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
Yes bro,... I will do the same as you have done here, literally to move-on. I cutloss on Starhub a few years ago when the dividend payout amt was cut from 5c per qtr, to an amt that I can't remember now. Thing is,.. everybody has been saying that this model adopted by Starhub is not sustainable. Thru accounting treatments, Starhub has been able to pay out 20c dividend per year for many years, and it was the ONLY telco that pay out 4 times a year.
ReplyDeleteI moved into Mapoltree Industrial Trust when this REIT changed its mandate to include Data Centres based in The USA. I remembered I read this news from a BT edition presented to me when I boarded the plane.
We have to act,... you have done so, bro,.. so stay confident this is the right move. Short term losses can be made back by longer term gains.
I have to admit I woke up to my senses too late. Waiting and hoping for the tide to reverse. Thinking that telcos are still defensive business. My first similar act was performed last year when I sold Singtel to buy Ascendas Reit. Now I hope to repeat the same feat. Though the price of Starhub will rebound in the short term and MIT may retrace after hitting the next peak, I hope to continue adding to MIT. I believe the landscape of Singapore stocks will be dominated by Reits sooner than later.
DeleteTo add one more point - Cromwell European REIT is today looking into acquiring Data Centres in Europe too. Now is th time to get in before they make their first acquisition. JMHO.
ReplyDeleteCK Lai
Thanks for the reminder. Cromwell is a 100% European pure play Reit that is undervalued and has very high yield. The risk reward ratio is low and I think it is worth investing. Ireit is another very good Reit with European presence too and CDL has been increasing their stakes in it.
ReplyDeleteTq Qiongster,... I did compare with iREIT too,.. but I saw iREIT's gearing being high, and its mkt cap is not big enough compared to CEREIT's. iREIT ran into some debt problems a year or two back, and had to put in mitigation steps to reduce its debt. Size is very important for a REIT today.
ReplyDeleteI recalled its dpu in SGD kept dropping too as time passes by.
CK Lai
True. I have already sold off Ireit to buy Frasers L&C which is even better in terms of gearing and risk. The price of Ireit has also recovered and is not attractive anymore. Cromwell share price has more upside potential still.
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ReplyDelete