Friday, October 16, 2020

Net Worth Update Oct 2020

My net worth increases $14k to $979k from Sep 2020.

It is another step closer to SGD 1 million.

I injected around $13k to buy Aims Apac Reit, UOB and subscribed to Frasers Centrepoint Trust's preferential offering shares.

I have attempted and passed my IPPT with $200 incentive.

I will continue to live frugally, grind at work, save up and inject more money into the stock market for the rest of the year.

I am looking forward to the earnings reporting season of Reits in the coming weeks and sitting back to collect dividends. Let the Cum Dividends rain $$$!!!



Thanks for reading.

With love & peace,
Qiongster


Thursday, October 15, 2020

Applied for Frasers Centrepoint Trust Preferential Offering Shares

I initiated a small long-term position in Frasers Centrepoint Trust (SGX: J69U) in Aug 2020 using my daily expense funds.

It was not part of my plan but the temptation of owning a stake in resilient sub-urban malls before phase 3 and subsequent recovery of the economy was too strong to resist. 

Coincidentally, the price I nibbled is $2.34 which is the same as the preferential offering price. $2.34 is a fair price as it is near to the book value of FCT and previous preferential offering price of $2.35 in Jun 2019. 

I just paid up for my entitlement and some excess of the preferential offering shares at the ATM to double up my small investment in FCT. I believe that its share price will experience further weakness and possibly drop further before making a strong wave up based on catalysts of either solid financial results or further improvements in the pandemic situation.


I will slowly and steadily add on to my positions in FCT at close to its book value whenever I have the opportunity and spare cash in future. 

FCT is well positioned for the economy recovery and is a long term resilient sub-urban mall play. Short term traders and speculators will be flushed off the boat and get burnt badly while long term investors will be handsomely paid off with their loyalty and patience.

Thanks for reading.

With love & peace,
Qiongster


Wednesday, October 14, 2020

Added UOB

I first initiated position in UOB (SGX: U11) in May 2020 at $19.72 and have collected $1.14 of dividends, bringing the average holding cost to $18.58.


As the share price of UOB is languishing below its NAV of $22.59, I feel that it is still an attractive investment prospect. This is despite headwinds in the economy, increasing Non-Performing Loans, declines in Net Income Margins and extension of bank dividend caps to 2021. At 0.8x book value, with dividend yield close to 4%, I believe it is better to invest in banks during times of uncertainty rather than waiting for the economy to recover before doing so. During economy booming times, we will then have to pay inflated prices for bank shares.

I think that UOB is more conservative and defensive relative to DBS and OCBC because it has greater presence in domestic markets, larger focus on South East Asia growing and youthful economies, higher ROE and edging out in dividend yield. Ideally, it would be great to own all 3 banks to have the best of all worlds but given limited resources now, I decided to focus on accumulating UOB first.

Hence I decided to add some more UOB shares and my order was filled at $19.56 this morning.


I also collected 6 free UOB shares from scrip dividend reinvestment which is going to be implemented for next year's dividends too. 

See Related Posts:

Nibbled UOB

Own the banks or let banks own our money

Thanks for reading,

With love & peace,
Qiongster


IPPT returns. Using body and sweat to earn some money

Individual Physical Proficiency Test (IPPT) sessions for operationally ready NSmen have been suspended since 31 Mar till 30 Sep 2020.

IPPT has been finally opened for booking from 1 Oct 2020 onwards.

As fit Singaporean sons, this is either an annual national service liability to attempt and pass it or rather an opportunity to reap some monetary rewards from acing it.

For the past 10 odd years, I have been seeing this as an annual affair to earn back some money from taxes for my war chest to cover some brokerage costs for buying stocks. This is despite me being an unfit guy who seldom exercise or go for runs.

This year is no different. I passed the IPPT with 63 points and qualified for $200 incentive despite having not run for the past 6 months and merely did some push-ups and sit-ups occasionally at home. I ended up with cramps, aches all over body after the test but it's worth it. 


