Sunday, 11 June 2017

Portfolio Update - May 2017

*As of 10 June 2017

Counter Average Price Yield on cost(%) Weightage
Singtel
3.7072
4.74
26.37%
First REIT
1.2736
6.00
9.88%
Fraser Logistics & Industrial Trust
0.9317
7.50
9.54%
ParkwayLife REIT
2.4000
5.10
6.14%
M1
2.3600
5.00
6.04%
UOB Bank
18.2150
4.00
5.18%
Capitaland Mall Trust
1.9050
5.80
4.88%
Guocoland Limited
1.8150
2.75
4.64%
CDL Hospitality Trust
1.3050
6.80
3.34%
AimsAmp Cap REIT
1.3300
8.40
2.65%
Capitaland Mall Trust
1.9238
5.70
2.19%
Starhill Global REIT
0.7550
6.25
2.15%
Capitaland Commercial
1.3523
6.15
1.92%
SPHREIT
0.9293
5.80
1.85%
Keppel Corp
6.4300
3.00
1.83%
Ascendas Hospitality
0.6991
8.03
0.99%
STI ETF
2.8058
3.50
9.57%
Total

5.24
100.00%

Legend
CDP
SCB

Total Invested Capital = $35,365.02

Total Expected Dividends/month = $154.14

Average Dividend Yield = 5.24%

I have been putting off updating my portfolio for the month of May owing to spending more time on a side business I have recently started to execute. If all goes well, this side business may allow me to increase my warchest amount, which I can use to deploy when time calls for it.



There was a lot of changes in the portfolio in the first part of this month so I have decided to include the changes in this portfolio update.

The month of May - June had been an eventful one for me. I had reduced several poor performing counters, while increasing exposure to rebalance my portfolio.

1) Small stake with Guocoland

Firstly, I have started with a smallish stake in Guocoland at $1.815 a piece. This property counter had been lagging the big caps, namely Capitaland in response to the government relaxing of property cooling measures. It has not really spilled over to the share price of Guocoland yet, but my small stake is more of valuation buying instead of dividend play. This counter has no strong history of paying large dividend yields, so correspondingly a smallish stake.




2) Increased position with Singtel and liquidated Starhub

I have also decided to rebalance my telco portion of my portfolio by exiting Starhub and correspondingly increase my existing position in Singtel. I know right now my portfolio is heavily weighted to Singtel, standing at a hefty 26% in weightage! This does not mean that I have utmost confidence in the future performance of Singtel and its subsidiaries, given their weakest performances particularly Bharti Airtel. Neither does it say that Starhub is likely to do much worse than it would currently. But from the current circumstances, I just feel that Starhub dividends are unsustainable whereas Singtel's dividends would continue to be sustained. The impending IPO of Netlink Trust would not mean a bumper dividend, and I am not expecting anything from Singtel either. The investment thesis on Singtel remains the same as I had previously posted on this before.




3) Completed 2 trades on SIA

I had previously put some money on SIA and waited patiently for the slow rise in share price due to improving sentiments and also speculation due to some analysts claiming that SIA would book a 25% increase in profits. This claims led to some strength in SIA stock, with it reaching a high of $10.80+. Unfortunately, the shock loss reported resulted in a strong gap down in price the following day. It was not surprising given the bruising effect onto the sentiments of traders, whom ran for the exit. The greater the expectations, the greater the disappointment when results do not meet expectations. Unfortunately for me, I failed to take profit. Upon the news reported, I decided to take action and bailed on when the market opened the following day. I still managed to make some kopi money, but it is good enough for me. As the prices eventually reversed to a low of $9.66, well below my entry price. Which I took the opportunity to pick some up again on the rebound at $9.79 a piece and finally exited at $10.08 to round up the 2 trades done on this counter. The share price might continue to rise on speculation on possible privatisation after the strategic review. But I feel the chance to be likely low, though I will not rule out the possibility.




