Tuesday, March 31, 2020

Portfolio Update - March 2020

It's the end of the month once more, and you know what that means on my blog - a portfolio update for the month of March 2020.

Just when you thought February was pretty eventful already, March 2020 came in hard and wrecked havoc to everyone's portfolio. The oil price crash and escalating Covid-19 hits hard, and recession looms.

However, is this not one of the reasons why we invest? To guard our future via wealth accumulation in case one became victims to retrenchment or any personal black-swan events?

See: Link to Main Portfolio page

Contents:
  1. Portfolio (31 March 2020)
  2. Transactions and Dividends
  3. First Tranche Deployed
  4. Closing Thoughts



Portfolio (31 March 2020)


Notes
1 - Forex rate is based off indicative conversion (actual values will differ)

Performance


The chart shows a sharp increase, only due to distortion from capital injection (CMT + warchest).

Without the capital injection:
  • I would actually be down by a whopping 24.6% since end-Feb 2020.
  • I would actually be down by a whopping 22.1% YTD.
Some commentary on my portfolio
  • Welcome back CMT! Readers of my blog in its early days will know I used to own it back in 1Q2018, but chose to let go of it when faced with a choice what to divest to fund my home purchase. (Big mistake)
  • The price of Fu Yu Corp seems to have stabilised for now, but we have yet to observe financial impact. I am thankful Fu Yu Corp is debt-free and significantly net-cash positive.
  • Prime US REIT and Lendlease REIT were amongst those hit very hard earlier on, but has have slight recovery from their lows since then.
(back to top)

Transactions and Dividends 

(a) Transaction Summary
  • Injected SGD 6000 into portfolio, of which 3640 was spent on Capitamall Trust (CMT).
  • Bought 2000 units CMT at SGD1.82 each.
  • Remaining cash is added into warchest.
(b) Dividend Summary
  • Dividend received
    • Totals approximately SGD79, and this is cycled into the warchest
    • PRIME US REIT: SGD 59.72 (4.11 US cent per unit)
      • This represents a forex rate of 1.453 USD/SGD.
    •  Lendlease Global REIT: SGD 19.35(1.29 Singapore cents per unit)
  • No dividend declared for the month of March 2020
(back to top)




First Tranche deployed
This is going to sound contradictive, but despite what I said previously that we have yet to observe the impact on financial report (see Portfolio Feb 2020 update), I decided to "open fire" at CMT, as this price is quite attractive (it saw a low of 1.855 back in 2015, representing a 5-year low). Unfortunately somewhat too early as it saw a further selldown to as low as SGD1.56 before climbing back up to its closing price of SGD1.79 today.

Yet here I am in two minds, however, to get itchy fingers and sell CMT for small profit if it does bounce back up to 1.89 or more while we wait for it to revisit lows again. My budget for this year is limited to ~6000 + any dividends I get, and the purchase of CMT, already bite-sized to begin with,  leaves me with a tiny balance of 2400. Trading this way might help increase my balance, but then the risk of losing money is probably much more elevated.

FOMO is real, and managing emotional aspect in my opinion is one of the more challenging things in the world of investing. And see, this is probably why we do investment instead of trading - so we don't end up dealing with such what-ifs, and proceed to reap our rewards after some years.

It was said that the crash of REITs (does it apply to other equities? I can't remember) was due to forced selldown from margin calls on leveraged positions. I wonder if and/or when there will be another bout of selloff as realisation of actual financial impact.

Closing Thoughts
This concludes the portfolio update for 1Q2020. I have made a bunch more mistakes since the start of the year due to FOMO, so I ought to straighten up and get back on track with recovering from losses before pushing hard to outperform the market.

While buying opportunities has risen this month, we have yet to see the financial impact through financial reporting. I believe despite the measures taken to mitigate the situation worldwide to aid businesses, it ain't over yet.

So get lock and loaded, and get ready to accumulate again soon.

Sunday, March 15, 2020

When the Bear strikes 2020 (Part 1) - Damage Report 2020-03-15

Wow, what a week! The market got hammered left, right, center by not just the escalating Covid-19 situation, but also the crash in oil prices. Circuit breaker in the US market even got triggered - historically it has been triggered only 4 times, and even the Global Financial Crisis (GFC) back in 2008 did not cause their market circuit breaker to be tripped.

Folks, the bears has finally started their assault - and perhaps it's time to take up arms towards a better personal financial future.





Take a look at the chart for Dow Jones Industrial Average (DJIA), Standard & Poors 500 (S&P500) and Straits Times Index (STI).

DJIA Chart (Source: Yahoo! Finance)

S&P500 Chart (Source: Yahoo! Finance)

Both DJIA and S&P500 got hit hard, taking them to a low of 21,154.46 and 2478.86 respectively, before spiking back up by 9+% to close at 23,185.62 and 2,711.02 respectively following the spike in Dow Futures.

STI Chart (Source: Yahoo! Finance)
STI also got spooked, and we saw it crash to a low 2510.88 in the morning of 13 March (Friday) before recovering to close at 2634.00, following a spike in Dow Futures. The last time we came anywhere close this low was in 2016.

