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My Singapore Stock Portfolio End August 2011

09.01.2011 · Posted in Dividend Stocks, Singapore

I have received some requests from users to post my portfolio and here it is! I thought it would be good to summarize my stock portfolio holdings on a monthly basis. While I don’t think it is a portfolio for everyone to emulate since everybody has got their own financial positions, it is a good guide for those interested in building safe, growing Passive Income Portfolio.

My portfolio as a whole generates an estimated 6.5-7% dividend yield annually. The current basket of stocks include some higher dividend payers like Starhub and Singpost and also dividend growers such as Singtel and SMRT. It is designed to beat inflation easily and provide some growth as well. The portfolio is also resilient and performed quite well against the STI in the recent stock market turmoil.

For this first time, I will also list out a short summary of the stocks I invested in.

img_august2011portfolio

Real Estate Investment Trusts (REITS)

Industrial

Ascendas – Strong sponsor, largest industrial REIT. It also has a decent dividend yield of approximately 6%

Cache – Logisitcs REIT with high yield, but also long lease terms, so growth may be slower but stable

Cambridge – Independent REIT, high yields of about 8%, just a diversifier for the high yields, it should not be a significant part of the portfolio

Mapletree Industrial – Strong sponsor, good assets

Mapletree Logistics – Strong sponsor, long lease terms similar to Cache

 

Retail

CapitalMall Trust – Largest S-REIT with well run malls, strong management team, includes some of the best shopping malls in Singapore i.e. Tampines, Bugis, Bishan, Funan

Fraser Centerpoint Trust – Good REIT with suburban malls, more resilient in downturn as suburban traffic is stable. Malls include Causeway Point, North Point

Mapletree Commercial – Hybrid of Retail and office assets, main asset being Vivocity. Most bullish REIT with significant DPU upside as rentals are below average for the location

Starhill – A bit of a gamble with Wisma Atria assets, Starhill Gallery in KL and Japan malls. Just included it for some exposure to Asian shopping malls ex Singapore




Hospitality

Ascott REIT – I like the exposure to quality hotels and residences around the world, good proxy for tourism boom globally. Currently also valued below NAV and decent yields of approx 7%

 

Healthcare

Parkway Life REIT – Ultra defensive REIT with healthcare assets like Gleneagles, Pantai Hospital in Singapore, Malaysia and more. Guaranteed rental increases, can’t get better than that. However, likely to remain at higher valuations, should buy on stock market weakness.

First REIT – Similar to Parkway Life, yields are higher at about 8%, focus on Indonesia and Singapore healthcare assets. Also very defensive, buy on weakness.

 

Telecommunications

Singtel – Globally diversified, large cash position and cash flow. Stable dividends and like to give out bonus dividends every now and then.

Starhub – High dividend yield at 7%, Starhub is a huge cash cow. However, dividend growth seems unlikely in the short term.

 

Infrastructure

SMRT – Monopoly in NS, EW MRT lines, stable earnings from transport fares and rental. Highly defensive and good dividend growth prospects, *management aims to provide growing dividends*

Keppel Green – Little known trust focused on green assets like incinerators and wastewater. Stable revenue streams, high dividends at above 8%.  Currently no leverage, can easily acquire new assets to boost dividends. Good stock to acquire for long term.

SingPost -Another huge cash cow like Starhub, stable dividend yields above 6%, but dividends have remained the same for a few years.

 

Media

Singapore Press Holdings (SPH) – Huge conglomerate with monopoly on media assets such as newspaper, magazines. However, industry is stagnating and move into real estate management such as Paragon and Clementi Malls yet to pan out. Remains to see if SPH can retain its status as “Grandfather” stock.

 

There it is!

Feel free to post if you have any questions and/or comments!

 

16 Responses to “My Singapore Stock Portfolio End August 2011”

  1. There is an ongoing discussion on my facebook page about this post. Please click on the weblink below to see the comments. Thanks!

    https://www.facebook.com/MakingPassiveIncome#!/calvinyeo23/posts/154906137929027

  2. well, i hope and i think u need to review ur portfolio for singpost, starhub, cache, starhill, kgreen, cambridge, firstreit. Not all high yield stocks can be kept for super long term. good luck.

