Sold SATS

The share price of SATS (SGX:S58) has climbed from the lows of $2.50 to above $4.30 today, fueled by recent dramatic news of vaccine, potential increased travels and flights in the short future. 

I own 4,000 shares of SATS in my ultra long-term SRS portfolio at an average cost of $4.30 and $4.22 after lessing off the dividends collected in past 2 years.

I sold them all off at $4.32 today at slightly more than breakeven, avoiding the possible hefty loss of more than $7k if I had cut loss in Mar 2020.

From my SRS account as of 23 Nov 2020, SATS share price was 4.08 before further run ups of SATS share price to above my holding cost on 24 Nov 2020.

Why did I change my mind on a long term investment and decided to sell SATS?

1. No dividends in short term

SATS was a great company with strong balance sheet and consistent income producing power in its pre-Covid days. It duopolizes the gateway services and flight food catering businesses in Changi Airport together with DNATA. However, this Covid health pandemic has given a wake up call to mankind and casted a huge impact to the travel and aviation industry. SATS has lost its earning power and monopoly in several airports in Asia, including the Changi Airport, and will be burning cash to sustain its business operations for at least the next 2 years. Flights will not resume to pre-Covid days anytime soon and SATS has already suspended payment of dividends to shareholders in this FY. I do not foresee SATS being able to pay more than 5 cents of dividends in FY2021 and more than 10 cents of dividends until at least FY2023. My primary objective of investing in SATS is for long-term consistent passive income with expectation of more than 15 cents from SATS annually. As this objective could not be met, SATS no longer fulfill my investment criteria. To make matters worst, equity fund raising is definitely an option for SATS to manage its cashflow well.

2. Loss aversion bias

Due to dollar cost averaging consistently since 2018 using SRS funds to invest in SATS, my holding cost of $4.30 is rather high with low margin of safety. I have been sitting on paper losses since the onset of Covid health pandemic grounding flights and the aviation industry. Sitting on huge paper losses of up to $7k at times in Mar and May 2020, my loss aversion bias generates more satisfaction from avoiding the $7k loss than holding out long term for another $7k potential capital gains. Based on technicals and fundamentals, the probability of SATS' share price running up to above $5 is lower than than it correcting back to below $4. Selling now is an escape chance for me to free up my capital and recycle into other businesses with higher potential returns in the short to long term.

3. Harsh reality

Even though flights will slowly resume, the capacity is much reduced. In Singapore, there is lack of domestic travel and international travel has been crippled severely. Vaccine will take time to be given to most people in the world. Stringent travel restrictions will continue to hamper travel possiblity between countries. Air Travel bubble between Singapore and Hong Kong has hit a major stumbling block due to fourth wave of Covid spread in Hong Kong, and face the disappointing possibility of being abandoned.

Even though SATS has diversified its business away from aviation, such as providing food & beverages catering for events, managing cookhouses in SAF camps, cargo handling etc, more than 80% of its revenue will still be derived from air travel due to its core business in providing gateway services and food catering for flights.

In conclusion, I am out of the waiting game for aviation industry. I am taking my money back to open up my investment options in other resilient industries perhaps technology or healthcare instead of incurring the opportunity costs of waiting for the full recovery of the aviation industry. When the opportunity arise for me to invest in SATS again, I would do so again. However, there are plenty of choices now to grow my wealth at a faster rate. Thanks for reading.

With love & peace,

Qiongster

Net Worth Update Nov 2020

My net worth increases $13k to $992k from Oct 2020.

It is another stride towards SGD 1 million.

I injected around $6k to buy Capitaland Integrated Com Trust and subscribed to Mapletree Logistics Trust's preferential offering shares this month.

The vaccine news and post US Presidential election news have indeed propelled many stocks and Reits in my portfolio, contributing to my net worth growth.

Many of the Reits have reported their quarterly or semi annual results and announced dividends to be paid in this month and Dec 2020. This will give a further boost to my war chest and net worth. 