Naturally, my current portfolio is not spared from this either (you can visit the StocksCafe portion on my main Portfolio page to see my current positions at last closing price).

  • Down-Month on-Month (MoM) by 18.46% (In comparison, STI is down MoM by 12.52%)
  • Down Year-to-Date (YTD) by 15.63%. (In comparison, STI is down YTD by 18.67%)



I see a number of investors have taken this opportunity to load up on their targets as well, deploying their "troops" (cash) in waves to "attack" positions , anticipating possibility of further hits.

This is the first bear market I am experiencing as an investor and I am looking forward to accumulate although so far I had not added any new positions yet.

Also beating myself up for my loss in Alita Resources for not having much "troops" to deploy, and buying in Fu Yu Corp too early - so many "objectives" (targets) I want to "attack", but not enough to make the most of the opportunity. But what to do, just gonna make the most out of what I have on hand instead.

Anyway folks, what do you think of the rally on 13 March (Friday)? Dead cat bounce? Or recovery?

Saturday, February 29, 2020

Portfolio Update - February 2020, Blood on the streets and buying opportunities?

February has come to an end and it has been pretty eventful since the start of 2020 - most noticeably the market selloff driven by the evolving Covid-19 situation. Here's the portfolio update for the month of February 2020.

See: Link to Main Portfolio page

Contents:
  1. Portfolio (29 February 2020)
  2. Transactions and Dividends
  3. Blood on the streets and emerging buying opportunities?


Portfolio (29 February 2020)



Notes
1 - Forex rate is based off indicative conversion (actual values will differ)
2 - Alita Resources was previously known as Alliance Minerals Assets Limited.
3 - I had written down Alita Resources to 0. Unless some miracle happen to revive the company or salvage the investment, I expect to remove from my portfolio sometime end-March 2020.

Performance
Down by 4.56% since end-January 2020.



Some commentary on my portfolio
  • Still surprised by the relative resilience of Fu Yu Corp's share price - I was expecting it to touch 0.220-0.230 due to exposure to operations in China. I'm interested to know the upcoming financial results to observe the extent of impact of Covid-19 to its business.
  • Prime US REIT lau-sai (diarrhoea) from high of 1.07, but slightly offset by forex.
  • Lendlease REIT also lau-sai, and is now cheaper than its IPO price.

(back to top)

Transactions and Dividends 

(a) Transaction Summary
  • No transactions
(b) Dividend Summary
  • Dividend Declared
    • PRIME US REIT: 4.11 US cent per unit, payable end-March 2020
    •  Lendlease Global REIT: 1.29 Singapore cents per unit, payable end-March 2020
  • No dividends received for the month of February 2020.
(back to top)



    Blood on the streets and emerging buying opportunities?
    It seems that more has finally started feeling the heat of Covid-19. The past week has saw the market bathed in red. Dow Jones and S&P500 are now officially in correction territory.


    Screencap of past few days of market for Dow Jones and S&P500 (Source: Yahoo! Finance)
    Similarly, Singapore market has tanked, with STI down to 3011.08. Likewise, I am not spared from the onslaught, being down -4.56% from end-January 2020.

    Straits Times Index chart (Source: Yahoo! Finance)

    But I am not panicking (In fact, feeling zen). I attributed could be due to my degree (lack of) of exposure to the market and having a bit more experience (read: stomached significant losses before) now. In my opinion, a correction was overdue and stock valuations was generally too high and not in line with fundamental growth - Covid-19 was merely the catalyst for it. I am starting to see possible opportunities and taking aim.


    Is this really the right time to buy though?

    In my opinion (and probably shared by quite a number of people too), while we have observed actions by businesses to brace for impact, we have not seen the actual impact to businesses, and the current selloff is more attributable to being fear-driven as opposed to fundamental-driven. In other words, I think this selloff is just a start and there may be a second wave of selloff later on when businesses starts reporting their next financial results.

    Some sharing - I also came across one of Dr Wealth's post on Facebook - a list of "Signs of market tops and bottoms". Think it will be a useful read for you guys too.


    Closing Thoughts
    As tempting as it is, I have decided to stay by sidelines for now, at least until it is possible to observe fundamental impact. There's limited funds for deployment to market and I will have to make the best of it (Ah, the pains of not having much capital at the moment).

    (back to top)

    Sunday, February 23, 2020

    The Moving Target Board of CPF Minimum Sum - Are You On Track?


    Retirement planning is something I believe one should start as early as possible - perhaps as early as early 20s, and developing financial intelligence even earlier on. After all, time is a valuable resource and a key advantage younger people have over older people. Part of the retirement planning usually takes your CPF into account. And when we talk about CPF for retirement planning, CPF Minimum Sum would be on the mind of most Singaporeans.

    Also a pretty timely moment to write on CPF, given the announcement of Budget 2020.




    What is the CPF Minimum Sum
    It is a sum of money one needs to set aside in your CPF Retirement Account (CPF-RA), so as to help one prepare for retirement. Your CPF Ordinary Account (CPF-OA) and CPF Special Account (CPF-SA) is transferred into CPF-RA when you reach the age of 55.

