Wednesday, 9 December 2015

2015 Portfolio Review and Projected Dividend Income for 2016


My dividend income target of S$1.4k per month has been met this year. That is a 7.7% increase y-o-y. The market value of my portfolio is hovering slightly above S$300k, which is a 7.1% drop y-o-y. My portfolio value has been ravaged by the weak performance of the telcos and REITs. Fear of the 4th new Telco, impending Fed rate hike and slowdown in China have wiped out around $20k from my portfolio in 2015. We seem to be living in an era of extreme volatility. The market sentiment is often affected by attention-grabbing headlines in the mainstream media. Brave new world...

The silver lining is the strong performance of Raffles Medical Group (RMG), SATS and Sheng Siong. I am cautiously optimistic about the growth prospects of these trio in 2016. Shareholders of RMG has the upcoming Raffles Medical Holland V to look forward to in 1H2016. Construction work on the extension to its flagship Raffles Hospital is already well underway. SATS will hopefully ride on the expansion of Changi Airport. Sheng Siong is slowly but surely building its way towards the management's target of 50 local stores within a few years while venturing gingerly into the China market. The online grocery market could be a potential growth catalyst too.

Talking about silver lining, there is another one. I was unscathed from the carnage that has been bludgeoning the O&G companies throughout most part of 2015 due to a sharp collapse in oil price. Some investors caught the proverbial 'falling knives' in SembCorp Industries, SembCorp Marine and Keppel Corp. Blue chips can be battered too!

My investment focus for 2016 will be on healthcare (aging population), logistics (e-commerce) and data centres (Internet Of Things). With regards to REITs, I will be super selective. I believe the more resilient ones are healthcare and retail REITs. Stay away from hospitality and office REITs. Lastly, I will be keeping a close eye on the banks as their valuations have gotten compelling in recent weeks. My portfolio of 18 holdings has no exposure to the finance sector at all. Hence, I would love to fill in the last 2 remaining slots of my portfolio with banks. A 20-stock portfolio is probably my threshold as I doubt I have the time and energy to manage beyond that.

Click to enlarge

Projected Dividend Income 2016
  1. Singtel: S$1, 400
  2. Starhub: S$2, 000
  3. M1: S$2, 263
  4. ST Engineering: S$480
  5. SATS: S$560
  6. Raffles Medical Group: S$165
  7. Sheng Siong: S$227.50
  8. VICOM: S$135
  9. CapitaLand Mall Trust: S$784
  10. Frasers Centrepoint Trust: S$1, 392
  11. Suntec REIT: S$600
  12. Mapletree Commercial Trust: S$160
  13. MGCCT: S$490
  14. CACHE Logistics Trust: S$1, 500
  15. Mapletree Logistics Trust: S$1, 332
  16. AIMS AMP: S$3, 300
  17. Keppel DC REIT: S$712
  18. Parkway Life REIT: S$670
Total Projected Dividends: S$18, 170
Projected Average Monthly Dividends: S$1, 514
Projected Average Daily Dividends: S$49.80
Portfolio yield: ~ 6%
Annual Dividend Income Target: $19, 200

Saturday, 5 December 2015

Dividend Knight Portfolio Update (Dec 2015)


 
Company
Shares (1000)
1.
M1
12
2.
AIMS AMP
30
3.
Starhub
10
4.
Singtel
8
5.
Frasers Centrepoint Trust
12
6.
CACHE Logistics Trust
20
7.
Mapletree Logistics Group
18
8.
SATS
4
9.
CapitaLand Mall Trust
7
10.
Raffles Medical Group
3
11.
ST Engineering
3
12.
ParkwayLife REIT
5
13.
Suntec REIT
6
14.
MGCCT
7
15.
Keppel DC REIT
10
16.
Sheng Siong
7
17.
Mapletree Commercial Trust
2
18.
VICOM
0.5


Dividends received in December 2015: S$1, 386

Total dividends received since Jan 2015: S$16, 835

Average dividends per month: S$1, 403

Average dividends per day: S$46.10


I am done with investing for 2015. The last stock which I accumulated was CACHE Logistics Trust, which happened a couple of weeks ago and I blogged about it in my previous post. Right now, I am just waiting for the knee-jerk reactions which will inevitably follow the announcement of a very possible rate hike on 16 Dec by the Fed. By the time all the knee-jerk reactions are done, I will restart my 'nibbling engine' in the new year if prices become attractive again.

