Thursday, 23 February 2017

Dividend Knight Income Portfolio Update (Jan & Feb 2017) - Was Budget 2017 a Non-event?


No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
DBS
2, 500
3.
Mapletree Logistics Trust
20, 000
4.
Singtel
10, 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
10, 000
13.
Frasers Logistics & Industrial Trust
13, 000
14.
Suntec REIT
6, 000
15.
Sheng Siong
7, 000
16.
Mapletree Commercial Trust
8, 000


Dividends received in Jan & Feb 2017: S$2, 804.02

Total dividends received since Jan 2017: S$2, 804.02

Average dividends per month: S$233.67

Average dividends per day: S$7.68

Total portfolio market value: S$353, 768

 Unrealised Profits: S$42, 243

For the months of January & February, I had/would be collecting a total of S$2,392.02 in dividends and distributions from my income portfolio.

·         Singtel: S$544

·         CMT: S$201.60

·         FCT: S$433.50

·         Suntec REIT: S$155.76

·         Keppel DC: S$358.40

·         MLT: S$607.56

·         MCT: S$91.20

·         PLife REIT: S$336.60
·         Ascendas REIT: S$412.02 (*Advanced distribution)

Latest Portfolio Re-balancing:
Completed a partial divestment of MLT and a full divestment of MGCCT after their respective XD. Although MLT’s DPU has been steady over the past few quarters, I find it a tad too stagnant for my liking. MGCCT’s DPU took a small hit for 2 consecutive quarters due to a change in property tax regulations in China and unfavourable forex movements of the Chinese RMB against Singapore dollar. I feel my funds can be put to better use in other counters with brighter growth prospects.

The funds from the divestments were promptly utilised in building my positions on MCT, CMT, Singtel and DBS. The recent acquisition of Mapletree Business City Phase 1 had given a considerable boost to MCT’s DPU. The recent trend of businesses shifting their backend operations outside the CBD to cheaper business parks should benefit MCT in the long run since it still has Mapletree Business City Phase 2 (where Google is a major tenant) waiting in the wings. The management is also competent in achieving strong positive rental reversions from lease renewals/new leases.


 

The accumulation of CMT is more of a ‘buy on dip’ decision. Besides, I like the new retail concept at the Funan mall redevelopment, which I expect to provide future growth catalyst in 2019. The new Funan will feature an indoor cycling path, rock climbing and other sports facilities and a new cinema experience when it reopens. is being redeveloped into a mixed-use complex that will comprise two office towers, serviced residences and six floors of retail stores. Three tenants have already signed on: movie operator Golden Village, food court operator Kopitiam and rock climbing facility Climb Central.




Apart from indoor cycling lanes, there will also be bike shops, bike cafes, lockers and shower facilities for cyclists. While a floor of the mall will be dedicated to IT products, it will also incorporate workshops and other interactive elements. Other new concepts include a drive-through for collection of products ordered online, and a 4,000 sq ft urban farm.

The accumulation of Singtel was largely based on its latest set of resilient results compared to the truly woeful results from its competitors (Starhub & M1). Furthermore, the management finally officially stated that they are preparing the blockbuster IPO of NetLink Trust in 2H2017, widely expected to be worth $2.5b. I am hoping a one-time juicy special dividend payout from this IPO. Fingers-crossed. The statement made by Mr Heng Swee Keat, Finance Minister, in his Budget 2017 speech, was a confidence-booster for me too.

With increased digitalisation, data will become an important asset for firms, and strong cybersecurity is needed for our networks to function smoothly.”


Light at the end of the tunnel for the banks?
No surprise from the latest results of DBS, OCBC and UOB. Earnings were down y-o-y and provisions for O&G related NPLs increased. I believe the worst of the O&G crisis is behind us. We are looking  at a slow recovery in 2017. Moving forward, major players like Keppel Corp and SembMarine should be on stronger footing. For the love of God, no more ‘Swiber-like’ fallouts this year (Please!).  So I asked myself, when the market eventually recovers (and it will), which bank will be the best-positioned to grow fast again? OCBC’s insurance arm (Great Eastern) has been a drag on its earnings in recent years and UOB has always been relatively conservative in my opinion. That leaves DBS as my top choice because I like the looks of its ‘crown jewel’. DBS’ wealth management fees climbed 19% to a new high of SGD 714 million from stronger bancassurance income. The ‘Wealth Management’ customer segment income increased 19% to SGD 1.68 billion with assets under management growing 14% during the year to SGD 166 billion. Earning more fees from ultra-high-net-worth individuals in Asia? Hell yeah!


Raffles Medical Group (RMG) – Expansion plans still in gestation period
RMG’s topline and bottomline were weak as operation costs intensify due to the recruitment of staff and procurement of medical equipment. Weak medical tourism and rising expansion costs have hit its hospital segment’s profit margin. ISOS is taking longer to turn profitable. I am expecting earnings growth to be minimal this year. Even though I am confident of the new Raffles Hospital extension and Shanghai International Hospital in providing long-term growth, I am only willing to consider adding current holdings if PE comes down to 28 times.

 
Patience is not the ability to wait, but the actions you make while waiting
DK

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