Dividend Knight Income Portfolio Update (1Q2018)

No.	Company	No. of Shares
1.	DBS	2, 300
2.	Singtel	15, 000
3.	AIMS AMP Capital REIT	30, 000
4.	Frasers Centrepoint Trust	15, 000
5.	SATS	3, 000
6.	OCBC	2, 000
7.	Raffles Medical Group	20, 094
8.	Mapletree Logistics Trust	22, 000
9.	ParkwayLife REIT	8, 000
10.	Keppel DC REIT	12, 800
11.	Frasers Logistics & Industrial Trust	13, 000
12.	Mapletree Commercial Trust	8, 000
13.	Frasers CentrePoint Ltd.	5,000
14.	Comfort DelGro	10, 000
15.	CapitaLand Commercial Trust	6, 000
16.	Sheng Siong	27, 000
17.	Straits Trading Corp	3, 000

The latest quarterly results from the local 3 banks have shown that the worst of O&G NPL woes is over. They enjoy uplift in NIM and loan growth. During the recent market dip, I added 300 shares of DBS below $27 mainly due to the management’s commitment to a higher dividend payout moving forward. Annual dividend per share will double in 2018, from $0.60 to $1.20 per share!  A secondary factor is the robust growth momentum in its wealth management and investment banking fees.

Another stock I accumulated was Sheng Siong, 10k shares at $0.915 back in February. Its strategy of focusing on fresh foods in densely-populated HDB estates has proven effective against the e-commerce threats of Amazon, HonestBee and RedMart. Sheng Siong is potentially opening 4 new stores in 2018, with the joint venture in China finally operational. In my opinion, its China expansion story has not been fully priced-in yet. Slow & steady growth, just the way I like it.

The current trade ‘quarrel’ between the US and China has the risk of turning real ugly, real fast. So far, both sides have flashed their weapons but not fire any actual bullets yet. Any impulsive tweet from Trump might send the situation spinning out of control. As an export-driven economy, China stands to lose out more than America if a trade war erupts. In any trade war, an economy that depends heavily on exports would almost always lose out more. That’s why Germany and Japan are also countries more vulnerable in the event of a global trade war. I am keeping my fingers crossed that common sense and rationality would prevail in the end. Besides hoping for the best, it is always prudent to plan for the worst too. So, I am parking half of my investment warchest in the May issue of Singapore Savings Bonds.

The supreme art of war is to subdue your enemy without fighting

DK

Dividend Knight Income Portfolio Update (End-Of-Year)

No.	Company	No. of Shares
1.	DBS	2, 000
2.	Singtel	15, 000
3.	AIMS AMP Capital REIT	30, 000
4.	Frasers Centrepoint Trust	15, 000
5.	SATS	3, 000
6.	OCBC	2, 000
7.	Raffles Medical Group	20, 094
8.	Mapletree Logistics Trust	22, 000
9.	ParkwayLife REIT	8, 000
10.	Keppel DC REIT	12, 800
11.	Frasers Logistics & Industrial Trust	13, 000
12.	Mapletree Commercial Trust	8, 000
13.	Frasers CentrePoint Ltd.	5,000
14.	Comfort DelGro	10, 000
15.	CapitaLand Commercial Trust	6, 000
16.	Straits Trading Corp	3, 000
17.	Sheng Siong	17, 000

*Subscribed to the rights issue exercises of MLT & CCT

Total dividends received since Jan 2017: S$19, 000

Average dividends per month: S$1, 583

Average dividends per day: S$52

Profit-Taking On 'Ripe Fruits'

Global markets have gone through a strong rally in the 2nd half of 2017. It seems like the synchronised global economic recovery is pushing investors into 'overconfident' territory. During this bullish/exuberant period, I took some profits off the table for DBS, OCBC, SATS and Starhub. These are the transactions.

- Sold 1k shares of DBS at $24.10
- Sold 1k shares of OCBC at $12.02

- Sold 3k shares of SATS at $5.15

- Full divestment of Starhub at $2.90

DBS did a 'spring-cleaning' on its O&G bad loans. One-time pain, long-term gain. Its private wealth business unit is still growing at a healthy pace. SATS would benefit from the recent opening of Changi Terminal 4. I hope they can win more contracts from airlines operating at T4. Starhub's CEO is leaving next year and he has sold most of his Starhub holdings. With TPG coming into the local mobile market next year, I feel now is a good window for me to cash out.

Planning For Future Fed Rate Hikes

Most S-REITs rallied hard and hit their multi-year highs. With the inevitable Fed rate hikes coming real soon, I decided to channel my funds into non-REITs such as Comfort DelGro and Sheng Siong. My warchest is still left untouched. These are the transactions. 

- Bought 10k shares of Comfort Delgro (CDG) at $2.02

- Bought 10k shares of Sheng Siong at $0.94

In my opinion, $2 is a fair price to pay for CDG. It is currently in talks with Uber on a potential alliance. The bulk of its earnings is generated from its overseas subsidiaries as well as local ones like VICOM and SBS. Not to mention its public rail & bus businesses. Lastly, its current earnings (even with another 10% drop) would not endanger the annual dividend payout. A blue-chip with 5% dividend yield is a reasonable buy. However, this is more of a 'Buy-and-Monitor' position because Grab would come up with disruptive/innovative ways to compete. 

