My Rights Application for CACHE (Updated)

CACHE is another industrial REIT whose shares I owned other than Soilbuild Business REIT. I still own Soilbuild Business REIT sharesthrough CPFIS. Recently, the company announced rights issue to raise approximately S$102.7 million. Approximately S$99.9 million (equivalent to approximately 97.3% of the gross proceeds) will be used to partially repay Cache’s existing borrowings to reduce aggregate leverage and create additional debt headroom for future growth.

The rights issue will reduce the gearing of CACHE from 43.4% down to 35.5%. However, the DPU would also reduce with the increase in number of shares. NAV would also drop slightly.

My average purchase price for CACHE is $1.12 and I currently own 16000 shares. I am still in the negative for this REIT. I am entitled to 2880 shares. I accepted and applied for 7120 excess shares. Hopefully, it would not be a mistake to average down. The results for the rights issue would be out on 9th Oct.

Is CACHE Worth Investing Now?

CACHE's share price as at 22 Sep 2017 closing price was $0.835. It is trading above it's NAV. For this company, I don't it's worth the premium currently even though the dividend yield may seem attractive. I did cover CACHE in an earlier blog post. I don't see any positive news coming from CACHE.

Screenshot from Chartnexus

However, at an offer price of $0.632, I will buy first. Buy more too. Assume a DPU of 6.882 cents, based on my purchase price of $0.632, my dividend yield for the new shares would be 10.89%. Of course, the dividend yield for my existing shares would also suffer as a result.

Screenshot from Stocks.cafe

The Management was capable of growing the DPU in the past. Hopefully, they could turn this REIT around soon. Until we could hear some positive news coming from CACHE, I would not touch this REIT if I am not currently invested.

Screenshot from Markets.Ft

It's long overdue. Show me the money, CACHE!