The outcome of the yesterday's closely-watched OPEC meeting was not favourable to oil price, at least in the short term. The countries in OPEC decided to maintain their current output. Current oil supply far outstrips global demand. So if you are looking to get vested in the O&G industry, I would advise you to think twice and thread very carefully. The valuations of Keppel Corp and Semb Marine might look cheap. But cheap can get cheaper.

I will be blogging about the overall full-year performance of my portfolio soon. Stay tune!


Blaze of Glory
DK

Sunday, 15 November 2015

Life goes on - Accumulated CACHE Logistics Trust

The market has reacted badly on CACHE's private placement and the Paris terror attacks made sentiments worse. The private placement of units was done at $0.94, so I believe CACHE is being oversold. Today, the price reached $0.905, which is significantly lower than the private placement price. Hence, I seized this opportunity to accumulate more units.

As promised by the management, CACHE utilised part of the funds raised by the private placement to acquire a new logistics facility in Adelaide, Australia. This latest acquisition looks to be yield-accretive. It is a freehold property with 8.9% NPI yield and WALE of 4.6 years. Furthermore, the deal is a triple net lease structure with annual rental escalation built in. I like the swiftness in the management's execution. They accomplished what they promised efficiently. The gearing stays healthy at 35%.

Looking forward to full rental contributions from the newly-completed DHL facility and Australian acquisitions. Life goes on. Stay strong, France! :)



DK

Saturday, 14 November 2015

Worries about the 4th telco are overblown

A 4th Telco could potentially launch operations in the Singapore market after the spectrum-bidding is settled in 2017. Analysts have been busy looking into their crystal balls and coming up with various projections, none of them bodes well for the 3 incumbent Telcos (SingTel, Starhub and M1).
 
The general consensus is that the new entrant will seize market share away from 3 existing Telcos, thus causing them to suffer a drop in revenue and profits. A bleak and uncertain future was painted especially for Starhub and M1 as their businesses are focused in the Singapore market.
 
However, I think the fears and concerns are blown out of proportion.
 
1. Competition is not something new
The 3 local Telco have been competing against one another for many years. Pricing wars is a norm for them. The tongue-in-cheek advertisements between Singtel and Starhub never fail to amuse me before every COMEX, The IT Show. In fact, Singtel also competed against foreign behemoths in overseas markets like Telstra in Australia and Vodafone in India. Despite the stiff competition over the years, they survived and grew. When Singtel snatched the exclusive broadcasting rights of the Barclays English Premier League back in 2009, everyone thought Starhub would be in terrible state. On the contrary, Starhub kinda benefitted because the obscene amounts of money which were originally earmarked for bidding for the broadcasting rights can be re-channelled into other areas of capex. Starhub emerged stronger, raising annual dividend payout to 20 cents per share and maintaining it until today. This event not only shows the resilience of Starhub but also the aggressiveness of SingTel. SingTel, with financial muscle, is willing to do whatever it takes to win the broadcasting rights even though they barely break even by offering EPL matches on Mio TV packages back then. I will like to believe Singtel, Starhub and M1 are not sitting ducks. They are professionally run by experienced and capable minds which are able to mitigate the potential challenges posed by the new Telco. They can see the new Telco coming from a mile away, with time to prepare. 

2. No guarantee the new Telco will be a roaring success
Analysts are expecting the new Telco to eventually grab around 10% of the local market after a few years in operation. This is only a projection, an assumption, a best case scenario. The actual figure could well be lower. If the new Telco tries to entice new customers with huge discounts, dirt-cheap pricing and unlimited data plans, they will probably be making a loss initially during the promotional period. But they cannot afford to be that aggressive forever. As their customer base grows, I doubt their network can support the unlimited data usage in the long run. Upgrading the network will be capital intensive. Eventually, their pricing will normalise for the business to be viable.

