Sunday, December 31, 2017

Letter To Shareholders (9) - Performance Review 2017Q4

Performance Highlights
The stock market continue its relentless ascend - The DOW is at all time high and cryptocurrency is all the craze nowadays. You know we are in a bubble when even uncles and students are trading cryptos. Humans never learn, do they?

“Bitcoin has no underlying rate of return,” said Bogle, 88, who started the first index fund in 1976. “You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.” - Jack Bogle

Our portfolio underperformed this time, growing only 4.2% compared to 5.7% of the index. This is largely due to the lack of banks in our holdings. (greatly regret not buying OCBC/DBS last year). Nevertheless, we were able to ride on the growth of our REITs.

In the final quarter, we paid out about $600 in dividends (base on pay-date, hence excluding the massive injection from Singtel). We also became friends of SGXCafe in order to more accurately track our performance - look out for more statistics in our annual report!


Operating Highlights - Income
Overall income for the quarter was more than 50% higher compare to same period last year, making up for the 40% drop in Q1. Salary-wise, 2017Q4 was roughly equal to 2016Q1 due to shift in bonus period.

Aside from the bonus, income this quarter was pushed up by many factors:
- Passing with incentive for IPPT
- Birthday red packets from family
- Side "job" allowance
- Passive income a record for Q4.

Operating Highlights - Expenses
Our big purchase this quarter was a Lenovo laptop, which we brought after much consideration. This is our first laptop purchase after nearly 10 years (last brought in 2008 for University). It has better specs (8th Gen i5) compared to the Microsoft Surface and come in at a much lower price (with Pen, Keyboard all inclusive). Overall, we think it is a good value deal that would make our life at work easier.

Otherwise, regular expense is 20% lesser than last year. We did not spend much except for a couple of clothing/shoes brought mostly during 11-11 sales.


Acquisitions
We subscribed to CCT rights and add on to Singtel again on its continued weakness. Interestingly, we also brought Singtel during the same period last year.

We continue to believe that Singtel is currently at an attractive price and would buy more if we were not already heavily vested in it. Largest company in Singapore, 20 years dividend track record, mere 60+% payout ratio and a stable 4.8% yield.

Topping Up CPF
We seriously evaluated the possiblity of topping up our CPF to reduce tax - more specifically medisave. This is something we have been contemplating since 2014. The critical factor once again came down to our long term goal - do we want to retire after 55? Or earlier?

If your decision is to retire after 55, there is no doubt that topping up CPF is extremely attractive. In fact, we would advocate pumping as much as you can so that you can hit FRS by early 30s.

In the end, we still conclude that topping up contradict too much with our FIRE goal.

Outlook
More details to come in our Annual Report.

Saturday, December 16, 2017

Quarterly Results Review - 2017Q3

M1

Results continue to dip, but IMO it is actually not bad. There are signs of it bottoming (for now), with net profit declining 5% year on year. For 9 months it is down 13.5% (9M EPS from 12.6c to 10.9c), which seems to be in line with the stock price ($2 to $1.8). Service revenue increase 5% and mobile ARPU remain stable at $55. Mobile customers base fall due to shutdown of 2G network, and overall their market share is still stable at 25%.

They launched lots of initiatives this past quarter like malware detection solutions, nationwide IOT, smart sensors etc which would all take time to materialize. Yield at $1.8 is 6.1%, based on trailing results. The million dollar question is if they can sustain the current DPU.

Afternote: More news of first "intelligent" waste management system, cloud offering of digital startups. I might consider averaging down if I sell other position.


CapitaCommercial Trust
DPU still went up 2.6% despite selling away 3 buildings. This is the definition of a well managed REIT. Subscribed for their rights. Main catalyst now is Golden Shoe redevelopment and how they can bring Asia Square Tower 2 forward.

Afternote: For some unknown reason, CCT had a crazy run-up after the rights issue to over $1.8. The pro-forma NAV is $1.76 and 1H2017 DPU is 4.23 cents (annualized 8.46 cents). Considering a 9c DPU yearly, the yield is barely ~5%. This makes me really tempted to just sell it.

I believe it would be more fairly valued at $1.65 for a 5.5% yield.


CapitaMall Trust
A very flat quarter with regards to DPU, shopper traffic and tenants sales. Expect stable 11c DPU (5.4% yield at $2.04) until the launch of Funan in 2019.


Frasers Centrepoint Trust
Full-year DPU rose 1.2 per cent to 11.90 cents, the highest since the FCT's listing in 2006. Integration with Northpoint City North Wing is in its final stages.

My crown holding - low debt level (29%), 11 years of increasing DPU, NAV grown from 1.78 to 2.02 since I first vested in 2014, best management, super resilient. Every single quarter the results is good. What more can you ask for?

Stock price has reached an all time high (>$2.20) that sometimes, I am tempted to sell it in hope of getting it back at a lower price.


Far East Hospitality Trust
DPU falls 8% to 1.03c but the stock keeps going up - probably in anticipation of recovery next year (revenue for hotel rooms went up). There is also the acquisition of Oasis Downdown mid next year which is expected to be slightly accretive.


Sembcorp Industries
Saw a 37.7% drop in net profit due to several one off items - non-cash impairment charges and 11m of doubtful debts write offs. Marine show small profits again after losses last year.

Overall I think the company is stabilizing (Operation Profit up 11% for 9 months) and management indicate strategic review will be completed soon. NAV is up from $3.58 to $3.86.


Singtel
Only 3c special dividends (from about 14c gain) from Netlink IPO, on top of standard 0.68c (60% payout) dividends. Excluding Netlink, earnings fell 4% mainly due to intense competition in India.

Still feel confident that it should trade between $3.6 to $4.

Afternote: Fair results, down trending price? Singtel is the number 1 stock in Singapore by market cap, and deserve to at least trade at a "fair value". I strongly believe $3.6 can hold and increased my position again seeing the continued drop. Look forward to my 9.8c dividends in January next year.


Frasers Centrepoint Limited
Dividends maintained at 8.6c per year (60% payout ratio) and delivered yet another solid quarter with revenue/profit increasing 17%. NAV is now at $2.46.

Like that they are diversifying their income to now over 50% outside Singapore, and concentrating on growing their recurring income. This is the best "ETF" I ever brought.


Accordia Golf Trust
Ah! The big surprise this quarter. DPU plunged over 30% due to "unusually large return of members' deposit" despite profits and revenue going up. Hopefully this is a one time event.

To add further uncertainty, golf utilization fell ~15% as they were closed for 10 days due to typhoon in October. It does not sound good for their next quarter in view of the harsh winter ahead.

Given that I am comfortably in the money, I will hold and see.


Netlink Trust
Nothing much to say - everything according to forecast results and on track to meet target DPU.


Watchlist
Comfort Delgro - $1.9 and below would be extremely tempting.

SGX - Closer to $7.

Raffles Medical Group - Closer to $1.

Starhill Global Reit - 6.5% yield at $0.75.

Mapletree Comm Trust - Below $1.5, camping at 6% yield. NAV is $1.37.

ST Engineering - Would likely bite at 5% yield (closer to $3)

Capitaland - Look closer to $3.3 or below.

Mapletree Greater China Trust - $1.1 or when it retract to more than 7% yield.