4) Increased position in First REIT

I have increased another tranche of First REIT as the share prices seem to have retraced quite a bit, perhaps due to the change in CEO, which is still of questionable direction and also a substantial stakeholder reducing some of their stake in the REIT. I am not certain why the weakness, but this is just my hypothesis. Depending on this, the CEO will lay of the direction for more inorganic growth in the REIT, which it had been relying on for the past few years to grow. My opinion is that the direction of the new CEO is likely to be the same as the outgoing one as that strategy has proven to have performed well over the decade, so he would likely not to make any changes. Therefore, I took the chance to increase my stake a just little bit more.




5) Made several rebalancing work on my mini portfolio in Standard Chartered


I have managed to initiate Priority Banking status to my bank account and this allowed me no minimum commissions on my trades. With this, I am now likely to just use my Standard Chartered account for my trading and investing activities, given their way much cheaper brokerage rates compared to the others.



With this power on hand, I took the opportunity to clean out my mini portfolio, reducing heavy positions and increasing smaller ones, provided that the share prices are still fair enough to purchase. Some of the REITs I have had already ran up, so I didn't touch them. I sold some like Mapletree Logistics due to the strong run up in prices, and also that I had such a small stake I didn't see the need to increase my positions with. I had also closed/reduced positions in Ascott REIT and Aims Amp REIT, they had been my outsized positions in this mini portfolio and now I had finally been able to take some profits off the table. I increased some positions in Starhill Global, Capitaland Mall Trust and Keppel Corp. I was also thinking of taking profit on Ascendas Hospitality, but I feel that there is still some growth potential and also dividend yield still pretty decent to warrant me holding on. I had been thinking of adding some after XD at $0.76 but my priority banking status had not been initiated yet so that chance had passed.



The overall portfolio I have is not heavily weighted to Singtel and the REITs. The impending rate decision next week may cause some volatility to my portfolio, but nevertheless, I will use that chance to further beef up my portfolio of income stocks.

That is pretty much it. As a result of my rebalancing efforts, I have reduced many of my stocks positions recently. My portfolio size has now reduced to the $35k region, given expensive valuations in REITs, which is the sector I am monitoring to increase positions in. Excluding the telcos, UOB, Keppel and Guocoland, now my entire portfolio is made up of REITs.

I am not saying that REITs are cheap or the way to go at the moment, but I still believe in companies who are mandated to pay back the profits they have earned. Better than owning a share of the company which takes majority of the profits earned to pay large salaries to their family members running the company or "reinvest" into new areas of growth potential. Unfortunately, it is not as easy as it seems. If interest rates increase faster than growth can pick up, this would be a poor environment for REITs. So definitely still better to diversify our nest eggs.



REITs currently form around 45% of my portfolio, and that is set to grow larger should opportunities present itself next week when Janet Yellen makes her decision. 

Wednesday, 17 May 2017

How I managed to save $100k before hitting my 28th birthday

Now this calls for a celebration. After scrimping and saving and working hard saving everything I could afford, I have finally achieved my target of $100k before the age of 30, with 2 more years left to spare. I shall make full use of these 2 extra years to continue to build my savings and wachest to the next target, which is to achieve $200k in savings and investments before my 32nd birthday.


Why 32nd birthday?

Well, some readers may ask this question, so I might as well answer it first. Well, its more like an extrapolation of my saving abilities. When I started working after graduation at age 25, I took 3 years to achieve 100k in savings and investments, so I had simply added 3 years + additional 1 year buffer for unforeseen circumstances. So voila, the number 32 comes to my mind. Furthermore, I had a headstart after graduation as I had already saved around the region of $20k before starting to work full time.

How I did it

I am going to spoil the surprise by saying there is no magic involved. All it takes is sheer hard work and discipline. I cannot emphasize it any more, discipline in delaying instant gratification goes a long way to achieving your goals before you even know it.

In fact, I didn't even realise I achieved my target until I recently checked on my investments and saving accounts. I had multiple saving accounts which makes it harder to keep track of the total amount I had saved.


