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Buying DBS, OCBC, UOB and cheering for IREIT Global.

Tuesday, April 7, 2020

The title of this blog pretty much says it all, doesn't it?

OK, end of blog.

Ouch!

Who threw a shoe at me?

Anyway, I nibbled at DBS, OCBC and UOB earlier in the day.

Why did I nibble at DBS, OCBC and UOB?

Well, fundamentally, we want to buy into stocks with strong balance sheets and which are good dividend payers.

More so during a time of crisis.

So, tell me why didn't AK think of investing in SIA instead?

Hey, AK is mental but not that mental.

Ahem.






If DBS, OCBC and UOB have strong balance sheets and are good dividend payers, why didn't AK buy 2 weeks ago when prices were about 10% lower?

Well, AK is growing older and as he grows older, he becomes more timid.

This is the honest truth.

Basically, I didn't know if stock prices were going to move much lower from there

I was waiting for the dust to settle.

So, has the dust settled now?

I am not sure that the dust has settled but I think the dust is settling.

What do I mean by that?

It means that the bottoming process seems to have started.

I wouldn't say that things are bullish and that everything will be fine and dandy from now.

However, I will say that things are looking less bearish for now.

Prices have risen from the lows formed on 23 March and have been moving sideways for a while.






Today, the stock prices of DBS, OCBC and UOB all broke the resistance provided by their declining 20 days moving averages (20d MA).

What this says to me is that they broke their downtrends.

It doesn't really say anything else to me.

For sure, it isn't saying that stock prices will only go higher from here.

Personally, I feel that there is probably more downside in the weeks or even months to come.

However, Mr. Market doesn't care what I think and how I feel.

So, I just do whatever the plan which I drew out at the start of this crisis tells me to do.

For clues as to what I am talking about, read this blog:

COVID-19 defeated by Mr. Market in 2021 or so...


Remember, have a plan, our own plan and stick to it.

What is acceptable to me might not be so for you and vice versa.

Just remember that I am only talking to myself here in ASSI about my plan or, sometimes, plans.





What is going to happen next?

That is an easy question to answer.

The market will either move higher or move lower.

Yes, I know.

Bad AK! Bad AK!

What does my plan say?

Well, if DBS, OCBC and UOB see their stock prices move higher or just move sideways in the near future, we should see their 20d MA turning up in due course.

A rising 20d MA will provide some support and I would buy more at supports.

Basically, we want to see any retreat in stock prices bouncing off the 20d MA then.

If this is just a relief rally and if DBS, OCBC and UOB should see their stock prices plunging once more, then, we could see the lows of 23 March again.

Indeed, stock prices could go even lower than those lows which would be consistent with the view that the COVID-19 crisis is as bad as the Global Financial Crisis or even worse.

In such an instance, I would have to see a positive divergence formed with a momentum oscillator, the MACD, before buying more.

That is the plan.

Just have to wait and see how things pan out.

Mr. Market cannot be rushed.

Neither am I in a rush.


Stay calm and play Neverwinter!





Before I end this blog, I just want to share a bit of good news with fellow IREIT Global unitholders.

If you don't already know, IREIT Global is seeing a huge spike in its unit price today.

It is up 20% right now as I am typing this!

Now, I wish I had bought a lot more when I did at 42c a unit.

50% capital gain!

If only I had a working crystal ball, right?

"Tikehau Capital raised its stake to 29.2 per cent from 16.64 per cent while CDL increased its stake to 20.87 per cent from 12.52 per cent.

"This brings their aggregate shareholding to over 50 per cent.

"Meanwhile, new investor AT Investments has also acquired a 5.5 per cent stake in the Reit"


Source: The Business Times.
"Tikehau Capital, CDL raise their stakes in IReit Global as strategic partners."





In closing, today is the first day of stricter measures that will last for a whole month to combat COVID-19 in Singapore.

Remember, be socially responsible.

We are #SGUnited.


References:
1. Have a plan, your own plan.
2. COVID-19 defeated already?
3. Largest REIT investments updated.

43 comments:

laurence said...

Wow, AK the Oracle has finally spoken and revealed four cards. :)
Everyone now bz counting their money to throw at DBS, OCBC, UOB and IReit Global tomorrow!!! ;)

AK71 said...

Hi Laurence,

Alamak.

Don't like that say.

I scared. -.-"

redponza said...

Likely Tong selling his stake in IREIT to Tikehau Capital & CDL...

AK71 said...

Hi redponza,

Could be the case, of course.

laurence said...

Tong Jinquan sold them $64m worth of share.
In May 2019, he also sold 127m shares.
Looks like he has lots of debts to pay.

