Portfolio Update - 2Q2019 (16 July 2019)

In the blink of an eye, 2Q2019 is done and over with. A bit of a late update to the portfolio and to be honest, there is little to see - facing a bit of a chilly winter here.

	Income Portfolio
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
1	Cromwell European REIT*	3000	0.7497	2249.1	26.26%
	Growth Portfolio
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
2	Alliance Mineral Assets (AMAL)	50000	0.123	6150	71.81%
	Cash and other Assets
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
3	Warchest	1	165	165	1.93%
	Total SGD			8564.1	100.00%

* - Conversion of EUR:SGD of 1.53.

Alliance Minerals (SGX: 40F)
Despite trying to keep it short and sweet, this is relatively lengthy for a portfolio update. I guess maybe I have a lot on my mind for Alliance Minerals (AMAL). I will write more in a separate post



It has not been a good past 2 year for holders of AMAL. After all the saga and then the Lithium bear, stock price took a nosedive over the past year. AUD is facing weakness as well, with AUD:SGD of 1:0.95. This probably contributed to balancing out the stock price of SGD 0.123 as of today - on ASX, Alliance Minerals (ASX:A40) closed at AUD 0.130.

While AMAL is currently indeed facing some company-specific challenges, the price drop is not just company-specific - the phenomenon is consistent sector-wide, with junior miners taking a bigger hit.

Despite all this, I still am a firm believer that Alliance Minerals will make it in the longer term, . Some positives can at least be taken away from the recent capital raising and the MOU for Alliance to go downstream. Based on the Managing Director (Mark Calderwood)'s update, he expects this equity capital raising to be the last AMAL will do.

Link: Alliance is done with capital raising for now (Investor-One)

Cromwell European REIT (SGX: CNNU)
I suppose this is a (tiny) silver lining - while capital appreciation is not something I am too focused about for Cromwell European REIT (CEREIT), it is still nice to see. I believe the capital flow into defensive stocks have played a part on this.



For the period 1 Jan 2019 - 1 Jul 2019, CEREIT declared distribution of 0.0205 EUR per unit. This equates to 61.5 EUR. Based on EUR:SGD conversion of 1.53, I got about 94 SGD.

As with my previous update, this goes into my tiny warchest as I find my way back into investing bit by bit (added in advance of receiving the payment, expected end-July).

My last update on CEREIT regarding its private placement.
Previous update: Portfolio Update 1Q2019

Plan going forward
I am fond of REITs and defensive stocks but as things stand now, most REITs and defensive stocks are overpriced IMO as hot money continues to pours into defensive assets and compressing their yield.

Additionally, my options to get back to investing is limited without larger capital and barring certain exceptions, I am simply not keen on paying minimum brokerage commission fee on a sum of low-thousands. My best bet is probably to keep focused on building back my savings first.

For now, I have applied for small number of shares in Prime US REIT. Hope I am successful for this.

Prime US REIT - Applied for small number of IPO shares

Background
Prime US REIT is offering 335,203,200 units (subject to overallocatement option) in its IPO at USD 0.88 (fixed at SGD 1.20 for public offering) per unit, of which the public offering is no less than 16,761,000 units. The offer will close on 15 July 2019 (Monday) at 12pm Singapore Time and they are currently scheduled to list on 19 July 2019 (Friday) at 2pm Singapore Time.

The Portfolio comprises of 11 Freehold Class A Prime U.S. Office Properties spread across the United States.

Distributions
Prime US REIT will make distributions to Unitholders on a semi-annual basis with amount calculated as at 30 June and 31 December each year.

Their distribution policy is to distribute 100% of their Annual Distributable Income for the period from the Listing Date to the end of Projection Year 2020. Thereafter, they will distribute at least 90% of its Annual Distributable Income for each financial year.

The first distribution will be for the period from Listing Date (19 July 2019) to 31 December 2019, and will be paid by the REIT Manager ("Manager") on or before 31 March 2020. The distribution to be paid is forecasted to be 4.87 US cents per unit (or its equivalent amount in SGD) for this period.

Thereafter, subsequent distributions to unitholders will be on a semi-annual basis, with the projected DPU of 6.70 US cents for Projection Year 2020. The Manager will endeavour to pay distributions no later than 90 days after the end of each distribution period.

Blogger Posts
Several prominent bloggers in the community have done extensive research and did write-ups.

