ATRIUM (5130) - Stock Review – ATRIUM(5130)



image source from Big Chart Marketplace

image source from Big Chart Marketplace
Bursa Malaysia - 5130
Bloomberg - ATRM:MK
Yahoo - 5130 .kl

Webpage - http://www.atriumreit.com.my/


Key Value Investor Criteria: -

Description
Value
Criteria
Point
Price to Tangible Book Ratio
0.76*
< 1
4/5
Return on Asset
2.54*
> 0
4/5
Return on Common Equity
9.03*
> 0
5/5
Quick Ratio
0.04*
>1
0/5
Long term Debt / Total Capital
8.59*
<50 span="">
5/5
Continue Dividend over Past 10 Years / Since Inception
Yes
Yes
1/1
Historical Dividend Yield
7.85%
>3%
2/2
Cash From Operation
Positive > 5 years
Positive
5/5
P/E
8.8
10
1/2
Total Point
27/35
Note:
 *            Data obtain from Bursa Marketplace on 28/7/2016
Company Profile

ATRIUM is a REIT focus on warehouses. Table below summarised the warehouse own by ATRIUM

Warehouse
Occupancy
Tenant
Tenant Expired
Atrium Shah Alam 1
100 %
Marelli Asia Pacific Sdn Bhd
31-5-2021
Atrium Shah Alam 2
71 %(1)
SSGSCL(1)
31-3-2019
Atrium Puchong
73 %
Tiong Nam Logistic Sdn Bhd
31-6-2016
Atrium USJ
100 %
i) SAF- HOLLAND
ii) Century
iii) 20 Cube
i) 31-8-2017
ii) 31-12-2017
iii) 31-7-2017
NOTES:
1.      According to announcement make by ATRIUM on 31 March 2016, SSGSCL had rented Atrium Shah Alam 2 phase 1 commence on 1st April 2016 and phase 2 will commence on 1st January 2017 for 3 years

ATRIUM had long term 6 years tenancy agreement with Marelli Asia Pacific Sdn Bhd until 31st May 2021 with will give Atrium a stable income. Besides that ATRIUM manage to find a tenant for ATRIUM Shah Alam 2 until 31st March 2019. ATRIUM Shah Alam 2 will be fully occupied on 1st January 2017.

However Atrium Puchong tenant is still a temporary, the management required to find a long term tenant for Atrium Puchong.

PROS:
è Long term tenancy agreement for Atrium Shah Alam 1 will give ATRIUM a stable income
è Managed to find new tenant for Atrium Shah Alam 2 until 31st March 2019.

CONS:
è  No long term tenant for ATRIUM Puchong.
Financial Statement

After obtaining tenant for ATRIUM Shah Alam 2, the revenue of ATRIUM will increase and hence the distribution income is expecting to increase more than 1.30 sen which distributed last quarter. Besides that, the new tenant increase the long term liability of RM 2,380,673 to RM 5,702,224 as a deposit. These deposits indirectly increase the cash of ATRIUM as these deposit will not give back to the tenant until the end of tenancy agreement, hence ATRIUM management can invest the extra cash to bank deposit or other cash generating asset to increase the income of ATRIUM.

Compared to 2014, the cash generated from operation for 2015 had decrease from RM 13,693,208 to RM 6,723,070 these is mainly because of disposal of ATRIUM Rawang and vacant of ATRIUM Shah Alam 2 in 2015. However the management manage to get tenant for ATRIUM Shah Alam 2 from Q2 of 2016 will increase the cash generated from operation for the next quarter.

With bank negara cut the Overnight Policy Rate by 0.25% to 3.0% will reduced the financial cost of ATRIUM when renew their short term revolving credit (STRC) of RM 39,600,000 which renew yearly. Besides that, ATRIUM had a term loan which required to paid in one lump sum cost of RM 20,000,000 in October 2018.

PROS:
è New tenant for Atrium Shah Alam 2 might increase the distribution to shareholder each quarter.
è Extra RM 2,380,673 deposit to invest in safe asset for extra income.
è Reduction of OPR by 0.25% will reduce the financial cost of ATRIUM in the future.
CONS:
è Cash generated for 2015 had reduce by 50.09% compared to 2014.
è Term loan of RM 20,000,000 which required to be paid on October 2018.
Conclusion

After the review on ATRIUM, ATRIUM had a dividend yield of more than 7% which is a very good dividend yield. In my opinion. with the volatility and the uncertainty of the stock market today investor will start looking into a stable asset with dividend yield. Hence I will recommend BUY to ATRIUM.

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ATRIUM (5130) - Stock Review – ATRIUM(5130)
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