Dividend Magic

Saving and Investing towards Financial Independence in Malaysia

Companies in the News

IGB REIT – Annual Report 2015

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Filed Under: Dividends, Companies in the News, Portfolio - Freedom Fund 4

What is a REIT?

So first and foremost, what is a Real Estate Investment Trust (REIT)? A REIT is a company that owns, and in most cases, operates income-producing real estate. They are listed on the KLSE and its shares are open to the public to purchase.  Learn more about them here in my Complete Guide to REITs in Malaysia.

Now, on to one of my favorite REITs – IGB REIT.

IGB REIT

IGB REIT Annual Report

I was awaiting the arrival of the dividend voucher from IGB REIT when to my surprise, it came together with its annual report in the form of a CD. Personally, I like how companies are mailing their annual reports in a CD instead of the old days when they printed thick copies of the reports and mailed those to every single shareholder.

Before we go into the details, you may download and open IGB REIT’s annual report here: IGBReit AR15

For the benefit of those who don’t know, IGB REIT’s property portfolio consists of Mid Valley Megamall and The Gardens Mall in the Klang Valley. Their main shareholders are IGB Corporation Berhad and Goldis Berhad whose main shareholders are the family of IGB Corp’s co-founder the late Datuk Tan Kim Yeow.

I will attempt to brief everyone on some of the more significant details of IGB REIT.

Balance Sheet

Dear shareholders of IGB REIT, these are yours.

IGB REIT The Gardens Mall

Photo Source: thisismetrixit.blogspot.com

IGB REIT Mid Valley Megamall

Photo Source: mapio.net

There were no significant changes in the REIT’s assets and liabilities, value of the company’s investment properties stood at RM4.9 billion. Mid Valley Megamall is valued at RM3.61 billion and The Gardens Mall at RM1.28 billion by Henry Butcher as at 31 December 2015.

Cashflow

A Real Estate Investment Trust’s (REIT) main source of income comes from rentals and the company’s gross rental income increased by 7% in 2015 to RM380 million a year. I particularly liked that IGB REIT also managed to not only keep expenses low, they were able to reduce it by almost RM3 million a year.

However, a lower net profit was declared for 2015 mainly because there was no changes in the fair value of the REIT’s properties. Generally most properties held by REITs would have an increase in value every year, I am not concerned with this aspect of IGB REIT because fair value of properties are paper gains, the true value of a REIT comes from its rental income.

Apart from rental income, I’d like to bring your attention to their Other Income section mainly car park, advertising an kiosk rental. The REIT is rakin in RM44 million a year in parking fees alone, RM6 million for advertisements and a cool RM23 million from renting out kiosk booths. All of which have increased compared to 2014.

My Holdings

IGB REIT has been in my PORTFOLIO since July 2015 with my gross investment at RM1.3152. I’ve been adding to my position when the price was right. As of today (3/3/16), the market price is RM1.54, giving me an unrealized capital gain of 16.33%. I have also received dividend income from IGB REIT recently amounting to RM766.08. Total gains including dividends received stands at 20.93%.

At the current price, dividend yield for the REIT is still above 5%, I will consider disposing off some of my shares in IGB REIT when the yield dips below the 5% mark and will top up on the REIT depending on their next quarterly results.

Do you own any REITs in your investment portfolio? 

Thanks for reading.

A&W Malaysia – Coney dogs, Root Beer and a dying franchise

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Filed Under: Companies in the News, Investment, Travel, food and the finer things in life 0

I was on my way back to Kuala Lumpur and decided to stop by the Tapah R&R for a break. Lo and behold – an A&W stood in front of me. It had been months since I’ve had my coney dog and root beer float. I found out that the coney dogs were named The Chicken Coney and The Beef Coney now which are self-explanatory. The revamped Beef Coney was really good and they ran out of ice cream so I settle for a regular root beer.

A&W Malaysia

A&W Malaysia

Having my meal there brought back memories of my frequent visits to the A&W drive in at Petaling Jaya (opposite Amcorp mall). Back in 2014, news of the outlet’s impending closure surfaced with its owners KUB Malaysia Bhd stating that demolition will start early 2015 with the outlet opening with a new look in 2018.

A&W Malaysia Drive In PJ

Photo source: The Star

Well, it is now Feb 2016 and that particular drive in is still around. So, what is going on? Despite earlier announcements, we can continue to enjoy their root beer floats and Coney dogs for now as no date has been set for the closure of the outlet. Two new outlets have since opened up in PJ. More of the story can be found HERE in the article by The Malaysian Insider.

KUB Malaysia Berhad

I believe that A&W Malaysia offers tremendous opportunity and is loved by Malaysians. Even being able to compete on the same level as brands such as McDonalds and KFC in Malaysia. However, KUB just hasn’t been able to tap into that potential. Take a look at their website for example. A few paragraphs on the history and some lousy description of the fast food chain doesn’t do A&W justice.

A quick look at the facebook page of A&W Petaling Jaya Drive-In will show many 1-star reviews of the outlet reflecting the services rendered. I admit I’ve been hoping for years now that KUB is able to turn things around with this awesome fast food chain and I might’ve even gladly picked up a few shares myself. 

I sincerely hope that the A&W franchise is able to return to its former glory and if not, KUB, please sell it off and leave it in the hands of better F&B managers.

As always, thanks for reading.