Portfolio Update Jun 2020

Portfolio value increases $4k or 2% to $191k.

Most of the counters in the portfolio are trending sideways or dipped slightly due to worries about the worsening of Coronavirus situation globally as economies are opening up.

Executed portfolio rebalancing actions:
Sold Starhub at $1.39
Bought Mapletree Industrial Trust at $2.73

SRS portfolio value inches up $2.7K or 4%.

Collected all the dividends for 2Q 2020 and started to build up more than $1k in war chest.

Achieved a passive income of more than $7k from the first half of 2020.

The stock market is in a limbo state. Not fearful enough for a huge correction and yet no positive catalyst for further run up.

I believe there will be further weakness and downside to the stock markets till Nov 2020, when the US presidential election takes place and after which we shall see the real long and gradual recovery of the global economies as the virus tapers down and full effects of recession kick in.

Nonetheless, my plan is to stay invested by picking up undervalued bank counters such as UOB and accumulating more solid Mapletree Reits slowly in 2H 2020.

Thanks for reading.

Love and Peace,
Qiongster

A Reit that I do not dare to sell again

AT&T Data Center at 402 Franklin Road, Brentwood, USA
Source: Brentwoodhomepage.com

On 20 May 2013, I bought Mapletree Industrial Trust (SGX: ME8U) at $1.55 as a novice investor.

Its share price plunged to the $1.20 - $1.30 region for me to incur a loss of more than 20% for the next few months.

Back then, Reits were not a popular financial instrument. All industrial Reits were traded at discounts to NAV.

On 24 Apr 2014, I eventually sold MIT at $1.435. At a loss of 5% after dividends. Buy HIGH Sell LOW.

The share price of MIT rose steadily in the next 6 years in tandem with rising net property income, DPU with quality acquisitions along the way. The share price breached $2 in Dec 2017 and scraped $3 in Dec 2019.

Then comes the market crash in Mar 2020 when its share price dived from $3.04 to $1.87 and then made a V shape recovery back to $2.98.

After observing the defensiveness and resiliency of MIT during a crisis, I decided to nibble MIT at $2.38 during the halfway recovery in Apr 2020 before its Q4 2020 results announcement. As expected, the impact of the health crisis to its net property income is minimal and its share price continued to rise. I actually sold it off for a small profit thinking that there would be retracement.

I realised it was a grave mistake trying to time the market. I should have always kept MIT long term.

The FOMO in me prompted another purchase of MIT at much higher price $2.73 after MIT was announced to replace SPH in the Straits Times Index. I knew its share price has a high chance to recover back to pre-Covid levels and it really did.

On 23 Jun 2020, MIT announced a $350m private placement to acquire the remaining 60% interest in 14 Data Centers from Mapletree Redwood Data Center Trust. Though dilutive, this deal is DPU accretive and will increase the % of resilient data center assets in its property portfolio. This acquisition  serves to sustain the share price of MIT above $2.80, which is the private placement price for institutional investors.

Even though the share price of MIT is $2.95 at the time of writing presenting decent capital gains, I do not dare to sell it again as I learnt my mistake of timing the market and believed strongly that MIT will do well in the long run in terms of DPU and share price.

It will take extreme bad news and immense fear before institutional investors and funds sell off MIT for its share price to correct and every dip will be a good opportunity to add based on dollar cost averaging.

Riding on the waves of digitalization, Industry 4.0 and advent of data analytics, MIT is a solid and steady Reit well positioned for the future and should be a long term investment. NOT FOR TRADING NOR SHORTING.

The above is just my personal sharing and opinion and is by no means any recommendation of investment advice. Thanks for reading!

Love & Peace,
Qiongster

Passive Income in 2Q 2020 and 1H 2020

Half the calamitous year of 2020 has passed and it is time to stocktake the dividends collected as passive income from my investments.

I collected the interests from Singapore Savings Bonds (SSB) from Apr to Jun, and dividends from the companies and Reits in my CDP and SRS portfolios.

The total amount of passive income in Q2 2020 is $4,151.49.

Together with the $3,192.33 passive income in Q1, my passive income in the first half 2020 is $7,343.82, which is actually lesser than my monthly active income, but able to cover all my basic necessities and essential expenditure for 6 months, except for my monthly insurance premiums.

I would be able to declare myself being financially free if not for the hefty whole life insurance premiums which was not a savvy decision made some years back.

