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2Q 2020 passive income: COVID-19 crisis.

Wednesday, July 1, 2020

I thought of not blogging about my 2Q 2020 passive income till a couple of weeks later because Mod 19 of Neverwinter, Avernus, just went live this morning.

Yes, the world of Neverwinter just received another expansion.

Anyway, after an initial foray which lasted almost 3 hours in the new adventure zone, I told myself I should quickly pen and get this blog published so that I can continue adventuring without feeling terrible about myself.

Before I start, this is a peek into the world where I will be spending most of my time in the next few weeks:







Some might remember that in the title of the blog on my 1Q 2020 passive income was the phrase "COVID-19 disaster."

This time, in the title, I have the phrase "COVID-19 crisis."

Although economies are re-opening, we are not out of the woods.

The virus is alive and kicking and we are seeing many cases of resurgence.

The COVID-19 pandemic has been described as "a crisis of a generation" by our country's leaders.

The COVID-19 virus is showing some worrying staying power.

The pandemic has damaged economies around the world very badly, erasing years of progress, plunging countries into deep recessions.






Unlike the Global Financial Crisis some 10 years ago, this is a Global Health Crisis.

A recession that stems from a financial crisis can be ended with financial tools.

A recession caused by a health crisis like the one we have now cannot be ended with financial tools.

The aggressive implementation of supportive monetary and fiscal policies around the world has provided relief but it does not address the root of the problem.

As long as a safe and effective vaccine for COVID-19 is unavailable, a return of the global economy to pre-COVID-19 level in a short time is rather unlikely.

We would probably see more of the population suffering from joblessness and business failures in the meantime.

Not being pessimistic.

Just being realistic.

An important thing for us to do is to make sure we can definitely survive this crisis financially especially if it drags on for much longer.

Instead of chasing possible upside, it is more important to be prepared for possible downside in life.

If you are new to my blog or cannot remember, you might want to read this blog:
The most dangerous crisis and what should we do?





Now that I am done nagging, how much did I receive in passive income in 2Q 2020?

$57,395.95

I will say a few words about the entities which made more substantial contributions to my passive income in 2Q 2020.

Frasers Commercial Trust contributed a smallish 4 figure sum which will not be repeated.

This is because they have been bought over by Frasers Logistics Trust (now Frasers Logistics & Commercial Trust).

My investment in Frasers Logistics & Commercial Trust has also become bigger because of this and should continue to be a good income generator for me.





Other entities which made much larger contributions than Frasers Commercial Trust and Frasers Logistics & Commercial Trust to my passive income in 2Q 2020 were Centurion Corporation, DBS, OCBC, ComfortDelgro, VICOM, WILMAR, AA REIT and Accordia Golf Trust.

Of these entities, I expect Centurion Corporation and ComfortDelgro to be the most challenged during this crisis.

AA REIT reduced their distribution by about 20% in 2Q 2020 but I am reasonably confident that they will stay resilient.

WILMAR looks set to list their Chinese business before the end of the year which should result in a special dividend.

Accordia Golf Trust has revealed details of the offer by its sponsor to acquire all its assets and I blogged about this recently.

Although my passive income in 2Q 2020 looks healthy, I am aware that it was paid out by my investments from their strong performance in the past.

With their future performance likely to be weaker, I expect my future passive income to weaken in tandem, all else being equal.






Apart from the passive income received in 2Q 2020, my float has also been strengthened through selling a big chunk of my investment in Ascott REIT-BT.

Ascott REIT-BT is no longer one of my larger investments.

I have also received money from BreadTalk as they paid me 77c a share for my investment as they delisted.

This was a smallish investment but a profitable one.

As for the stock market, it looks like the dust has settled.

Although the economy is quite sick and will probably continue to be sick for some time to come, the stock market has found a bottom.

Technically, there is still a chance that the bottom could be tested in the next few weeks or months but the chance of that happening is slimmer now.