My income 

I am not going to reveal my income, but I have to say my gross income is definitely less than the median income of the employed people we see in Singapore. Yes, even though I have been working for 3 years, I have not experienced a phenomenal increase in salary to even assist in my saving goals. So this shows that, increasing incomes do matter, but even without it, it is still possible to achieve it if we have the perseverance and focus, we can achieve it.

Investment returns

Next, people may point to my investment growth. Well, my returns coming from my investments are almost similar to the returns we get from the STI. It is simply because my portfolio had been weighted heavily to the local banks and telcos. However, due to the weak telco sector, my returns have been staying even below the performance of the STI, so that also means I didn't make more than say from a regular investor who had invested in the STI ETF at similar times I had entered the market. Thus, it is clear that there was no stellar returns to assist in boosting the growth of my savings towards the $100k level faster than anticipated.


My advice

What I am trying to drive here is, simply sheer perseverance and discipline goes a long way to achieve the savings goal we all have always dreamed of. We always see in sensational facebook feeds of making tons of money from the stock market, and this person relaxing at the beach as a result without lifting a finger. This is definitely a scene which this advertisers would like you to believe to buy their product, be it their hugely expensive courses or products they are looking to sell to you to make that commission. Don't fall for it to make another person reach their savings goals a lot faster!

So I am going to give a simple reminder. Stay focused on your goals. Make it a game, a game you would want to unlock the achievement. The achievement of financial independence, the dream of all financial bloggers out there. It is a lot closer than you think, as you let the power of compounding do its work, while you work hard to save more from your income.



Now you just need some motivation, and I hope this can motivate others seeking for some affirmation of their belief or simply looking for a way to grow their wealth. Stay the course and may we have a good weather ahead!

Monday, 1 May 2017

Portfolio Update - April 2017

*As of 30 April 2017

Counter
Average Price
Yield on cost(%)
Weightage
Singtel
3.7000
4.74
15.73%
Fraser Logistics & Industrial Trust
0.9317
7.50
8.91%
Starhub
3.4700
4.60
8.30%
SIA
9.8600
2.00
7.86%
First REIT
1.2532
6.38
6.09%
ParkwayLife REIT
2.4000
5.10
5.74%
M1
2.3600
5.00
5.64%
UOB Bank
18.2150
4.00
4.84%
Capitaland Mall Trust
1.9050
5.80
4.56%
CDL Hospitality Trust
1.3050
6.80
3.12%
AimsAmp Cap REIT
1.3300
8.40
7.07%
Ascott Residence Trust
0.9700
7.50
5.67%
Keppel DC REIT
1.0822
6.17
2.30%
Capitaland Commercial
1.3523
6.15
1.80%
SPHREIT
0.9293
5.80
1.73%
Ascendas Hospitality
0.6991
8.03
0.93%
Mapletree Logistics
0.9800
7.40
0.78%
STI ETF
2.8058
3.50
8.95%
Total

5.40
100.00%

Legend
CDP
SCB

Total Invested Capital = $37,637.27

Total Expected Dividends/month = $169.37

Average Dividend Yield = 5.40%

The month of April had been an eventful one. Mostly a rebalancing of my portfolio by liquidation of oil & gas counters and increasing on certain counters.

1) Ascott REIT Rights Issue

First off, we start on the results of the Ascott REIT rights issue which I had taken part in March. I was allotted 2200 shares from the issue from both the provisional and oversubscription of the rights issue. I am still holding on to the units as the prices have not really recovered strongly, as it still continues to be resisted at the price level which I had previously sold the mother shares. I am looking at the TP of at least higher than $1.15 before I offload the positions. Given the huge resistance at $1.10, it is going to be some time before the price will hit my TP. Nevertheless, at the price issues and taking into account the loss I made when I exited the mother shares, my average price of the REIT is in the region of $0.97, at a comfortable level to get around 6-7% yield and having some exposure to the hospitality sector which is seeing some signs of recovery.