The following are the streams of CDs, interests and contra trade profits.
$98 Savings Bond (1 Apr)
$165.54 Mapletree Ind Trade Profit (30 Apr) 
$97.50 Savings Bond (4 May)

$60.49 Frasers Centrepoint Trust Trade Profit (18 May)
$88 Suntec Reit (28 May)

$144.92 Keppel Reit (29 May) SRS
$100.10 Mapletree Com (29 May)
$470 ST Eng (29 May) SRS
$109.50 SSB (1 Jun)
$126.50 Netlink Trust (3 Jun)
$72 Sembcorp Ind (3 Jun)
$59.22 Mapletree Log Trade Profit (4 Jun)
$66.30 Capmall Trust (5 Jun)
$657.72 OCBC (5 Jun) SRS

$264.60 Comfortdelgro (9 Jun) SRS
$210 OUE (10 Jun)
$112.50 Starhub (12 Jun)
$447.60 Frasers L&I Trust (26 Jun)
$576 Aims Apac Reit (29 Jun)
$225 UOB (29 Jun) 

I hope to collect more passive income in 2H 2020 and wish that the economy starts to crank up again. 

The effects of recession caused by this health crisis have not been fully effected yet. We should continue to save for more rainy days and thunderstorms ahead. Build up war chest for investment opportunities. Grow our emergency funds to be ready for stocking up food supplies or unforseen spending needs as we do not know what lies ahead in the future. 

I still believe in proper portfolio allocation to stay invested in the stock markets instead of having 100% cash waiting to time another big market crash. Unless we are traders who only speculate in index or stock price movements and do own any long term positions of income producing assets, we should avoid being overly smart or accurate. 

While there are immense challenges ahead, I am still optimistic that the long term future will be great for mankind. There is no obstacle that man cannot overcome.

Thanks for reading!

Love and Peace,
Qiongster

What is Richness in Life?

What is richness in life? 

It is not always about being wealthy, but rather it could be richness in our mind, richness in health or richness in the spirit. 

The best things in life are always free and not measurable by money. They are intangible. 

The abundance of love, the plentiness of oxygen in the air, the constant flow of water. They are all essential elements for us to survive.

In this world, no one is poor because everyone is given the precious commodity of time - 24 hours or 86400 seconds a day

We ourselves determine whether we live poor or rich. One can be not wealthy but if one adopts a correct mindset, he or she can feel rich too. It all boils down to the mind. Richness can comes in the form of contentment, satisfaction, happiness, healthiness ....

So everytime if you feel poor, take a deep breath and appreciate the time you still have to enjoy in this world.

With Love & Peace,
Qiongster

My Net Worth Growth Over Past 7 Years

I started to track my net worth since May 2013.

That was after working for more than 2 years as a fresh grad and having paid off entire tuition fee loans.

Hit SGD 100K net worth in Jan 2014 at age of 27.

In 2016, I realised there is "money" in my CPF account too. So after some thinking, I decided to factor the numbers in CPF into my net worth. Until now, I am not sure if this is the right thing to do.

I feel richer when I factor my CPF. So there was a boost since Jan 2016.

My short term target is to cross the psychological SGD 1 million figure.

Achieving this milestone will give me the morale boost to believe that anything is possible in life. It is possible for an employee, a salaried worker, a poor pauper to become a millionaire in a capitalist society driven by consumer spending, wage slaves, properties and business ownerships.

A million net worth will present a strong foundation to achieve my ultimate financial freedom goal before the age of 40.

My intermediate target within next 3 years is to achieve a net worth of SGD 1.5m with $2k/mth passive income with a $400K portfolio

My ultimate target is a net worth of SGD 2m with $4k/mth dividends from an $800k portfolio. This day will come. Certainly I believe.

Thanks for reading.

Love & Peace,
Qiongster

Net Worth Update Jun 2020

My net worth increases $29k to $940k from $911k in May 2020.

More than $20k is gained from the portfolio due to continued recovery in the stock markets.

I also collected more than $2k of dividends in the month of June alone.

Savings from monthly salary and CPF contributions make up the rest of the increase.

After ploughing more than $40k investing in the likes of Comfortdelgro, SATS, OCBC, CapitaLand Mall Trust, Frasers Logistics & Commercial Trust, Mapletree Industrial and UOB from Mar to May, I have sat back and relaxed while watching them recover and rally, thereby contributing to the increase of my net worth. I have removed deadwood such as Starhub and the other deadwood, Sembcorp Ind suddenly had become a potential gem for the future after the de-merging plan was announced.

My emergency funds and secondary war chests in Singapore Savings Bonds and fixed deposits are intact.

Primary warchest in POEMS Money Market Fund is topped up with dividends but depleted due to portfolio rebalancing and I have no plans to invest more in the short term.

I plan to use the cashflows from next few months of income to pay off insurance premiums, income taxes and top up mum's CPF retirement account for tax relief. Hopefully by Sep, I can build up my warchest and invest more again.

Well, I am on track towards the one million milestone. With further easing of Circuit Breaker measures, and as the economy slowly recovers, I believe that my net worth and passive income will soar to greater heights! Every crisis is an opportunity indeed.

Thanks for reading!

