Sept 2020 Updates

Sept 2020

Portfolio Value after market close

S$129,962.76

Wifey's Portfolio Value after market close

S$92,752.76

Purchase

None

Sold

None

Dividends

1) CapitaLand Retail China Trust (CRCT) @ $241.60

2) ESR Reit @ $66.20

3) Mapletree Logistics Trust @ $153.72

Total: $461.52

Short-Term Transactions

None

Summary

01 Sept 2020 STI Open: 2,538.55

30 Sept 2020 STI Close: 2,466.62

 

My portfolio value fell by about $3,500 this month.

And with work getting busier, there is little time for me to study the market hence I rather not trade.

STI closed lower than its opening for the month of Sept which is contrary to the prior month. 

July closed lower, August closed higher and finally September closed lower again.

This roller coaster ride is a mirror of the lack of clear direction of the local market. In other words the bulls and bears are still fighting with no clear winner yet.

If you ask me how to invest in this market, I would say follow your investment plan if you have one. I have blogged about my plan here and here.

 

If you do not have a plan, you might want to use the STI as a gauge. In my opinion at 2,500 levels, it might be a good time to start nibbling your preferred counters.

 

As always, enter in batches.

 

Three pieces of good news

 

1) Mapletree North Asia Commercial Trust (MNACT) has announced its maiden entry to the South Korean market by investing into a 50% stake in The Pinnacle Gangnam, a Grade A office in Seoul.

 

Looking at it from a long term perspective, this will further reduce its concentration in Festival Walk.

 

In the near term, this acquisition is expected to offset the temporary reduction of income from Festival Walk.

 

While the initial yield of 3.2% appears to be low, around 97% of the leases have fixed annual rental escalations of 2 to 3%.

One downside is the relative low occupancy rate of 89.6% as compared to the market average of 95%. However this might not be a huge hurdle for a manager as experienced as Mapletree.

 

Even 'steadier', the Reit manager also announced that it will waive its performance fee until the Reit's DPU exceeds 7.12 cents which is the pre-Covid amount achieved.

 

Thumb's up!

 

2) CapitaLand Commercial Trust (CCT) has finalised the merger with CMT although it's all to be expected. To be honest I didn't even bother to send in my vote.

With this finalised I am looking forward to the performance of the new entity, CICT.

3) CRCT has announced it is expanding into new sectors apart from its traditional retail sector. 

 

The Reit will include office and industrial assets as part of its portfolio diversification strategy.

 

This reduces its sector concentration risk which I feel no doubt, is driven by the effects brought on by Covid-19.

 

Indeed, Covid-19 has made many companies realised their risks and accelerated their transformation.

Many of those that failed to realise this have unfortunately been forced to close down. And these companies included many brand names familiar to all of us. We have seen this in Singapore and all over the world during this pandemic.

 

With the above announcement, I expect CRCT to follow up by announcing their maiden investment in the new sectors soon.

Just a gut feeling.

March 2020 Updates

Mar 2020

Portfolio Value after market close

S$109,576.22

Wifey's Portfolio Value after market close

S$70,896.22

Purchase

1) 3,000 shares of CRCT @ $1.33 (Added the same for wifey's portfolio)

2) 300 shares of DBS @ $23.90 (Added the same for wifey's portfolio)

3) 300 shares of DBS @ $19.78 (Added the same for wifey's portfolio)

4) 500 shares of OCBC @ $9.20 (Added the same for wifey's portfolio)

Sold

1) 40,000 shares of Japfa @ $0.62

Dividends

1) Ascendas REIT @ $175.35

2) Mapletree Logistic Trust @ $102.53 

3) ESR REIT @ $85.50

4) Mapletree North Asia Commercial Trust (MNACT) @ $66.84

5) CapitaLand Retail China Trust (CRCT) @ $180.50

Short-Term Transactions

1) Intraday trade on 5,000 units of DLC SG5xShort DBS

2) Intraday trade on 10,000 units of DLC SG5xShort DBS

3) Weekly trade on 5,000 units of Ascendas Reit

Summary

Received a total of $610.72 of dividends this month. 

Portfolio value dropped by $20.9k when compared to last month's portfolio value of $130,500.85. The decrease is of course driven by the downturn of the market caused by COVID-19 and partially offset by the capital injection of around $21.7k in DBS, OCBC and CRCT.

I have added another batch of CRCT to my long term portfolio at $1.33.

I have also made my maiden entrance into DBS which is a counter I have always wanted to own.

So far I have bought in two batches of 300 shares each.

As for OCBC, it is a counter I have owned previously so this is a return of one of my favourite counters.

Letting it go back then was one of those decisions where I regretted so I'm glad the chance came for me to own it again.

