Friday, 29 April 2022

April 2022 Updates

Apr 2022
 
Local Portfolio Value after market close (excluding USD and HKD)

S$141,679.18

Purchase
 
None

Sold

4,000 units of MNACT
 
Free shares of AAL, SNDL and WISH

Dividends
 
DBS @ $216

Short-Term Transactions
  
Sold 3 x AMD Put 220429 at $85 strike with $0.82 premium. 
 
Closed early at $0.96 for 1 contract.
 
Closed early at $0.65 for 2 contracts.
 
Summary

SGD portfolio:
  
Sold 4,000 units of MNACT at $1.23. Total profit margin including dividends at about 30.6%.

Portfolio value decreased by about $6K after the sale.
 
Looking to add others when suitable opportunities arise. Was eyeing Ascendas Reit and CLCT.

Syfe Core Growth portfolio:
 
Will probably close this experimental portfolio when the value recovers. It has not been as resilient as I would like it to be.
 
A bear market is a good way to see a portfolio manager's performance. In this case Syfe Core Growth has not met my expectations.

Current TWR at -2.34%.

USD / HKD portfolio: 
 
Made use of the $0 commission from moomoo to sell the following shares won from various contests in moomoo previously:
 
Sold 1 x free share of AAL at $20.14. 
Sold 1 x free share of SNDL at $0.503.
Sold 2 x free shares of WISH at $1.81. 
 
Made a small profit of approximately US$20 in options this month.
 
What a volatile month it has been in the US market. My above options ranged wildly from ~$500 loss to $120 profit sometimes within the same night.

Since the market recovered slightly last night, I decided to close off early and took a small profit as the options have tested the strike price and in fact went ITM several times in the past few days already.
 
Afterall a bird in hand is better than two in the bushes. Capital preservation is more important.

On the other hand I am looking to add several other counters which have reached pretty attractive price levels.

Wednesday, 6 April 2022

House Keeping Completed

Sold off my MNACT yesterday at $1.23. Including dividends, a yield of ~30.6% is netted. Not too bad for a three and half years holding.

This, together with ESR Reit and Suntec Reit which were sold earlier, completed what I set out to do. The latter's recent run up is 'Ouch' though.
 
Main reason for the selling is their high gearing and the wish to reinvest into higher quality dividend counters.

Moving forward the actions will likely to be buy only unless fundamentals deteriorate for individual counters. 

Friday, 1 April 2022

Mar 2022 Update

Mar 2022
 
Local Portfolio Value after market close (excluding USD and HKD)

S$147,984.56

Purchase
 
None

Sold

None

Dividends
 
Ascendas Reit @ $805.38
CLCT @ $217.80
MLT @ $83.98
CICT @ $19.97

Total: $1,127.13

Short-Term Transactions
  
Closed early at $0.02 for 1 x SE Call 220304 at $180 strike with $1.28 premium.
 
Closed early at $0.07 for 1 x SE Call 220325 at $180 strike with $1.28 premium.
 
Sold 3 x AMD Put 220325 at $97 strike. Expired. 
 
Summary

SGD portfolio:
  
Portfolio value boosted by the buoyant local market despite no additions.

Syfe Core Growth portfolio:
 
Still seeing slight negative returns for this month although the gap has narrowed.

USD / HKD portfolio: 
 
No trades in equities for this month. 
 
Made a small profit of US$254.15 (~S$344.09) in my overall option positions in March.
 
Moving forward I will remain cautious and will remain on the side line if I don't see a clear trend ahead.

Also, the treasury yield curve has started to invert recently and this almost always precede a recession so all the more reason to be nimble.

Monday, 21 March 2022

MCT - MNACT Proposed Merger New Option - Full Cash

I have previously written about the proposed merger between Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) here.

In that post I also included some calculations to gauge which was the best option for me based on the original two options offered by MCT namely
 
Option 1: Cash + Scrip
 
Option 2: 100% Scrip
 
At that point of writing, option 1 was the best for me as it offered the highest cash value then.
 
Today, a third option has been given to MNACT unitholders which is

Option 3: 100% Cash

More details can be found here.

With option 3, MNACT unitholders can receive $1.1949 for each MNACT unit he or she possesses.

This is clearly the best option for me right now. Based on my holdings of 4,000 units of MNACT and the current MCT share price of $1.88, the return in terms of cash value for the three options are as follows.

Option 1: $4,531.57

Option 2: $4,484.18

Option 3: $4,779.60

Option 3 would give me a return of around 27.5% including dividends collected over the years. Not too bad I would say.

For now my plan is to monitor the share price of MNACT closely for the next couple of months. If the open market price goes above $1.1949 I would likely offload my MNACT units in the open market.

At current point of writing, MNACT is trading at $1.18 and testing $1.19.