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

The next corporate action I will participate in will be Ascendas Reit's Prefential Offering at $2.96 a share. Meanwhile, I am still nibbling 99 shares of CICT everyday using the free odd lots brokerage promotion on Phillips POEMS.

As long-term investors, we should not be too bothered the short term volatility and noises from the mainstream news. Always be prepared for corrections in the financial markets while we enjoy surges. Enjoy sailing through the ups and downs of the wave tides instead of paddling against the resistance in our investment journeys. Have a plan, stick to it and be in control of our destiny!

Thanks for reading.

With love & peace,

Qiongster

Another Equity Fund Raising of an S-Reit to milk my war chest

Equity fund raising by Reits has become a trend recently. Following after Frasers Centrepoint Trust and Mapletree Logistics Trust, Ascendas Reit has announced on 10 Nov 2020 that it plans to acquire 2 freehold office buildings in San Francisco and a portfolio of data centres in Europe via a private placement and a preferential offering to raise funds of $1.2b.

The 2 properties are situated in the epicentres of San Francisco's technology industry, with extensive connectivity to transportation links and in close proximity to rich amenities and attractions. This move is obviously by A Reit to ride on the emerging technology bandwagon in the US.

505 Brannan Street, PInterest Headquarters in San Francisco

This acquisition is DPU accretive, NAV accretive, increases the WALE of AReit's properties portfolio and increases geographical diversification. On paper it looks good, but as usual, an announcement to raise equity for acquistions will always result in volatility in the share price of a Reit. It will be no different for AReit. Its share price plunged more than 5% to below $3 from its last traded price of around $3.16.

The preferential offering price is $2.96 which is not very attractive compared to the previous preferential offering price of $2.63 just one year ago in Nov 2019. As I currently own 8,000 shares of AReit, this will be a good opportunity to add 2,000 shares to round up my investment. I will subscribe to the preferential offering shares unless its price in the market offers more discount.

In the short term, the share price of AReit may retrace lower, possibly even lower than the preferential offering price due to hedge funds and institutional traders pulling out of safer defensive assets to plough into recovering assets in the tourism, aviation and retail sectors which have been battered badly and recovered a slow pace. However, in the long term, AReit is one of the best, if not the best Reit to own in an investment portfolio. I believe it will definitely play its role to reward consistent and steady returns of more than 5% for its long-term investors.

Thanks for reading.

With love & peace,

Qiongster

Applied for Mapletree Logistics Trust Preferential Offering Shares

I nibbled Mapletree Logistics Trust to initiate a new position in Sep 2020.

On 19 Oct 2020, MLT announced the proposed acquisition of a 50% stake in 15 China logistics properties, 100%  stake in 7 China logistics properties, Mapletree Logistics Hub, Tanjong Pelepas, Malaysia and Mapletree Logistics Hub Bac Ninh, Vietnam Phase 3, all valued at SGD1.067B. The acquisition will be funded by a combination of debt and equity.

Mapletree Changsha Logistics Hub

The logistics properties to be acquired are built to Grade A specifications, with strong floor load, high ceilings, large floor plates, and ramp access, with majority having cross-docking features that cater to fast goods movement. Situated in Key Asian logistics hubs in China, Malaysia and Vietnam, well-connected to transport infrastructure of highways, railways, air and sea ports, and near large population catchments for labour, these properties are riding on the waves of booming e-commerce.

I had decided to participate in this equity fund raising of preferential offering at $1.99 until the share price of MLT plunged to the lows of $1.94 on 2 Nov when it was more cost effective to buy from market instead of pressing at the ATM. The subsequent recovery of MLT's share price back to $2ish levels meant that I should just subscribe to the preferential offering shares. 

So there it is, another small step towards increasing my investment in Asian logistics. Hopefully more investors decide to skip this equity fund raising and let me have all the excess shares.