Chinese tycoon Tong Jinquan sells substantial stake in IReit Global to key unitholders Tikehau, CDL

Property developer Tong Jinquan disposes 127 million units of IREIT Global

Unknown said...

Dear AK

Is ireit global still a buy at 61C
'
thanks and God bless you

victor

Unknown said...

Dear AK

is ireit global at 61c is still a good buy??

thank and God bless you

victor

AK71 said...

Hi Laurence,

Thanks for sharing the news.

It could be that Mr. Tong really needs the money.

Margin calls?

Your guess is as good as mine. ;)

AK71 said...

Hi Victor,

IREIT Global is a good investment for income.

It was a good investment for income when CDL got in a year ago and it is still a good investment for income now.

Is 61c a unit a good buy?

If you are asking me if I know whether the price will stay strong and not decline from here, I don't know. ;)

Reference:
3Q 2019 passive income: IREIT Global.

SgFire said...

AK

All rocketed quickly. Are you still betting another correction ?

AK71 said...

Hi SgFire,

Betting on another correction?

Another correction is certainly possible but you might want to read the blog again.

The plan is not to bet one way or the other.

Unknown said...

Hi AK,
Just to let you know that your Facebook is back to normal now. We can see your post and everything.

AK71 said...

Hi Unknown,

Wow! Really?

Facebook realised their mistake?

I took at look at when I became Facebook free.

Reference:
Financially free and facebook free!

March 2019.

OK, it only took them one year. ;p

Thanks for letting me know. :)

H said...

Hi Ak. Thx for talking to yourself. Assuming you had none of the 3 banks, which one would you buy more and which one less?

Personally i prefer OCBC because they seem to have a better/longer div track record vs DBS which only in the more recent years started paying out more. Also, DBS seems to have burned a much large amount of cash on buy backs (and a large amount at over $20). Your thoughts?

AK71 said...

Hi H,

All three banks have strong balance sheets and are good dividend payers.

With prices being where they are now, there is really no compelling reason not to buy the three banks equally.

Having said this, if we have limited funds and if we really must choose, from a valuation perspective, today, OCBC and UOB are trading at a big discount to NAV whereas DBS seems to be trading at NAV or close to NAV.

We have to bear in mind that this is just one way to look at it, of course.

Unknown said...

Hi AK,

Just wondering if you have invested or are considering any investments in the Japanese market? I believe prices will continue to fall in the coming weeks, and it could be a long climb back to pre-covid price levels, but in general Japanese companies are conservative and have good cash holdings. Interested to know your thoughts, thank you for the valuable insights here!

Unknown said...

Hi AK,

Can you talk to yourself on the how the 3 local banks digitalised their businesses?

Both DBS & UOB have digital banks overseas in India, Thailand and/or Indonesia. Do you think OCBC is losing out in this aspect?

Also, do you think DBS’ high ROE (in 2019) and high dividend payout have anything to do with its digital bank?

Thank you in advance for sharing your thoughts.

AK71 said...

Hi Unknown,

I am too lazy to look outside of Singapore.

The Singapore stock market is enough to keep me occupied.

Used to have exposure to the Japanese economy through Saizen REIT and Croesus Retail Trust.

Now, I have some exposure through Accordia Golf Trust, of course. ;p

AK71 said...

Hi Unknown,

I am not an IT savvy person and that has been a disadvantage.

The IT savvy portion of the population is growing and digital banks will grow and maybe become mainstream.

The banks have their own growth strategies and OCBC's strategy is to grow in Greater China.

DBS is a very efficiently run business and it might have something to do with them going digital, of course.

PL said...

Hi AK,

Can ou share with us the prices you bought into the 3 banks?

Thank You

Lian

AK71 said...

Hi Lian,

Nope, I won't because what those prices are shouldn't matter to readers.

Of course, it won't stop readers from making a guess from the date of this blog.

That's fair, I guess. ;)

JH said...

I'm thinking why MAS stop share buy back for banks.... guess the price is too attractive now?

MAS eases some capital requirements for banks, but says no share buybacks
https://www.businesstimes.com.sg/companies-markets/mas-eases-some-capital-requirements-for-banks-but-says-no-share-buybacks

AK71 said...

Hi JH,

I don't think MAS is interested in whether stock prices are attractive or not.

It is more likely that MAS wants the banks to use the capital released from the easing to extend lending to businesses more readily to keep everyone afloat in this crisis.

Peach MilkTea said...

Hi AK, can you share the proportion you used for the three banks? I don't think you will buy all three 33%. In fact, I already bought in DBS, but I am wondering if I should go UOB and how much I should go

AK71 said...