With Love & Peace,
Qiongster

My Starting 11 players on the Investment pitch

Since the stock market crashed in Mar 2020, I have taken opportunities to add on and re-balance my investment portfolios in CDP and SRS to brace for the new decade.

As football leagues across the world are restarting the season, just as the world economies reopen, I am unveiling my strongest 11 players on the investment pitch!

The formation is 4-2-3-1.

Goalkeeper: Netlink Trust as it is a monopoly business which is more static in terms of growth and share price movement.

Central defenders:
ST Engineering deals with defence business, Smart Nation, Internet of things, robotics etc. and is a relatively resilient business. Its weakness is the Aerospace sector which is heavily impacted by the pandemic.

Frasers L&C Trust owns a well diversified portfolio of freehold industrial, logistics properties and business parks in Australia and Europe and is a relatively solid and resilient Reit in terms of business operations of the tenants.

Left Back:
Ascendas Reit is a tough tackling, big sized and high stamina left back. It owns industrial properties in Singapore and business parks in the US and can give consistently increasing dividends while continuing to grow its portfolio.

Right Back:
Mapletree Industrial Trust is a young and speedy right back. It can give consistently increasing dividends and its numerous Man-of-the-Match performances have earned it place in the Straits Times Index national team.

Midfielders:
Aims Apac Reit is a well-managed small industrial Reit that provides consistent dividends. Despite its small size, it has stamina to sustain matches without incurring injuries and will throw occasionally in tackles to defend the ball.

Mapletree Commercial Trust is more of a box to box midfielder. It links up the defence and attack. It owns top quality properties that can thrive on the Greater Southern Waterfront in Singapore. It has proven to be consistently reliable in terms of providing increasing dividends and capital gain in share price. During a crisis, it will play safe and conserve stamina by retaining dividends.

Central Playmaker:
Capitaland Mall Trust is an all-rounder attacker who likes to provide assists. Owning high quality shopping malls all over Singapore, it provides the best locations for dining, shopping and relaxation. However, it is a victim of social distancing measures and shutting down of non-essential retail stores during the pandemic. During a crisis, it will play smart and conserve energy by retaining dividends. It has a never give up attitude and will blossom to become the greatest world class playmaker when the crisis is over.

Left Winger:
Capitaland Commercial Trust is a dependable winger who is going to retire soon. It will be merged with Capitaland Mall Trust. It owns top quality Grade A commercial skyscrapers in Singapore and is under immense pressure from the growing needs and popularity to WFH due to the pandemic.

Striker:
OCBC is a versatile, agile and speedy target man. No doubt it is suffering from low interest rates, slow growth in loans, its recent surging performances has depleted most of its energy. Time for a rest!

Right Winger:
UOB is an old school winger who likes to throw in crosses and bend free kicks like Beckham. Like the striker, its recent surging performances has used up most of its energy. Time to take a long rest after vomiting $0.75 CD and bounce back stronger as we overcome the health crisis.

Reserve bench:
Goalkeeper: Sembcorp Ind (Suffered long term depression but recovering well after deciding to kick its useless son, Sembcorp Marine out of the house)
Defenders: SATS (Broken foot and undergoing physiotherapy learning to walk again)
Midfielders: Far East Orchard, OUE, Guocoland, Suntec Reit
Strikers: Ascott Reit (Awaken from coma), Comfortdelgro (Injured), Keppel Reit

Thanks for reading!

Qiongster

What will I do about Sembcorp Industries?

I own a small quantity of Sembcorp Industries (SCI) shares in my portfolio. They were purchased in 2015 when I decided to invest in a great business dealing with energy generation, renewable energy, waste management, urban development and marine industries. It was a defensive growth stock paying decent dividends of 3.5% yield then.

However the past 5 years, declining earnings and dividends plagued Sembcorp Industries as it was dragged down by the decline in marine and offshore and plummeting oil prices inflicted on its marine arm, Sembcorp Marine (SCM), of which it owns a 61% stake.

After factoring in all the dividends collected over the past 5 years, my average holding cost is $3.30, suffering a more than 50% capital loss. There were plenty of chances to sell Sembcorp Industries to make decent profits but I chose to hold on due to faith in its essential global utilities business which has immense potential in the long term.

To be honest, I am tempted to cut my losses on several occasions to make my money work smarter and harder. I would get more dividend income and return on equity by investing in Reits or other growth stocks than waiting for the recovery of Sembcorp which seems too distant and improbable.

On 4 Jun 2020, the shares of Sembcorp Industries and Marine were halted from trading. On 8 Jun 2020, the plan for recapitalisation of Sembcorp Marine and demerger of Sembcorp Marine from Sembcorp Industries was announced.

SCM will raise $2.1 billion from rights issue. Parent SCI will subscribe to all its entitled rights for up to $1.5 billion by writing off the loan it provided to SCM in 2019. The other $0.6 billion will be raised from existing SCM shareholders or Temasek if SCM shareholders decided not to exercise their rights shares at a heavily dilutive ratio of 5 rights shares for every 1 existing SCM share.

