Cory Diary : DBS Investment thoughts

As you may know, DBS has just released its results, offering another amazing reward to shareholders. DBS is currently the largest allocation in our portfolio for the local market. Here's a summary of the rewards.

Quarterly Dividend Increase - The dividend has increased by 6 cents to 60 cents per share, implying a potential annual dividend of $2.40.

Future Quarterly Special Dividend - There will be a future quarterly special dividend of 15 cents per share for 2025 ( updated 2/16 - and assuming can last three years).

Three years indeed a long time, so it's not unfair to say that the annual dividend income could work out to $3 per share. At stock price of $45, this translates to a yield of approximately about 6.7%.

In DBS's latest quarterly report, full-year earnings were approximately $11.4 billion. The sustainable regular dividend ($2.40) accounts for about 60% of earned income.

DBS' book value has shown an increasing trend despite recent bonus shares and strong dividend distributions; theoretically, around 40% could be reflected in book value growth (though how much effectively flows through remains uncertain).

Does this meet a Wonderful Business Model ? 

Cory Diary

2025-0211

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Cory Diary : Straits Times Index (STI)

Straits Times Index (STI) in Perspective

Coverage

The Straits Times Index (STI) represents the top 30 companies by market capitalization on the Singapore Exchange (SGX) Main Board that meet specific investability criteria.

Objective

The STI is designed to serve multiple purposes, including:

Creation of structured products.

Index tracking funds and exchange-traded funds (ETFs).

Use as a performance benchmark for investors.

Performance Overview

As of the latest data:

The YTD return for the STI is 18%, excluding dividends. In comparison, DBS Group Holdings has achieved a 49.5% return, excluding the impact of a 10% bonus share and dividends.

This performance indicates that investing directly in banks, particularly DBS, has yielded significantly better returns than the broader market represented by the STI this YTD.

Weightage of Index

The STI is calculated using a free-float market capitalization-weighted methodology, meaning that companies with higher market capitalizations have a greater influence on the index's performance. This approach ensures that the index accurately reflects the relative size and importance of each constituent stock within the Singaporean market.

Cory Diary

2024-12-05

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Cory Diary : Recent Trades

Banks

In recent days, bank stocks have experienced a notable rise. Following a recent round of rebalancing, I observed a directional split between DBS and OCBC. I took the opportunity to sell some DBS shares and reallocate to OCBC, which helped trim my oversized DBS allocation of over 26%. In my view, while DBS is still buoyed by share buybacks and is undergoing a CEO transition, this move serves as a mitigation strategy regarding the new CEO and aims to secure a larger dividend from OCBC. This is a defensive measure. I am still deliberating whether to allocate more fresh funds into this segment, which currently constitutes nearly 40% of my equity portfolio.

Sheng Siong

There appears to be a near-term peak based on the Relative Strength Index (RSI), alongside a positive trend in the Moving Average Convergence Divergence (MACD). Broadly speaking, recession fears seem to be subsiding. However, there has been slight awareness regarding losses in overseas operations, and yield has dropped to approximately 3.8%. Given these factors, I believe it is a prudent time to take profits while retaining only residual shares.

iBit

The recent spike in Bitcoin (BTC) has allowed me to redeploy funds into Google, which is currently under-invested in my portfolio. I have no emotional attachment to taking profits; my focus remains on prioritizing stocks with solid business fundamentals. I intend to return to iBit in the long term as I see it as an insurance component for my portfolio.

Additionally, I have made several minor adjustments in the portfolio regarding allocation and cleanup, which I have chosen not to detail here as they are relatively insignificant.

Cory Diary

2024-12-04

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Cory Diary : Review Sheng Siong Business Update

Before I started the review, I trimmed my position to right-size the allocation after the recent run-up prior to the Business Update. Personally, I maintain a sizable position in Sheng Siong to receive reasonable dividends and provide an added buffer for the stability of my portfolio. I still hold a sufficiently large position today.

Margin

Sheng Siong's gross margin has been steadily increasing, now exceeding 31.3%. The net margin is at 10.8%, which has also seen an increase. Basic EPS reached 2.6 cents last quarter. Trading at $1.60, this translates to a 6.5% earnings yield on an annualized basis, although this may be slightly lower in practice due to the earnings cycle. However, I suspect some of this could be cashless and might enjoy a premium if they decide to sell their properties. I could be wrong about this, but it won't significantly affect my outlook as I consider it a bonus.

