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9M 2015 passive income from non-REITs.

Tuesday, September 29, 2015

Some wonder if Mr. Market could go into a depression? I don't know but I do know that many stocks became much more attractively priced in the last three months.

Consistent with my strategy to diversify my portfolio to reduce reliance on S-REITs for income, I added to my long positions in the following as their stock prices declined more significantly recently:


1. Accordia Golf Trust
2. Ascendas Hospitality Trust
3. ST Engineering
4. Starhub
5. SembCorp Industries


In the last three months, I also initiated long positions in the following as investments for income:

5. VICOM
"A 15x PE ratio would give us a fair value of $5.36 or so per share."

6. Religare Health Trust
"Trust has demonstrated its ability to improve its revenue organically quite strongly which makes up for the expiration of the sponsor's waiver to their share of the distributable income."

7. King Wan
"King Wan is in a net cash position and it also has an order book that would provide earnings visibility until 2018."

Finally, I accumulated the following stocks which have a bit of an income investing angle but the main reason is because I think they are worth much more and at lower prices, they became even more attractive:



8. Wilmar
9. OUE Limited


If you should be interested, you could search ASSI for more of my blog posts on these stocks and why I decided to add them to my portfolio when I did.


Of course, stocks could stay undervalued for a long time but regularly receiving some dividend in the meantime makes the waiting more palatable. I like to be paid while I wait.

If you suspect that I have dipped into my war chest in the last three months, you are right. 

Could we see another big decline in the stock market? We could and we should be ready. So, being cautious, I have not exhausted my war chest.

I have a couple of fixed deposits maturing next month in October and I will probably be keeping the money close at hand instead of putting it in another fixed deposit or two.


In Q3 2015, the following non-REITs paid dividends:

1. SATS
2. Old Chang Kee
3. APTT
4. SingTel
5. SCI
6. SMM
7. Wilmar
8. NeraTel
9. ST Engineering
10. QAF Ltd.
11. Starhub
12. HongLeong Finance
13. Croesus Retail Trust

For the first 9 months of 2015, total passive income received from non-REITs: S$ 57,747.59

This works out to be S$ 6,416.40 per month.

Have a shopping list and be ready to pounce if Mr. Market becomes depressed.

Related post:

28 comments:

becks2000blog said...

Hi Ak,

I trying to find another golf trust that is listed in Asia region? Do you think there is? Googling golf trust only bring me to Accordian

becks

becks2000blog said...

Hi Ak,

I trying to find another golf trust that is listed in Asia region? Do you think there is? Googling golf trust only bring me to Accordian

becks

AK71 said...

Hi becks,

I believe that Accordia Golf Trust is unique. ;)

betta man said...

Hong Leong Finance has hit a 52 weeks low of $2.23 at the point of writing. Time to open war chest!

AK71 said...

Hi betta man,

I am also looking at it.

Closing at $2.23 means a 40% discount to NAV. PE ratio could be less than 9x if 2H 2015 performs like 1H 2015.

It looks very undervalued to me.

Les Lim said...

Hi AK, Croesus has recently made an acquisition and intend to fund it thru rights and borrowings. What are your thoughts for shareholders ? Thanks.

AK71 said...

Hi Les,

I blogged about the matter. It was the blog post before this one.

You might want to look for it. ;)

betta man said...

APTT has hit 52 weeks low of $0.77 recently. Potentially 10% yield. Accumulating ?

AK71 said...

Hi betta man,

My smallish long position in APTT is a legacy from MIIF. I am quite happy to hold on to it as it is mostly free of charge.

However, to add to the position, I would need to see a much lower price since I do not believe that APTT's 8c DPU is sustainable.

AK71 said...

Reduced long position in Wilmar at $3.17 a share as its stock price rose and met with resistance provided by the declining 200d MA.

AK71 said...

Wilmar International Limited (WIL) was queried by the SGX for the reason behind its share price jump of nearly 9% and the company replied that its substantial shareholder ADM (Archer-Daniels-Midland) has raised its stake in the company; ADM made purchases representing some 22% of the total volume of WIL traded on the SGX yesterday. WIL added that it will be updating the shareholding of ADM in due course – ADM held an 18% stake as of Mar 2015 according to Bloomberg data.

Source: OCBC Research, October 2015.

AK71 said...

In September, typhoons caused unprecedented heavy rains in some areas mainly in the East Japan. Thus, the number of visitors and utilization rate decreased 5.6% and 3.6 percentage points respectively compared to last September.

Source:
http://accordiagolftrust.listedcompany.com/newsroom/20151013_171448_ADQU_EBYU0UPD9FIJ50DP.1.pdf

AK71 said...

A few days of insider buying, the latest being on 19 October (10,038,000 units bought), has pushed Morgan Stanley's stake in Accordia Golf Trust to 11.01%.

Increased my exposure to Accordia Golf Trust today at 64c a unit for a prospective 9% distribution yield. Next distribution date is probably two months away in December.

AK71 said...

A-HTrust on Wednesday reported a distribution per stapled security (DPS) of 1.38 Singapore cents for its second quarter ended Sept 30, 2015, up 8.7 per cent from a year ago.


AK71 said...

CDLHT posted a 9.7 per cent drop in distribution per unit (DPU) to 2.36 Singapore cents for the third quarter ended Sept 30, 2015.

AK71 said...

1. Kuok is 65 this year yet he still works 16-hour days. He reassured shareholders he would find a new successor before he hits 70. On day-to-day business operations, he is not worried as it’s fully taken care of even when he is not around.