3. No mass exodus of customers from M1 and Starhub
Looking at how drastic the prices of M1 and Starhub have corrected over the past few months (M1 hit another 52-week low yesterday), the market seems to be assuming that customers of the new Telco will be mainly switching from M1 and Starhub. The truth is, nobody knows for sure how consumers will react to the new Telco. Maybe most of the customers jump ship from Singtel? Maybe the loss of market share will be evenly spread out among the 3 Telcos? Who knows?

4. Population growth
We live in a digital world and the smartphone is an essential part of our lives. The pie might not be big enough for 4 telcos now, but in a few years time, the population might have grown to a size that make it a viable scenario.


DK

Tuesday, 10 November 2015

Is there really a need to invest in foreign companies in the name of geographical diversification?

This year, Singaporeans celebrate five decades of nation-building. Development, transformation and progress of this once fishing village into a modern city has been nothing short of an economic miracle. As we look forward to the next 50 years, how will SG100 be like? Will Singapore still prosper? Will Singapore still be relevant in the distant future? It is no secret that the Singapore market is lagging other major global indexes in recent years. The 2013 'penny stocks debacle' has somewhat dealt a crippling blow to the confidence of local retail investors. So naturally, people are starting to shift their funds towards foreign stocks which offer potentially better returns and diversification as there is no guarantee that a tiny island Singapore will still be around 50 years from now.

Well, in my opinion, blue-chips such as DBS, UOB, OCBC, SingTel, ST Engineering, SingPost and CapitaLand have already spread their businesses deep into other countries for years. In fact, some of them are not as 'local' as they seem although they have the term 'Sing' in their names. For instance, SingTel gets the bulk of its annual revenue from overseas subsidiaries like Bharti in India and Optus in Australia. Some REITs offer exposure to other countries too. For example, Mapletree Logistics Trust has a massive portfolio of logistics real estate spanning across Asia.

So do not fret. You can still achieve geographical diversification by being vested in these 'local' companies.



DK

Friday, 6 November 2015

Dividend Knight Portfolio Update (Nov 2015)


 
Company
Shares (1000)
1.
M1
12
2.
AIMS AMP
30
3.
Starhub
10
4.
Singtel
8
5.
Frasers Centrepoint Trust
12
6.
CACHE Logistics Trust
16
7.
Mapletree Logistics Group
18
8.
SATS
4
9.
CapitaLand Mall Trust
7
10.
Raffles Medical Group
3
11.
ST Engineering
3
12.
ParkwayLife REIT
5
13.
Suntec REIT
6
14.
MGCCT
7
15.
Keppel DC REIT
10
16.
Sheng Siong
7
17.
Mapletree Commercial Trust
2
18.
VICOM
0.5


Dividends received in November 2015: S$2, 184

Total dividends received since Jan 2015: S$15, 449

Average dividends per month: S$1, 287

Average dividends per day: S$42.30


CACHE Logistics Trust will be doing a huge private placement at a significant discount. This placement will fund a potential (hopefully yield accretive) acquisition in Australia and also lower the gearing to a reasonably healthy 35%. There will be an advanced distribution so as to be fair to existing unit-holders. I will still stay vested for now as full rental contribution from the new DHL facility will be coming in next quarter. This should help to mitigate the drop in DPU due to the dilution effect. Based on a quick 'back-of-the-envelope' calculation, DPU per quarter will drop to around 19 cents after the placement.

Global markets have stabilised and rebounded in recent weeks. Not so long ago, I still remember doomsayers mentioning the word 'recession' and an impending 'bear' market. Sometimes, people fall into the trap of 'investment paralysis' due to over analysing the price movements.

When there is a market correction, they would say , "Oh! The prices are dropping. Low can get lower! I should wait for awhile before entering the market."

When the market eventually recovered, they would say, "Oh! The prices are too high now. I have missed the boat. I should wait for the next correction."

And the vicious, investment-paralysis cycle continues......

In the meantime, prudent investors who buy on dips and hold through volatile times are collecting dividends while enjoying the chance of a potential upside when the market recovers. Better still, they can reinvest their dividends in order to compound their returns. If you seriously strive to be a long-term investor, you must have the fortitude to last through the volatile times and not be easily swayed by sensational headlines from the mass media.



Man on a mission
DK