Asian Pay TV Trust is one of the companies I'm looking on SGX in the very beginning of my investing journey and one of those I actually started doing a homework for... or rather... an analysis.
A simple one.
I was pretty much attracted by the yield back then and I started to source out some in our local market.
I remember going through Mapletree GCC Trust at about 1.00 range (something that I pretty much regret till date), APTT at around 38-39 cents, AA REIT at 1.35 range and HPH Trust at 48 cents USD.
And yes, you're right. I've bought myself some dustbins in International Business Park at Jurong for my Valentine's day present to myself.
I got a little more curious when APTT prices scaled even higher up to 50s and 60s range in late 2017 and decided to pay a little more attention to it. To be honest, I'm pretty much disgusted by the level of debt APTT got itself in and I did punch myself a little for not acting back then.
The high level of CAPEX and FCF back then also serves as a warning for me to not enter a position with them. I felt that the risk taken for entering at that range could not be compensated by the dividends.
APTT had announced a dividend cut and will only be paying only 1.20 cents annually, at least for the next 2 financial year ahead when the 3rd quarter financial results are released.
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| From: APTT 3Q Financial Presentation |
How about now when it had fallen by 16-17 cents to 16-17 cents??
Is the compensation fair now? I'm not certain. But definitely, it looks much better than it is at 30, 40 and certainly 50 cents.
For those that had paid a higher entry price to APTT, this will translates to a big pay cut and probably even a big unrealized loss we're looking at.
How is it then to non-APTT shareholders?
With this move to cut their distribution, APTT will now have a much more sustainable payout ratio and in fact with some additional room, which could be used for repayment and certainly further development in the future.
Aside from this, with the completion of digital cable TV upgrade, CAPEX should start to taper off and this should bring in more positivity along with the dividend cut for its future cash flow, something which is extremely important. Hence, I would like to believe that the management is being prudent in doing so.
The position initiated with APTT is a relatively adventurous one, or rather like what some would call it, a risky one as compared to the other counters due to the high level of debt they are in and the business they're engaged with. However, if we look at things from a different angle, we might get to see some light.
APTT will continue to face headwinds and challenges in their business, but I believe at the new move should allow them to do more things than they originally could.
We must be reminded that as investors, we are paid for the level of risk we take. The risk to take today seem a little more delicious and tempting for me which resulted in my itchy fingers pulling the trigger.
With today's price hovering around 16 cents, we're looking at somewhere between 7.5% yield for this investment, which is somewhere what one would typically demand for APTT, probably even higher.
I'll certainly be happy to increase my exposure with APTT should the price continues to fall. I will soon write a little more about my thoughts on APTT.
*Coincidentally, right after my purchase, I happen to see many bigger hands scooping some of APTT shares!*
Read: APTT Q3 Financial Presentation
