies to give guidance and advise on the course layout, etc.
If not, I still prefer China golf courses and next, Thailand golf courses... and then Indonesia golf courses.
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