At $1.99, it is definitely not attractive or low enough but at a yield of 4% (same as CPF Special Account interest rate) in a resilient property segment, it is still rewarding for long-term investors who believe in riding on the waves of booming e-commerce. Also not to underestimate the compounding effect of 4% to more than double an investment over 20 years. Thanks for reading.

With love & peace,

Qiongster 

Portfolio Update Oct 2020

My portfolio took a beating from the market plunge in recent weeks leading up to the US Presidential Election. It is a healthy correction and reality check from bad news such as worsening Covid-19 situation in Europe and uncertainty over future stimulus.

Portfolio value drops $7k to $199k despite capital injection of around $10k.

I still firmly believe that this crisis presents opportunities to buy quality income producing assets at discounted prices. While it is disappointing to see investment portfolio value get eroded and declining personal net worth, it is important to stay calm, stick to own plan by executing small steps towards fulfilment of long term goals during such uncertain times.

My upcoming plan would be to add Mapletree Logistics Trust at below Preferential Offering price of $1.99, add Mapletree Industrial Trust at below $3 and hopefully initiate a new position in Keppel DC Reit below $2.80. The best time to invest is now for a better future! 

Portfolio Actions

1. Added 302 shares of UOB at $19.56

2. Gotten 1,500 shares of FCT at $2.34 from Preferential Offering

3. Conversion of 10,000 shares of CCT into 7,200 shares of CICT after the merger

4. Nibbled 297 shares of CICT between $1.75 and $1.82 using the free brokerage promo by Philips POEMS

Portfolio Dividends

1. Received 6 shares of UOB from scrip dividend

2. Received 48 shares of OCBC in SRS from scrip dividend

3. Received $2,590 of capital returns from Capitaland Commercial Trust from the merger

My SRS portfolio value declines slightly to $68.5k. Mapletree NAC Trust has recently reported a DPU of 2.876 cents for 1H FY2020/2021 and acquired a 50% stake in The Pinnacle Gangnam office building in Seoul, South Korea.

I wish the best for all in your investment journeys. Thanks for reading.

With love & peace,

Qiongster

CMT + CCT = CICT Completion

Today marks the completion of merger between Capitaland Mall Trust (CMT) and Capitaland Commercial Trust (CCT) to form the largest Reit in Singapore called Capitaland Integrated Commercial Trust (SGX:C38U). Do note that the ticker name of the new entity is the same as former Capitaland Mall Trust. 

For shareholders of CMT, no action is required; for shareholders of CCT, they will receive 0.72 share of CICT and 25.9 cents today on 28 Oct 2020 for every share of CCT owned.

As I own 10,000 shares of CCT, I have received the 7,200 CICT shares from the conversion of CCT and $2,590 in cash from the capital return.

Together with my existing 7,800 CMT shares, in total, I now have 15,000 shares of CICT geared for the post Covid recovery of the economy and retail scene.

Besides admin stuff related to conversion of CCT shares, for those of you who are using a Philips Capital POEMS trading account, there is an odd lot (<=99 shares) brokerage promotion for trading CICT applicable to cash, CPF and SRS. There will be no brokerage fee imposed on the trade but SGX clearing fee, access fee and GST still apply. 

As the share price of CICT languishes at an attractive level now, I may make good use of this promotion to add on to CICT in the next few weeks by adding 99 shares every day. 

With love & peace,
Qiongster

3 Commodities in Life

The three precious commodities in life are time, money and energy. As time decays, energy can be recharged through sleeping or resting but the maximum capacity of our energy degrades just like a battery does due to inability to store charges. Money, on the other hand, grows as we work by exchanging time for money. 

Sometimes I ponder if retirement entails getting to enjoying own sweet time, enjoy spending the money earned during younger days while keeping our bodies at high energy levels. I think it may not be possible due to the natural process of ageing and we are not able to intake as much foods when we are older or possess the same energy and health levels compared to younger. 