Currently, the annualized dividend yield is about 4%. Compared to alternative investments, this is not particularly impressive since higher earnings and dividends can be found elsewhere, albeit with much higher risk. Therefore, my allocation is always managed to outperform fixed deposits or T-Bills. Since these are not capital-protected investments, there is inherent risk that must be sized appropriately for my situation.

China

On the China front, they reported a minor loss, which I find interesting. In the near term, I do not expect much of an earnings catalyst from that region. Conducting business there is likely challenging for supermarkets, and if the market turns unfavorable, it could be quite detrimental. This is something to monitor closely.

Lease back and final thought

Another point to note is the separate acquisition announcement and leaseback by DFI, which could provide a regular boost to income. Sheng Siong is one of the few rare companies in the SGX market where I can sleep well and earn something; however, we cannot become complacent.

Cory Diary

2024-11-02

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Cory Diary : Review Mapletree Industrial Reit

MIT Report 2Q & 1HFY24/25 just came out. It has been with me since Year 2018. My expectation is around flat performance. It is one of the REITs which I just need to do a quick glance through and then go away after in 5 or 10 mins. That's for me, so please DYODD.

MIT is one of the largest REIT positions I have and one of the few I continue to add this year. I blogged that most REITs are in a monitoring or re-balancing situation till next year due to rising loan costs despite rate cuts. This has to do with the lagging contract renewals while higher loan rates are still in the process of catching up relative to previous agreements years ago.

Picture 1 :DPU Checks

One of the most obvious things to check is DPU. YoY (or for MIT's current report presented HOH) and QoQ. Looks well so far. Do note QoQ is lower by -1.7%, which is not in the highlight. So it kind of fits into my expectation.

The second thing to check is the DPU trend. When I invest in REITs, the key is sustainability of DPU and being able to sleep well. This means the REIT's operation is safe or stable, as this forms our cash flow needs. We can see how high rates have affected MIT in recent years; however, overall it is still relatively good. There aren't fundamental changes in their business.

Picture 2 : DPU Trend

The third thing to look at is loan management in Picture 3. This is one of the cores of REIT management. Screw this up, and we can be in a lot of trouble. Stats look good and have stabilized somewhat. We still have to continue to monitor future reports; however, chances are the impact will be small from Picture 4. Do note that even though rate cuts have started, the latest loan cost renewal could be higher than their previous contract.

Picture 3 : Loan Management

Picture 4 : Loan Impact

The fourth aspect is REIT-specific. MIT has large USD exposure, and they have lots of DCs, not just industrial properties. This is something to be aware of when you invest in this REIT. The recent move on Japan acquisition seems good to bring loan costs down.

Lastly, I checked the rental revision. Usually, this is in stages since only a portion of the REIT is up for contract renewal. In this case, the Hi-Tech segment seems to have quite a large drop in rental rates for new leases. Last Q presents quite a different picture between renewal and new leases. It doesn't give the full picture, but it does help to be aware of possible situations to watch in future reporting. (update is probably due to exception situation)

Summary

Overall, the REIT looks well-managed and stable. There are only a few REITs that can do that well in today's environment that fits into the dividend investment concept with reasonable levels of capital protection.

The focus on rental retention could also mean less confidence in the marketplace. So whatever I have now, which I am pleased to ride with this good report, will hold for the long term but not more additions due to portfolio-level views and coming personal allocation.

Cory Diary

2024-10-31

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Cory Diary : Rising Tide Lifts All Boats

With the recent revivals of Reit how do strong reits compare with each other. This is especialy cloudy when most reits do rise in tandem. One way to look at it is on recent Rate Cut Plan events caused by Interest Rate hikes few years back using TA.

The period of back up 2 year will be a good gauging point to study. For the exercise of this, we use FCT, CICT, Ascendas, MIT and ParkwayLife Reits.

FCT, CICT and Ascendas are in Positive returns 2% ~5%. Mapletree Ind (MIT) slights negative which if we include dividends which will be good plus. Interestingly, Parkwaylife Reit has -19.25% capital loss. It also has one of the lowest yield which may not help reduce the losses much.