After the rights issue, shares of SCM owned by SCI will be given away to existing SCI shareholders at a ratio of between 427 and 491 shares per 100 shares of SCI owned. SCI will not own any stakes of SCM anymore. Temasek which currently owns SCM indirectly through SCI, will own SCM directly together with SCI shareholders.

The financial position of SCI greatly improve after SCM is decoupled from its entity. 

The plan will be executed only if at least 50% of both SCI and SCM shareholders are in favour during the EGM.

What existing Sembcorp Industries shareholders can do? 

1. Do nothing
Let the rights issue and demerger take place and receive the SCM shares converted from debts to equity. No further capital injection is required. There is a fairly high chance that SCI shares will still hover between $1.50 to $1.80 in the short term while SCM shares are traded in the $0.20 to $0.30 range after the rights issue. Decoupled from marine industry, SCI may start to do well in its energy and utilities business in the long term and the share price may converge closer to its post demerger NAV of around $1.90. Who knows the "free" SCM shares may be acquired by Temasek or Keppel Corp to be merged with Keppel O&M arm or rising oil prices may bring the marine and offshore back to life again?

2. Increase stakes of SCI
Purchase more SCI shares to average down their holding price or increase shareholdings to speculate on the possible increase in share price of SCI in the short term and also to leverage on the strengthening position of SCI and ride on the potential growth of renewable energy and utilities business in the years to come.

3. Sell off partial stakes
Reduce exposure to SCI by recycling partial capital back for other investment opportunities and keep a sizeable amount of SCI positioned for the long term recovery and growth.

4. Sell off everything
Get back all capital from SCI to avoid complications and invest in other businesses or contribute back to war chest for better opportunities.

What I will do?
As I only hold a small quantity of SCI and have already held it for more than 5 years, I can afford to do nothing if the share price stays below $1.90. I will consider selling off all my shares if its price hits above $2 in the short term because after the demerger, its new NAV is around $1.90 and $2 should be a fair value in the short term. If I think about why I invested in SCI in the first place, I particularly like its essential waste management and utilities business that I believe will has plenty of potential growth especially in developing countries such India and South East Asia and will be motivated to keep SCI for the long term.

I hope all SCI and SCM shareholders will make the wisest decisions for yourselves. Always think about why you bought the share in the first place. All the best! Thanks for reading.

Love & Peace,
Qiongster

Portfolio Rebalancing: Cut Starhub Buy Mapletree Industrial Trust

Mapletree Industrial Trust (MIT) will replace SPH in the Straits Times Index (STI) from 22 Jun 2020.

The STI is reflective of Singapore's economy and the 30 constituents are businesses with the largest market capitalization. It is evident that Reits have grown in stature and importance in Singapore as MIT will be the 6th Reit out of 30 companies in STI.

The STI reserve list comprises of Keppel DC Trust, Suntec Reit, NetLink Trust, Frasers L&C Trust and Keppel Reit. I am happy to own 4 of the 5 reserves.

It is time to realize that traditional old school corporations such as SPH, Sembcorp Industries, ComfortDelGro, Starhub, Singtel and SIA have all faced headwinds in their core businesses and seen declining profit margins and erosion of equity year after year.

The future is about technology and innovation. Apps, virtual reality, artificial intelligence, data analytics, digitalization. Data centres hosting IT infrastructure is the bedrock for the future. MIT, like a hybrid of Ascendas Reit and Keppel DC Trust, owns industrial properties as well as data centres on freehold land in the North America is the benchmark for the future.

It is with deep heart that I decided to cut my losses in Starhub and move on to MIT. I prefer stability, increasing dividend income and certainty in the future over possibility of declining earnings, reducing dividends and high capital expenditure on 5G infrastructure that will take decades to breakeven.

Mapletree Industrial Trust symbolises the future. Starhub represents the historic past and gone are the glory days. SPH is archaic. Nobody will want to watch Pay TV nor read hardcopy newspapers in the future. It is time to move on. The time is now or never. I scrambled to get on the boat. FOMO.

I believe all the exchange traded funds (ETF), hedge fund managers, portfolio managers are strategizing to remove SPH from their portfolios and scrambling to place huge bids to buy Mapletree Industrial Trust from today till 22 Jun. Their portfolios simply need to mimic STI and contain the 30 company shares. Though the valuation of MIT is not attractive, its share price will only rocket to the skies because there simply isn't enough shares for the funds to buy. With limited supply of shares, and oversupply of money, there will only be one outcome. $3 or $3.50. Pump and dump also does not matter. MIT will only grow its portfolio and pay increasing dividends and can be one of the best long term investments for the coming decade.

Thanks for reading!

Love & Peace,
Qiongster