Thursday, April 30, 2020

Portfolio Update Apr 2020 - Resurgence, Recovery, Rebound or Recoil?

Resurgence. Recovery. Rebound. Recoil. Words to describe my investment portfolio after the bloodshed and battering caused by virus pandemic in previous months.

My portfolio value increased by $20k in Apr 2020 to $175.5k.

No sales. Capital injection of $6k by adding some Frasers L&I Trust (new name is Frasers L&C Trust) at 0.97 this week after trading Mapletree Industrial Trust. Frasers L&C Trust surged to 1.06 after reporting a good set of results and cleanup DPU of 3.73 cents after the merger with Frasers Commercial Trust, which I have sold off from SRS portfolio and explained before.

In my Net Worth update in Apr 2020, i mentioned about the following:

"As the virus situation merely peaked and stock market gradually stabilised, I believe there will be one last chance to grab whatever is left on the table before the new economy recovery phase kicks in for a new steady bull run in the new decade."

What's left on the table now are laggards, travel, heavily-overseas exposed and hospitality related companies that offer deep value for your bucks.

I was lucky to have grabbed Fraser L&C Trust. Is this the one last chance to grab whatever is left on the table.

I have depleted my primary war chest and have no intention to dip further into secondary war chests (Fix deposits and Savings bonds) as stock prices have recovered more than 20% from the lows on 23 Mar 20, the very day when I managed to grab a cheap piece of OCBC pie.

Slight recovery in my ultra long term SRS portfolio from rallies by ST Eng, OCBC and Keppel Reit. SATS and CDG are heavily impacted and will take longer time to recover.

Whether the rebound in the stock market is fake, dead cat bounce, short term, window-dressing, U, W, M shaped recovery or will retrace back to new lows or not, it does not matter as long as we stick to our own game plan.

My game plan is to stay invested in this game under all market conditions. Continue reaping dividends, rewards and ride out the challenges with the businesses I own, enjoy the journey of investment and pursuit of financial freedom.

We are starting to see glimmer of light from this dark tunnel. This crisis will definitely be over. It is a matter of how and when. Let's embrace the better future ahead for mankind! End the circuit breaker and let lives resume back to normal soon! Thanks for reading!

With Love & Peace,

Tuesday, April 28, 2020

Nibbled Mapletree Industrial Trust but sold it off after results announcement

In my Mar 2020 Portfolio Update, I shared about my shopping list in the SGX stock market.

If Mapletree Industrial Trust hits < 1.70, Mapletree Logistics Trust hits < 1.20 or Parkway Life Reit hits < 2.30

None of the target prices materialize. It is either they are unrealistic or too low.

On 24 Apr 2020 last Friday, I decided to nibble Mapletree Industrial Trust (SGX: ME8U) at 2.39 knowing that this Mon they will announce their Q4 2020 results.

My original intention was to start building up MIT in the portfolio though the entry price was far from ideal. Anyway it is only a small position so even if it declines further, I can always average down. I was also expecting at least a 3.0 cents dividends as sweetener

Then came MIT's Q4 results. They were solid and resilient but not super impressive.

DPU decreased 7.5% Q-o-Q to 2.85 cents. 0.3 cents were kept as contingency funds to help tenants affected by Covid virus. After sustaining increasing DPU over the years, this decline is a rare blemish in its ever growing DPU graph.

Though the DPU inched up to 12.24 cents for the entire FY, Gross Revenue, NPI and amount for distribution actually dipped in relative to previous quarter. This comes after the recent acquisition of 13 Data Centers in North America.

It is important to note that locally in Singapore, about 55% of the local tenants are SMEs that may well be affected by the virus situation and highly possible will seek relief from MIT. Up to 30% of MIT's tenants are providing non-essential services and their operations are stopped till 4 Jun 2020 as part of the extended circuit breaker measures. Hence, there is a possibility that subsequent DPU will stay in the range of 2.6 to 2.9 cents due to reduction in amount for distribution as some are set aside for the $13.7m relief package by MIT. This relief package does not come from the government but from shareholders' DIVIDENDS! It is with good intention to help the tenants get out of the crisis so that they can continue to pay rental, rather then let them go bust and default on future rental payments.

Today I decided to flip it off for some Kopi money. Not because the results are poor or MIT has no potential but because my entry price does not warrant sufficient margin of safety and current yield is not very attractive (~4.8% at price of 2.52) compared to smaller counterparts such as AIMS APAC Reit (Yield >10%) and Frasers L&I Trust (Yield >7%). Furthermore, I believe it will take a few more quarters for the DPU to recover back to pre-Covid level above 3 cents per quarter. With the looming recession and uncertainty in the economy, some SMEs and non-essential tenants may face cashflow difficulties and require extended relief to defer rental payments. Furthermore, it may take a few pullbacks before the share price of MIT reach its pre-Covid high of 3.04. Anyway, MIT is a solid and resilient industrial Reit to be in every income portfolio. Hence, I hope to buy MIT some time again this year.

Thanks for reading!

With Love & Peace,

Tuesday, April 21, 2020

5 Lessons I learnt from this crisis

As I spend a lot of time in my own space working, relaxing, eating, exercising, I also think and reflect on how this health crisis impact lives and make us rediscover the simplicity and inner peace of living.
In summary, there are 5 lessons that I have learnt.

1. Appreciation of Freedom & Peace
We take it for granted when we leave our homes and commute to work everyday, working in the office, going for lunch breaks and meetings. We walk, drive, take public transport. Dining in restaurants, coffee shops, drinking in cafes. All these daily routines have become a habit that we become accustomed to and have always taken it for granted. With this Circuit Breaker, it will make us realise that the freedom of movement for urban dwellers is a gift. And of course, to be able to breathe in the free air without wearing a mask is something to enjoy.