Monetary incentives from IPPT are actually classified as active income and will be taxed. 

It is an irony that passive income from interests and dividends are not taxed in Singapore while any income earned using body, mind, blood or sweat will be taxed by the government. This is how the capitalist system works and hence the more we should be motivated to own more income producing assets to generate more passive income that do not require physical effort to earn.

Thanks for reading. 


With love & peace,

Qiongster

Sunday, October 11, 2020

What will I do about Suntec Reit?

A year ago, I initiated position in Suntec Reit (SGX: T82U) because I believe it was an undervalued Reit with immense growth potential and headroom for DPU to increase. I suffered capital losses since as I entered at $1.88 near the highs.

Its share price even plunged to the lows of $1.12 during the stock market crash in Mar 2020 but I was unfazed. I did not cut losses nor add on to the investment by averaging down because this was intended to be a small long-term position and I had other better buying targets then in Mar 2020.

On 8 Oct 2020, Suntec Reit announced the proposed acquisition of 50% stake of London Nova Development from Canada's pension fund for £430.6m. The development consists of two Grade A office buildings in the heart of Victoria, West End, London with a leasehold tenure of 1,042 years. The net property income yield is 4.6% and this acquisition is 4.9% DPU accretive. There is 100% committed occupancy with long WALE of 11.1 years. 

This acquisition will be funded fully by debt, propelling the gearing ratio of the Reit to 45.2% which is close to the revised leverage limit of 50% as stipulated by MAS. As as result, the selling of fearful retail investors and some funds caused the share price of Suntec Reit to dip more than 3% on 9 Oct 2020.

It is almost certainly that an equity fund raising is on the cards in the near future to possibly pay off short term liabilities, for working capital or for the next acquisition. The dividends collected from Suntec Reit by unitholders in the recent years will not be enough to cover the additional capital outlay. Hence short term traders and funds holding Suntec Reit with no long term commitment are selling it.





I believe that this acquisition is beneficial to unitholders for the long-term in terms of DPU, geographical diversification, strengthening and growth of Suntec Reit's property portfolio at the trade-off of incurring additional debt at a weighted cost of debt of 2.58%. Locally in Singapore, there is limited room to acquire long leasehold high quality commercial properties for around 5% yield. Hence it is justifiable that the manager seek opportunities abroad in Europe for expansion of its portfolio. Suntec Reit has faced challenging times to sustain its DPU due to the health pandemic impacting retail operations in Suntec City and its newly developed properties such as 9 Penang Road, 477 Collins Street in Melbourne and 21 Harris Street in Sydney have not fully contributed to their property income.

As a long term investor, I treat this transaction as merely another purchase of an overseas property for geographical diversification as well as to increase assets for additional future recurring income. It is a first foray into UK commercial property market even though Suntec Reit is focused on deepening its presence in Australia while also seeking opportunities in other key gateway cities such as Seoul, Tokyo, London, Paris, Frankfurt and Berlin.  

I am prepared to subscribe to rights or preferential offering if there is any equity fund raising in the short-term to avoid dilution. However, I do not plan to average down on my holdings in Suntec Reit unless if its share price plunged to below $1.30 then I may consider given the larger margin of safety.

Thank you for reading.

With love & peace,
Qiongster



Wednesday, September 30, 2020

Portfolio Update Sep 2020

Portfolio value increases $9k to $206k mainly due to more than $7k of capital injections.

I nibbled Mapletree Logistics Trust, topped up Sembcorp Marine received from the demerger from Sembcorp Industries and added Aims Apac Reit.

See related posts:

Nibbled Mapletree Logistics Trust and Sembcorp Marine

Added Aims Apac Reit

The local stock market has generally been stagnant. Corporate actions such as the impending equity fund raising by Frasers Centrepoint Trust and merger between CapitaLand Mall Trust and CapitaLand Commercial Trust did not help to propel these Reits higher but caused massive exodus of foreign funds instead.