Something to think about Rising Tide Lifts All Boats when they start to recede.

Cory Diary

2024-0907

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Cory Diary : Ascott Trust Investment Review

Ascott Trust

Ascott Trust just released their result. The DPU reduced about 8% YoY but is only 1% if we exclude forex. The table to explain as follow. Base case 5.4% yield. Include other gains 5.7% yield at price 0.895. Price did not drop much after result which likely priced in somewhat currently.

The business is robust and growing at 11% growth. Compared to Bank which give similar dividend range. Is a good diversification from high bank allocation portfolio. High rate seems like has much lower impact to them as they can adjust their cost better. Their loan currently is not expensive which may not be always will be my assumption.

Debt management looks ok and Well staggered.

Cory Diary

2024-0726

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Cory Diary : MLT Result Review

MLT is one of the smaller allocation in the portfolio which I intent to grow when opportunity arises. However, this is on the premise that the Fundamental of the Reit, the Returns of the investment and Risks are better understood before ploughing more and more into it each time. This review is a quick and dirty fast way to get a basic understanding too.

The Reits are relative large and seen recycling of assets in their managed properties during this high rate environment period. A possibilities of DPU support too. Currently 6.6% DPU Yield.

They are also exposed to Weaker China Environment. About 20% of the Reit. But if we include HK that's about 40%. They are well diversified across asia regions.

The result has been "well managed" looking at the footnote. Good thing about large branded reit. So the question is this sustainable. Currently NAV 1.4 which looks quite align to the traded price. Will they have more recycling to go ? Possibly.

Debt Management

Low cost at 2.5%. Quite surprising. No weakening in ICR.

Added 5/12 to better reflect debt profile

Conclusion

When i first start the review, I am quite concern with the HK/China exposure. And a quick reflex is a Hold of this counter. However, the financials, the size and the stability the management provided so far do bring some comfort that there maybe enough Risk/Reward ratio to ride the dragon returns. One thing to note is not sure how effective or duration on the recycling part as I am not familiar with this but I guess this maybe something to monitor and learn.

Cory Diary

2024-05-03

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Cory Diary : Sheng Siong Result Review

No surprises. Do well as usual. Operation data excellent. High cash level helps to boost their fixed returns which is quite substantial. Their total return in my perception typically lower than banks but strong stable returns. A good diversification from portfolio heavy in other sectors. A boring and steady company.

Foreign Operation

This is something like the growth engine of the company. Which may spring surprises one day.

They are very careful on the expansion not to derail the company profitability.

Dividend

Continue to grow. Annulised 4.13%. ( Local banks currently range between 5.5%~6.5% range )

It has the basic essential attribute and can do ok in poor economic situation. 

Cory Diary

2024-05-01

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Cory Diary : Netlink BNB Trust H1 FY24 Review

Currently, the business growth is peaking and there is no major catalyst. It has a Resilient business model. And a declared 1H DPU of 2.65 cents. A slight increase.

Most key question is the DPU sustainable ? If we look at below chart it appears they are paying out slightly more than they earn. The returns probably matches on the expectation of market returns for investing in the company with little upsides and rising costs. So technically it can last for years even in losses but this also mean is not healthy for investment in critical infrastructure which the country needed in coming future.

The NetLink Group has a stated policy to distribute 100% of its cash available for

distribution on a semi-annual basis.

Net Gearing 21.5%. Do note that is different definition from Reits Gearing Ratio.

Weighted average number of units (‘000) in issue for calculation of basic and

diluted earnings per unit 3,896,971 

Cash and bank balances 178,378,000. Reduction roughly 11M from previous comparison 1H.

The business return may need to be adjusted upwards to ensure they are confident enough to invest for future needs while ensuring DPU returns align to inflation to make it viable long term. This is especially so where we need to layout key infra on long term planning.

Cory

2023-1103

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Cory Diary : Mapletree Log Trust 2Q FY23 Report

Did a quick run through of Mapletree Log Tr reporting. The result is quite strong imo in current high rate environment. DPU Quality seems good. Increase Rev, npi and distribution on the back of higher units.

Cost of borrowing low at 2.5% which is quite interesting. With added upside when there is China recovery, this stock gives me a 180 degree turn in perspective from negative view of it.

Have sold 1/3 of my position just recently before the major sell down and today report. Looks like I will be holding the remainder for quite a while. Quite happy with the Reit performance so will Hold and monitor due to many transaction of their properties.

Below ref. on coming dividend.

Cory

2023-1025

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Cory Diary : Mapletree Log Trust Review

This post will be a start of my quick review on each Reit stock I am holding for this earning season results. The intent is to be my notes.

1QFY23

FIRST QUARTER ENDED 

30 JUNE 2023

YoY 3.1% reduction in NPI reflecting in YoY 13.4% increase in borrowing cost and foreign exchange. Into the mix is host of forex considerations and financial derivatives between the YoY comparison including perp, tax write back etc. Large gap if we look into operation return is -24.1% YoY. In net, there is higher distribution due to capital returns as well that tip it into higher distribution this Q. DPU flat. Trying to go through the Quarterly report is quite daunting tasks.

To simplified my perception, the DPU looks ok though not as high as Ascendas, MIT etc. There is PP/PO and there will be slight reduction in DPU assuming all else being equal which is typically not in every new quarter reporting.

In summary this is what I got into below table.

There are enough Pro to provide conditions to manage debt and high interest rate/hike. The yield is ok based on the DPU. There could be forex risk from China & HK combined. Not saying JPN and other developing economies won't. 

The comparison QoQ and YoY, tells me the business impact stabilizing this Q compared to previous Quarters.

Finally, the DPU may move up/down due to capital gains, issue unit etc however I feel we should not see significant move down more than 3~5% with the recovery, new divestments and acquisitions. This is up to the manager to manage them to ensure we stay above. A hallmark of quality manager which they are usually. We shall monitor.

Cory

2023-0731

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Cory Diary : iReit Review

During a recent conversation on Telegram, someone asked me about the risks associated with iReit Global, a Singapore-listed Real Estate Investment Trust that invests in income-producing properties in Europe. While I had previously done some due diligence on the investment, I had put it aside and couldn't remember when. However, in today's economic climate, debt management is more critical than ever due to rising interest rates. While not all REITs have felt the full impact yet, those that have will likely need to weather the effects for several more quarters.

Fortunately, iReit Global's management has taken steps to mitigate risks, as shown in a slide shared by the company. They have identified and addressed risks such as interest rate risk, refinancing risk, and concentration risk. However, it's important to note that all investments carry some level of risk, and forex risk, in particular, may impact the REIT's earnings as it is listed on the local exchange and the SGD has appreciated by approximately 7-10%.

The COVID-19 pandemic has also impacted the real estate market, including the office segment where demand has decreased. While this may affect iReit Global's portfolio, it's important to note that their properties are located in Europe, where the situation may differ from other regions. 

Overall, iReit Global may be a suitable investment for those seeking exposure to European real estate, but it's important to consider the risks and monitor the REIT's performance regularly. It may be helpful to seek the advice of a financial professional to determine if this investment aligns with your investment goals and risk tolerance.

Cory

2023-0513

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Cory Diary : iReit Review of Annual Report

One of our building's tenants vacated in December 2022, which caused a drop in vacancy. However, we are currently in advanced discussions with a potential new tenant, so the vacancy period is expected to last another two months.

Another factor affecting our DPU is the currency exchange rate. The Singapore dollar has been strong in recent years and appears to have bottomed out, barring any unforeseen events.

Our DPU has decreased by double digits in the latest quarterly comparison, primarily due to the factors mentioned above, as well as cash retention and management fees.

We have no loan renewal issues until 2026, and our effective loan rate is currently at an incredibly low 1.8%.

Overall, the current stock price already reflects most of these factors. However, with an annualized yield of 7.7% and the possibility of higher returns after the new tenant moves in, we may see another adjustment in the next quarter. Nonetheless, even with a worst-case scenario yield of 7%, the REIT remains an attractive investment option.

Cory

2023-02-25

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Cory Diary : Mapletree Industrial Reit Info

This Reit is one of key holding in the portfolio. It has years of long term record performance. Recent quarters we have seen some tough market condition especially higher interest rate cost. The Reit just announced their result and this post will be on my read up and highlights due to my vested interests. I may provide some personal view however this is from fast read up and understanding so please dyodd. For those who read the report directly, you may want to skip my post.