    This is subsequently drawn down when you reach age of 65-70 (depending on which option you have opted for) under CPF-LIFE or Retirement Sum Scheme.

    CPF Minimum Sum in broken into 3 brackets:
    • Basic Retirement Sum (BRS)
      • The Minimum Sum for a person owning a property with lease that can last till at least the age of 95
    • Full Retirement Sum (FRS)
      • 2x BRS
      • The Minimum Sum for a person who does not own a property or a person who owns a property and wishes to receive the full monthly payout.
    • Enhanced Retirement Sum(ERS)
      • 3x BRS
      • For members who wishes to receive higher monthly payout.
    For Singaporeans turning 55 in 2020, BRS is currently $90,500, which translates into FRS of $181,000 and ERS of $271,500. For the year 2017 to 2020, the increment to FRS has been consistent at +$5,000. With the release of Singapore's Budget 2020, the Minimum Sums for year 2021 and 2022 are listed as below, with subsequent years expected to keep up at a +3% annual increment for subsequent cohort.

    The table below shows the Minimum Sums required for Year 2020 to 2022, as well as the projected sum from Year 2023 to 2050, with increment of 3%, BRS rounded up to the next highest $500, and multiplying 2x and 3x for FRS and ERS respectively, assuming the format of the increment remains consistent. There will be some distortion baked-in in the form of the rounding up, but it might add a little bit of safety factor in planning so let's just roll with that.


    Accelerating CPF Minimum Sum Accumulation by leveraging on CPF
    It is possible to accelerate the accumulation of you or your loved ones' Minimum Sum by leveraging on the effects of compounding and the interest rates of CPF-OA (base of 2.5%) and CPF-SA (base of 4%).

    Remember what I have said before for effects of compounding!

    See old post: Effects of Compounding on Principle Amount

    Some things that you can do with your CPF monies:
    • Voluntary Cash Top-up to CPF account (Risk-free)
    • Voluntary Transfer of CPF-OA monies to CPF-SA (Risk-free)
    • Using CPF monies for investment with CPF Investment Scheme (CPFIS) (*not* risk-free)
    See: Link to CPF Retirement Sum Topping-up Scheme FAQ

    For those who are not comfortable with taking on risks, I do think leveraging cash top-up or CPF transfer is a good way to meet the Minimum Sum.

    So question for readers at this point:
    Is your retirement planning on track?





    Personal Sharing - Am I on track?
    Relating this to myself, I am turning 32 this year. If the increment remains consistent up till I turn 55 at 2043, I am looking at an FRS of $370,000. With my current combined CPF-OA and CPF-SA balance at about 26,000, there is a sum of $344,000 to close up on. Annualising this figure, I need to achieve an average yearly compounded growth of about $15,000. This works out to a required CAGR of 11.9%.

    In all honesty, my balls shrank I found it quite daunting when I look at the figure and that made me want to see what extent am I on or off track by.

    (Yes, the strikethrough bit is intentional for a bit of humour, though a bit coarse.)

    I did a calculation up till age 55 with some assumptions to a particular scenario:
    • CPF
      • CPF Interest rate unchanged
      • CPF Contribution rate unchanged
      • CPF Allocation rate unchanged
      • No voluntary top-ups or transfers
    • Career
      • Working up till age 55 in my current company, without any no-pay leaves or salary deduction.
      • A base case steady salary increment of 3%, with a couple promotion increment (6% instead of 3%) in between before salary peaking mid-life.
      • Yearly bonus of 1.5 months
      • Gross salary peaking mid-life at 6000, and no further changes up to age 55.
    • Expenses
      • Owning my current home and not downgrading/upgrading
      • No change to CPF-OA expenses until fully paid (Mortgage, Home Insurance)
    • Investment with CPF
      • Not making any investment with CPFIS
    It is a rather smooth-sailing (read: no retrenchment or penalties) scenario but nothing out of the ordinary, which should lead to me hitting FRS by age 50. However, I will still miss ERS by almost $90,000 when I turn 55.

    It is likely there will be a lot of deviation from this, but:
    • At least I have visibility of numbers if this is the direction I chose to take and my life decides to play out as per this particular scenario 
    • I also have visibility how the numbers will change if I make any decisions or if there is any other events that will reduce the balance in my CPF accounts (e.g. upgrading to a more expensive property, investing with CPF-OA monies).

    New Feature - Introducing Stock Database
    While still in its infancy, I am excited to try out starting this project to maintain a database of stocks and personally tracking major announcement of shares.

    You can check it up by accessing the the Database here! On the desktop website, you can also access the Database page via the tab on top, while you can also select the page from the dropdown box.

    PRIME US REIT and Lendlease Global Commercial REIT represents my initial entries to the database, with Elite Commercial REIT being the latest entry - feel free to check it out too!

    Like my post? Feel free to subscribe to my blog to look out for new posts, or share it on social medias!