The lure of financial freedom at a younger age than the official retirement age of 60s hence opens up the world of options and presents the great opportunity of retiring early to enjoy all 3 precious resources at the same time in our living lives. 

It is difficult but not impossible to attain financial freedom in Singapore or any cities in the world. With faith, discipline and belief, we should strive for it. If we cannot achieve financial freedom, at least we will be close to achieving it through financial stability or at least feeling secured. 

With the increasing uncertainty of jobs prospects in many industries, replacement of human labour by artificial intelligence and robots, the more importance and urgency that we should increase our sources of passive income and work towards financial freedom. Of course, it is not wrong to possess a YOLO mindset thinking that life is short and enjoy life by spending all the wealth we earn to ensure we die with zero money. Afterall, we dictate the life we love to live.

We have to be aware of losing the most precious commodity of life as time is ticking away. While we gain more money as we grow older, we have to be conscious and resign to declining energy levels. 

Thanks for reading. 

With love & peace,
Qiongster

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

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

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

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

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

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

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

Passive Income in 3Q 2020

With a blink of an eye, almost 9 months of 2020 have passed by. 

In third quarter of 2020 from July to Sep, I have collected the following streams of interests from savings bonds and dividends. 

$107.00 SSB (1 Jul)

$87.00 Mapletree Ind (28 Jul)
$581.60 Ascendas Reit (27 Aug)
$76.65 Suntec Reit (27 Aug)
$83.76 Ascott Reit (28 Aug)
$334.00 Capcom Trust (28 Aug)
$164.58 Capmall Trust (28 Aug)
$141.91 Keppel Reit (28 Aug) SRS

$101.00 SSB (1 Sep) 

$235.00 ST Engineering (2 Sep) SRS
$327.90 Far East Orchard (4 Sep)
$576.00 Aims Apac Reit (17 Sep)

That add up to $2,816.40 of passive income for 3Q 2020.

My passive income in the first half 2020 is $7,343.82

Hence, my passive income for 9 months of 2020 has surpassed $10k!

This is supposed to be the quarter most heavily affected by the health pandemic. In my portfolio, several companies such as Comfortdelgro, SATS have not been able to pay dividends while retail and commercial REITs have seen their DPU slashed by more than 50%.

This crisis is a good test for investors like us to understand which counters in our portfolio are most resilient and allow us to reposition our portfolio for the future, especially if our objective is to build a steady source of dividend income. We should have already known the answers from the V shaped recovery of several counters. 

Thanks for reading. 

With love and peace, 

Qiongster

Net Worth Update Sep 2020

My net worth increases $14k or 2.1% to $965k from Aug 2020.

Dividends received, savings from active income, CPF contributions, recovery of stocks particularly retail Reits in my portfolio contribute to the strong increase.

More than half of my net worth (55%) is illiquid in CPF, SRS and Insurance plans. I am still working on increasing the percentage of my liquid net worth in cash and stocks.

The component of stocks (Reits & Equity) -21% is almost on par with my cash (19%). My short term target is to be less conservative and increase the percentage of my stocks to 25%.

I have started to build up war chest in Phillips POEMS Money Market Fund from dividends received and active income. This will come timely as I look forward to participate in the upcoming equity fund raising by Frasers Centrepoint Trust.

I also look forward to the merger between Capitamall Trust and Capitaland Commercial Trust, that may possibly propel the share price of Capitamall Trust higher. Together with the imminent recovery of the likes of Mapletree Commercial Trust and Frasers Centrepoint Trust, they should give my net worth a boost in the coming months.

I am grateful and fortunate to be working in the recession proof IT industry immune from Covid-19 to allow me to continue farming the CPF contributions and monthly cashflows.

I am glad that my long term strategy of staying vested in the markets and not chicken out during market crash continue to boost my net worth and financial health.