    • Michael,

      Thanks for the comments.

      I will be watching Singpost, Starhub closely as they are in stagnating industries. As long as they don’t cut dividends, I am happy keeping them around.
      Starhill is a bit of a gamble, depends on how Wisma Atria turns out. Malaysian assets are doing well.
      K-Green, please refer to my comment below.
      Cache, Cambridge are smaller industrial REITs with high yields just to balance the portfolio out a bit, don’t intend to allocate much to them.
      First REIT is still doing well with long term rental contracts, guaranteed rental upside for the hospitals. Only issue may be concentration in Indonesia and FX risk.

      I will still keep an active eye on the developments with all my stocks. It cannot be 100% passive.

      • there is low FX risk for first reit since its paid in Singapore dollars. compare the impact of this versus Singtel’s telkomsel.

        Starhub is stagnating? pray explain.

        • Drizzt, Yes there is actually very limited FX risk to DPU since the leases are very long and denominated in SGD. The real FX risk is on revaluation of the properties, should the Indonesian Rupiah drop, I am quite sure it will affect the valuations somewhat even though they report all asset values in SGD. Then the asset values may fall and leverage ratio may go up since the loans are in SGD. I am just speaking from experience when my relatives invested in Indonesia many years ago, their properties appreciated in IDR terms, but converted back to SGD, it was capital loss in SGD. However, Indonesian economy is experiencing good growth and I hope they remain politically stable.

          Regarding Starhub, I guess stagnating was not really appropriate. What I really mean is that revenue growth might be limited, furthermore Starhub only has business in Singapore with a small population. It’s pretty much the same case with established telcos in developed countries all over the world. However, the strong cash flow from Starhub still more than makes up for the low revenue growth, which is why it still stays in my portfolio. Just need to watch and make sure revenue does not decline.

  3. Hi Calvin,

    regarding K-green, some investors feel that it is a “self liquidating trust”, thus not a sound investment. What are your thoughts on this ?

    • Hi Shouyi,

      I have been following the discussions on K-Green closely regarding it being a self liquidating trust and so on. However, my opinion stands as below.

      1. K-Green and its subsidiaries have concession agreements with NEA and PUB to provide waste processing and water treatment for 15 – 25years. All of which contracts will be discussed for extension within 5 years from now.

      2. The projects are under Design, Build, Own and Operate (DBOO) category, not (Build, Operate and Transfer) BOT, which means that K-Green owns the assets, not NEA or PUB.

      3. I would like to draw a parallel to SMRT, which initially only received 10 years License and Operating Agreement (LOA) for NS,EW lines for 10 years, subsequently followed by a 30 year extension.

      4. As far as I read, the Senoko trust under K-Green did not have to pay a single cent for the concession agreement. The concession agreements are just long term service contracts to lock in revenue and ensure proper government regulations and compliance.

      5. The rights of first refusal for all 4 green assets are DBOO. Furthermore, K-Green has no debt, it is easy to raise debts to buy the assets, thus raising DPU.

      It’s really getting quite long for a comment. Maybe I will come up with a post for this. Long story short, I still like K-Green as an investment. However, it’s my interpretation of the public documents. I am no expert in waste incineration, water treatment or legal concession contracts.

      • soudns to me like HPH. but i think HPH is more attractive. if we calculate the XIRR for the length of concession the yield for kgreen is bloody less than 3%.

        even some of these overvalued trusts at this price have an XIRR of 6% for the yield on assets. most of the reits dun care 10% yield 6% yield their yield on assets worked out to be 5-7%. if you don’t hit this amount its not even worth thinking about.

        • Drizzt,
          I can’t say for HPH as I have never really analyzed the stock.