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    Friday, February 14, 2020

    PRIME US REIT - Maiden Distribution, Placement, DPU and NAV Accretive Acquisition





    On 12 February 2020, PRIME US REIT requested for trading halt to announce the following:
    • Announcement of 4Q19 and FY19 results
    • Sale of new units at USD0.957 via private placement to raise USD 120m (inclusive of 20m upsize option exercised)
    • Acquisition of Park Tower in Downtown Sacramento, California for USD165.5m
    • Estimated maiden distribution of 4.11 US cent consisting of FY19 distribution and advance distribution for period 1 Jan 2020 - 20 Feb 2020 in relation to the private placement
    See following announcement on SGX:
    PSA - Please do not forget to send your W8-BEN to avoid the 30% withholding tax for your distribution!




    Performance for 4Q19 and FY19
    In my opinion, the REIT did fantastic in beating the forecast. It will be interesting to see where PRIME goes from here.

    Source: FY19Results Presentation Slide, Page 6
    • 4Q2019
      • DPU of 1.77 US cents (9% above forecast of 1.63 US cents)
      • Gross Revenue of USD33.5m (Above forecast of USD32.9m due to higher rental income and recoveries income)
      • NPI of USD22.3m for the quarter (3% above forecast of USD21.3m)
      • Income available for distribution was USD16.4m (8.8% above forecast of USD15m)
    • FY2019
      • DPU of 3.15 US cents (7.5% above forecast of 2.93 US cents)
      • Income available for distribution at USD29.2m (7.3% above forecast of  US$27.2m)
      • Gross Revenue of USD60.7m (2.2% above forecast of USD59.4m)
      • NPI of USD40.2m (2.9% above forecast of USD39m)
    FY2019's DPU of 3.15 US cents is for the period between 19 July 2019 - 31 Dec 2019. If we annualise this figure, we get 7.09 US cents. At today's closing price of USD1.040, this works out to an annualised yield of 6.8%.

    Trivia: If you are a Singapore unitholder and you subscribed to the public tranche, your annualised yield on cost for your IPO units works out to be about 8.2% - the increasing forex rate has played a part in slightly raising this too.

    Also do note the management is currently opting to receive 80% of their base fee in units and DPU will be lower if they opt to receive more or all of the base fee in cash.

    Usage of Placement Proceeds
    • ~USD115m to partially fund acquisition of Park Tower, with remainder funded by debt.
    • ~USD5m to pay for fees and expenses in connection with private placement and acquisition.
    • Balance of gross proceeds (if any) to be used for general corporate and/or working capital purposes.
    Acquisition of Park Tower
    The property in question is Park Tower in Downtown Sacramento, California. The acquisition will be USD165.5m, representing a discount of  2.7% over its valuation of USD170.1m (given as at January 2020).

    Source: Acquisition Presentation Slide, Page 8

    This will expand their portfolio to include a new market, and the enlarged portfolio also adds government into the tenant mix.


    Source: Acquisition Presentation Slide, Page 12 and 13

    They touted Downtown Sacramento as "One of US's Strongest Real Estate Market".

    Source: Acquisition Presentation Slide, Page 9
    Collier's 4Q2019 report for Sacramento seems to support this:
    • 4Q2019 Average Asking Market Rates for Downtown Class A increased by 9.1% to USD3.35/SF y-o-y.
    • It was also mentioned in the last page of report that "Space constraints Downtown remains an issue with no sign of letting up any time soon".
    Sere: Collier - 4Q2019 Office Report - Sacramento





    Gearing after Acquisition and Placement
    The aggregate gearing as at 31 December 2019 is indicated at 33.7% (Source: 4Q19 Financial Report, page 9 and FY19 Results Presentation Slide, page). Working out some calculations, the gearing should work out to 30% 33% - 33.1% after the placement and acquisition. (please correct me if I'm wrong - I'm happy to make any necessary corrections) (2020-02-17 - Made corrections to my calculation, my bad)

    Source: FY19 Results Presentation Slide, Page 7

    DPU and NAV Accretive Purchase
    Taking a look at the 4Q19 Results and the Acquisition Presentation Slides, they have announced the private placement to fund the acquisition will be accretive to DPU, and to a much lesser degree, to NAV as well. I do wish there was a rights issue to participate in instead but understand their rationale behind the private placement.

    Anyway, onto the main topic:

    Source: Acquisition Presentation Slide, Page 15
    So based on the presentation slides for the Acquisition, they are running the numbers with the following:
    • Assuming 106,045,000 new units are issued at illustrative price of USD0.943
    • Assuming raising only USD100m. The figure for overallotment being exercised is given in the footnotes.
    • Units to be issued for Management Base Fees on 31 Dec 2019 is excluded.
    (a) Units to be issued for Management Base Fees Excluded
    Based on the 4Q19 Financial Report (page 14), 1,374,720 units are to be issued for Management Base Fees. This is what they were referring to when they mention in the footnotes "Excludes units to be issued at 31 Dec 2019." While these units will not be entitled to FY2019 distribution, they will be entitled from 1 Jan 2020 onwards - that includes the advance distribution before the placement shares are issued. The changes are not meaningful and do not impact the numbers shown.

