 Although JASIF has amended the rental structure, which will lower the near-term dividend per unit, this will be offset by a longer lease term and thus have limited impact on our TP. We therefore keep our recommendation NEUTRAL with an intact DCF-based TP of Bt8/sh (5.1% WACC and 0% LTG) as rising bond yield caps near-term upside. At the same time, we see the fund as good for investors looking for a dividend stock, especially since ADVANC – with its strong financial position - will soon become the sponsor of the fund. Our TP would be cut to Bt7/sh if we base it on the new lease terms (ending in 2038 with no extension). Unitholders approve amending lease terms. JASIF held a unitholders meeting on Wednesday. The key agenda item was to approve a new rental structure and also extend the lease term from Jan 29, 2032 to Dec 31, 2038. A full 96% of unitholders who attended the meeting voted yes, as expected by INVX and the market. The new rental structure. Initially, JASIF had two lease agreements: the main lease and rental assurance. For the main lease, TTTBB pays a monthly rent of Bt654mn, with Bt289mn for the rental assurance. Under the new agreement, there will be only the main lease. This implies a drop of 30% in rental income for JASIF. The new rental structure will be in effect from Aug 23, 2023. Next focus is the deal between TTTBB and JASIF. The next focus is the conclusion of the deal between TTTBB and JASIF, which ADVANC is waiting for the NBTC to approve. Behind this is the desire for a reduction in interest rate from BBL based on the sponsor’s stronger financial position. Estimated impact. We nudge down our 2023F earnings by 17.8% to Bt7.4bn and 2024F by 35.7% to Bt6bn to reflect the new rental structure. Our new assumptions also assume that the interest rate for the fund will be reduced to MLR-50bps from the current MLR, as we expect the deal between TTTBB and JASIF will be approved by the NBTC. Note that the new interest rate will take effect after the completion of the deal. Based on our new assumptions, dividend per unit in 2H23F is expected to be Bt0.29/sh (JASIF already paid Bt0.46/sh dividend in 1H23) and Bt0.7/sh in 2024F. Risks and concerns. Rising bond yield pressures share price via making the yield gap with government bond less attractive. Sentiment would also be soured if the NBTC does not approve the deal between TTTBB and JASIF. |
