Monday, 5 December 2016

Dividend Knight Income Portfolio Update (Nov 2016) - All Hail President Trump!


No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
DBS
2, 073
3.
Mapletree Logistics Trust
32, 498
4.
Singtel
8, 000
5.
Frasers Centrepoint Trust
15, 000
6.
OCBC
3, 040
7.
Raffles Medical Group
15, 094
8.
SATS
4, 000
9.
ParkwayLife REIT
8, 000
10.
Ascendas REIT
7, 000
11.
Keppel DC REIT
12, 800
12.
CapitaLand Mall Trust
7, 000
13.
Frasers Logistics & Industrial Trust
13, 000
14.
MGCCT
12, 000
15.
Suntec REIT
6, 000
16.
Sheng Siong
7, 000
17.
Mapletree Commercial Trust
4, 000

Dividends received in November 2016: S$1, 924.77

Total dividends received since Jan 2016: S$13, 955.23
 
Average dividends per month: S$1, 162.94
 
Average dividends per day: S$38.23
 
Total portfolio market value: S$350, 424
 
Unrealised Profits: S$39, 686


For the month of November, I have collected a total of S$1, 924.77 in dividends and distributions from my income portfolio.
  • Suntec REIT: S$152.10
  • Ascendas REIT: S$68.31
  • Frasers Centrepoint Trust: S$422.25
  • CapitaLand Mall Trust: S$194.60
  • Mapletree Commercial Trust: S$1.31
  • Parkway Life REIT: S$153
  • Mapletree Greater China Commercial Trust: S$433.20
  • Starhub: S$500

Remember I talked about being resilient in my previous portfolio update? It definitely come in handy as Donald Trump won the US presidential election. Did the global markets implode as so many experts/analysts expect? Nope! The world kept on spinning. The markets kept on rallying. I continue to collect dividends from my portfolio.

Portfolio Shuffle - Accumulating Quality Yield Assets
Divested UOB, Starhub and M1 due to a huge recent run-up in bank stocks and the near-certainty of an all-out Telco war in 2017. Holding on to my DBS and OCBC positions despite the temptation to take profits. Both banks are Asian wealth management plays with UOB lacking allure in this aspect. The private wealth business has become the jewel in DBS's crown. Despite a challenging 2016, it is the only unit to register double-digit growth in the bank. DBS is now ranked the fifth largest private bank in Asia, up from ninth spot in 2012. Furthermore, with rising interest rates moving forward, NIM should trend higher which would lead to a rise in earnings. OCBC's life insurance business should also benefit from a rising rate environment. Lastly, I am hopeful that the worst of the O&G crisis is behind us and the NPL issue will clear up next year.

Channelled the funds into PLife REIT, MLT, MCT, FLINT and Ascendas REIT as I believed the hunger for yield-play assets will stay strong next year. We just need to focus on quality REITs that have healthy gearing, long debt maturity, low all-in debt cost and a high percentage of total borrowings hedged on fixed rates. Having strong backing from sponsors is a welcome bonus. Take PLife REIT for example. Empty shops? Worried about finding tenants to fill up the retail space? No such problem for PLife REIT. The demand for healthcare and nursing services is still growing at a rapid pace.

  • 100% committed occupancy at Mount Elizabeth, Gleneagles Hospital and Parkway East Hospital with a master lease with IHH. Furthermore, this master lease is 15+15 years since 2007 with a triple net-lease and favourable CPI+1% lease structure.
  • Solid track record of growing DPU over 8 consecutive years even during the post-2008 GFC period 
  • No refinancing needs at all in 2017.
  • All-in debt cost of 1.4% (lowest in the S-REIT sector)
  • Well-staggered debt maturity profile over the next 5 years
  • High Interest Coverage of 9 times
  • 98% of total borrowings is hedged on fixed rates
The rest of my recent additions are meant to be quality plays on the logistics (MLT & FLINT) and business parks (MCT & Ascendas) sectors.