    (b) Price and Number of new units
    Illustrative Price of USD0.943 is the mean value of USD0.928 and 0.957 and rounded up from 0.9425. With 125,392,000 new units to be issued out at USD0.957, the numbers remains unchanged.

    However, since over-allotment is exercised, the Pro-forma DPU and NAV is actually 3.20 US cents (after round up from 3.196) and USD0.894 respectively, remaining unchanged to what is mentioned in the footnotes.




    Closing thoughts
    I am happy with the outperformance from forecast and the acqusition being DPU-accretive. I am only finding it a pity I was not able to try and get more units during IPO and the early days since launch.

    With the current USD/SGD exchange rate and my tiny shareholding of 1000 units, I should be getting about SGD55-56 for the distribution to be paid on 30 March 2020.

    Still keeping fingers crossed for opportunity to participate in rights issue.

    New Feature - Introducing Stock Database
    While still in its infancy, I am excited to try out starting this project to maintain a database of stocks and personally tracking major announcement of shares.

    You can check it up by accessing the the Database here! On the desktop website, you can also access the Database page via the tab on top, while you can also select the page from the dropdown box

    PRIME US REIT and Lendlease Global Commercial REIT represents my initial entries to the database (yes I just started out and not done with past events yet, haha!) - feel free to check it out too!

    Like my post? Feel free to subscribe to my blog to look out for new posts, or share it on social medias!

    Follow by Email

    Tuesday, February 11, 2020

    Wuhan coronavirus outbreak - Thoughts and Personal Impact



    (Source: itv.com)
    Contents
    1. Background and Thoughts
    2. Impact to Businesses
    3. Impact to Portfolio
    4. Impact to Holidays
    5. Under Mandatory Quarantine





    Background and Thoughts
    Unless one has been living in the caves free of civilisation and technology, one would already heard of the Covid-19 / Wuhan Coronavirus (2019-nCOV) and the escalating situation belying the outbreak. Since then, what has happened?
    • Lock-down of cities in China
    • Suspension, reduction of flight frequency, and cancellation of flights between China and other countries, including Singapore
    • Shares of companies who has business exposures to or in China, or shares exposed to retail, tourism and hospitality in particular are among those hit the hardest, depending on the degree of exposure
    • As of 7 February 2020, DORSCON raised from Yellow to Orange.
    • People in Singapore panic-buying and hoarding essentials in supermarkets, to the extent NTUC Fairprice had limited how much essentials each person can buy (See: Straits Times - FairPrice limits purchases of paper products, rice, instant noodles and vegetables amid coronavirus outbreak)
    • Global death count exceeded that of SARS outbreak
      Some are studying opportunities in the stock market amidst the situation. There are also some analysing the trend of the virus outbreak and relating to SARS outbreak back in 2003.

      See: World Of Meters - Wuhan Coronavirus Update

      I am generally interested to see the impact on the fundamentals of businesses after - the extent of the impact, and the method and time taken to recover from or mitigate this.

      From what I see:
      • If the trend of the virus outbreak reverses (i.e. confirmed cases and death drops off), that could be a starting point to observe recovery in businesses that has been negatively hit.
      • Globally, assuming the virus outbreak is successfully contained, the trend of the virus outbreak is anticipated to lag behind China and reverse some time after it does in China - some have anticipated this lag to be a month or so.
      There are talks of how the virus is vulnerable to exposure to warm weather and the sun's UV rays. By extension of that, if the world is successful in containing the virus outbreak by the time warm weather (summer or even spring) rolls about, there will be a rapid drop in new cases. This was also based on looking at the trend during SARS outbreak back in 2003.

      See:
      (back to contents)






      Impact to Businesses and Share price
      As mentioned earlier, business with exposure in China, as well as the retail, hospitality and tourism industry will be impacted to varying degrees. Correspondingly, shares of such publicly-traded companies and REITs has been affected as well.

      For example, Sasseur REIT, a REIT with a portfolio of 4 retail outlet malls all located in China, had to close all of their malls for an indefinite period. Their non-operational period is going to put a huge damper for this financial year.

      See: The New York Times - Singapore-Listed Sasseur REIT Shuts China Malls as Wuhan Virus Spreads

      On the other hand, certain stocks related to healthcare, such as Riverstone (being glove makers) and Raffles Medical Group (being in the healthcare industry) saw a spike in their share prices before dropping to only a slightly higher price before the spikes occurred.


      Share price YTD for Riverstone Holdings (Source: Yahoo! Finance)


      Share price YTD for Raffles Medical (Source: Yahoo! Finance)
      Hundreds of companies have warned of impact to 1Q20 earnings as reported on Forbes. Indeed, industries such as retail, travel, fast food and gaming will see a hit.

      See: Forbes - Over 400 Companies Have Warned of Impact Coronavirus Could Have On First Qaurter Earnings

      A lot of companies in China have started to take on bank loans to soften impact of the virus outbreak, and China's central bank has also injected cash into the banking system. Additionally, the local bureaus of the National Development and Reform Commission (NDRC), the top economic planner, and the Ministry of Industry and Information Technology (MIIT) are also compiling lists of affected companies and offering them support.