1. Dr Wealth
2. Probutterfly
3. Investment Moats
4. Financial Horse
5. Singapore IPO

My subscription to the IPO / Afterthoughts
I took some time to think whether to subscribe to the IPO weighing the gains and risk such as:

• Forex exposure
• Economic conditions specific to the U.S.
• Potential equity fundraising in future for acquisition of new properties
• Opportunity to get it cheaper than subscribing to the IPO a-la Eagle Hospitality Trust

Eventually I decided to go for it, albeit just a small position of 1000 units. Should the application be successful, this will slightly increase my REIT holding. Wish me luck!

Bearing in mind their gearing is at 37%, I do agree there is a likelihood of equity fund raising in the future should they plan to acquire new properties. In the event there is a rights issue when they acquire new properties, I will most definitely be subscribing to it.

With my portfolio updates being on a quarterly basis (Jan-Mar / Apr-Jun / Jul-Sep / Oct-Dec), I am a little late to write for 2Q2019 - do expect the post to be up within the next 2 weeks. Cheers~

Cromwell European REIT - Property Acquisition and Private Placement 21-06-2019

Property Acquisition and Private Placement
Cromwell European REIT (CEREIT) went on a trading halt and announced their intent to acquire 6 new properties in France and Poland for a total of 247m EUR, which is expected to increase net initial yield by 7.4%. To that end, they have raised fund of 150m EUR for the acquisition via a private placement at 0.46 EUR per unit.

Post-placement, the share base is enlarged by 326,086,000 units (about 15%). Consequently, one can expect the distribution down the road to also drop by about 13.1% before accounting for the increase in DPU from the new properties.

You can read more about the acquisition here and here, and the private placement here and here.

Distribution for existing shareholders
To ensure fairness to existing shareholders, the distribution for period 1 Jan 2019 - 1 Jul 2019 will be paid out prior to the issuance of new shares. The stock will go ex-dividend (XD) when the market opens on 28 Jun 2019, with the distribution for the half-year is currently estimated to be 0.0205 EUR per unit (the amount is to be confirmed later on). Payment of distribution is expected on 28 Jul 2019. Comparatively, CEREIT usually gives distribution about 3 months after they have gone XD.

The next distribution will comprise of period 2 Jul 2019 - 31 Dec 2019 after issuance of new shares. Thereafter, the distribution period will continue to be semi-annual as per its usual practice.


My thoughts

• I think that it is interesting the private placement was oversubscribed, suggesting confidence from institutional investors.
• I have slight concern that my DPU will be diluted, but nothing major other than that - there is room for growth without further dilution.
• Personally I wished a second rights issue was done instead (I would definitely have subscribed again), but maybe that will not be as well-received comparing given the previous 38-for-100 rights issue - even the result came in as a surprise for me. I have previously blogged about the rights issue below:
• Cromwell European REIT - Recent Price performance and 38-for-100 Rights Issue
• Cromwell European REIT - 38-for-100 Rights Issue (Part 2)
• Cromwell European REIT - Got all the rights unit I applied for!
• In the short term, I suspect share price will experience some weakness, but not fall below the private placement price

Thanks for reading.

Closing a chapter - Moving on to a new job soon

Hi guys! Hope everyone is doing well. It has been a couple months since I last blogged - even then, this is kind of diverting from blogging about investing and stock market.

Then again, I suppose career is also a form of investing. Sometime back, I've mused about this as well.

A lot of people change job as they progress in their career. For me, the time is now.

A few weeks ago, I submitted my 1 month notice. It will be my last day towards end of first week of June 2019. Reflecting back, it was a bittersweet experience - there were many high moments, as well as hectic moments. It also felt funny as it was the first time I am resigning from a permanent position. Most importantly, I made new friends, some of which are close enough to be family with, and I learnt a crapton of things, and last but not least, meeting my wife there.

Ultimately, a few things drove my intention to move on, key among which are:

(1) Wanting to explore opportunities outside of my current role and outside of the industry
To share, I currently work as a QA Engineer in a manufacturing company (dealing mainly with oil and gas companies) and have been so for the last 3 years. Adding my initial 1.5 years in the same company in an Engineering role, that sums up to 4.5 years.

After some reflections, I felt it is time for me to continue pursue my interest in engineering. At the same time, I wanted to deal with something new (in this case, composites such as carbon fibre) and also part of my interest also and this offers me an opportunity to at least give it a shot. It is a bit of my unknown territory as I have

(2) Wanting to experience a working environment in a larger company
It is expected that in larger companies, one will be more focused on core role and I feel that is essential to develop further as an engineer. Stability and more control of my personal time comes under this consideration also (I have done a lot of OT to help the company meet deadlines). I am also keen to experience for myself how a larger company operates.