So far I have bought 500 shares as a first batch.

This is one of my busiest months in the market after a long time.

If you have been following my previous update posts you will know that I hardly trade at all. The total no. of trades I did for last year can be counted by the fingers of my hands.

I'm still more of a long term investor than a trader.

So for this month, I sold off my total holdings of Japfa at $0.62. Average cost price is $0.59. 

I held it for slightly over a year. Decided to sell it to take profit since the market situation is worsening and this is not my core holding after all. 

Funds collected will be used for some short term trading and investment for my long term portfolio. 

I've also bought 5,000 shares of Ascendas Reit at $2.71 for a short term trade and sold them at $2.79 after a week for some small profit.

This month also marked my first foray into Daily Leverage Certificates (DLCs). It wasn't a pleasant virgin experience. See below for more.

COVID-19 and My Investment Strategy

Since February this year, I have amassed about $40k of funds to be used for my long term portfolio.

Beginning from last month, I have observed that the share price of a number of counters in my watch list are starting to approach my target price.

With a long watch list but limited buying power, I decided to add another selection parameter to help me narrow down the counters to buy and focus my fire power on.

This additional selection parameter is in the form of a calculation and it indeed helped me to narrow down on the counters to buy during this period to three and they are DBS, OCBC and CRCT.

So far I have made my purchases in these 3 counters in batches.

Perhaps I will write a separate post on this calculation and how I narrowed down to the above 3 counters.

Buying in batches is always my to-go approach as I'm not very good in catching the bottom.

Time in the market is always better than timing the market for me.

And also to quote something from Michael Batnick when he was asked about when is the right time to buy stocks: "It doesn't matter when you buy, only that you buy."

Target Price

Below are my target prices (TP) for the three identified counters and the reasons for setting the prices.

While the term is called 'Target Price', it is by no means a static figure to me. Rather, I treat it as an area, a fluid figure to adjust according to the present trend when the target price is hit.

For example, I had wanted to add more CRCT at $1.37. But eventually I added it at $1.33 as the down trend was going strong then.

Last but not least as I always said, do not blindly follow.

Daily Leverage Certificates

Made my first foray into Daily Leverage Certificates (DLCs) when I traded DLC SG5xShort DBS twice.

Made a loss of about $3.9K in total.

I can probably break down the reasons for the loss to bad luck, personal factor and external human factor.

Bad luck because the market, especially DBS share price has been dropping steeply for the one week before I entered my first DLC trade. However on the very day I entered, dear Donald Trump decided to make a certain tweet that made the market rebound that day.

I promptly cut loss. And the market resumed the drop the next day.

For the 2nd trade, I was actually looking at some gains in the morning until the bank stocks suddenly moved up sharply and quickly around noon. There seems to be no reason for the sudden uptrend. Probably only the insiders know.

I decided to hold on till the later part of the day as the chart suggested the bears and bulls are still fighting.

However when I finally cut loss around 4.15 pm, the share price began to drop again. I could have lessen my loss if I have held on for a few more minutes.

Sometimes it seems like someone or something is plotting against every of my moves.

Personal factor reason is because I did not monitor the market closely enough and my trading skills have lots of room for improvement. No excuses here.

External human factor is because according to my MBKE broker, the DLCs can only be traded via them (the brokers) as it is a volatile product.

This partly contributed to my loss due to the higher commission involved and more importantly, trading through the broker is less nimble as compared to making the trade myself using my online account.

I have checked with my other brokerages, apparently they did not mention having to trade DLCs through the broker.

Another important factor that will turn your winning trade into loss is the bid-ask spread.

I have observed that the spread for some DLCs can be rather wide at times and it's not easy to enter at a favourable price.

Despite the bad first start, I won't rule out trading DLCs again especially if a good setup is present.

However I won't be using my MBKE account for this product. I very much prefer to do it on my own online.

Anyway my focus is still building up my long term income portfolio.

Sustainability

While I have an emergency fund to sustain myself and my family for about two years, I can't rest on my laurels as everything so far points to a protracted downturn in the economy.

Hence this pot of cash is one that won't be touched for my personal investment no matter how tempting the market has becomes.

This is something I have to constantly remind myself of recently.

Already I can feel my business slowing down in these two months. No. of enquiries have become lesser. Potential projects seem to be taking longer to be confirmed.

The company cash flow is still healthy but I can't help but become more concerned as the days go by.

I am still evaluating how will the two rounds of government stimulus help businesses like mine. Hopefully I can get some assistance from them.

Meanwhile I am making use of this period to get some certification for my company and also attend some training courses listed in Skillsconnect.

Portfolio Page of this Blog

Lastly I have also updated the Portfolio page of this blog. I realised I have been getting quite a number of page views on the portfolio page but the portfolio displayed was still that of 2016's.