      See: Yahoo! Finance - Hundreds of Chinese firms seek billions in loans amid coronavirus outbreak


      (back to contents)

      Impact to Portfolio
      See: Portfolio Main Page

      Lendlease Global Commercial REIT understandably has had its share price dropped to 0.900 or thereabout, given its majority exposure to Somerset 313 in Singapore. I do however feel if the virus outbreak is successfully eradicated over the next several months (May/June?), they should do okay.

      For Prime US REIT, nothing much to say here - share price itself was not impacted, but the forex exposure has been a positive.

      Fu Yu Holdings saw its share price found itself correcting to 0.245 - 0.260 range for the past few days, but otherwise does seem to be holding up for now. To be honest, I am surprised it hasn't gone down further. To shed more light on its China exposure, they have a total of 8 plants, of which 4 are located in China (they recently consolidated their Shanghai operations with Suzhou). If they do get impacted by the outbreak, I hope they are able to receive help from NDRC and MIIT.

      (back to contents)



      Impact on Holidays
      (Author's note - this section is more of a ranting session for me)
      My wife and I went back to Hainan to celebrate Chinese New Year with the in-laws mid-January. This was very important to my wife as she has not been back to celebrate Chinese New Year for the past 8 years she has been in Singapore.

      What was meant to be a very joyful event has unfortunately, got marred by the outbreak.

      News broke out that the Wuhan coronavirus situation have escalated about a week and a half after touch-down. Instead of visiting relatives-in-law for Chinese New Year, or going to visit places in Haikou, Sanya or Baoting to enjoy ourselves, we confined ourselves at parents-in-law's place.

      Fortunately, it was quite safe - being a non-touristy area, we had, collectively, very few cases in the city and they are all away from the town I was staying in. The locals takes great effort to observe preventive measures (e.g. masks, social distancing). It also helps that the area is less population-dense in comparison to Singapore. It was to the extent we felt safer back in Hainan than we currently feel back here.

      To make matters worse, we were also on the afternoon of 31st January, we found news of flight frequency reduction and change of flight days from Scoot which will affect our flight. We were not sent any notifications and had to find out through browsing their website. The only reason why we caught the notification was because our relatives in Singapore have hearsay and told us to look out for announcements, prompting us to visit Scoot's website everyday.

      We had trouble calling in to Scoot on our end, but through proxy in Singapore (my brother managed to reach out to Scoot), their customer service assured us e-mails were sent to affected customers only, and since need not do anything about our flights except to keep an eye out for news.

      That very evening on the same day, at 11.50pm, we receive e-mail notification of our flight cancellation. The notification also covered news of suspension of flight effective from 4th February till 28th March and that they will refund the unused itinerary.

      Both of us being gainfully employed in Singapore, we cannot afford to be locked down. There was no option to rebook earlier flights on our existing itinerary and we had to buy new one-way tickets. Only remaining flights available were on 1st and 2nd February, costing about SGD 500+ and SGD250+ each respectively.

      (Author's Note: The whole point of us having bought the ticket to have us return back to Singapore on 4th February on the original itinerary was because the earlier dates were too expensive.)

      Attempts to reach out again to Scoot customer service for clarification fell flat and we were forced to buy the earliest available one-way flight back to Singapore on 1st February, fearing Scoot's last-minute changes again that will make any recovery impossible. We packed our luggage within an hour and after another 8 hours or so, we boarded our flight back.

      Upon return to our home back in Singapore, we took efforts to disinfect our home and ourselves. Once we were adequately rested, we reached out to Scoot and AXA.

      Here's the kicker in summary:
      • Scoot's Customer Service advised they can't do anything beyond refund of the original unused itinerary
      • AXA's Customer Service advised possibility of our circumstances not having grounds to make claim after hearing us out
      While we (both ourselves and our extended families on both side of the family trees) are safe and sound and I appreciate how Scoot has probably already tried within their means to respond to the escalation, I am disappointed of:
      • How Scoot has handled overall communications of the escalation
      • How Scoot is unable to go further than refund of the unused portion of the original itinerary
      • The possibility that AXA's travel insurance cannot cover the increased cost of the replacement ticket. Nevertheless, going through the coverage, I do feel we still have a case. We are attempting and have made our claim and keep our fingers crossed it will work out in the end.
      (back to contents)

      Under Mandatory Quarantine
      As a result of the situation escalating, we have been on Leave of Absence (mandatory quarantine) since touchdown back to Singapore. It's currently Day 11 of 14 as of completing this article.

      I guess there is a silver lining despite the unfortunate turn of events - we took this opportunity to take care of other businesses which we would otherwise have more difficulty and/or less energy or motivation to do.

      I cooked special dishes I have planned to try out for quite some time among my share of meal duties (we split our cooking duties ~50/50), and did plenty of catching up on other leisurely activities, studying the stock market and last but not least, brainstorming ideas on new blog articles and improvements to the whole blog.