It is known working in SMEs will likely involve you putting on a few hats as part of your work - having adaptability is key. Having worked in this current company for 4.5 years, I have developed good understanding of not only my role, but also in a cross-functional manner. This had also benefited me in educating myself as an investor and trying to work with the POV of a business owner.

(3) Wanting to widen my experience beyond my current company as well
It is said that staying in a single company throughout your career can possibly limit your exposure to other ways of doing things, and it would be good to experience firsthand how other companies operate. You will be able to compare the differences and value-add to your new organisation through application of these experiences also.

(4) As usual, renumeration is also one of the reasons.
Being the man of the house now, it is all the more important I push myself to bring my income up, and as of now, I foresee not be able to continue investing at an acceptable pace without doing so. Every additional dollar saved and earned contributes significantly to meet that cause.

The first three reasons above makes it that I will not consider a counteroffer, but perhaps in the future there is still a possibility I may return to the company in the future - hard to say.

In closing:
This is closing of a chapter, only to start a new one. I am excited to start my new role. Having more time and energy (hopefully!) should let me put more time to blog more about stocks and investing, and plan my wedding dinner as well. Haha.

Portfolio Update - 1Q2019

Howdy guys - looks like the first quarter of 2019 is finally done!

	Income Portfolio
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
1	Cromwell European REIT*	3000	0.7524	2257.20	20.19%
	Growth Portfolio
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
2	Alliance Minerals Assets (AMAL)	50000	0.177	8850	79.17%
	Cash and other Assets
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
3	Warchest	1	71	71	0.00%
	Total SGD			11178.20	100.00%

* Conversion done at 1 EUR = 1.52 SGD.

Nothing much going on with my portfolio to be honest, aside from the correction hitting Alliance Minerals Assets (SGX: 40F). Makes me think of the saying by Paul Samuelson:

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

Can't say the same with the rest of the market though, what with Hyflux saga and all.



Alliance Minerals Assets Limited

While AMAL continuing to get hammered sucks, I believe that not only the company will be profitable this year, but also in the mid-term to long-term. I'm looking forward to the quarterly report expected in the month of April, which should well contrast with the previous quarter, owing to record production to start the month of January off with, re-commencing of drilling (a major factor in share price of mining companies), expected second offtake and more to come.

Cromwell European REIT

Cromwell European REIT (CEREIT) (SGX: CNNU) has done some good in recovering from low 0.4XX to its current price of 0.495 and is hanging around a bit within a few bids of this price even after going XD.

I got about SGD 71, which will go towards topping up the warchest (lol). At this point of time, the newly acquired properties have yet to make a contribution (otherwise I think I would be getting about SGD 90 or so?).

EUR to SGD has come down since the IPO and that contributed to reduced returns as well.

Only regret is not putting some more cash into the rights issue since I may have had good chance to get even more units. :P

In closing
 
It is still not the right time for me to pump significant amount of money into the market nor time to build up the warchest (short of random windfall(s) changing my plans or rights issues I guess).

I need to continue to prioritise re-building emergency funds and the wedding banquet. Paying all these off is slated to complete within first half of 2020, which is still a long way off.

Starhub cutting dividends - will it shine again?

(Source: Starhub)

Starhub has announced its FY2018 results on 14th February 2019. Besides a decline in its business, it has also announced a change in its dividends policy. Where it had given out 20c per share from FY2010 to FY2016, and then 16c per share in FY2017 and FY2018, it will be revising the dividend policy to at least 80% net profit. This is estimated to be 9c per share assuming Free Cash Flow stays constant.

Investors who have done their due diligence will have flagged out the unsustainable nature of its dividend (it was consistently above their free cash flow (FCF) - they were essentially funding part of the dividend from debt.)

With the change in its dividend policy, they will finally be giving out less dividends than their FCF. In my opinion, this is a step in the right direction and it piqued my attention. Will it shine again?