Having said this, if the COVID-19 pandemic has taught me anything, it is that low probability events could happen and they could pack quite a punch when they do.







I see the moving averages turning up and rising in many charts.

So, I am likely to add to my investments if prices should retreat to some of these moving averages as they should provide support.

I would not be throwing in everything including the kitchen sink because if the supports break, the fall might be another big one.

Technical analysis shows where the supports are but it does not tell us if the supports will hold.

No one knows for sure.

Oh, please allow me to nag again before I go.

Please continue to act responsibly and keep all of us safe.

We are #SGUnited.




Related posts:
1. Accordia Golf Trust: $0.732 offer.
2. AA REIT, IRET, Ascott REIT-BT.

94 comments:

The Dreamzola Traveller said...

That amount very good liao la.
I only managed to achieve 30% of yours le.

keng said...

Hi AK,

Would you consider adding to QAF?
Seems like the Primary Production has somewhat stablized and they are looking to sell off this business.

AK71 said...

Hi TDT,

I am not complaining.

In fact, I said in the blog that my 2Q 2020 passive income looks healthy.

My concern is with possibly weaker passive income in the future.

AK71 said...

Hi keng,

I am quite happy to hold on to my existing investment in QAF.

After all, QAF has a good track record of bringing home the bacon. ;)

Having said this, I am unlikely to add to my investment in QAF in a big way because my strategy has been leaning more towards investing in the local banks which have much stronger balance sheets.

SgFire said...

Hi AK

I can relate the stress that you are going thru now with low or no expectation of future income from our investment.

This situation doesnt look like its going to recover to normal very soon but staring at the portfolio really makes one wonder if it is time to cut and reduce spending or manage a tighter contribution . Next year Cpf VC do look gloomy for me if dividend is further reduce in 2H.

AK71 said...

Hi SgFire,

Unless we do what an ostrich would do, we should be able to see a storm brewing.

Headwinds in the economy are getting stronger, not weaker.

Add to the ongoing global pandemic, there are also major geopolitical flash points and the threat of nationalistic anti globalization drive in the developed world.

Anyway, if I must choose between spending less money or contributing less to my CPF savings, I would choose the former.

Risk free and volatility free CPF that pays 2.5% to 4% annually looks more attractive than ever in the current environment.

Reference:
How much passive income is enough for you?

AK71 said...

Hi PG,

Thanks for sharing the link to the article.

Voluntary quarterly reporting has reduced visibility on listed companies' outlooks.

Here is an article from The Forbes published in 2018 on why quarterly reporting makes sense:

Why Quarterly Reporting From Business Makes Sense?

"...President Trump directed the Security and Exchange Commission to explore extending financial reporting deadlines from three months to six. In a morning tweet, he said this suggestion came from top business leaders who told him that this “would allow greater flexibility & save money.”

"What the president’s proposal will do is reduce transparency and deny investors, government regulators and the public essential information about a range of topics that are in the public’s interest to know."

Chenheyuan87 said...

Hello ak.. Are you concerned that our local stock market is unable to attract quality listing? As with all the negative news surrounding local exchange. Is income investing locally still relevant in e middle to long term?

Thanks!

AK71 said...

Hi Chenheyuan87,

I don't know what the future will bring.

I do know what has worked for me and will continue doing it.

It is good to remind myself from time to time that my approach is a holistic one.

Not fully dependent on the stock market, I have greater assurance:
Holistic approach to a secure financial future.

Unknown said...

Hi AK,
Just wondering if it is in your thoughts to do an online course/workshop to share your experience in dividend investing and also earn some passive income at the same time.
It will help to also make up for the dropping dividends.

AK71 said...

Hi Unknown,

Many have asked for this before in the past but I am too lazy to do this. ;p

I also don't fancy the responsibility that comes with classes, courses or workshops.

Still, thank you for the idea. :)

Jackie said...