      The Mrs, besides cooking her share of our meals, doing some leisurely activities and having work-from-home arrangements, had taken the opportunity to catch up on her essay required for her Bachelor's degree (she's still an undergraduate). I can't wait to see her graduate. :)

      (back to contents)

        Sunday, February 2, 2020

        Portfolio Update - January 2020

        It looks like I am ready to return to doing Portfolio updates on a monthly basis!

        See: Link to Main Portfolio page

        For a period of time, my portfolio updates had transitioned to a quarterly basis primarily due to real-life commitments (buying a new home in mid-2018, job change mid-2019, traditional marriage and wedding dinner) taking up headroom in my mind (see what I did there?), combined with lack of my participation in the market.

        Without further adieu, let's dive to the contents!
        1. Portfolio (31 January 2020)
        2. Transactions and Dividends
        3. Going Forward


        Portfolio (31 January 2020)

        Notes
        1 - Forex rate is based off indicative conversion (actual values will differ)
        2 - Alita Resources was previously known as Alliance Minerals Assets Limited.
        3 - I had written Alita Resources to 0. Unless some miracle happen to revive the company, I expect to remove from my portfolio sometime within March 2020.

        (back to top)

        Transactions and Dividends 

        (a) Transaction Summary
        • Sold my position of 3000 units in Cromwell European REIT (CEREIT)
        • With the proceeds from selling CEREIT, I topped up some capital and initiated a position of 11000 units in Fu Yu Corporation (SGX: F13)
        (b) Sale of Cromwell European REIT
        I decided to sell my position in Cromwell European REIT to lock in capital gains. This has been on my mind for quite some time even before 2020 came. The diminishing EUR/SGD conversion also contributed to my decision.

        (Source: Yahoo! Finance)
        Thanks to participation in the rights issue, I had been sitting on some capital gains for quite some time, but it was not quite high enough for me to want to lock in gains until recently. Even with the private placement done, the share price recovered gradually from bottom of 0.460 to hover above 0.500 before appreciating further to hang around 0.530 - 0.55.

        To give some perspective to the diminishing conversion rate:




      • It debuted on the market at EUR 0.55.
      • Its IPO pricing was at about SGD 0.88.
      • The conversion rate used back then was ~1.60.
      • If I converted this back to EUR at present conversion rate, I have paid EUR 0.59 for each IPO units.
      • Rights issue unit was at EUR 0.373. Given the Forex Rate of ~1.56, This was approximately SGD 0.582. Converting with present-day conversion rate, I have paid about EUR 0.388 per rights issue unit.
      • Current conversion rate is about 1.50. It had briefly drop before this number for the month of January 2020.

        • 2-Year Chart is attached below.

          2-Year Chart for EUR-SGD currency pairing. (Source: XE website)





          (c) Purchase of Fu Yu Corporation
          The locking in of gains from CEREIT meant I can diversify my positions beyond the property sector. I felt it was the right time I diversify my portfolio to take up shares in a fundamentally solid  company that is still reasonably priced, able to regularly give dividends in excess of 4%. The targets on my watchlist back then simply did not meet my criteria.
          • For example, Shares of company such as UMS among them were and still is not at or below my comfortable price to entry yet.
          • I do not think it is the right time to buy bank stocks despite being keen on getting exposure to the banks.
          It was then I chanced upon Fu Yu Corp and studied their financials as well as the announcement. I concluded that, despite the  premium in P/B back then, I would be happy to buy in and gain some exposure to the manufacturing sector.

          Unfortunately, a mistake was made. I bought in at a high as I did not see any catalysts for a sell-off to put it closer or below book value, despite its operations exposure to China. It was at a high due to the news for redevelopment of their Tuas premises. Subsequently, the Wuhan coronavirus selloff decided to rear its ugly head, so sitting on a bit of paper loss.

          See: General Announcement - Redevelopment Project at 9 Tuas Drive 1, Singapore

          Despite that, I am comfortable holding onto my position, given the plan to embark on growth via the redevelopment and their cash holdings. Should the share price drop further, I probably will open my wallet to add position barring other better opportunities.

          (d) Prime US REIT
          Previously, I wrote my intention to get Prime US REIT primarily as a means to inject capital and compounding dividends (actually, this is what I usually go for with any REIT IPO I like). Even if USD/SGD conversion goes down, I believe the quality of its yield is worth holding onto.

          See my previous posts:

          Prime's Share Price Performance since IPO Listing (Source: Yahoo! Finance)
          Currently, I am sitting on some paper gain, thanks to not only capital appreciation since listing, but also forex exposure - USD/SGD is currently ~1.364 (indicative conversion).

          I am just sitting down and... primed (forgive the bad pun) to get its maiden distribution, and waiting for opportunities to partake in rights issue. The REIT is scheduled to release its upcoming financial results on 12 February 2020, before Singapore market opens.

