Wednesday, 2 November 2016

Dividend Knight Income Portfolio Update (Oct 2016) - Dark Clouds Looming? Bring An Umbrella.


No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
Starhub
10, 000
3.
Singtel
8, 000
4.
DBS
2, 073
5.
Frasers Centrepoint Trust
15, 000
6.
Mapletree Logistics Trust
25, 398
7.
OCBC
3, 040
8.
Raffles Medical Group
15, 094
9.
SATS
4, 000
10.
CapitaLand Mall Trust
7, 000
11.
ParkwayLife REIT
5, 000
12.
MGCCT
12, 000
13.
Keppel DC REIT
10, 000
14.
Suntec REIT
6, 000
15.
Ascendas REIT
3, 000
16.
UOB
400
17.
Sheng Siong
7, 000
18.
M1
3, 000
19.
Mapletree Commercial Trust
100


Dividends received in October 2016: NIL
 
Total dividends received since Jan 2016: S$12, 030.46
 
Average dividends per month: S$1, 002.53
 
Average dividends per day: S$32.96
 
Total portfolio market value: S$352, 884
 
Unrealised Profits: S$48, 665
 
 
Investment Actions
In October, I shifted some funds from Raffles Medical Group (RMG) to M1. In my opinion, RMG's multi-year expansion plans require a long gestation period. M1 had been sold down heavily in recent days which I think is unwarranted even considering its lacklustre quarterly result.
 
S-REITs
On the S-REITs front, I have applied for Keppel DC REIT's preferential offer (PO) although the offer price was not exactly attractive. Fair, but not overly appealing. Nevertheless, I am still cautiously optimistic on its DPU growth over the next few years. The funds raised from the PO is used for a yield-accretive acquisition in Singapore. Data centre demand is still greater than supply and the growth in data consumption is set to continue. Lastly, the freehold German data centre under construction should boost the DPU after its completion in 2018.

The other REITs (retail, commercial, logistics, healthcare) which I am vested in have produced a resilient but less than stellar quarter. Their distribution per unit (DPU) were stable but there were signs of slight weakening in occupancy rate and rental reversions. Well, I guess this set of results could be as good as it gets since dark clouds are already looming over Singapore's economy as shown by a spate of retrenchments and 'right-sizing' in certain blue-chips (Keppel Corp, SembCorp & SPH).


Banks
Thankfully, there were no nasty earnings shocks from the three local banks' latest results. It seems that the feared contagion expected after the Swiber collapse has not materialised for now. The provisions for NPLs from the O&G sector did not balloon out of control. Many O&G companies are actively engaging bondholders and re-structuring their bonds. A promising sign.

The major acquisition of ANZ bank's Asia private banking business should be a rewarding long-term move for DBS. Private wealth management still has huge room to grow since Asia is still minting millionaires & billionaires at a relatively faster pace than other regions in the world. Lots of second-generation wealth sloshing around. As one of the largest bank in Southeast Asia, it makes sense for DBS to expand into other Asian countries while carrying the reputable Singapore brand. Trust is critical in wealth management and the Singapore brand travels well among the wealthy Chinese. Most importantly, scale is crucial for private banking due to a surge in compliance costs related to stringent anti-money laundering regulations, tax regulations etc etc. The bank needs to spread this cost among more fee-generating clients. 

 

People can talk about strategy all they want, but what really matters is resilience
DK