I believe this health pandemic will make the rich go richer and the poor go poorer. While this crisis presents immense money making opportunities for many in recession proof businesses and stock market, there are many rank and file workers affected deeply by losing their jobs. More companies will not be able to survive in the new world and go bust in the coming future, causing more people to lose their jobs. All these happenings in the world only reinforce my belief in the pursuit of passive income and financial freedom through frugal and simple living.

We should be grateful for what we have, be optimistic on the future and always be prepared for the worst that can happen to our lives.

 Thanks for reading.

With love & peace,

Qiongster

Nibbled Mapletree Logistics Trust and Sembcorp Marine

The share price of Mapletree Logistics Trust (SGX:M44U) has taken a beating in recent weeks and I decided that it is time to initiate a long term position for this high quality logistics Reit riding on the booming waves of e-commerce. Also, to complete the quadruple Mapletree collection.

While technically MLT's share price may correct further below 2, I would then be happy to slowly accumulate more in future. Practically, I am practising the commonly used dollar-cost averaging strategy to build up my investment portfolio.

I have also received the "free" shares of Sembcorp Marine (SGX: S51) demerged from Sembcorp Industries (SGX: U96) today.

As I have 2400 SCI, based on the payout ratio of 4.911 shares to each SCI share, I got 11,786 shares of SMM credited to my CDP account.

There is an ongoing $5 commission promotion by Phillips Capital POEMS for odd lots trading in Sembcorp Marine shares from 11 Sep to 9 Oct. I decided to round up my SMM to the nearest 100 even though the commission is more than the shares value because I wanted to have the flexibility to sell off all my SMM shares entirely if I decide to do so in future.

I have shared my thoughts on the demerger of SMM from SCI previously.

What will I do about Sembcorp Industries Part 2?

What will I do about Sembcorp Industries?

I gauged a fair value of SCI to be around $2. After the demerger, one would be able to get around $2.01 of value from the SCI share price of $1.18 and $0.83 from the 4.911 SMM shares at $0.170 at the time of writing. It is not a bad deal if one managed to keep SCI through the end of this demerger process as SCI was only closed trading at $1.91 on the cum entitlement day.

I look forward to other upcoming corporate actions affecting my portfolio - Merger between Capitamall Trust and Capitaland Commercial Trust, and the Equity Fund Raising by Frasers Centrepoint Trust to acquire its remaining stakes in AsiaRetail Fund.

While local stock market remain weak and sluggish, I still intend to continue building up my investments slowly and steadily for the rest of 2020.

Thanks for reading. 

With love & peace,

Qiongster

What will I do about Frasers Centrepoint Trust?

I traded Frasers Centrepoint Trust to make quick kopi money a few times this year.

When I last nibbled it on 7 Aug 20 at 2.34, I decided to keep for long term because after visiting the grounds of NorthPoint City and Causeway Point, I am convinced that the retail landscape has recovered and will be stronger than pre-covid days.

The picture below depicts the queue of waiting to go through thermal scanner to enter Northpoint City when the mall was at maximum capacity on 5 Sep 2020.

 

From supermarkets, cafes, f&b outlets to electronics and furniture stores, the crowd is back and the only difference from pre-covid days is the implementation of safe distancing rules by theory and wearing of masks.

The huge pent up demand after the circuit breaker, work from home creating demand for furniture and electronics product needs, and travel lock down curbing short trip visits to JB for cheap grocery shopping and food have resulted in suburban malls to be a favourite hangout for shopping and food other than exercising in parks.

Frasers Centrepoint Trust (FCT) announced on 4 Sep 2020 that it plans to raise $1.39 billion from equity fund raising through private placement and preferential offering to purchase the remaining 63.1% stake in AsiaRetail Fund (ARF) for $1.06 billion from its sponsor Frasers Property.

ARF owns five suburban retail malls - Tiong Bahru Plaza, White Sands, Hougang Mall, Century Square and Tampines 1 in Singapore and Central Plaza office building in Malaysia.

