Question 1: On Tuesday, the price of bond fund NB Global Corporate Income Trust (NBI) surged by almost 7%. It announced a proposal to de-list from the ASX. Can you please explain the price surge?

Answer: Like many listed investment companies and listed investment trusts, NBI has been trading at a discount to NTA (net tangible asset value). Its latest NTA is $1.56 per unit, while trading on the ASX (prior to the announcement) at $1.35. Delisting and reverting to being an unlisted unit trust means that redemptions (sales) will be carried out at NTA, less a pricing spread. To create the cash to process redemptions, the manager will potentially have to sell some of the fund’s assets. The trust will effectively change from being a ‘close-ended’ structure to an ‘open-ended structure’.

The market price for NBI surged (and the discount closed) because some investors saw the opportunity to buy now at a big discount in the expectation that they will redeem (once the de-listing proposal has been approved) at a price much closer to the NTA. Being “unlisted” is no “bed of roses”. The fund might contract in size or if there are too many redemption requests, or alternatively, may be frozen providing no liquidity to investors wanting to exit. Transition to the new structure will need to be carefully managed, and ultimately, the fund will rely upon strong investor support to be sustainable.

Question 2:  What are your thoughts on Credit Corp (CCP) after the 30% drop in its share price? I bought a small amount at $12.

Answer: Credit Corp (CCP) is a well-managed company, but in an unloved stock market sector (diversified financials). There are also some concerns about its US collections book, in particular, ongoing delinquencies as US interest rates increase. The broker market is quite divided. While the consensus target price is $15.03, about 21% higher than the last ASX price of $12 43, the range is quite wide: a low of $11.30 from Macquarie up to a high of $18.75 from Morgans. If you can be patient, and think US interest rates are close to peaking, I would be inclined to hold on.

Question 3: Do you think property manager Charter Hall Group (CHC) is a good buy at the $9.00 level it’s pulled back to?

Answer: I think Charter Hall Group (CHC) is interestingly priced at $9.02. The brokers are quite positive. Notwithstanding the general negative sentiment on the property sector and commercial property in particular, the consensus target price is $13.28, about 47% higher than the last ASX price of $9.02. The range is a low of $11.10 through to a high of $15.90.

Most of its revenue is from its funds management business, although it does have a direct exposure to some commercial property. Direct gearing at 2.2% is low. While I prefer Goodman Group (GMG), I think there is value in Charter Hall.

Question 4:  What is the schedule for the bank profit results?

Answer: The schedule is: