Cory Diary : Elevated Inflation is the New Normal

Staying Elevated

Not saying Super Inflation. Not Referring to Stagflation. Simply Inflation. Yes the new normal will be much higher inflation simply due to larger than normal amount of printed money this time round due to Covid-19. Some big shots say Transitory. This could possibly leaves room for interpretation on what it really means later. There is good possibility this can be no much further increase but it can stays elevated.

From above chart, coming back to 2.x range seems not easy without causing a recession. It may mute a little but it will be relatively elevated to support businesses profit.


Oil Price

Then we look at Oil Prices below. Is not much high and unlikely to be back to Mar'20 crash figures unless market really crash again. Maybe the Shale Oil will go away which seems not likely else inflation will speed up further. They will keep OPEC in-check for next few years at least.

Regulator will be in tight spot. They can't raise the rate meaningfully even if there is as this will be counter-intuitive to businesses emerging out from Covid-19.

Reality

The Market may need to accept the reality that higher inflation for some time to come and this mean savers will be in trouble. And this is probably the better option than others.

Staying Vested in the Market is way to go as we ride through the waves.

Cory

2021-0828

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Cory Diary : Trading Log 2021-0825

SGX

One significant change this week is another reduction in SGX share after HKEX announced the launch of derivatives product on New MSCI CHINA A 50 CONNECT INDEX. This is the 2nd reduction of the stock and as blogged earlier that while is easy to make the buy decision, the sell price is not easy to determine. So the decision is to take profit while there is still sizeable gain and the yield is now below 3%. With this move fund is released for opportunity.

Tencent

Yesterday the large rebound on Chinese Tech stocks came as a surprise. Whether it will last, time will tell. So far initial positions are to buy on low. In fact Portfolio added some Tencent shares just the day before. Lucky in sense but not big enough. Hindsight is a bitch. Tencent is now on about same level as early Year 2018 peak. This is around a new support level. Whether they will go another dip is anybody guess. Who guess right will be Guru of the Week. With that, Alibaba HK, Lion HS Tech and now Tencent HK exposure into Chinese Shares.

Some folks make it big by averaging down significantly. Timing has to be really good to do so. But for this portfolio, it will be in stages which means more transaction costs.

Cory

2021-0825

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Cory Diary : Categorizing Investment Chart View

When we categories equity type in our Pie Chart, we basically shape it the way we view them and it could be bias. Due to that, it could influence us negatively if we are not careful. So the last article about the pie chart link here and right below.

This view tells us probably we have a good balance of what we want to see. With reducing bond. Increasing Growth. And Reits mainly for dividends and some growth.

Below is a new view of the investments which include CPF and Gov Securities. As blogged earlier, the plan is to have them as part of Bond contributors.

We also want to make sure to benefit from stocks that keeps our STI index kicking. Namely, Banks. As we can see from below, banks allocation is not that great despite the risk of digital banking. This is probably something that we should keep in mind to build-up when there is dip opportunity to be portfolio balance. 

Gov Security is reserve to hold for home loan emergency needs. If we take this view, there is opportunity cost we have to pay for due to low yield. If we try to invest in SSB today, is not a good place for experience investor as the interest is quite low. As current amount is sufficient, we won't see absolute increase in here in the future. 

This segment is purposeful but it will also be in the back of our mind to find a way to optimize it if risk can be managed. It is also untapped potential when loan get smaller over time or the portfolio gets bigger which lower the risk of this portion that could tap as opportunity fund in major crisis.

As for CPF, the current rule support higher SA allocation till 55 for people in specific age group. So likely will max the annual allocation allowed to be contributed for the next few years. 4% interests provide baseline low risk returns.

CHN-Growth is investment in Chinese stocks. The small segment helps this time from the market crash and have better understanding of their stocks. However it also present room if the condition is right to invest in China Market. Regulatory issue aside.

What next ? Maybe should include investment property.

Finally, to make life easier is important we Maximize our money to Work but it has to be Risk adjusted. Key takeaway, how we categories our chart matters.

Cory

2021-0822

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Cory Diary : Equity Sector Allocation

Segment of Portfolio Equity has not been review for some time. I think is time to do a quick checks using Pie Chart. The plan is to eliminate Bond long term and becomes opportunity fund.

Growth Stocks are mainly listed in US and HK Markets at 60% to 40% respectively. They are World Class Companies. Newly introduced into this year portfolio to gain exposure to foreign markets especially Tech stocks after they have registered significant gains in Year 2020. Due to that, introduction is careful. While the US is doing well, Chinese shares take a heavy beating. Mainly Alibaba. Overall Foreign shares are still quite above the waterline. The next step is to target Growth stocks to 15% of portfolio. How to do it we will have to see even though in logical sense Chinese shares are the way to go however executing it aren't easy.

REITs are Portfolio Dividend Drivers. They form the core of dividend returns. In this approach, the goal is to provide sustainable income generation capability. Most of the Reits are lower yield due to strong attributes. Within, we have Euro and UK focus. And many other REITs have exposures in US, EU, AU and Asia Regions. At the moment I have deployed some cash to Keppel DC Reit however further injection will need to monitor for a while.

SG Cores Stocks are strong local stable companies that are diversified in different segments. Bank, Exchange, Supermarket, Telecommunications and Testing Services. Each of them has their own niche of their businesses in the local economy. They are also good dividend providers especially with recent curb removed for the banks. Long term wise, Singapore Stocks are not seeing much growth with exception applies. Other than DBS for trading, I do not see the need to manage others in here.

Bond allocation has been on reduction path as CPF will be the main holding for such in which SA account is giving at least 4% returns. This has been blogged earlier on the slow shift. Still in deliberation mode whether should CPF be tracked here or just in Net Worth allocation chart. Cash generated here will be locked in CPF till Age 55. And bulk of it in RA account if the size is not much bigger than FRS requirement.

Still no coins ... 😂

Cory

2021-0816

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Cory Diary : Comparison List of Stocks

Have we ever wonder if we have a group of interested stock list. How do they perform against each other for a specific period in time ?

Stock List

• 9988 - Alibaba HK
• ACDSF - Ascendas Reit ( Paid 3.02% dividend )
• AMD
• DBS ( Paid 2.23% dividend )
• HST - Hang Seng Tech ETF
• ME8U - Mapletree Ind Reit ( Paid 3.4% dividend )
• MSFT - Microsoft ( Paid 0.3% dividend )
• TSLA - Tesla

They can be found in Cory Portfolio. In summary, SG Reit stocks do ok if we include the dividend already distributed. Champion is slow and steady Microsoft interestingly followed by DBS powering this year STI. At the bottom are Alibaba and HS Tech ETF due to Chinese Regulatory crackdown. From the pace that is going on, doesn't looks like abating.

Cory

2021-0815

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Cory Diary : Microsoft Corporation (MSFT)

When first start US stock investment this year it feels like after a major battle already won and we are going over what's left of pockets of resistance. There's nothing much to left to take. And if things turn bad, we got more to lose. Many technology stock after Year 2020 Covid have significant capital gain. This becomes a problem as there is element of FOMO ( Fear of Missing Out ) phenomenon that could left late investors carrying the elevated price.

We could wait for price correction which may not happen based on S&P500 hundred years performance. To not learn from this Year 2020 mistake of not investing in US stocks specifically Tech Stock is a non-starter from Growth and Covid perspective.

To overcome this, Microsoft fits the bill in that the stock climbs in a gentle and consistent manner. Of-course this is after some deliberation I did on the basic fundamentals of the company. ( MSFT ). Interestingly on data level, just the PE. Since then after my first lump sum investment, it has already registered almost 25% gain ytd. This is not common for a dividend investor who aren't use to seeing such growth in gains and that's exactly what we want our portfolio to have in diversification. Unfortunately I am so pre-occupied with so many things that I lack the conviction to build on it.

Nevertheless, it has grow to 1.7% of portfolio allocation. Potentially I could still build on it slowly with some injections on a portion of cash excess whenever necessary. There's few things to watch unlike Index ( country level ) which is that Microsoft still has to have an edge in their businesses.

Maybe investing is that simple. dude.

Cory

2021-0814

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Cory Diary : Keppel DC Reit

Started my awareness on Keppel DC Reit early this year. Held it for a month and then sell it on Ex-dividend. Good kopi money. Welcome to the world of speculation.

In Aug this month, I find the price has dropped quite significantly. Started to put some money in it after the price bounce on China acquisition. This time the entry evaluation is for longer term investment from growth and dividend angles. Adding some money will kickstart my curiosity with skin in the game. 

KDC has track record of it though the yield is low due to running away price I presume. However buying low is not easy to lose a trade for a company that has a big sponsor. Ok, I do get some basics info. 

Unfortunately, there is reason for the near term dip. Seems like the market knows there is private placement coming. And today it announced 2.522 ( 2 % discount ) at the high side. So basically we pay back some kopi money for it. People who is veteran in this counter probably will sense it coming.

Blogged previously that private placement (PP) is not a bad thing especially for one who is not familiar. It helps to reinforce the decision and whether we should build up investment in it. A small price to pay to Private institutions and accredited investors who are generally more savvy and skin in the game as they are paying high side of it.

Now with this all happened, time to do a deeper understanding of the stocks. The first thing to do is to get the basic direction right. NAV, DPU, Gearing, Interests Coverage and Debt cost. This are easily available in SGX website. If you are not doing this, probability of success will be much smaller.

Before PP, the interest coverage interests ratio is 12.9 ! Debt is 1.5%. This is quite striking right ? And if you think they probably gear to the max, is not right too. Gearing 36.7%. This tells us a lot on the profitability of the business. NAV is a reference in this case as I feel running DCs is more technically talent based. And the last but not least is the DPU. Depending how we count, the yield can varies. Currently I am seeing 3.6%-3.8% range. Not shabby but certainly not in the same league as many well run property Reits. However what it lacks, it makes up with growth story.

The recent acquisition in China is a break from a dry spell since the change of CEO. And this keeps me excited even though recent China crackdown do cloud them a little. The PP left some cash untapped but personally for now not so worry considering relative to the amount raised, this Reit is significantly much larger. There are other metrics but those story will be for others to play them out as it requires more attention to dive into for some.

With 5G requiring a lot of data space, and the world going more data, this could continue for some time. With the latest Rights Issue, metric will change slightly I believe. However, is this good enough for me ?

Cory

2021-0813

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Cory Diary : Equity Allocation Aug'21

Driving more focus into few areas in August. Below a glimpse shot of Equity Portfolio.

Activities

1. Adjusted to 10% Cash Investment fund of Portfolio. Continue to maintain 60k dividend plan.

2. Did some re-balancing down in DBS, Netlink, AMD and IS Asia Bond. Also cleared CICT, AIMS, OCBC & MNACT Positions

3. Some cash back into KDC as the counter is down about 16% from peak. The start of acquisition is a good step for the New CEO.

Portfolio

7 Reits ( Including iReit and Elite Com )

5 Foreign ( including HST )

5 Core ( Including SS )

2 Bonds

Looks to me in clean slate which I feel comfortable.

Evaluations

Quick Evaluation of a few counters. Koufu, VHT, ... , And whether to increase further in HST, Elite, iReit, Sheng Siong and Tesla. Decided to get more of MCT and MIT.

I wanted to dedicate some time on my evaluation methodology but a little lazy. Will do this next time. Basically the time I spend in such is not much as I prefer higher level decision making.

thanks

Cory

2021-0812

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Cory Diary : Multi-Years Compounded Performance

This is a long term tracking chart. The performance includes Dividend received however for ease of tracking, STI dividend was excluded. Therefore, will need to add about 3%+. There is already some elaborate study done on it so is quite safe to do it for aga-ration.

Annual and Multi-Years Compounded S$ Returns

One thing I like about this chart is setup one time without need for modification as is all in %. This is especially so for those who has heartburn to see absolute figures especially younger adults that just step into the adult world, and feels astronomical.

For this chart, there are two vertical scales. Left is to track annual returns. Right is to track Compounded Multi-Years Returns. They are put together because when I first have them drawn, there is good corresponding reference to each other in same scale with different chart representation. Over time the sense of different size proportion looks better if I could include Year 2008 GFC swing, and the scales differentiated.

The annual performance has been coming down over the years due to increasing portfolio size and risk management. It has stabilized for the last 7 years. Trying to breakout from it on risk perspective will be difficult mentally. However my recent venture into oversea markets may change the picture. The US stocks invested have stabilized and recent investment in HK Tech at lows (which can go lower). Moving forward it will be interesting to see how US and HK Markets exposures will do to the returns.

As the chart indicated, compounded returns multi years stood at 7.3%. Only the last figure of the years matter. As for STI, is 0.1% only. And if we include dividend it will be around 3%+. Take note this is S$ and I have written earlier that currency matters if we invest overseas due to strong S$.

Some people will be questioning why STI is so low. Relatively, STI has not been performing well. Another reason is the chart started on Year 2007 just before the Year 2008 GFC. Frankly it can be worst if it has not been held up by the banks and a few Reits this year.

Unfortunately you can't choose when you are born and so are the year we start investing. Take note past returns does not implied future returns.

Cory

2021-0809

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Cory Diary : Short History of iReit Global

Timeline

7th Aug'20 - 1H2020 DPU S$2.85 (3.16 bf. ret), NAV €0.55, 641,862,550 Shares, Gearing 39%.

7th Aug'20 - Propose Remaining stake in Spain. Stock price dropped 3 cents from S$0.67 and then slide down to S$0.575 in early Nov. A significant right issue at 39.5% discount. 

22nd Oct'20 - The acquisition was completed.

28th Oct'20 - IREIT also repaid the €32.0m loan provided by CDL.

10th Feb'21 - 2H2020 DPU S$2.18 (2.42 bf. ret), NAV €0.47, 938,963,000 Shares, Gearing 34.8%.

28th Apr'21 - Propose acquisition of 27 properties of Decathlon France.

12th May'21 Completion of acquisition expected in 3Q2021

30th Jun'21 Placement 11,372,868 Units @0.6155. Stock Price @0.635.

2nd Jul'21 Launch of PO 214 for every 1000 existing units. Closed on 14th Jul'21 PO 201,137,870 Units @0.595. Stock Price @0.635

6th Aug'21  - 1H2021 DPU S$2.30 (2.56 bf. ret), NAV €0.50, 952,302,277 Shares, Gearing 33.3%.

Stock Price 0.635.

In Review

If we are to do comparison on 1H2021/1H2020, DPU reduced by -19.3%. Per 1st Rights and 2nd Rights issue if we take the number literally is -8.3% and -2.2%. For both rights issues, they were DPU dilutive and shareholders are compensated through rights discounts and for savvy holders applying for more excess rights. The first Rights discount 39.5% on large amount of shares while the 2nd Rights issue yet include will be typical and much normal.

So If we understand the complexity of the above we would understand the result below on why iReit needs to reinstate 2020 results as this is already expected, to achieve 17.3% YOY increase instead just on larger share base basis, and not considering the discounts.

So to make it simple, how do we value it ?

Year 2020 yield is 7.2%.

Year 2021 YTD 6.9%.

However we have significantly enlarged base excluding Decathlon France exercise. Between the two dates, shareholders gained in discounts, distribution and capital. Win-Win. Now, how will 9th Aug'21 trading day think is anybody guess.

Hope this helps.

Cory

2021-0808

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Cory Diary : Trading Log 2021-0808

Do quite a number of trades recently for a number of reasons. So I thought is good time to document my thoughts as my portfolio hits ATH and want to secure my profits for some counters and some rebalancing. Take note this is from memory so I could make some errors so please DYODD as usual.

