BJFoods-A Breather or Sprouting Roots?

Delicious Combo!

BJFoods (BJF)- after a flurry of buying, it seems BJF has met its nemesis price. It hit RM1.45. Was that a flash in the pan? Is RM1.40 that psychological " bridge too far" for this food giant?

Reading the answer given to Bursa in August 2011, BJF made some interesting assumptions when pricing both their rights and their warrants.

At the then going price of 81 sen, the rights issue was priced at a 13% discount of 65 sen. The TERP was quoted at 75 sen. With that berth of 10 sen, it was assumed that shareholders will pick up the rights.

As for the warrants, since they have been  given free, they wanted to impute a value on it as well. So, they decided that it should be priced at 70 sen giving the tradable value per warrant at 5 sen apiece higher than the 65 sen rights.

Let us used their logic to appraise the current price of BJF. will this be a true reflection or a mirage?

Let us take RM1.40 for convenient calculation. Let us also give it a 13% discount. That would work out to a fair support price of RM1.22 sen. Let us exercise the rights at 65 sen at 1000 shares. Total investment will be RM1.22+0.65=RM1,870 for 2000 shares. That means per 1000 lot is adjusted to RM940.00. At the theoretical support price of RM1.22, you stand to gain RM240.00. Selling off 2 lots of 1000 units will fetch  you RM480.00 gross profits.

Will buyers invest in this counter when their shares are adjusted truly to at RM1.22 sen? Looks okay to me since you would still be taking in 28 sen  of profit (29%) in such a short window of time.

Let us look  the warrants. It will be priced at 70 sen still. So to convert, add 70 sen. Total outlay will be RM700 to change for 1000 shares. If the ex-price is RM1.22, then the TERP of each warrant should be 52 sen.

To a layman this is a bonanza of 52 sen per share. That is another RM520 for the piggy bank.

When the rights offer letter are traded, the opportunity to sell presents itself.

First you collect the 28 sen from selling the rights and then a potential 52 sen from the warrants. The take home will possibly be RM800.00 for one lot of 1000 shares.

Let us see what happens on 17 July or is this the warped and fickle workings of an infantile mind?

STAREIT TAKES OVER 3 AUSTRALIAN MARRIOTS

No longer A local REIT

Stareit has moved aggressively to accumulate premium assets. This tme it made significant 

forays down under to take over three Marriots-Sydney Harbour Marriott Hotel, Brisbane 


Marriott Hotel and Melbourne Marriott Hotel.

An outlay of RM1.315 billion is the total cash payout for this acquisition.

 The purchase consideration will be satisfied in cash via bank borrowings and cash balances 


of Starhill REIT upon receiving approvals from the relevant regulatory bodies.

Managing director of  YTL Corp/chief executive officer of Starhill REIT) Francis Yeoh  said 


that the acquisition of this new portfolio of hospitality assets would enlarge the REIT's 


portfolio to about RM3bil from RM1.58bil currently.

With the acquisition, more than half of Starhill REIT's property value will be constituted by 


its hotel assets in Australia and Japan, making this the largest portfolio of overseas property 


investments of any Malaysian REIT. So, the footprint of Stareit has changed character-wise 


with a large exposure in Australia. Wise move I guess since the Aussie dollar is solid as 


Gibraltar!

“The acquisition represents a yield accretive opportunity for the REIT, generating two 


income streams, firstly, stable fixed lease rentals arising from its existing property portfolio 


and, secondly, variable income from the three Marriott hotels, increasing the potential for 


distribution per unit growth and variations,” he said.

The Marriot, Melbourne

He added: “It will also allow Starhill REIT to participate in the vibrant real estate market in 

Australia and explore further geographical diversification of the REIT's asset base.”

The Sydney Harbour Marriott Hotel, built on a 3,084 sq m site on Pitt Street is in close 


proximity to reknown tourist attractions, including Circular Quay, The Rocks and the 


Sydney Opera House as well as the city's major office and retail precincts. The 33-floor 


building has 563 rooms.

The Brisbane Marriott Hotel sits on 1,532 sq m land and is located close to the Brisbane 


River and with a view of the Storey Bridge. It is a 28-floor building with 267 guest rooms.

The Melbourne Marriott Hotel occupies 1,636 sq m, located on the corner of Exhibition and


Lonsdale Streets with 16 floors and 186 rooms.

The three are five-star AAA tourism-rated hotels, situated on freehold land within the cities' 


Central Business Districts and operated by Marriot International Inc. Group group.

Starhill REIT currently owns ten (10) prime hospitality related properties with a total 2,690 


rooms and services residences units in Malaysia and Japan, namely the JW Marriott Hotel 


Kuala Lumpur, The Residences at the Ritz-Carlton, The Ritz-Carlton, Kuala Lumpur, the 


Pangkor Laut, Cameron Highlands and Tanjong Jara resorts, the Vistana chain of hotels in 


Kuala Lumpur, Penang and Kuantan and Hilton Niseko. As at 31 March 2012, the combined 


value of the Trust’s property portfolio stands at RM1,577 million.

The Trust was established on 18 November 2005 and Starhill REIT was listed on the Main 


Market of Bursa Malaysia Securities Berhad on 16 December 2005.


An an IPO price at 0.98 sen, STAREIT is an undervalued REIT.

Time to accumulate STAREIT on weakness, don’t you think?