I am happy that they stay this way so that I can still add on more Reits and bank counters at decent valuations for the rest of the year. As 3Q 2020 ends, we shall await the quarterly reporting season and get to know the dividends to be received in Oct to Nov period.

Total Portfolio Value = $206k

The SRS portfolio remains largely stagnant and dips $1.1k to $68.7k. 



Thanks for reading.

With love & peace,
Qiongster

Tuesday, September 29, 2020

CMT + CCT = CICT

After a long 9 months wait since my first post on CMT + CCT = CICT in Jan 2020, this merger proposal is finally approved.

All resolutions in the CapitaLand Mall Trust and CapitaLand Commercial Trust EGMs are passed today on 29 Sep 2020.

This means CMT + CCT = CICT will confirm take place and be completed before end Nov 2020.

Both EGMs started with a brief presentation and recap on the benefits of this merger. 

The benefits can be summarized as such:

a) to future proof for large acquisitions and grow beyond Singapore
b) to improve credit rating and boost financing power
c) DPU accretive to unitholders of both Reits
d) reduce single asset class risk through diversification

CapitaLand Mall Trust EGM

Resolution 1: To approve the proposed amendments to the trust deed constituting CMT (99.75% For)

Resolution 2: To approve the proposed merger of CMT and CapitaLand Commercial Trust by way of a trust scheme of arrangement (the "Merger") (98.89% For)

Resolution 3: To approve the allotment and issuance of units of CMT to the holders of units in CapitaLand Commercial Trust as part of the consideration for the Merger (98.88% For) 

The CEO Tony Tan concluded the meeting by thanking shareholders for the unwavering support for this transformative merger and they will continue to work for sustainable dividends for great interest of unit holders.

CapitaLand Commercial Trust EGM

Resolution 1: To approve the CCT Trust Deed amendments (96.04% For)

Resolution 2: To approve the proposed trust scheme (98.23% For)

The CEO Kevin Chee is grateful for the decisiveness of CCT shareholders and thankful for the unwavering confidence and trust in supporting the merger. He has also mentioned about waiver of odd lots trading offered by several brokerage houses to cater to CCT shareholders having to deal with odd lots after receiving the CICT shares. 

We can refer to the indicative timetable found on Capitaland Mall Trust slides to understand what will happen next.


As a CMT shareholder, no action is required and there will be some sort of cleanup distribution to reconcile the books before listing of CICT entity. As a CCT shareholder, one is expected to receive 0.72 share of CICT and 25.9 cents for every share of CCT owned. The 25.9 cents of cash consideration capital return is expected to be credited on 28 Oct 2020. CCT is expected to be delisted after 16 Oct 2020.

I am looking forward to the listing of CICT on 21 Oct 2020 and happy to be onboard this largest Reit in Singapore. 

Thanks for reading. 

With Love & Peace,
Qiongster

Added Aims Apac Reit

In May, I blogged about trying to add Aims Apac Reit but failed. In the end, I used the funds to nibble Frasers Centrepoint Trust instead.

Today I decided to try my hands on adding Aims Apac Reit (AA Reit) again and succeeded. This will increase my holdings to 32,000 shares, making AA Reit the largest constituent of my investment portfolio.

Why did I want to add Aims Apac Reit even though it is not the strongest and best industrial Reit?

1. To reinvest dividends collected from Aims Apac Reit.

In recent quarters, there are no dividend reinvestment plans for the dividends distributed by AA Reit unlike last year. I have collected more than $1k of dividends from AA Reit and am determined to buy back units myself during a time when there is 13% discount from NAV to achieve the compounding effect by putting money where the mouth is.