 
 

Moving forward, I am excited about the impending launch of Changi Terminal 4. Hoping SATS is able to win some lucrative ground-handling and in-flight meal contracts from the airlines at the new terminal next year.



Everything you want is on the other side of fear
DK

Wednesday, 2 November 2016

Dividend Knight Income Portfolio Update (Oct 2016) - Dark Clouds Looming? Bring An Umbrella.


No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
Starhub
10, 000
3.
Singtel
8, 000
4.
DBS
2, 073
5.
Frasers Centrepoint Trust
15, 000
6.
Mapletree Logistics Trust
25, 398
7.
OCBC
3, 040
8.
Raffles Medical Group
15, 094
9.
SATS
4, 000
10.
CapitaLand Mall Trust
7, 000
11.
ParkwayLife REIT
5, 000
12.
MGCCT
12, 000
13.
Keppel DC REIT
10, 000
14.
Suntec REIT
6, 000
15.
Ascendas REIT
3, 000
16.
UOB
400
17.
Sheng Siong
7, 000
18.
M1
3, 000
19.
Mapletree Commercial Trust
100


Dividends received in October 2016: NIL
 
Total dividends received since Jan 2016: S$12, 030.46
 
Average dividends per month: S$1, 002.53
 
Average dividends per day: S$32.96
 
Total portfolio market value: S$352, 884
 
Unrealised Profits: S$48, 665
 
 
Investment Actions
In October, I shifted some funds from Raffles Medical Group (RMG) to M1. In my opinion, RMG's multi-year expansion plans require a long gestation period. M1 had been sold down heavily in recent days which I think is unwarranted even considering its lacklustre quarterly result.
 
S-REITs
On the S-REITs front, I have applied for Keppel DC REIT's preferential offer (PO) although the offer price was not exactly attractive. Fair, but not overly appealing. Nevertheless, I am still cautiously optimistic on its DPU growth over the next few years. The funds raised from the PO is used for a yield-accretive acquisition in Singapore. Data centre demand is still greater than supply and the growth in data consumption is set to continue. Lastly, the freehold German data centre under construction should boost the DPU after its completion in 2018.

The other REITs (retail, commercial, logistics, healthcare) which I am vested in have produced a resilient but less than stellar quarter. Their distribution per unit (DPU) were stable but there were signs of slight weakening in occupancy rate and rental reversions. Well, I guess this set of results could be as good as it gets since dark clouds are already looming over Singapore's economy as shown by a spate of retrenchments and 'right-sizing' in certain blue-chips (Keppel Corp, SembCorp & SPH).


Banks
Thankfully, there were no nasty earnings shocks from the three local banks' latest results. It seems that the feared contagion expected after the Swiber collapse has not materialised for now. The provisions for NPLs from the O&G sector did not balloon out of control. Many O&G companies are actively engaging bondholders and re-structuring their bonds. A promising sign.

The major acquisition of ANZ bank's Asia private banking business should be a rewarding long-term move for DBS. Private wealth management still has huge room to grow since Asia is still minting millionaires & billionaires at a relatively faster pace than other regions in the world. Lots of second-generation wealth sloshing around. As one of the largest bank in Southeast Asia, it makes sense for DBS to expand into other Asian countries while carrying the reputable Singapore brand. Trust is critical in wealth management and the Singapore brand travels well among the wealthy Chinese. Most importantly, scale is crucial for private banking due to a surge in compliance costs related to stringent anti-money laundering regulations, tax regulations etc etc. The bank needs to spread this cost among more fee-generating clients. 