2. Willmar has are five main key business segments. Each one of them is the leader in its own respective market. For example, Wilmar owns oil palm plantations covering around 240,000 hectares which is equivalent to four times the land area of Singapore! Wilmar has 45% market share for consumer pack oil in China, 35% in Indonesia, 20% in India, 55% in Vietnam and 20% in Bangladesh. Wilmar entered the sugar business in 2010 and since then, this division has grown by leaps and bounds. Today, Wilmar is one of the largest raw sugar producers in the region and refines almost 75% of Australia and New Zealand’s sugar requirement.

3. According to Ho Kiam Hong, chief financial officer of Wilmar, there are very few companies in Asia that have a vertically integrated business model like Wilmar – the company owns the manufacturer, supplier, distributer, etc. Vertical integration helps reduce costs and improve efficiency among other advantages.

4. Wilmar is strengthening its consumable market brands. Management believes that building up brands offer a higher value-added proposition than merely being a commodity company. In 2012, Wilmar joined forces with Kellogg’s to produce premium breakfast cereals and snacks in China. This year, Wilmar acquired 50% of Goodman Fielder which owns brands such as MeadowLea, Praise, White Wings, Pampas, Helga’s, Wonder White, etc. across Australia, New Zealand and Asia Pacific. And most recently, Wilmar joint-ventured with Repi Soap who owns prominent soap and detergent brands such as ROL, Ajax and Largo to enter new markets (e.g. Ethiopia). This segment constituted 11% of profit before tax in 2012 and has since grown to 18% in 2014. Kuok further elaborated: “One company recently listed in China with only one consumer product yet has the similar market capitalization of Wilmar International. Our consumer business with multi-prominent brands is obviously under-unappreciated by the market at the moment.”

5. Wilmar doesn’t rely on biological asset gains to boost its earnings. For the past nine years, Wilmar booked a total biological asset gain of US$684 million. Comparing that amount against its total profit before tax of $13.74 billion in the same nine-year period, biological asset gains are only 5% of profit before tax. The reason for this is because management chooses to value its plantations at cost rather than market value. According to the CFO, the average value of Wilmar’s biological assets is approximately US$7,800/ha is very conservative compared to the recent transacted market value at approximately US$20,000/ha.

6. As at Dec 2014, Wilmar’s total debt stood at US$22.4 billion — 15% lower from a year ago. 57% of its total debt is due to trade financing. Trade financing grows and shrinks in proportion to commodity prices as the financing is solely used for working capital. As highlighted in our 2014 AGM article, trade financing is simply a tool used to minimize credit risks between importers and exporters. These loans are relatively cheap (0.5-1% p.a.), short-term, and is the norm among commodity companies.

7. The company is likely to spend at least US$1 billion p.a. on new investments in the next few years. Kuok is seeing attractive opportunities surfacing in the market. The investments will be internally funded and there are no plans to raise any equity as Wilmar’s recurring income from its businesses is self-sustaining.

For complete article, refer to:
The Fifth Person.

AK71 said...

Commercial airframe maintenance, repair and overhaul provider Singapore Technologies (ST) Aerospace will reconfigure the cabins of eight of Air Canada's Airbus A330 aircraft, in their second contract with the airline.

In a news release issued on Monday (Nov 2), ST Aerospace said that it will be installing additional premium economy seats in each cabin and enlarging the economy class section. It will also set up an integrated audio and video on-demand system, and maintain checks for the entire fleet.

Source:
http://www.channelnewsasia.com/news/singapore/st-aerospace-to/2232698.html

AK71 said...

Far East H-Trust posted a lower distribution per stapled security (DPSS) of 1.2 Singapore cents for the third quarter ended Sept 30, down from 1.32 cents a year ago. Income available for distribution slumped 8 per cent to S$21.57 million in line with lower revenue and higher finance costs.

AK71 said...

Buy order for DBS at $16.50 a share filled.
Stronger support to be found at $16.10 a share.

waikaye said...

Hello Ak,

What is your thought process on DBS vs the other 2 big banks?

AK71 said...

Hi Waikaye,

DBS seems cheaper based on price to NAV. Generally, there is also consensus that DBS will benefit more from a rising interest rate than OCBC or UOB.

AK71 said...

Jack James:
Sir , what's your view on Sembcorp Marine at S$1.95 ?

Assi AK:
Market sentiments very negative. Could go lower.
With revenue and earnings impacted, it would be safer to buy more only closer to NAV.

Martini said...

Hi AK,

why not OCBC since they are probably all trading at the same price to book value. OCBC has a 10% Scrip on their dividend. It will be very attractive if you let it compound. Since OCBC is the top 10 safest bank in the world. This can be the bond investment you are looking for long term? Secondly, OCBC and UOB are 2 of the 9 foreign banks to get a banking licence in Myanmar. I think there is potential over the long term. I do prefer DBS and OCBC over UOB though.

Regards
Huang XinLong

AK71 said...

Hi XinLong,

OCBC looked good too but DBS looked slightly more attractive based on the premium to NAV at the time of my purchase. You know AK lah. ;p

Good point on OCBC's DRP. Hmmm...

AK71 said...

BUY order for APTT at 63c a unit filled.

AK71 said...

Overnight BUY order for SingTel at $3.66 a share filled.

kkelviin said...

hi AK,
may i ask how many counters you have in total?
regards,
KS

AK71 said...

Hi KS,

I have never really counted. Off the top of my head, maybe, 30 or more.

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