          For K-Green, they got probably the longest contract term of between 15-25years. None of the REITs or business trusts for that matter come even close to that. Its true that if you were to just calculate returns on the concession period, you would get a very low return. However, does that mean that once concession ends, there is no business for K-Green assets? My understanding as I read the Prospectus is that extension of discussion to the contracts will be discussed 5 years from now. If you look at SMRT, they were initially offered only 10 years for NS and EW, later on it was extended for 30 years upon satisfying all requirements set upon them. In fact, most utilities have contracts of between 10-30 years around the world and they get extended on and on as long as requirements are met.

          For REITs, I don’t really look at Return on Assets. That’s because they revalue their assets on a periodical basis to satisfy debt requirements, to calculate leverage ratios and so on. Since practically all their assets are made up of properties, the revaluation is likely to trend up as most properties do appreciate over time. If the rental does not pick up at the same pace as the capital appreciation of the property, you could see a drop in ROA. The better figure to look at is Return on Investments, how much they bought properties for and the annual rental returns + capital gains on the capital invested. With rental and capital gains picking up over time, ROI is most likely to trend up in the long run. Hence DPU should increase in the long run due to increasing rentals. Then again, it is quite tough to calculate ROI for a REIT as a whole as they divest and invest in properties all the time, it would be a lot of work to calculate individual costs of properties. So we just see if the new acquisition is DPU accretive in the long run.

  4. this looks like a very diversified portfolio. looks damn large if you ask me. How much is the yield on cost?

    • Hi Drizzt,

      My portfolio was actually bigger before the roller coaster started in Jul/Aug. My previous stocks included SATS, ST Eng, SIA Eng, Keppel, Comfort. If the market continues to tank, I may think about picking these stocks up again at bargain price and higher yields. I read a book that if you did not have at least 20 stocks, you are not sufficiently diversified, well that’s a point to be contended with. Warren Buffet thinks diversification is for fools lol. I actually moved my portfolio around quite a bit this year, so its a bit difficult to calculate the dividend yield for this year. However, if I project for next year, approximate dividend yield on cost would be about 6.7% if I retain the same portfolio. My capital gains for the portfolio stocks now is only at about 3%, but that moves around quite a lot so I am not too concerned.

  5. Any particular reason you didn’t invest in Ascendas India, AIMS AMP Capital trust & Sabana Industrial Reits which are yielding much higher?

    • Hi Sim,

      For Ascendas India, I do not invest as I am unfamiliar with the Indian property market, I have never even been to India!

      As for AIms AMP Capital and Sabana, there is no particular reason. For industrial properties, I prefer the blue chip REIT Ascendas REIT (A REIT) as it is very big, well diversified and has a strong financial sponsor, hence it will not have financing problems. AIMs AMP and Sabana are small cap REITs which may have trouble refinancing if there is a downturn in the economy, although Sabana does have a much lower leverage ratio currently. AIMs AMP also has the history of MacArthurcook REIT, which ran into a lot of problems during the recent financial crisis. I am not heavily invested in industrial REITs other than A REIT, MIT, logistics trusts and a little bit of Cambridge REIT.

  6. OK,OK, i come here by accident. I ask this, what if your reit all go down by ave of 10%.

    So now, what so good about that 7% to 9% yield you shout about???

    The last time i ask this, the other guy said , technically, it is still an income.
    I would said technically you have lose money on paper.

    Now, what say you???

    victor

    • Hi Victor,

      I assume the business is stable, for example like a healthcare REIT like Parkway Life REIT. Even if the stock price falls due to the negative sentiments, the rental income remains stable, so does the dividend. Since dividend stays the same and the stock price falls, the dividend yield goes up. So it is even more attractive and undervalued so I buy more.

      For e.g. Parkway Life REIT is at $1.80, annual dividend is $.095, so dividend yield is 5.3%
      If it falls by 10% to $1.62, annual dividend is still $.095, dividend yield is 5.9%.
      Better discount, so I buy more. Anyway, the dividends tend to grow regardless of the economy as they are long term triple net, guaranteed rental increase leases.

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