This is a strategic, shrewd and well-timed move as Setapak Central, a mall in Kuala Lumpur will be sold off by ARF and Bedok Point which is more ulu in Bedok central will be divested at the same time. This also comes at around the time when Capitamall Trust and Capitaland Commercial Trust are merged, leaving FCT as the only pure Singapore Retail Reit. The share price of FCT has also run up recently, making equity fund raising palatable.

This proposal will greatly strengthen FCT's portfolio of suburban retail malls to 11 properties spread all over Singapore island. FCT will become the 8th largest Reit by market capitalisation and 53.6% of its gross rental income will derive from tenants providing essential services. Most importantly to investors, its DPU is accretive by 8.59%.

While the details and timeline of preferential offering are not released yet, the EGM date has been announced on 28 Sep 2020, Monday at 10am. Shareholders can click on the link in FCT's website to register the EGM and mail back the forms to vote.

From the pro forma illustration, there are 585.6m new shares to be created in this equity fund raising.

I hope there will be more involvement from preferential offering to retail shareholders relative to preferential offering to institutional shareholders. In May 2019, out of the 184m new shares created, only 28.8m new shares were allocated to preferential offering and it was on a basis of 31 for 1000 existing shares. I hope this time round will be on a basis of at least 200 for 1000 existing shares.

I expect the share price of FCT to languish between $2.50 and $3 in the years to come in a low interest environment where we still have a Reit offering more than 4% yield based on an estimated DPU of 12 cents at $2.60. There will be minimal buying opportunities and we can only hope for another health or financial crisis for its share price to crash in the future. Other than that, dips that may come from interest rate hikes and US-China tensions may present small window opportunities to add.

The preferential offering is a no brainer decision. I will subscribe to my entitled shares and excess shares at the indicative price of $2.22. I believe this will be a great long term investment for at least next 5 to 20 years.

Thanks for reading.

With love & peace,
Qiongster

Portfolio Update Aug 2020

Portfolio value increases to $197k due to buying back of Frasers Centrepoint Trust and Mapletree Industrial Trust which were sold last month.

While industrial Reits remained sluggish and corrected slightly, retail Reits of the likes of Capmall Trust and Suntec Reit actually recovered to negate the losses from Ascendas Reit.

The property developers in my portfolio remained stagnant other than Guocoland which rose to reflect the 6 cents dividends announced.

I have received $1.2k of dividends in Aug and they go into my war chest.

SRS portfolio inches up $1.8k to $69.8k due to slight recovery from Comfortdelgro and SATS. ST Engineering reported a decent set of results to prove its resiliency and managed to maintain an interim dividend of 5 cents. 

I have opted for script dividend at $7.81 for the upcoming OCBC dividends as OCBC will be an ultra long term investment for up to 30 years and I am happy to make use of scrip dividend to achieve the dividend reinvestment compounding effect.

The local stock market remains weak and sluggish regardless of S&P 500 and DJI hitting new highs. I look forward to and hope that it continues to remain weak until the rest of the year so that I can still add on more Reits and bank counters to my portfolio at decent valuations. I will stick to my plan of staying invested while continuing to add on to my investments to achieve greater passive income for the future.

Stay safe and thanks for reading.

With love & peace,
Qiongster

Net Worth Update Aug 2020 - Surpassing $950k

My net worth surpasses $950k for the first time in Aug 2020.

It is another small step towards achieving the millionaire status.

I have depleted my war chest in POEMS Money Market Fund after buying back Mapletree Industrial Trust and Frasers Centrepoint Trust which I sold off in Jul 2020.

I intend to top up $2.5k to renew an expiring fixed deposit at rate of 1.15% for 14 months with UOB. The expiring FD has a rate of 1.6%. I will then be cash poor. The 1.15% p.a interest rate is still higher than the yield of Sep 2020 Singapore Savings Bond at 0.88% average return over 10 years.

This is my living example of being rich as a broke person. Asset rich but cash poor.

