Sunday, October 7, 2012

Malaysia Biggest REITS: PAVREIT VS SUNREIT

Recently, I have been actively investing in REITS as I start to see a lot of potential in REITS market. Previously, I have written about "Investing In REITS is Better Than Trading Stocks", you can have a read if you want.

I am looking at PAVREIT and SUNREIT. Both of this REITs are performing quite well and they are giving good dividend. So, I am aiming to trade REIT and at the same time receive high dividend yield from REIT as the dividends from REITS are way better than putting our money in saving account or Fixed Deposit.


I have included my analysis on two of the biggest REITs in Bursa Malaysia. These two REITS can be consider the top two big brother in Malaysia REITS.

SUNREIT-Sunway REIT

Curently, SUNREIT is closed at RM1.50. At this closed price, based on the historical dividend payout which is the Current Year to Date Dividend, it is RM0.075,  the dividend yield is 0.075/1.5 which is 5% annually. At this price, personally I do not prefer to buy SUNREIT. I will choose to buy other REITS. Another reason is that the EPS Current Year to Date is decreasing at a fast rate, 2011-20.64 while 2012-15.62. This is a big drop in EPS. So, personally I think that SUNREIT is overpriced and push up too much by investor.

PAVREIT-Pavilion REIT
Curently, PAVREIT is closed at RM1.34. At this closed price, based on the historical dividend payout,  the dividend yield will be around less than 1% annually. PAVREIT is now a bad counter. The Earning per share (EPS) is only 4.77 (2012: Q1 1.59 and Q2 3.18). Q2 2012 dividend is 3.36 as compared to Q4 2011 0.44, the dividend is increasing at fast rate.

For normal dividend rate is around 7-8% per year from REITS for my investing criteria. As for now, both PAVREIT and SUNREIT is having low dividend yield, I am not going to buy at the price.

Suitable buy Price based on the Dividend Yield
SUNREIT-if dividend maintain at 0.075, in order to get 7% dividend yield, the best buy price will be RM1.07.

PAVREIT-if dividend maintain 0.44 at Q4 and 3.36 at Q2 (PAVREIT give dividend every 6 months), to get 7% DY, the best buy price will be RM0.54.

From the above, you can see that it is quite impossible for the stock price to reach that level. From the point of view of fundamental analysis, EPS should increase and dividend will also increase. In PAVREIT and SUNREIT, SUNREIT EPS decrease and dividend increase, this is not so healthy while PAVREIT EPS and dividend increasing but the price is too high to get a 7-8% return.

As for now, I am collecting more ARREIT because I see some potential in this REIT.

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2 comments:

CK TAN said...

Hi

Now I start to look at REIT as new way to grow my hard earn money.

Let me get this straight about REIT.

REIT is high risk and high return, right?

How do you select REIT?

How do you calculate dividend yield?

Thank, I kind of new and still learning.

William Lee (Greenleaf) said...

Hi CK Tan,
REIT is consider low risk in stock market. It gives stable dividend of around 7-9% a year depend on what REITS you buy and what price you buy. (some company give up to 95% of total profit as dividend to investor.)

The dividend yield can be found in the trading platform. For example, Hong Leong bank, their system got show what is the dividend given based on historical dividend payout.

I would say invest in REIT is very safe because it pays dividend 7-9% a year which is higher than Fixed Deposit. And we can also earn capital gain from the price fluatuation. :)

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