Next, Sheng Siong was not as affected by the entry of Amazon as I initially feared. The management is aiming for 50 stores in Singapore eventually. Slow but steady growth. I hope its China expansion could bear fruit next year and its dividend payout would not decrease again. 

Overconfidence is the most dangerous form of carelessness

DK

(*P.S. - I am switching to quarterly updates instead of monthly ones)

Dividend Knight Income Portfolio Update (April 2017) - Rebalancing Mode Activated

No.	Company	No. of Shares
1.	DBS	3, 000
2.	Singtel	15, 000
3.	AIMS AMP Capital REIT	30, 000
4.	Frasers Centrepoint Trust	15, 000
5.	SATS	6, 000
6.	OCBC	3, 040
7.	Raffles Medical Group	20, 094
8.	Mapletree Logistics Trust	20, 000
9.	ParkwayLife REIT	8, 000
10.	Keppel DC REIT	12, 800
11.	Frasers Logistics & Industrial Trust	13, 000
12.	Mapletree Commercial Trust	8, 000
13.	Frasers CentrePoint Ltd.	5,000
14.	Starhub	3, 000
15.	CapitaLand Commercial Trust	5, 000
16.	Straits Trading Corp	3, 000
17.	Sheng Siong	7, 000

 

Dividends received in April 2017: S$0

Total dividends received since Jan 2017: S$3, 635.02

Average dividends per month: S$302.92

Average dividends per day: S$9.96

Total portfolio market value: S$395, 755

Unrealised Profits: S$47, 276 (+11.95%)

Despite not receiving any dividends/distributions in April, it had been a rather hectic ‘portfolio rebalancing’ month for me. The percentage paper gains of some REITs in my portfolio have entered double-digits territory in recent weeks as another result season approaches. I was in a dilemma, torn between taking some profits off the table and just holding onto my current positions. In the end, I decided to fully divest Ascendas REIT & CMT. My capital appreciation in Ascendas REIT is equivalent to 2-year worth of distributions. Furthermore, the current price of Ascendas REIT is a huge premium over its NAV. CMT reported flat results last week due to the redevelopment of Funan Mall and negative rental reversions at Bedok Mall & WestGate Mall. I shall revisit CMT again closer to the completion of the new Funan next year when there should be new catalysts for DPU growth again. Besides, similar to Ascendas REIT, I get to reap the capital gains of nearly 2-year worth of DPU from CMT too.

A guru once said ‘when you see a quality company selling at a fair price, don’t be afraid to bet big on it.’ Well…..I spotted not one, but 4 such targets over the last two weeks, the ‘juiciest’ one being Singtel. Lucky me!

I made the biggest single trade in my entire investing life (serious >_<) by buying 5k shares of Singtel at $3.73. The price dip was caused by fears of increased competition from TPG in both the local and Australian telco markets. The remaining funds were then funnelled into smaller (but still significant) new positions in Starhub, Straits Trading Corp (STC) & Frasers Centrepoint Ltd. (FCL) I have been eyeing both STC and FCL for awhile now. After doing my homework, I decided to pull the trigger when they went Ex-dividend. I believe STC will reap the long-term rewards by investing in real estate ventures together with ARA & Warburg Pincus as strong strategic partners. Remember, the legendary John Lim is still leading ARA. As for FCL, I like the way it is steadily transforming into the next CapitaLand or even a ‘mini-Mapletree Investment’. FCL is expected to get higher recurring income from its significant stakes in FCT, FCOT & FLT, which brings me to my next point.....

Taking A Leaf From Mapletree Investments' Playbook
Last month, Mapletree Investments has closed a private trust to hold US$1-3 billion in student accommodation assets in the UK & US. It plans to close a series of private trusts and potentially launch Singapore's very first IPO of student-housing assets when the portfolio reaches $4b-$5b in the future. This trust is expected to pay an annual yield of 6% -7%, which is comparable to the 4 SGX-listed REITs sponsored by Mapletree.

Mapletree's strategy is to acquire assets on its balance sheet before seeding them into private trusts. Once the assets in the portfolio reach a large scale and stabilised, there is an option of launching an IPO. A private property trust is more cost-effective to set up and run. Maintaining a listed REIT also requires higher compliance costs due to recent stricter financial regulations. Mapletree's entire $40b-$50b AUM consists of properties in the office, retail, logistics, industrial, residential, corporate housing, serviced apartments and student-housing segments.  In my opinion, John Lim probably has a vision of transforming ARA into another Mapletree with the backing of Warburg Pincus & Straits Trading Corp. I want to ride on this opportunity by being vested in STC.

As small-time retail investors, I believe we are still able to emulate Mapletree by gathering stable income-producing real estate assets in the form of REITs over the long-term.



The expert in almost anything was once a beginner
DK