It is fine because nowadays I seldom dine in coffeeshops and hawker centres paying cash. I do my shopping in malls and pay groceries in supermarkets using credit cards. There are also rebates by the government to Town Council S&CC and utility bills to lower my spendings.

I am looking forward to receive this bunch of upcoming dividends to restart my war chest rebuilding.

$581.60 Ascendas Reit (27 Aug)
$76.65 Suntec Reit (27 Aug)
$83.76 Ascott Reit (28 Aug)
$334.00 Capcom Trust (28 Aug)
$164.58 Capmall Trust (28 Aug)
$141.91 Keppel Reit (28 Aug) SRS

$101.00 SSB (1 Sep) 

$235.00 ST Engineering (2 Sep) SRS
$327.90 Far East Orchard (4 Sep)
$576.00 Aims Apac Reit (17 Sep)

I have completed all the actions for tax reliefs in 2021- top up $15.3k to SRS, top up $7k to own CPF SA and $7k to parent CPF RA accounts.

In the next few months till end of 2020, I will channel all my savings from active income to the investment portfolio.

My top purchase targets are Aims Apac Reit, Mapletree Logistics Trust and UOB. I will monitor their price movements closely and add them at <$1.18, <$2.08 and <$19.60 after XD respectively.

Reserve targets are CapMall (hint: going to merge with Capcom soon to be the largest S Reit and should see strong recovery), Mapletree Commercial Trust and Mapletree Industrial Trust and Frasers Centrepoint Trust at <$1.85, <$1.90, <$3.10 and <$2.34 respectively. 

I believe the best time to invest is now or never. Ignore all the naysayers and bullshit from news to pick up whatever good assets or businesses we can during a crisis like this. Reits and banks are still preferred.

Stay safe. Be fearless and charge towards freedom. Thanks for reading.

With Love & Peace,
Qiongster

Site Survey of Bishan Towers - Aug 2020 HDB BTO

Bishan Towers is HDB Build-to-order development opened for application from 12 Aug to 18 Aug 2020. For the first time in 14 years, there are new HDB flats for sale in Bishan Town.

This development is situated on a plot bounded by Bishan Street 11 and Bradell Road and along the Kallang"River".

There are only 2 blocks of 472 units of 2 Room Flexi, 3 Room and 4 Room flats ranging 25 to 33 storey in height.

Source: HDB

A site visit to this plot begins with a 15 min walk from Junction 8.

This plot of land is where the 2 HDB blocks will reside in end 2026 (estimated).

To get a glimpse of the scenary that dwellers in Bishan Towers could view, let's head up to 20th storey of Blk 156, Bishan Street 11, the tallest building in the area with south facing view of this plot of land. 

Spot the Kallang River. It is that canal filled with rain water after a heavy pour. Otherwise, it would just be an empty longlang. At the top of the picture, we could see Toa Payoh Estate which is separated from Bishan Town by Bradell Road. Comfortdelgro building and BCA academy can be spotted in top left. The plot for Bishan Towers is the vast green land on bottom right.

 

The park connector can connect to both Ang Mo Kio Bishan Park and Kallang Riverside Park. Great for cyclists, joggers and marathoners to click their mileague in training and for recreation. 

Let's check out the Kallang "River". 

Peaceful and wide park connector for cyclists and joggers. 

Checking out the wet market at Blk 151A and dry market shops in Blk 150 and 151 which were closed in the afternoon. There are also a handful of coffeeshops in Blk 151 and 150. 

I feel that living in this part of Bishan is not very convenient for people who commute by public transport. For those who drive, it will be very convenient as it is a stone's throw away to CTE.

The amenities in this matured estate are not appealing. Shops are closed early and there are no supermarkets nearby except for a 7 eleven. The food stalls in the coffeeshops are not as attractive as hawker stalls in Toa Payoh nearby.

However, the park connector does offer a gateway to nature and a conducive environment for exercising. As one of the last few available plots of land in Bishan for public housing, this is the best offer now. 

Thanks for reading. 

With love & peace,

Qiongster