DPU and DRP

Mapletree Industrial Trust Announces Distribution per Unit of 3.39 Cents for 3QFY22/23. Annualized yield of 5.5% from this week price.

There will be DRP however with 1% discount I do no plan to consider at all. However with rising market, this maybe attractive for some.

Result

Comparison with 2Q, there appears to be some cost cutting measures as expenses are reduced with reducing revenue however dpu is up slightly due to capital gain and release of some cash withheld earlier.

Completion

Completion of the first block of the new high-tech industrial redevelopment project at Kallang Way in November 2022

Summary

Can see the management working to continue alignment with shareholders. Despite rising rate, the rising cost is contained. The coming Fed report expects to see another round of rate increase though smaller. This Reit is 3rd largest allocation in my portfolio. Not going to see much surprises and upside is limited in result performance perspective.

Decided to only reduce my allocation from the recent increase back to previous size to reserve more cash for other opportunity as the Reit stock price rebounded this week. May reduce further just a little more if the Reit continues to run up. Continue to be on the high side of the portfolio allocation forming a stable base for some core dividend. The main down side is possible macro environment.

Cory

2023-0128

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Cory Diary : Ascendas 1H22 Report

Ascendas reported another set of strong results. A quick glance on below table.

10th Aug'22 is Ex-Dividend. At current trading price of $2.99 which translate to annualized yield of about 5.27%.

Adjusted NAV 2.31 (after div distribution) the premium is about 1.29 or 29% to NAV.

Debt Management

Summary as below which looks healthy.

Diversified

Ascendas has a diversified portfolio mitigating currency impact.

DPU

Initially I have concern on the quality of the DPU. But below table probably addressed it mostly by the Footnotes.

Can't ask more in this report. Diverse property, debt, dpu and premium are well covered. Is such Reits that always let me think twice on allocating my money to safer elsewhere for lesser returns.

This is a quick glance on the result but I have most of what I needed to look at.

Please DYODD.

Cory

2022-0803

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Cory Diary : Ascendas 3Q'2021 Details

That's for Period of Jul, Aug and Sept. Ascendas Portfolio below. Well diversified. Currently I am tracking around 5.0% yield.

Key Development

Completed development of Grab HQ : S$184.6M

Handover 7/30. This improves SG occupancy. 11 years rental lease. NPI Yield 6%.

Divest 2 Australia Properties : S$104.5M

This are freehold warehouses. After fees and rate, there are not significant from acquisition price. difference to mention. The smaller one only has 61.7% occupancy while the other 100%.

Key Metrics

Leverage : 37.4%, Occupancy : 91.7%, Rental Reversion : 3.7%

Covid-19 Updates

Sept'21 Mandated 2 weeks rental support for SME and specific NPOs. This can be offset from May/Jun relief. Furthermore can enjoy land tax relief.

My Brief

DPU likely intact and better in next reporting. No DPU in this quarter update due to half yearly reporting. As Ascendas is already a key part of the portfolio, will continue to maintain position. The business is as hard as rock. The compensation reasonable for such steady business.

Cory

2021-1021

Cory Diary : Trading Log 2020-0925

Long time since I last post on Trading Log. In my portfolio when I last did on this log series, I venture a bit far on the risk side for higher dividends. So sometimes I get a little nervous. Next is my build-up in SGX has pulled off in Diary of Trading Log 2020-0814. Often act as counter balance to down trend stocks.

Accordia Trust

As earlier articles, I have reduced my position 40% on this. Is still sizeable but I no longer in "fear mode" :P .  AGT is Golf Trust nevertheless with "sibei" good dividends as we wait for the final offer that since arrived. And soon it will be Ex-dividend and then finally delisted. Good returns and not bad for a stock I know so long and suffer the mental rides of the prices this year as position grew.

Ascendas Reit

Continue to build up on this position which I have cleared some time back. I am waiting for a big gap down if any before willing to average down else I will leave my cash in War chest. At around 4.5% yield, this is one counter I can afford to hold for long term and sleep well. Not sure why but I feel the last dividend seems a little low. Is it just me for an accretive deal to be given a reason that there is now more shares in the market from the last acquisition to have lower DPU ? Interesting to know.