MCT is trading at $1.88 after opening at $1.95.

Tuesday, 1 March 2022

Feb 2022 Update

Feb 2022
 
Local Portfolio Value after market close (excluding USD and HKD)

S$139,845.54

Purchase
 
PYPL

Sold

AAPL

Dividends
 
None

Short-Term Transactions
 
Sold 3 x SE Put 220520 at $115 strike with $0.60 premium. Closed early at $4.55.
  
Sold 1 x SE Call 220304 at $180 strike with $1.28 premium.
 
Sold 1 x SE Call 220325 at $180 strike with $1.28 premium.
 
Summary

SGD portfolio:
  
Portfolio value remains around the same as last month's, surprisingly. Thought it would take further beating. Market remains very volatile though.

Continue to monitor closely for some additions to the portfolio. Eyeing CLCT and MIT currently.

Syfe Core Growth portfolio:
 
Still seeing slight negative returns for this month. Looks like this robo advisor is not as good as it seems.

USD / HKD portfolio: 
 
Continue to add small position in PYPL and took some profit off AAPL. 
 
Made a loss in my overall option positions in February due to a mistake.
 
The 3 contracts that I sold for SE went into the money for a period and I decided to close them early to cut loss which turned out to be a bad mistake as the share price went up after I closed the positions.
 
Hopefully March will be a better month.
 
I have also switched from a long to a short position in the market as the Ukraine-Russia war situation continue to evolve.

Wednesday, 23 February 2022

Review of OCBC FY2021 Results

Final dividend declared: $0.28 per share
 
Full year dividend: $0.53 per share
 
Dividend payout date: 20th May 2022
 
Dividend yield on my cost: ~6%
 
Overall an acceptable set of results from OCBC for FY21. We can't possibly say bad to 35% increase in net profit and resumption of full year dividend to pre-Covid level right?
 
 
However delving deeper into the numbers there are a few observations that I would like to highlight as follows.
 
Net Profit
 
Propped up by the non-interest income, contributions from associates and lower allowances catered for loans.
 
Net Interest Income
 
Fell slightly which is expected due to the fall in NIM. Looking from another angle, this segment should perform better next year due to the rising interest rates and coming off from a low base this year.
 
Non-interest Income
 
Traditional cash cow from Great Eastern Holdings saves the day again with a 63% YoY increase.
 
Associates
 
A big part of the jump in overall net profit comes from the associates which contributed a 35% increase in income YoY.
 
However not much is mentioned about the associates. I dug around and managed to find some information on who are these entities from last year's annual report.

 
Lower Allowances
 
There is a 57% drop in allowances catered for FY21 as compared to FY20.
 
However looking at the details, there is a 180% and 92% increase in allowances for impaired loans in Malaysia and Greater China respectively, suggesting sustained risks in these markets.

While the Malaysia market accounts for about 9.5% of the total loans to customers by geography, a greater concern lies with the Greater China market which accounts for 25.6% of the total loans by geography.

This is something to take note of.

 
Non-performing Loan Ratio
 
Remains at 1.5%
 
Non-performing Assets
 
Increased 8% YoY
 
Capital Adequacy Ratios
 
While the business is doing fine, I also want to know whether my money is safe in the bank.
 
OCBC Common Equity Tier 1 (CET1): 15.5% (vs regulatory minimum of 6.5%)
 
OCBC Tier 1: 16% (vs regulatory minimum of 8%)
 
OCBC Total Capital Adequacy Ratio (Total CAR): 17.6% (vs regulatory minimum of 10%)

Earnings Per Share

$1.07 (FY20: $0.80)

Return On Equity

9.6% (FY20: 7.6%)

Net Asset Value Per Share

$11.46 (FY20: $10.82)
 
Conclusion
 
With the expected improvement in the net interest income coupled with continual strong performance from the non-interest income segment, I believe OCBC should report a much better set of results in the next full year report.
 
Having said that, there lies certain areas of concern where there is room for improvement.
 
Among the different subsidiaries - GEH, OCBC Malaysia, OCBC NISP and OCBC Wing Hang; all posted 17% - 20% increase in net profit except for OCBC Wing Hang Hong Kong which suffered a 19% drop in net profit YoY.

This further proved the challenges faced by OCBC in the Greater China which is their third largest market by profit contribution.
 
Also, although the EPS and ROE has improved YoY, they are still lower than the figures of FY19 (pre-Covid).
 
Earlier in the post I mentioned that this is an acceptable set of full year results for OCBC. However breaking down into Q4, their result actually pales in comparison to DBS and UOB.

The market promptly sent the share price down this morning although it has somewhat recovered by noon.
 
OCBC has brought the full year dividend back to $0.53 per share - a level last seen before Covid. This represents slightly below 50% of the net profit after tax.