Hi AK,

Why do you say that the dust has settled and stock market has found a bottom when the virus cases globally has continued to reached all time high?

Thanks.

Jackie

AK71 said...

Hi Jackie,

There is an obvious and significant disconnect between the stock market and the economy.

Like I said, the economy is sick and will remain sick for a while.

However, the stock market has risen in spite of all the bad news and, more importantly, it has stayed buoyant.

So, we can say the stock market has found a bottom.

The stock market is not the economy.

Unknown said...

Hi

I am trying to find out more about passive income as I am toying with the idea of retiring and live off passive income - looking at monthly dividend income via Unit trust and stocks etc

I am very impressed with your Q2 passive income, are these all from stocks dividends ? If so, and assuming an average return of 6%, the invested amount will have to be about $3.8M ?

Thanks in advance for your sharing
best rgds
SC

AK71 said...

Hi SC,

I blog about my passive income numbers quarterly here in ASSI but some things I am not comfortable enough to reveal.

I will say that we should not annualise any one quarter's passive income because the quarterly difference can be quite significant.

Yes, the passive income is only from my investments in the stock market.

It used to be that I blogged about my income from REITs and non-REITs separately.

Now, I just lump them together.

You might want to use the web version (as opposed to the mobile version) of my blog and go to the right sidebar where I have provided links to many more of my blogs on passive income.

Gambatte! :)

Web version:
https://singaporeanstocksinvestor.blogspot.com/

Anon said...
This comment has been removed by the author.
Anon said...

Hi AK, I tried to email you but couldn't get through as there was some mail delivery error. Not sure if it's because your mailbox is full. Could you check your email please? Had an issue I needed your help with regarding an old blog post of yours. Thanks! :)

AK71 said...

Hi Anon,

In the web version of my blog, there is a statement right at the top:

"The email address in "Contact AK: Ads and more" above will vanish from November 2018."

Mystery solved. :)

Anon said...

Oh I see, my apologies, I didn't realise. Is there any other way I can contact you privately? Just wanted your help in removing mention of my real name in an old blog post, if that is possible. Thanks.

AK71 said...

Hi Anon,

There used to be Facebook but no longer.

Facebook was mean to AK and we had a parting of ways. ;p

Financially free and Facebook free!

The only way for readers to contact me now is here in my blog's comments section.

I wouldn't worry about old blogs of mine.

I doubt anyone reads them. ;)

RIck Fok said...

Hi, I am not very into stats and numbers.

But i do read analysis and blogs like yours to get info

I am now into blue chip bank stocks, SIA, and some REITS.

Not much but it does give me good dividends.

I like your post above. Do share more and would like to follow it

Rgds
Rick

AK71 said...

Hi Rick,

Welcome to my blog.

Although I don't blog as much as I used to, I still enjoy blogging when I do.

I am glad you enjoyed the blog. :)

NMHRGY said...

hi AK

are you nibbling at any stocks recently?
the bank shares e.g. DBS, OCBC looks quite interesting to me...

AK71 said...

Hi NMHRGY,

Not telling anyone if I am nibbling but looking interesting to me too.

Please don't let what I do affect your decision. ;)

laurence said...

Quote.
Not telling anyone if I am nibbling but looking interesting to me too.
Unquote.

The stock market is like the annual Sardine Run of South Africa fm May to July.
AK is like the great humpback whales --- one nibble catches one ton of sardines.
The rest of us are like the gannet birds diving into the ocean to score just one tiny sardine each time.
;)

AK71 said...

Hi Laurcence,

Just have to do what our circumstances allow us to safely and comfortably do, whatever our beliefs may be. :)

SgFire said...

Hi Ak

Latest AA reit results shows some positive news in their leasing front. Despite a challenging environment, AA reit was able to increased their rental.

Ceo saw strong demand for their space during Covid.

AK71 said...

