Friday, 24 March 2017

Dividend Knight Income Portfolio Update (Mar 2017) - A Peaceful Rate Hike


No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
DBS
3, 000
3.
Mapletree Logistics Trust
20, 000
4.
Singtel
10, 000
5.
Frasers Centrepoint Trust
15, 000
6.
OCBC
3, 040
7.
Raffles Medical Group
20, 094
8.
SATS
6, 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.
CapitaLand Commercial Trust
5, 000
15.
Sheng Siong
7, 000
16.
Mapletree Commercial Trust
8, 000

 
Dividends received in March 2017: S$831

Total dividends received since Jan 2017: S$3, 635.02

 Average dividends per month: S$302.92

Average dividends per day: S$9.96

Total portfolio market value: S$376, 663

Unrealised Profits: S$43, 975 (+11.67%)


For the month of March, I had collected S$831 in distributions from AIMS AMP Capital REIT.

Year-On-Year Quarterly Review
My portfolio’s market value grew 25.2% from S$300.9k in 1Q2016 to S$376.6k in 1Q2017. Most of this increase is attributed to a combination of fresh injection of funds (from savings) and re-investment of dividends. The bearish market last year (especially in the banking sector) made my stocks ‘shopping spree’ easier. Looking back, I was actually being greedy when others were fearful in 2016. My total dividends received also grew 12.9% from S$3, 219.50 in 1Q2016 to S$3, 635.02 in 1Q2017. Well on track to meet my 2017 passive income target.
There was a lack of knee-jerk reaction from the market after the US Fed hike rates this month. Evidence that time in market is better than timing the market. Fortunately, a short window of opportunity opened up this week that allows me to fully divest Suntec REIT while adding SATS, Raffles Medical (RMG), CapitaLand Commercial Trust (CCT) and DBS.


SATS
SATS has been leveraging on technological innovations to boost earnings despite stagnating revenue in recent quarters. For instance, its ground-handling crew at Changi Airport are equipped with customised smartwatches and bone-conductor headsets to boost productivity, bidding farewell to the ‘walkie-talkie’ era. At its massive, centralised inflight kitchens, robotic arms are humming away to arrange airline meal trays & autonomous guided vehicles carry bulky containers of goods


Source: The Straits Times

Automated machines wash, pack and sort cutlery. These machines are more energy-efficient, labour-efficient, and use less detergent, which is also better for the environment
Source: SATS

An automated facility called the SATS eCommerce Airhub would provide airmail-handling services to Singapore Post. This should form a seamless combination with SingPost’s recently-completed Regional eCommerce Logistics Hub to create a more robust e-commerce logistics network. This could give Amazon a run for their money if their possible entry into Singapore this year does indeed come to fruition. If Amazon wants to muscle in, it would need well-located, modern logistics facilities which MLT has in abundance. It is rumoured that Amazon has already leased an entire logistics warehouse from MLT.
According to SATS’ President & CEO, Mr Alex Hungate, 1.8 million people in Asia are expected to do air travel for the first time by 2034 due to a trend in rising middle-income consumption. SATS is investing now to boost its capacity to meet this future demand.
Its perishables handling facility, Coolport, has secured the International Air Transport Association’s endorsement for pharmaceuticals handling & storage. SATS has a firm grip on the local leisure cruise industry. It partnered with Creurs del Port de Barcelona to manage & operate the Marina Bay Cruise Centre.
All the above-mentioned business segments require huge initial capital outlay & a large-scale operation with experienced management. Furthermore, SATS is a trusted brand in these areas. This should provide a strong economic ‘moat’ & competitive advantage against potential rivals.


DBS
My top pick in the banking sector would be DBS. It started investing in digitalisation earlier than OCBC and UOB. I believe this has a future multiplier effect, especially on its already huge and growing private wealth business. With a large scale, DBS can use digital tech to raise productivity & efficiency,  thereby mitigating the rising costs of compliance. This should help DBS remain competitive. A rising rate environment should benefit DBS as its earnings are expected to be sensitive to rates.

 
CCT

CCT has a solid 5-year track record of raising DPU & NAV in a challenging office leasing market.

CapitaGreen would provide full-year rental contributions, thus boosting DPU in 2017. The total upcoming office supply in CBD is expected to peak in 2017. The small amount of new Grade 'A' office supply between 2018 to 2020 should help CCT seek positive rental reversions. Hopefully, the management is able to get all the necessary regulatory approvals from the authorities on the redevelopment of the Golden Shoe Car Park as soon as possible.


'Strategic Review' In Vogue

Lately, doing a strategic review seems to be the trend for major local companies. It is like a intelligent way of saying 'we want to take profit on some non-core assets on our books'. Let's take a look at a few potentially blockbuster ones. Time for crystal ball gazing!

- SPH, Keppel T&T & Axiata are considering a sale of their huge stakes in M1. This is a tricky one. Who would pay a premium to buy a controlling stake in struggling M1? The financial performance of M1 had been on the downtrend for 4 consecutive quarters - falling earnings & deep dividend cuts. Worse still, the threat of the 4th Telco (TPG) is already looming at the horizon. IMDA's vision of having 4 telcos in Singapore would rule Singtel out as a potential bidder too.

- Back in January this year, OCBC and its subsidiary, Great Eastern announced that they had appointed Credit Suisse to review their combined stakes in United Engineers & WBL Corporation. If a sale does indeed go through, there is a possibility of a one-time special dividend from OCBC.

- Back in December 2016, Global Logistics Property (GLP) undertook a strategic review of its business options after a request from its largest shareholder, GIC. Maybe Warburg Pincus, e-Shang Redwood & ARA can consolidate GLP, Cambridge Industrial Trust and Sabana REIT into one mega logistics company!

- Singtel should do a strategic review of its stake in SingPost. Even though SingPost is no longer a dividend powerhouse, once the new CEO gets the house in order and ramp up its e-commerce & logistics business, SingPost is still a reasonably attractive logistics play in my opinion.



The secret of getting ahead, is getting started
DK

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