My apologies for that.

I have now uploaded the latest year end portfolio (2019 end) for the readers' reference. Moving forward I will try to keep the page updated yearly.

I am also thinking of adding some graphs to depict the yearly performances such as portfolio value and dividends received.

Cheers.

CRCT-MNACT REIT Maybe?

I was thinking last night that with the flurry of M&A among REITs recently, would we see a merger between CapitaLand Retail China Trust (CRCT) and Mapletree North Asia Commercial Trust (MNACT)?

Afterall CapitaLand bought over Ascendas-Singbridge not too long ago.

The portfolio of CRCT and MNACT are similar in nature to an extent. They are synergistic geographically and in the type of properties - retail. 

Some basic metrics of both counters

CRCT

Market Cap (based on $1.53 share price) : $1.84 B

No. of Properties: 13 (China) 

Property Value: $3.8 B

MNACT 

Market Cap (based on $1.16 share price): $3.7 B

No. of Properties: 9 (China, HK, Japan) 

Property Value: $7.6 B

I couldn't find any information on market capitalisation from CRCT's report but a quick calculation got me $1.84 B. 

So if a merger does occur, we are looking at a REIT with about $5.54 B market capitalisation and 22 properties in North East Asia worth $11.4 B thereabout.

I also did a quick comparison against some of the REITs among my portfolio for curiosity sake. 

MLT Market Cap: $6.15 B

CCT Market Cap: $7.9 B

Suntec Market Cap: $5.2 B

Anyway the above is just a wild thought on a boring night. Just read and forget.

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On a side note, I drove my bro to a certain bubble tea shop just now.

Despite being a Tuesday afternoon, I saw streams of youngsters going into the shop.

That got me curious. After that I found out this shop is actually a franchise by a local mini celebrity. And a really famous singer once said this is his favourite tea shop in Taiwan*. 

(Not going to name names as I don't want to advertise for them and more importantly, I seriously find the tea so so only. Haha.. But some of you might recognise from this bottle.)

The busybody me did a quick back-of-the-envelope calculations. 

Their tea costs between $4 - $7. And they already sold nearly 500 cups by 2 pm. 

Basing on $5 a cup and a sales of 1,000 cups per day, their annual revenue is easily $1.8 M. 

With a 50% margin (easily for a F&B product like bubble tea), they are earning close to a million every year. 

Cool.

Lessons learnt: 

1) Power of networking

Especially if you know famous people. 

2) Power of celebrity endorsement

Just a simple one sentence remark by that famous singer can make this shop people mountain people sea.

Really power.

* Edited some information. 

January 2020 Updates

Jan 2020

Portfolio Value after market close: S$130,401.20

Wifey's Portfolio Value after market close: S$64,721.20

Purchase: 

1) CapitaLand Retail China Trust (CRCT), 5,000 shares @ $1.53
2) Japfa, accepted allocation of 3,000 rights and applied for another 7,000 excess

Sold: None

Dividends: SingTel @ $340

Portfolio value increased to ~$130K this month with the addition of the 5,000 shares of CRCT. This is one of the counters in my watch list and when its share price fell to my comfortable level, I proceeded to queue and managed to get it at $1.53.

 

Have written a short piece on this in the previous post.

 

Have decided to take up my Japfa allocation and apply for some excess as I view this as a nice opportunity to increase my holdings at a lower price than market.

There are a few other counters with price getting near to my TP. Will be watching closely.

My focus this year remains non-REITs, particularly banks, as part of my portfolio balancing.

 

Share price of DBS has fallen by quite a bit today before recovering slightly in the last two hours. However it is still above $25 which is still too high in my opinion.

First Purchase of the Year

Today STI closed 1.8% down. Barely catastrophic if you ask me. However the mini bloodbath presented some opportunities for entry. 

While share price of some counters in my watchlist remained quite resilient, some dropped and started to recover during mid day like the banks. For some, the price dropped and hovered at that level and that gave me some food for thought. 

Made my first purchase of the year today when the opportunity arose. CapitaLand Retail China Trust (CRCT) was trading at $1.54 / $1.55. I queued at $1.53 and managed to get it in the last hour. It might not be the bottom price but it is comfortable enough for me. Slightly below NAV with >7% forward yield. 

Just not my style to go all in in one go. Prefering to enter batch by batch. Hence the same for this counter. 

I don't know whether this is the start of a black swan or just a temporary response to the  Wuhan coronavirus outbreak. My feel is leaning towards the latter. 

If the price drops further I might buy in again. 

Time in the market is better for me than timing the market simply because I'm real bad at the latter.

Crisis = Opportunities