2) Exited position on Keppel Corp

I had exited my position of Keppel Corp at the price of $6.58 a piece. This was after it had announced results which I felt was disappointing. The profits it announced were manly from one-off gains which once taken out of the equation, puts Keppel Corp results to be on the weaker side this time round. Current price hovers at around PB of exactly 1, though the price I exited was far below the $7 plus highs it made during the strong rebound, I felt that the strength in the stock was unsustainable. For the strength in the rally to be sustainable, the results of the company should keep up. In the short term, the poor results could cause some short term weaknesses in the share price, which should it go back down to test the $5 mark, I would be interested to get back into the stock again. Nevertheless, at a 22% profit gained in the last 8 months holding this stock, I felt that it was time to take some profits off the table first. The stock may re-bounce off the oversold position it is in right now, but overall it was a good trading play.


3) Exited position on Sembcorp Industries

In addition, I had exited my position on Sembcorp Industries, after the poor results announced by Sembcorp Marine. Given the lacklustre activities in the rig business, we should expect a long winter ahead for the offshore segment for Sembcorp Industries. As for the utilities segment, which was deemed as the the most defensive business segment of Sembcorp. In this segment, the local power business remained heavily competitive, which adds to the worry that investors should continue to monitor for the results to come on Wednesday. The most promising part of Sembcorp has to be the aggressive inking of deals in the power market in developing markets such as India and Myanmar. Should the investments in these markets start to take off, then we might see some upside in the share price. However, the weaker positions it has in the rig and local power market may continue to cause a drag to its results, though many think that the worst which happened in 2016 was over. In other words, it cannot get any more worse than it is right now. So why the rationale for selling? I still believe that the results will still continue to lag the improvement in fundamentals in the rig and shipbuilding, repair services of Sembcorp Marine. We are beginning to see some uptick in interest in niche areas such as clean energy (e.g, LNG vessels) which may improve business activities for Sembcorp. However, in the bigger picture, the outlook remains bleak as the core business in rigs remains oversupplied. As such, I decided to bite the bullet and take profits first. Should prices correct to my original buy price, then I may assess again to enter again. Nevertheless, at around 25% gain in the 7 months of holding this stock, it was the most rewarding position I have taken so far.


4) Increased position on Singtel

I have increased another tranche of Singtel at $3.73 a piece as the prices started to correct heavily, perhaps due to the spotlight on the high prices paid in the spectrum rights bidding exercise. This brings the overall average price to $3.70 at 15% of my portfolio. This is rather a heavy position, I know, but should Singtel return to $4 then it would prove to be a good trading play. Therefore, I am tipping this to be 50% investment and 50% trading play. Sales proceeds from the oil and gas counters were used to fund this play, and I may continue to add on further weaknesses. On Saturday, I have seen the news that a substantial stakeholder has decided to dispose its stake in Singtel, citing the highly competitive market it is in right now. This news is likely to cause weakness in the share price come Tuesday when the markets open, and the next level to look out for after the $3.70 level breaks would be $3.66 and thereafter $3.60. Should it go lower, I would be waiting below to scoop more shares.



That is pretty much it. As we can see, I have reduced many of my stocks positions recently. Excluding the telcos and SIA, now my entire portfolio is made up of REITs. Not really a diversified portfolio anymore, I know. I may start to reduce some positions on the REITs as valuations now seem on the high side, given that Yellen is likely to continue in her hiking of interest rates, which is likely to cause REITs to fall once again. We have to anticipate this beforehand, and when it does, we can be ready to deploy our funds back in again.


My portfolio has remained the same size as compared to last month, as sale proceeds were used to pay for the new positions added to the portfolio. I would very much want to keep the portfolio in the same size as much as possible, which keeps my investment allocation at 30-40% of my investable funds. The maximum I can tolerate would be 50%, so that I can continue to have ample cash to deploy should opportunities/black swan events arise over the horizon.

Well, now lets welcome May, and May the Force be with you.