 

People can talk about strategy all they want, but what really matters is resilience
DK
 

Wednesday, 14 September 2016

Dividend Knight Income Portfolio Update (Sep 2016)

No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
Starhub
10, 000
3.
Singtel
8, 000
4.
DBS
2, 031
5.
Frasers Centrepoint Trust
15, 000
6.
Mapletree Logistics Trust
25, 365
7.
Raffles Medical Group
18, 094
8.
OCBC
3, 020
9.
SATS
4, 000
10.
CapitaLand Mall Trust
7, 000
11.
ParkwayLife REIT
5, 000
12.
MGCCT
12, 000
13.
Keppel DC REIT
10, 000
14.
Suntec REIT
6, 000
15.
Ascendas REIT
3, 000
16.
UOB
400
17.
Sheng Siong
7, 000
18.
Mapletree Commercial Trust
100
 
Dividends received in September 2016: S$1, 572.13
 
Total dividends received since Jan 2016: S$12, 030.46
 
Average dividends per month: S$1, 002.53
 
Average dividends per day: S$32.96
 
Total portfolio market value: S$353, 323
 
Unrealised Profits: S$51, 762
 
 
For the month of September, I will be collecting a total of S$1, 572.13 in dividends and distributions from my income portfolio. An improvement compared to last year's harvest.^^
  • Ascendas REIT: $174
  • Mapletree Logistics Trust: $433.13
  • AIMS AMP Capital REIT: S$825
  • UOB: S$140

Recent portfolio actions:
  • Total divestment of Frasers Centrepoint Limited
  • Accumulated Raffles Medical Group
  • Subscribed to preferential offering of Mapletree Commercial Trust
  • Subscribed to DBS's SCRIP
  • Subscribed to MLT's partial DRIP
 
The huge drop in my portfolio value was due to Fed rate hike jitters in recent weeks before the FOMC meeting later this month. Another contributing factor is the impending threat of the 4th Telco in the local market. The depressed oil price is not helping the banks either since their non-performing loans from the O&G sector will probably keep rising. Nevertheless, I shall stay mostly vested. Time in the market is better than timing the market. I know.....I sound like a broken record by now! hahaha :)

On the 1st September, 3 companies - MyRepublic, airYotta & TPG - submitted their interest in the bidding of spectrum in the local Telco market. The prices of the three incumbents (Singtel, Starhub & M1) have been on a downtrend ever since. M1 is heavily dependent on mobile revenue. Around 80% of its service revenue comes from mobile services, which is expected to be the segment most vulnerable to the 4th Telco. 55% of Starhub's service revenue comes from mobile data. Singtel is the most resilient as only 13% of its service revenue is attributed to mobile services. However, Singtel will soon be facing serious competition from Reliance in India.

The new challengers keep harping on building an innovative, exciting and data-led Telco instead of engaging a price war in the local Telco market. These positive, gung-ho talk is all good and nice but I have my reservations. Mobile services is rather straightforward and plain (maybe Starhub has the 'Hubbing' edge going for it). In general, when companies in an industry have difficulty differentiating their products/services from one another, a price war of some form usually erupts. Just look at Uber and Didi Chuxing in the cab-hailing market in China. In the end, Uber raised the white flag after a year of painful price war.


Assuming the 4th Telco provides the same quality of service as the incumbents (and that is a BIG 'if'), which Telco has the financial muscle to survive a prolonged price war? Singtel. More than 70% of its revenue is attributed to its overseas operations. If I am running Singtel, I would dig my heels in and seek to outlast the new competition. I would rather see my competitor lose than win myself. M1's revenue will probably be hurt the most if the 4th Telco moves aggressively to grab market share.

On the macro-economic front, I think the STI would remain pretty much in the doldrums for the rest of 2016. There is simply no upside catalyst at all for most of its heavyweights.
  • O&G sector is plagued by depressed oil price (Kep Corp & Semb Corp)
  • Banking sector has to contend with rising non-performing loans from O&G sector & declining housing & business loans (DBS, UOB & OCBC)
  • Telco sector facing competition from 4th Telco (Singtel & Starhub)
  •  Real estate sector is weak due to property cooling measures (CapitaLand, CDL)
  • REITs are facing pressure due to Fed rate hike & oversupply of rental spaces
Singapore's 'Committee of the Future Economy' really needs to pull a rabbit out of the hat by the end of 2016, otherwise the next few batches of graduates might become 'recession graduates'.


The sidelines is not where you want to live your life
DK