OCBC has always been prudent with the dividend payout ratio over the years. They are in fact, the most prudent among the three local banks. However if the new CEO can increase this payout ratio slightly to the levels offered by DBS and UOB, I'm pretty sure it will have a corresponding effect on the share price.
 
Last but not least, the leadership acumen of Ms Helen Wong will be important in steering OCBC forward especially with her background in Greater China. I will be looking forward to her first full year results as Group CEO next year.

Overall I am satisfied with the full year performance of FY21 and I am in no hurry to sell my current holdings. In fact I will add if the opportunities arise.

Thursday, 10 February 2022

Review of CapitaLand China Trust FY2021 Results

CapitaLand China Trust (CLCT) is another counter of mine which has released their full year financial results last week. 

This is one counter whose result I am keen in following closer as I have high expectation for it in terms of growth due to the expanded mandate approved by unit holders last year.

I have ran through the results and made some observations and views as follows.
 
Summary
 
Overall great results with huge jump in incomes YoY which is expected with the expanded mandate.
 
Distribution announced is 1.80 cents per unit and will be paid out on 7th March 2022, Monday.
 
This is on top of the 2.70 cents per unit of advance distribution paid in November 2021.

Total DPU for FY2021 is 8.73 cents per unit.

Based on today's close price, yield is 7.28%.



 
The Good
 
Diversified asset class of the traditional retail malls and the new economy - business parks and logistics parks located in Tier 1 and 2 cities.
 
Clear plan laid out by the management with their 5-year acquisition growth roadmap which resonates pretty well with what I had in mind.
 

 
Record high revenue and NPI.
 
Huge jump in DI and DPU YoY (though base unit is also enlarged).
 
NAV increased to $1.54 from $1.48 YoY.
 
Interest coverage increased to 4.9 times from 3.9 times YoY.
 
With interest rates expected to rise this year, it is good to see 77% of borrowings on fixed rate.
  
Portfolio WALE by GRI of 2.2 years and 2.6 years by NLA.

This is similar to CLCT's WALE historically even when they were a pure retail play.

A short WALE can be a double edge sword but in this case, it is beneficial for CLCT as more than 80% of the logistics park leases have rental escalation of 3% - 5% built in.
 
The relatively short WALE also allows the Reit to be more nimble in handling the market dynamics of the retail segment.

All three asset classes reported higher occupancy.
 
96.3% occupancy for retail portfolio.
 
96.2% occupancy for business park portfolio with 7% positive rental reversion.
 
97.4% occupancy for logistics park portfolio with 2.7% positive rental reversion.
 
As mentioned, I particularly like that >80% of the logistics park leases have rental escalation of 3% - 5% built in. 

It is also a big plus point when the Reit manager's interest is aligned with the unit holders'.
 
The manager's management fee comprises of two components - base fee and performance fee.
 
The base fee is 0.25% per annum of the deposited properties value while the performance fee is 4% per annum of the NPI.

The manager may elect to receive the fees in cash or units or a combination of both.
 
For this FY, the manager has elected to receive $14.3 million (out of $21 million payable) in new units. In other words they share the same confidence in the prospects of the Reit as the other common unit holders.

 
Also, since the bulk of the management fees is tied to the NPI, it would do them and us good to grow the income year on year.
 
The Not So Good
 
Gearing increased from 31.8% to 37.7% YoY.
 
This is not surprising given the borrowings for the acquisitions from the past year.
 
 
Cost of debt of 2.62%. Could have been lower.
 
Negative rental reversion (-3.4%) for the retail portfolio points to the continual pressure faced in this segment.
 
This would be a major cause of concern in the past but is now somewhat mitigated by the diversification of the Reit into other asset classes which provided positive rental reversions.

This is the power of diversification - to reduce concentration risks.

Management has guided that the leasing environment for retail to continue to be competitive.

Other than that, the main risk I can see here is the political environment in China which is somewhat unpredictable and the danger is often not visible until it hits you.

Conclusion

CLCT is a Reit that has been growing organically (through AEIs) and inorganically (new acquisitions) aggressively over the past year.
 
This is the first full financial year after the mandate to diversify into other asset classes was approved by unit holders.
 
Subsequently, CLCT invested into 5 business parks and 4 logistics parks located in 12 cities in China.
 
Together with the 11 retail malls, it is not surprising that this enlarged portfolio with diversified asset classes achieved the highest gross revenue and NPI for CLCT since listing.

In fact anything less would be a damper isn't it?

Based on the closing share price of $1.20 today, CLCT is still trading at a 22% discount to its NAV.
 
With a more than 7% yield and a solid growth plan ahead, I would say this is a no brainer addition for serious income investors.
 
I last added to my holdings in August 2021 and depending on the share price, I am looking to add some in the coming days.