IReit Global

I have decided to take profit 80% (CDP) with remaining 20% remains with another broker for the rights issue. I could use this to try out custodian broker for rights issue and learn something from it.

This sales put a large dent in my dividend returns so I am still in the work on mitigation mode before Year 2020 ends. The concern with this counter is the rights issue is discounted so much that I feel the management has taken investors for a ride. Furthermore the Spanish investment doesn't seem a good deal. I miss the previous CEO. I may still find opportunity to increase my position after as the they will have another chance but just smaller chance in my portfolio. Need to remind myself credibility is very important.

Mapletree Com Tr

Manage to build up some positions past few months. So now we have driven a gap of capital profits. I am still considering whether it worth to expand the allocation. This is Quality Reit in my opinion so unlikely will sell any in mid-long term. Is not everyday we can secure a position in the famous Reits at good price. So hold tight tight ....

Cromwell Reit

When it first listed I am pretty negative on the reit. I still do not have full trust in it. However it has dual currency denomination listed which I want and also act as a hedge being mainly listed in Europe. Small position so far.

With all this, I end up with much more net cash position for War Chest build up at lower theoretical dividend of-course.

Cory

2020-0925

Cory Diary : Trading Log 2020-0814

Due to Work-From-Home, Trading has increased despite very busy hours with my new born as I will managed time in-between caring for her as a relaxation instead of sleep. I will need to change this before sleeplessness becomes a norm.

SGX

Over months I have built-up a position in this counter after the large drop due to MSCI discontinuation. My thoughts is that this is financial, exchange, digital and Covid Proof. And the market over-reacted. Considering the situation in Hong Kong right now, I think MSCI moves probably not so good politically.

Below is the new interface of SGX Portfolio page. This is good improvement. Do note only track shares accredited to it. 

Yield wise, the increase in DPU is a positive move of SGX. And I am looking into their growth opportunities. Personally i feel they have many opportunities in the fintech future.

VICOM

The yesterday report of lower returns are not unexpected as the information is publicly known previously. My last position was June prior to the share splits so I did not sell at the top. I would think this may reflects on SBS Transit as well so avoided any new position on it. Both counters will be interesting to monitor.

DBS

Continue to average down on DBS as I feel the dividends able to provide is no brainer investment which is much better than my Reits. This is in-addition to the profitability. Unfortunately, MAS direction results Bank reducing their payout to 60% caught me by surprise in the sense Singapore Local bank gives me the impression that they are much more conservative in their operations compared to their oversea counterparts. So if any business is worth to lend, they would have the money.

The only risk which I have mentioned multiple times are Digital Banking Licenses which is an unknown risk which could put another big dent on Temasek earning after Keppel, Singtel, SBI, SBM, SAT, SIA ... are performing relatively poor. My list needs to be validated as I am using my untrained memory. Do the additional licenses timing be adjusted further or should it be curtailed ?

ACCORDIA GOLF TR

The long wait has finally arrived with the buy over of all the golf assets with a further price increase thanks to some key shareholders. From here, I learn that to have this folks are great. 

Relieved myself of recent increased position and some partial sale of existing holding as I am not very familiar with the entire returns process or any uneventful. The hope for remaining is we can have new surprises or my unknown that can further improve existing stakes as I will walk to the end probably as a learning experience.

The con of the buy over is that this counter provide good yield which will put a dent to my dividend plan. So I am in the process to mitigate but need to care that risk is also managed.

ASCENDAS REIT

Cleared all my positions when it run up recently. Manage to buy back in stages to build it back up after Ex-dividends. Due to this move, my dividend received has been reduced by more than 75% from this counter in exchange for capital gains. My final position is slightly smaller in shares from starting and overall I think a slight net increase compared to if I have done nothing. The experience is a not so fruitful exercise. Broker happy and I do not have loss.

The reason I buy back most of my shares are due to Ascendas is I feel is a key stake in any dividend portfolio. The yield has comes down slightly due to Covid but largely due to price increases. For later reason, one should not use yield to justify not buying back as it will be a big mistake. The counter is no longer my top position but certainly my best profit counter YTD.

There are more trades on others but I think today I have talked enough.

Cory

2020-0814