Hi SgFire,

AA REIT is a well run industrial properties S-REIT and still the largest investment in my portfolio.

I am reasonably confident that they will remain resilient. :)

SgFire said...

https://www.theedgesingapore.com/capital/brokers-calls/aims-apac-reit-still-buy-despite-dpu-and-revenue-decline-dbs?utm_source=twitter&utm_medium=dlvr.it&utm_campaign=contentdistribution

Ak

Two multitenant contract expired. I hope they can find replacement soon.

AK71 said...

Hi SgFire,

I believe that the assumption of a DPU of 8 cents for the year is realistic.

Based on a unit price of $1.22, we get a distribution yield of 6.55% which is not bad at all in the current environment.

Crossing fingers.

Yu said...

hi ak,

can u talk to yourself about current price for local banks? looks tempting

AK71 said...

Hi Yu,

If it looks tempting to you, ask why?

If the reason is a good one, go ahead and buy some. ;)

Unknown said...

Any thoughts on comfortdelgo? And why significant shareholders keep dumping?

SgFire said...

Ak,

Centurion boss starting to accumulate again.

Siew Mun said...

For SG bank equity lovers , MAS call banks to limit dividends to 60% of FY2019 DPS or scrip in lieu of dividends
https://www.mas.gov.sg/news/media-releases/2020/mas-calls-on-local-banks-to-moderate-fy2020-dividends

AK71 said...

Hi Unknown,

I do not know why ComfortDelgro's shareholders are "dumping" but I do know why I have not added to my investment in ComfortDelgro.

You might be interested in this blog:
COVID-19, ComfortDelgro and the new normal.

AK71 said...

Hi SgFire,

Could you provide more details?

I have been keeping an eye on Centurion Corp's announcements but have not seen anything about insider buying.

AK71 said...

Hi Siew Mun,

That would mean a 40% reduction in dividends from the banks. -.-"

Siew Mun said...

A season of planting. An opportunity for those who are able to buy bank shares and hold for more than 3 years.

LKH said...

Is there any change in your view on the banks in Singapore? Still a better buy than reits?

SgFire said...

https://www.sgx.com/mobileapp?action=view&cat=company-announcements&id=XKIVY84HGPYJ63JN

Here is a transaction by a management

AK71 said...

Hi Siew Mun,

Tree planting is good for the environment too. ;)

AK71 said...

Hi LKH,

I still want to grow my investment in DBS, OCBC and UOB. ;)

AK71 said...

Hi SgFire,

I only saw a transaction where Mr. David Loh's interest in Centurion Corp reduced by 500,000 shares because they were transferred to his daughter.

SgFire said...

Hi Ak

sorry, i read as differently.

Thank you for correcting.

AK71 said...

Hi SgFire,

No problem at all.

Looking out for more insider moves. ;)

Bananamint said...

Hi AK,

Please can I have your opinion - if local banks would be displaced by digital banks in the medium term?

It would be quite sad if they are, because these are the only shares I see worth purchasing at this point :(

Thank you!

AK71 said...

Hi Bananamint,

DBS, OCBC and UOB are aware of the how digital banks can be a challenge.

Will digital banks replace them in future?

I don't have a crystal ball and will just have to wait and see.

What is certain is that disruption of almost everything we know is intensifying.

Things are changing so fast that old economy AK finds it hard to understand sometimes.

laurence said...

Wow, many truth-seekers came to obtain enlightenment fm our holy Oracle this week as turmoil reigns the world.
Reminds me of the day in history when a bright star suddenly appeared in the night sky to a trinity of wise men.
;)

Darren said...

Hello Ak,

Will you add to Semb corp Indus before the meeting?

SgFire said...

Ak
With banks reducing dividend , firemen are feeling uneasy a bit.

No reason to sell and move away. Just have to keep it long term.

keng said...

Hi AK,

ESR Cayman bought another 400000 shares in AA REIT.

