My Singapore Stock Portfolio End November 2011
This is an update to my Singapore Stock Portfolio for the Month end of October 2011. For previous months, please see
My Singapore Stock Portfolio End October 2011
My Singapore Stock Portfolio End September 2011
As you can see from the portfolio, LippoMalls increased in proportion significantly from 4% to 14% of the portfolio. That was due to the rights issues for the purchase of Plaza Medan Fair and Pluit Village. I also subscribed to excess rights hence raising my stakes in LippoMalls significantly. I initiated positions in both CapitaRetail China Trust and Fortune REIT, both of which were severely undervalued due to the concerns with China and Hong Kong properties overheating and property curbs. I initiated a long position in Suntec as I felt the stock was undervalued too due to the negative views on the office sector. I also bought a little bit of CapitaMall Trust as it went down and presented some value.
CapitaRetail China Trust – Little known trust owns 9 well located malls in China including 4 major malls in Beijing and 1 in Shanghai. DPU has been increasing steadily every year and the price I invested at $1.15 translates to a pretty high yield of 7.3% for a pure play retail REIT. For more info, read CapitaRetail China Trust – An Overlooked High Performance Retail REIT
Suntec REIT – Owns the Suntec Mall, offices and part of the convention center. Currently managed by ARA management, an affiliate of Cheung Kong group by Li Ka Shing. With the announced AEIs, Suntec Mall will go through an intensive makeover which will hopefully spruce up the place and increase traffic as well as rental. Trading at close 7%, the retail/office hybrid REIT offers a value proposition. For more info, read Value in Suntec REIT and Upside Potential from $400m Asset Enhancement Initiative at Suntec City?
Fortune REIT – Another REIT managed by ARA management, Fortune REIT holds 14 retail malls in Kowloon and the New Territories. While not all the properties are in prime locations, all of them are located near MTRs and easily accessible by most forms of public transport. Quite a number of them also have occupancy rates at 100%. The only ones which are below 90% occupancy are currently undergoing AEIs, namely Fortune City One and Ma On Shan Plaza, however, they have precommitted occupancy rates 94.3% and 99.5% respectively, indicating rental upside. Fortune REIT properties are considered suburban malls, just like Fraser Centerpoint Trust, which are private housing estate retail properties catering to the day to day needs of the residents and households from these communities. Therefore, the properties are very defensive. I initiated a position at HK$3.25 when it traded down for no apparent reason, giving a very impressive yield of 7.7%.
For further reading, you may be interested in:
My Singapore Stock Portfolio End October 2011
My Singapore Stock Portfolio End September 2011
Hi Calvin, nice blog.
Any views on Singpost share price being so weak? Saw that you are vested, picked up more on recent weakness or having doubts on its fundamentals? Cheers.
Hi Ray,
Thanks!
My view for Singpost is that the rising labour costs and other expenses are eating into their profits, the firm is still profitable, just less profitable. There are many people who believe that Singpost industry is a sunset industry, on the contrary, if you look at their business, mail volumes have been increasing year over year. Singpost is a regulated monopoly, therefore postage costs are controlled and cannot be changed at any time without going through the regulations. Similar to transport operators like SMRT and ComfortDelgro, they are not able to raise fees to counter rising costs without asking the government. Singpost is in a similar situation to SMRT, but the sentiments for Singpost are more negative due to the reasons above. Therefore, I view it as a temporary weakness that will subside when the economy slows down, labour costs and expenses go down then Singpost will be back on track.
Hi Calvin,
I suppose if Singpost maintains the 6.25c div payout annually, surely buying now looks very attractive if one were to hold this long term?
Hi Newbie,
Yup the dividends don’t look like they are in danger of being cut anytime. For long term though, that would have to depend on the performance of Singpost going forward. With the new Chief Operations Officer in place, I will watch how well they can carry out cost rationalization measures. The key is to manage costs, mail volume will still grow steadily, unlike what most people think. So its not set in stone, you would have to react based on how the business does going forward.
I have some singpost which are still being lent out, possibly people shorting it?
Hi sgdividends, yes, that’s a possibility. However, further weakness in the stock barring any changes in the fundamentals means more attractive value for me.
I used to own fortunte reit at HK$3.20 or something. The prices crossed HK$4 before I sold off at about HK$3.95. SOunds like a good gain. NO. Why ? The HK$ depreciated so much during the period that the gains are significantly reduced.
I do expect the HKD to take a further beating vs SGD, making this HK$ reit unfavorable to be on my watch list.
Hi Snoopy168,
When you invest in stocks denominated in foreign currencies, you would have to take a forex risk. Unfortunately, you sold your stock when HKD has dropped against the SGD. Since HKD is pegged to USD, USD has rallied significantly the past few months therefore HKD is now up as well. Personally, I have a HKD account which I store my HKD for HK based trading, that way, I do not have to incur forex charges each time I buy and sell, since I only convert once. Do you have a HKD account or do you just buy fortune reit directly with your SGD account?