Hi Peach MilkTea,

I did buy all three banks equally recently because they were all so attractive.

Before this, I only invested in DBS and OCBC because I thought they were more interesting while UOB was somewhat boring.

Being somewhat boring seems like a strength now for UOB. ;p

You might be interested in my recent reply to a reader's comment on the local banks:
HERE.

JL said...

Hi AK,

Hope you are well.

What is your thought on the recent news on local bank exposure of total USD600M to Hin Leong Oil Trading?

Regards,
JL

AK71 said...

Hi JL,

What do I think?

We should be ready for more of the same in the coming months.

CupcakedCrusader said...

Hi Ak,

What do you make of the prices of the banks falling below their 20d MA?
Would you be adding as it falls below their MA? Or wait for better clarity

Cheers

AK71 said...

Hi CupcakedCrusader,

See my latest blog:
Market sways between hope and worry...

Have a plan, your own plan. ;)

CL said...

What is your evaluation of Starhill Global now compare to when you first got it?
Have you considered adding to Starhill Global given the share price is also hit badly and it has a few properties on master leasees?

AK71 said...

Hi CL,

I made a case that Starhill Global REIT (SGR) was more attractive as it was an undervalued investment for income compared to other retail properties S-REITs in early 2017.

Reference:
Online shopping, retail S-REITs and Starhill Global REIT.

With the COVID-19 pandemic, all retail properties S-REITs are hit.

Although not as bad as airlines and hotels, SGR and other retail S-REITs will take a while before recovering to where they were before the crisis hit.

If we believe that SGR will make a speedy recovery, then, we should buy more but since I am not sure that it would be the case, I am not adding to my investment.

Elaine said...

Yay 😀

IREIT Global
- 1Q20 portfolio occupancy crept up 0.1ppt q/q to 94.7%, supported by WALE of 3.9 years (4Q19: 4.2 years) with 3.5% of leases to expire in FY20/21.
- Key tenant GNG (subsidiary of Deutsche Telekom) exercised its break option to return 2/6 floors at Munster South Building (31.6% of gross rental income), though a new tenant has already been found and will take over the space (3,600 sqm or 13% of NLA) on a 9-year lease wef 1 Mar ’21.
- All rents for 1Q20 have been collected as well as 98% of Apr ‘20’s rent.
- Aggregate leverage eased 1.3ppt q/q to 38%, with average debt tenor of 5.2 years and stable interest cost of 1.8% (86.3% on fixed rates).
- Expects lower office space take-up in Germany but rents should remain stable. Notes a slowdown in leasing activity in Madrid and Barcelona.
- Looks forward to using a combination of debt and equity to repay its €32m loan due in FY21 and acquire the remaining 60% stake in its Spanish portfolio.
- Trades at 8.7% FY20e yield and 0.8x P/B.

AK71 said...

Hi Elaine,

Overall, a good set of numbers for IREIT Global. :)

Of course, we should be prepared for a possible rights issue.

AK71 said...

Reference:
IREIT Global Business Update dated 13 May 2020.

disr said...

Hi AK, I noticed your Web browser doesn't show tags? I used to use tags alot when I scoured ur blog when I first found it years ago so I think it was massively helpful. maybe you could consider adding it

AK71 said...

Hi disr,

The web version of my blog shows tags.

You might be viewing the new mobile version of my blog which looks cleaner but is missing many features.

There should be an option to "view web version" at the bottom.

Click on that and you will see the full feature web version of my blog. :)

disr said...

my bad I meant the mobile version doesn't show tags haha. which is one of the best features that newer guys may not realise if they use the mobile,version

Ok said...

Hi AK

https://www.businesstimes.com.sg/companies-markets/accordia-golf-trust-unitholders-vote-in-favour-of-proposed-divestment-and-winding

AK71 said...

Hi disr,

The mobile version of the blog is cleaner but it comes at a cost.

The web version is definitely richer in features.

I don't surf the net on my mobile phone much as I prefer using my laptop.

However, I understand that most people are not like me. ;p

AK71 said...

Hi Ok,

The slightly higher offer price still undervalues Accordia Golf Trust's assets but it is what it is, right? :)

David said...

Hi AK,
Good Day.

Ireit has a Right issue.
Every 1000xshares can subscribe 454xRights at $0.49.

Would like to seek your opinion.

Thank you
David

David said...

Hi AK,
Good Day.

Ireit has a Right issue.
Every 1000xshares can subscribe 454xRights at $0.49.

Would like to seek your opinion.

Thank you
David

AK71 said...

Hi David,

You might want to read my latest blog for more on this:
3Q 2020 passive income.

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