          See: SGX - Financial Statement and Related Announcement
            (e) Dividend Summary
            • No dividends received for the month of January 2020.
            (back to top)



              Going Forward
              With my priority this year to further build up my emergency funds, I expect to still not be adding too much position (not very disciplined of myself but I will give myself a bit more leeway given the right opportunity :P). I'll be happy enough to take my portfolio value above 10K by end of year. Even then, going back to monthly updates gives me an opportunity to improve on my analysis. This will in turn improve the quality of my contents in the future. After all, practice makes perfect.

              Aside from this and writing on Alita Resources, I am looking to do some more work on my blog. It's still too early to reveal in more details as I am still doing the planning, but it will be along the lines of enhancement to presentation of existing "permanent pages" (you see these as tabs on the desktop website) as well as having new pages where I share resources such as Excel-based calculation tools.

              Thursday, January 30, 2020

              Elite Commercial REIT IPO - Now Open!


              The IPO for Elite Commercial REIT ('Elite CREIT') is finally open for application!

              The REIT looking to raise gross proceeds of 130.9m by offering 114,686,200 units at £0.68 (SGD 1.21) each, of which 5,734,300 units available for the public offering. The timeline of the IPO is set out as below:



              Timeline
              28 Jan 2020 @ 9pm - IPO open for application
              4 Feb 2020 @ 12pm - IPO application closure
              5 Feb 2020 - Balloting of application for IPO
              6 Feb 2020 @ 2pm - Trading commences on SGX market

              You may access the prospectus from MAS OPERA via the link below.

              Elite Commercial REIT - Final Prospectus/Product Highlights

              I will do a recap based on my previous post, then expand on it in this article based on new info available.

              Previous post: Elite Commercial REIT IPO - Early Look

              Updated Summary / Recap
              • Pure-play UK-focused REIT, focusing on office assets. 
              • Market Cap of 230m at launch.
              • Portfolio consists of 97 freehold properties all located in the UK, with 100% occupancy and >99% leased to the UK Government.
              • Properties all let on co-terminus, fully repairing and insuring (triple net) leases.
              • Projected Yield of 7.1% for FY2020 and 7.2% for FY2021.
              • The yield of 7.1% for FY 2020 and 7.2% for FY 2021 is under assumption which the manager fees are in units instead of for FY2020 and FY2021. If manager fees are in 100% cash instead, the yield will be 6.3% and 6.4% respectively.
              • Management fee:  
              • Base fee of 10% of distributable income per annum.
              • Performance fee of 25% difference in DPU between the present financial year and the preceding financial year, multiplied by weighted average numbers of issued units in the financial year. This is only payable if there is growth. 
              • Sponsors will hold ~19% holdings collectively.

              Pricing of IPO / Valuation
              With the pricing out at £0.68 (SGD 1.21), this puts the P/B at ~1.03 based on the valuation of the portfolio at £319.1m. The P/B then compares favourably with commercial REITs such as CapitaCom Trust and Mapletree Commercial Trust. But do note those are Blue-Chip REITs -  the market seems happy to pay premium for stable large-cap and blue-chip REITs.

              Of note is when the portfolio was initially acquired on Nov 2018, it was then valued at £282.15m due to the ongoing Brexit situation, which would have given it a P/B of ~1.16.

              See:
              Elite Partners Capital Acquires 97 Freehold Commercial Properties in U.K. Worth £282.15 Million
              Growth
              The leases to the UK Goverment has a built-in rental escalation every 5 years based on UK Consumer Price Index (CPI). This is subject to an increase between 1% - 5% annually, giving predictable growth to distributable income.

              Beyond this? I see a need for the REIT to make property acquisition.

              Gearing / Likelihood of Rights Issue and Placement
              The gearing ratio is at 33.7% on launch. Given the small size of this REIT and the gearing limit of 45%, it does not leave much room to make acquisition by taking up more debt alone.

              As such, I see high likelihood of rights issue and/or placement in the future.

              Forex
              The public offering price of SGD1.21 puts the forex rate at 1.7794.

              Previously I mentioned Forex opportunity and risk playing a big part in evaluating whether it will be a good idea for one to participate.

              My personal opinion remain that forex is still a big uncertainty, but once again, different investors may see otherwise.

              Articles by fellow financial blogs
              Other financial bloggers have also written articles on this IPO and you can check them out here:


              What I like about this REIT
              • The management fee is aligned to the performance and hence the interest of the REIT unitholders
              • Responsibility for repairs is transferred to the tenants.
              • Solid tenancy - Tenancy virtually taken up by almost 100% UK Government.
              • Built-in rental escalations which will offer 
              • Some safety factor exercised into tenant break options scenario to bring up the yield.
              • Based on P/B of 1.03, the IPO is actually reasonably priced.
              • The initial yield is decent regardless if the manager opt to receive their fees in units or cash.

              Some of my concerns:
              • Forex - My opinion remain unchanged that forex is too much of an uncertainty. This is my biggest concern of the lot by miles. Investors who are bullish on GBP/SGD will be well-rewarded if this currency pairing goes up.





              Will I buy it?
              Given that the Forex uncertainty is a dealbreaker for me in spite of the positives. I will have to give it a miss at IPO. However, if market pessimism has reduced the price adequately, I may very well take another look at it.

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