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FKP Property (ASX:FKP) delivers profit increase - Will be assistedfurther by interest rate cut



 
 
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Old December 29th 11, 09:57 AM posted to misc.invest.technical
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Default FKP Property (ASX:FKP) delivers profit increase - Will be assistedfurther by interest rate cut

Hi ya'll, just wanted to bring to your attention an organization named FKP Property Trust (ASX:FKP), which is currently trading at a discount of 62% of its FTA. In other words, the cost per share is $0.48, though its actual value (Net Tangible Asset, NTA) is $1.25. This means that if you invested $10,000, you have actually purchased $26,042 worth of property. This is even better than investing in the property market! Investing in arbitrage is the method of Warren Buffet, and is the only method that HONESTLY works. In my experience, day traders (aka gamblers) only talk about their wins, and hide their losses.

Of particular importance is Stockland (which owns 14% of FKP Property Trust) is likely going to acquire the organization (it is already part way through a share acquisition). This is inline with Stockland's strategy to expand into retirement villages. Stockland started buying FKP shares at $2 a share, though it is currently trading at $0.47. Trading at a value so low below NTA backing, makes it a sitting duck for takeover. As everybody knows, an acquisition means the company buys ALL shares at a premium (say 20% of the current price) meaning you will make a definite gain on FKP shareholdings.

As for the wider A-REIT sector, the return in 2011 was +10% as supposed to -9.7% for equities. This is not surprising, given - you ever heard your mother tell you, invest in property, instead of being greedy and investing in the share market (where you can lose a lot), or gold (which isn't worth anything and is just waiting for a bubble crash)? Even if the country goes into war, the land on which property is sitting on is still worth something. Contrast this with businesses which close, etc etc. Trust me, don't waste time with mining, retail sector, health care, etc.. if you're new to investing, you're lucky you didn't lose 90% of your money (children's savings) in the 2008 market crash..

The organization itself is performing extremely well. Profit increased from $77m in 2009, to $109m in 2010, and now 11% to $121m in 2011. Dividend distribution was doubled from 1.5c to 3c, gearing (debt level) has been reduced to 29% since 2009 (and has been consistent for 2010 and 2011). If you look at Announcements, you also notice the Chairman (Seng Huang Lee) who is over the months acquiring more and more FKP shares. To me though, the most important is consensus recommendation (since often, fund managers have access to "inside" information that we the "public" may not have access to) which is 100% STRONG BUY (inc. Austock Securities, JP Morgan and Morningstar).

PS: I should note I (the author of this post) own holdings in FKP Property Group. Yeah, I put my money where my mouth is (unlike a lot of journos who just talk - but no action).

Sources:
http://www.smh.com.au/business/reits...228-1pcu1.html
http://www.fkp.com.au/media/20111125...ns_Address.pdf
http://www.fkp.com.au/media/annual_r...ual_Report.pdf
 




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