Working from home (WFH) allows us to rediscover the inner peace within ourselves, the peaceful neighbourhood, without having to deal with office politics and nasty bosses or colleagues physically. The empty streets and quiet coffee shops without diners portray the life of Singapore before 1990s when the city is much less crowded and peaceful when the population is less than 3m.

2. Stress test on investments

The plunging of the stock markets provides a comprehensive stress test on our investment portfolios. It stresses the ability of our chosen companies and Reits to sustain cashflow and earnings during bad times and gives us a wake up call on our blindless and greedy pursuit of yield and chasing higher than ever stock prices. In the coming weeks when the results of Q1 2020 are announced, we can witness the impact of how this health crisis and Circuit Breaker affect the ability of our beloved Reits in paying DPU and the tenacity of our invested companies to survive. It is important to realise that fundamentally sound investments and well-diversified portfolios can also be affected by systematic risk arising from a health crisis.

3. Importance of technology

Technology allows us to still be connected with other people in the world anytime, anywhere during times of lockdown and movement restriction. It is the best invention in mankind. With the closing down of borders, applications such as Google map still allow us to view the streets of other countries. Virtual reality applications allow us to view showflats of new properties and museum exhibits. Social media, game and video conferencing apps still allow people to stay connected in the virtual world. With advancement in online banking, money can still flow around through Paynow, Paylah and all sorts of payment modes. E-commerce has also evolved to cover online shopping of perishable items in supermarkets and ordering of food from restaurants. This health crisis has definitely highlight the importance of technology and business which leverage it to their advantage thrive during the Circuit Breaker but unfortunately, businesses that that are not adapting to technology suffer greatly.

4. Shortness and fragility of life

The Coronavirus is causing tens of thousands of people to die everyday in the world. More than 170k people have succumbed to this virus at the time of writing. Many of them, with families, children, great plans for retirement or career aspirations have to cut their lifespan short on this earth. From the famous quote of Seneca on the Shortness of Life,
We are spending alot of our time on useless activities, entertaining people we do not like and on social media that we do not realise that time is a scarce and limited resource. All of us beings have an expiry date. We need to realise the importance of living with meaning, duty and purpose. Actual living is to enjoy ourselves meaningfully in activities that will work towards important goals in our lives. It is time for every survivor of this crisis to wake up be grateful that we are still given the opportunity to enjoy all the great things on this earth.

5. Anything is possible in life

Things that are not possible in the past can become possible now during a Circuit Breaker caused by a Coronavirus. The pursuit of luxury items and branded stuff in boutique stores in Orchard Road has evolved to buying unglamourous toilet papers and instant noodles in Fairprice supermarket. The bustling CBD area in Shenton Way in Singapore downtown can become a ghost town as most companies allow staff to WFH. Many shops in malls and neighbourhoods are forced to close down by the government. The crowd watching waterfall and queues at Shake Shack in Jewel can suddenly disappear. Even Mcdonald can cease to operate for the first time in Singapore. What does not happen in the past does not mean will not happen in the future.

Thanks for reading! Stay home and be safe!

With Love & Peace,

Thursday, April 16, 2020

Net Worth Rebounded Towards SGD 900k in Apr 2020

After the battering in Mar 2020, my net worth rebounded strongly this month. This is due to the rebound in the stock market as well as the latest round of cashflows from active income, bonuses which was contributed to SRS for investment and CPF contributions.

Ever since my net worth inched towards SGD 1 million in early 2020, it has been on a continual decline. I expected it to happen with the worsening virus situation however the steep plunge of equities was faster and greater than expected. I am happy to finally see it increase again.

A breakdown of my assets revealed the bulk of numbers in the CPF fortress and I still have enough risk capacity to invest in more risky stocks and Reits. My SRS account is fully vested in strong companies such as OCBC, SATS and Comfortdelgro that are undergoing stress tests at the moment. I particularly favour Reits and though the recent selldown of Reits wiped out huge paper profits off my portfolio, I am slyly happy and relish at the great opprortunity to add on to more Reits. However, I only nibbled abit of Capmall trust and was disappointed to see the quick rebound of Mapletree Industrial Trust, Mapletree Logistics Trust and Parkway Life Reit, which were my other long term targets.

As the virus situation merely peaked and stock market gradually stabilised, I believe there will be one last chance to grab whatever is left on the table before the new economy recovery phase kicks in for a new steady bull run in the new decade. There could be a huge plunge to test new bottoms, slight retracement to a higher bottom or continued rebound in the stock markets. Nonetheless, I am still focused on staying investing in all market conditions.

I am reviewing my potential targets and may just grab Frasers Logistics & Industrial Trust, Mapletree Commercial Trust or even bashed up hospitality Reits such as Ascott Trust or CDLHTrust. I hope to make a comeback stronger than before after this crisis. In pursuit of my first million dollars. For financial freedom. For passive income. Pure freedom.

WFH does help to reduce my expenditure or cash outflow. I have saved from transport fare, lunch and tea breaks. I also have more time to sleep and enjoy more me time than ever. This is at the expense of freedom. Being literally at home almost 99% of my time makes me sometimes feel trapped in my own space but overall, the experience and benefits are great for me. I am trying to enjoy the moment of working semi-naked on bed and secretly hoping that mankind slowly conquer the virus so that life will resume close to normal in 2H 2020. The coffeshops and malls crowded wih people again. Getting to squeeze into the crowded city life. The borders start to open up and we can get to travel again soon.

I wish everyone the best of health. Stay safe, remain at home, be peaceful and enjoy the solitude! Thanks for reading.

With Love & Peace,