• Starhub's borrowing currently sits at $1028.5m, and perpetual capital securities at $199.9m. As a result, they need to pay out about $38m (combination of interest and payout to perpetual capital securities holders) yearly. This unfortunately means they need to further improve free cash flow such that it equals 20% of net profit or it will still remain unsustainable.
• Keeping in mind the current state of increasing interest in financing, it would be wise to de-leverage.
• For one to add position of Starhub, the company need to show at minimum, proven signs of recovery - stabilised Free Cash Flow and Revenue. The right time to enter will be if it is oversold relative to its fundamentals. Value play so to speak.

Will be monitoring Starhub closely for this year.

Note: The above should not be used as a decision to solicit buy/sell activity. Use all information at your own discretion and DYODD.

How your career is like investing in the stock market

(Source: https://www.timeshighereducation.com/books/review-a-culture-of-growth-joel-mokyr-princeton-university-press)

Your career actually shares so much similarities to investing in the stock market.

It is after all, also an investment - one where you trade in your time, existing experience and skillset (capital) for your salary, networking and further growth and development of your experience and skills.

You go to school to develop your education (reading up on investing in the stock market from the basics) and mentality (what is your target for investing into the market). The next step then entails internships and/or interviews. Your internships are akin to your initial foray into the stock market. You get a taste of your first professional experience relevant to your studies (research and/or playing with demo account).

Applying for the right jobs and then preparing for your interview after being shortlisted is similarly akin to studying market returns, screening for the right stocks to shortlist and then doing further due diligence.

When you land that job? Congratulations! That's you putting your time and skillset (capital) into your new role (becoming a shareholder) with that employer (stock).

It also goes without saying that investing your time in the right company throughout your career is crucial, to ensure you are at least adequately renumerated and developed for your time and effort (making positive and decent returns from the market). Kudos to you if you are getting above average or amongst the best renumeration (outperforming the market)! As you get your monthly paycheck, your time and effort becomes your "realised gains". And as the company grows, so do you. You get your increments and promotions (growth).

For some of you, you may end up working overseas (investing in foreign stocks and/or markets).

Given the age of globalisation, staying mobile - new role or employer every few years - has become a norm and even a necessity in some instance. Moving to new employers in your career are also more likely to pay better rates than existing employers even if your career progress is keeping pace (there are exceptions). This is akin to rolling over capital from one stock to another when your research tells you that will generate you higher returns.

When the company does well, and gives you bonuses? That's your "special dividends/bonus shares" right there!

Things are not always rosy, however. Recessions, downturns or cycles do occur as well (Market crash, bear market / corrections), as do your company facing headwind (Underperformance of the stock from rightfully realised decline in fundamentals). Perhaps for some, they are not being rightfully renumerated (market manipulation causing the stock to be priced down). Worst still, you may be retrenched (the stock being suspended). From a personal side? You may face issues which causes a need to additional spending in health or otherwise. You hedge against that by developing alternate incomes (diversification) or insuring yourself  with accident plan, life insurance or hospitalisation plan (erms... shorting? 0.o).

And at the end, when you retire - that's when you draw down on your savings and investments (exactly the same in this perspective). Your professional experience as your capital is drawn down in the form of your accumulated wealth to live out your golden years.

Ok, enough rambling - time to go to bed. Haha. It's the 6th day of Chinese New Year, and I have yet to wish my readers, so happy belated Chinese New Year to you guys! Let's huat together!

Alliance Mineral share price getting wacked - Day low of 0.177

The last few days has been harsh on the share prices of Alliance Minerals Asset Limited (SGX: 40F / ASX: A40) - dropping to a day-low of 0.177 on SGX. I am now in the red. -_-

(Source: Alliance Minerals website, https://www.allianceminerals.com.au/)

(Folks, this is one of the reasons why diversification is needed. Having mentioned that, it was a risk I was ready to accept.)

This could be attributed to the following:

• Sentiment in Lithium Sector
• Uncertainty after revision of offtake
• Outcome for ineligible holders
• Unclear ongoing shipment from Esperance

Most investors will have at least be caught by such events in one or more of their portfolio holdings. The silver lining is that it really tempers your guts to weather through this.

In some ways I am glad I have went through this when I first started trading.

While the saying "Never fall in love with a stock" always holds true, I have faith the future of Lithium is still there (especially for Alliance Mineral) and this is a short-term thing going on due to lack of information. Think about it - where's the credibility of Morgan Stanley buying into Galaxy AFTER releasing a pessimistic outlook for the sector? Pfft.

Keep in mind Alliance is a producer now, not an explorer.

I'm keeping close eye on the quarterly report to be out tonight or tomorrow morning, and then we will see how things goes.