CICT

Cleared my position when the price bounced back some after Ex-Dividend. My opinion is that opening up certainly will help the malls. Considering I have positions in both FCT and MCT, I could be more focus. CICT still has possible opportunity externally but I decided not to wait. I may come back to look at it again if they work this out well. Don't get me wrong. CICT is still a stable stock to own for dividend but I am looking for more growth and I feel FCT and MCT will likely do better in the long run.

Nothing is better than a picture. This is where I should focus for longer term. Hope this explain my changes with time. Is quite obvious.

DBS Holding & OCBC Bank

With MAS finally lifting of Dividend Curb, the stock is now back to 33 cents for coming quarter. DBS price went past $31. I took the opportunity to take some profit off the table instead. One of the main reason is that the earning has comes down before allowances. I still have large holding in the bank. I also take the opportunity to clear off my OCBC balance shares the same time. A wonderful ride with banks this year with DBS registering the largest gains YTD and indirectly pushing up the STI Index.

SGX

The result of SGX is not so good. Lower rev and profit. What's surprise me is the interests return from Treasury income took a hit due to lowering interest rates. I didn't see this coming. The stock is quite promising. My investment in the stock is I have the gut feel is quite undervalued. When it hits $12, I did not sell. Frankly, I do not know when to sell because I am not ready for it. So the financial report kind of hit it on my head. I decided to take some profit off the table. Again I am still well vested in SGX and will continue to monitor a bit.

Cory

2021-0808

Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

Cory Diary : Elite Commercial Reit - GBP

For those who are not familiar, Elite Commercial Reit (MXNU) is listed in SGX traded in GBP. Initially daunted by the need to manage exchange rate and it's risk, it is now a part of Cory Portfolio that provide strong dividend yield. It does take time for Old Cory to adapt but he really do. And is even better to do it when rate is favorable. Obviously, high yield is meaningless if the business fundamental is not there as it will not be sustainable.

Fundamental

1H2021 Report

DPU 2.63 in which 0.09 advance has already Ex Div. Annualized yield of 7.85% ( @Price 0.67 )

Gearing 42.1% which is slightly high so further acquisition will need to raise fund

Cost of Debts ~1.9% is quite low.

ICR 6.4x cannot be better

Exchange Rate

GBP has been doing very well against SGD. Current 1GBP = 1.88 SGD. So people who has vested since Oct last year enjoyed further currency gains.

Short and Sweet. 

Roger Out.

Cory

2021-0804

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Cory Diary : The Crackdown of China Mega Companies

The Crackdown

China crackdown on Tech and Education sectors have seen major corrections. Investors who are Pro Chinese economy suffered the most if they are vested in share of this Chinese companies. Wonder who's next on the list ?

To give a glimpse how deep it is.

Peak of Alibaba (HK) was HK$307.40, now is HK$189 over 8 months. That's -38.5% decline.

Peak of Tencent (HK) was HK$775.50, now is HK$549.5 in just 5.5 months. Declined -29.1%.

Peak of Mei Tuan (HK) was HK$460, now is HK$215 for -53% in about 5.5 months.

On the positive aspect, the price only slipped back to mid of last year which compared to Education Sector basically close to being annihilated over 5 months. Not going into why they are doing this but certainly CCP does a better job that Trump couldn't for his entire term.

And this comes to how unbelievable it can be on state engineered collapsed of the companies. It is basically one-sided affair without any compensations to shareholders. Can US shareholders sues China ? This going to be serious if they won except that they have never approved their listing. Sounds like CLOB huh ? 

HST

What we have learned is that probably we should  diversify if we want to have China exposure. So that's what I did recently. Initiated new small positions in HST except it is still Tech. So my main worry now is how bad can it get for Tech. Will have to go slow on my purchases. Someone mentioned to wait for uptrend. That's probably a good suggestion. At the mean time, stanch believers of Chinese economies will have hard pills to swallow politically.

Cory

2021-0802

Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.