3Q 2018 passive income (non-REITs): APTT.

In August 2018, I also received questions about APTT as its unit price plunged.

In one way or another, I was asked whether I was buying APTT again like I did when its unit price plunged in the past.

Regular readers might remember that I said APTT's 6.5c DPU was unsustainable and a more realistic DPU was 4c.





When I bought more APTT in the past, it was based on what I thought a reasonable and sustainable DPU would look like.

The purchase was not premised on what APTT was distributing at that point in time.

Please keep this in mine as I continue talking to myself.





Although APTT's very high debt level and the fact that they are running a deficit is worrisome, again, I remind myself that all investments are good at the right price.

The last time I bought into APTT, my premise was a realistic distribution yield of around 10.5% based on a sustainable DPU of 4c.

If we were to consider the higher risk that comes with an environment of rising interest rate, shaving 10% off what I thought was a more sustainable DPU then is not unreasonable, given APTT's highly indebted nature.

Now, a DPU of 3.6c is surely more sustainable.





Then, if we were to demand the same 10.5% yield like before, we would only be buyers at about 33.5c a piece (or lower).

Therefore, I wasn't interested in buying APTT in August 2018 as I didn't think it was priced attractively enough.

I also had a feeling that APTT's unit price might drift lower upon going XD as Mr. Market was feeling rather pessimistic.

Finally, weeks later, in late September, I took a bite of APTT.





If I didn't have anything else to invest in, I would have taken a bigger bite as I believe closer to 30c a piece, APTT compensates me sufficiently for the risk I am taking.

Having said this, everything else being equal, I would probably be accumulating APTT if Mr. Market should make me even better offers in future.

APTT is not going to implode anytime soon.

A safer distribution yield in excess of 10.5% is rather difficult to ignore.