2. Well managed small industrial Reit

Unlike its small industrial Reit peers such as ARA LOGOS, Sabana, ESR etc, I believe that AA Reit is well managed though several yield accretive Asset Enhancement Initiatives to increase its gross floor area i.e. redevelopment of 3 Tuas Ave 2 and Northtech in Woodlands Industrial Park E1, recent acquisitions of freehold properties in Australia i.e Boardrider HQ in Gold Coast and increasing its exposure to the resilient logistics sector through recent acquisition of 7 Bulim Street near to future Tuas Mega Port. Its divestments were value accretive as they were sold at above book values.

3. Offers value and decent yield

Unlike branded industrial Reits that yield less than 5%, AA Reit is still offering close to 7% yield while trading at 13% discount off its NAV. There is greater income stability and visibility as more than 30% of its Gross Rental Income comes from master leases with built-in rental escalations. Master lease renewal for 12 years with Optus will commence in July 2021 and the additional property income from recent acqusitions and redeveloped properties have not been factored in yet. With untapped GFA of over 500,000 sqft, there is great potential for organic growth. Hence, I believe AA Reit will be able to steadily increase its DPU back to at least 10 cents in time to come.

4. Prime acquisition target

With ESR Cayman secretly collecting shares and increasing its stakes on AA Reit, it will be no surprise that AA Reit will be acquired and delisted one day. Also with the trend of Reits consolidation in recent times, especially the most recent one involving Reits between ESR and Sabana Reits, AA Reit remains a prime acquisition or merger target sooner than later.

5. Technically stable

The share price of AA Reit has been in consolidation phase since many weeks ago. Although its 20 days MA has cut below the 50 days MA and 100 days MA, all 3 lines are horizontal with no major price movements on low volumes and does not really test its next support level at 1.14. I believe that if the 20 days MA can cut above the 50 days MA and surpass next resistance at 1.21 with high volumes, it is poised for a breakout to test 1.28 and will hover in the 1.20s range. Hence, the next quarter results will be crucial to determine its short-term future price movements.



I do acknowledge the risks in investing in AA Reit such as erosions to land lease tenures lowering NAV, small sponsor, Forex risks from AUD and so on. However, in such low interest rate environment, I believe in the need to stomach some risks in order to let monies earn decent yields.

Thanks for reading.

With Love & Peace,
Qiongster

Monday, September 28, 2020

Frasers Centrepoint Trust EGM

I watched the webcast of Frasers Centrepoint Trust EGM this morning. The share trading of FCT has been halted this morning prior to the EGM.

The CEO of FCT, Richard Ng started the EGM with a presentation of the background, benefits of this acquisition and addressing shareholders' posted questions before preceeding with the resolutions.

Questions asked by shareholders are related to the timing of this acquisition, prospects of suburban malls in Singapore, Asset Enhancement Initiatives in future for existing malls, and how current valuations of malls are affected by Covid.

Costly tax payment due to the indirect ownership of malls held by ARF is the driven motivation behind this move. FCT's focus is still on Singapore suburban malls and there are no plans to acquire malls overseas nor any other acquisitions in the short future. 


The benefits of this acqusition can be summarised in this slide.

All the 4 resolutions have been passed in the EGM.

a. The proposed Asia Retail Fund transaction

b. The proposed equity fund raising

c. The proposed sponsor placement

d. The proposed whitewash resolution.

e. The proposed Bedok Point divestment.

This means shareholders of FCT should prepare some cash to be ready for the involvement of equity fund raising through preferential offering. I believe the details will be released by FCT soon. I am looking forward to it. 

Updated after FCT released details of important dates on 28 Sep around 3.30pm:


We must remember to apply for our entitled shares and excess shares of preferential offering before 19 Oct 2020, Monday 9.30pm by electronic means. 

As a bonus to reconcile the books before 7 Oct 2020 for the private placement to big boys, FCT also announced dividends of 2.804 cents from 1 Apr to 6 Oct and retained distribution of 1.681 cents from 1 Oct 19 to 31 Mar 20. 4.485 cents of CD payable on 4 Dec 2020. Huat ah! 

Thanks for reading!

With love and peace, 
Qiongster