Looking at the merger between Sabana REIT and ESR REIT, I'm a little worried for what might happen to AA REIT..

SgFire said...

Hi Ak

Happy national day. Ireit is doing a right issues for its Spanish properties. Can you talk to yourself on it?

AK71 said...

Hi everybody,

Apologies for the tardy response.

I did add to my investment in SCI as its stock price sank to around $1.70 a share.

As for the local banks, I added to my positions as their stock prices weakened recently.

ESR has been eyeing AA REIT for a long time and were buying even when the unit price was a lot higher months ago.

Finally, the rights issue by IREIT Global is something I have been expecting although it is much larger than what I thought it might be.

Eric said...

Hi AK, can you talk to yourself on the latest 1H result of QAF? QAF has posted H1 earnings 13 times to S$28.2 million and also they are launching a sale process for its primary production arm in 2H 2020.

SgFire said...

Thank you AK

Even AA reit made an acquisition today. No7 Bulim Street.

And of course AGT upped the offer to us.

Song bo

Unknown said...

Wonder if investor at risk if ESR takes over AA Reit

AK71 said...

Hi Eric,

QAF had a good track record until its primary production business hit a cyclical downturn.

Selling its primary production business would unlock value and also remove the cyclical component of its earnings.

I rather like this.

AK71 said...

Hi SgFire,

Crossing fingers. ;)

AK71 said...

Hi Unknown,

Crossing fingers again. ;)

john said...

Insiders at centurion Han Kee Juan purchases 550k shares at $0.35 today. Good sign

Steven said...

Hi AK,
You seem to have stopped posting articles. Whats the problem?

Best Regards,
Steven

MK said...

Looks like centurion management has started buying.

https://links.sgx.com/1.0.0/corporate-announcements/YX36SGAI15JLGTMV/8cac735eba87164d97aca51c56828b5db6e33aca9e01ffc1f2cac3db61ed5e10

Blur Sotong said...

Hi AK71,
Please speak to yourself again, please. CDG just reported a really large (expected) loss (if not for the government help) for their 1H 2020 results. Was the price battering up to now, sufficient to account for the expected loss?

Thanks.

Ming-Jie Chai said...

Hi AK, Han Seng Juan has been adding more Centurion shares at $0.35. Will you be joining him to increase your stake in Centurion? :P

Deet said...

Mr Han SJ has bought 1.025 million shares of centurion last wk at price of 0.35

garudadri said...

The way the markets have moved here sideways for the past 2 months nearly, within a narrow range, makes me think that buying the STI ETF might be the safer option
Will capture significant upside of markets eventually recover
We are still off 20% YTD

Sunny said...

Hi AK, am a PR that went freelancing since beginning of the year as I need to move to another country to join my hub for starting a family. I have pretty much left my investments and CPF intact as I figure out it will be a good side income as my freelancing is not stable yet. When I moved I only left with medisave rider and NTUC membership that gives couple some life insurance protection. Medisave rider as just in case I need to come back to Singapore for hospital treatment, as I feel SG hospitals are very reliable. I have cut my losses and took out my ILP and Life insurance as I cant service them anymore as no stable job and I am moving anyways. Then covid come and now cant even travel, cant even go out and about. I did not add any more investment but also did not sell my current. Question is, do you think I should continue with my NTUC membership and also the rider?
and is it wise for me to just hold on to the investments? I dont need to use the money now so I can still hold it. Last few years I get pretty good dividends out of them, as most of them is reits, from learning n reading from u :) thanks!

Elaine said...

Hi AK

Wilmar is down 9.5% as the market reacts to ADM trimming its stakes. May I know what are your thoughts on this development?
https://www.channelnewsasia.com/news/business/archer-daniels-midland-to-cut-stake-in-wilmar--sell-shares-for-us-500-million-13035566

AK71 said...

Hi john, MK, Ming-Jie Chai and Deet,

This is very good news, of course.

Unfortunately, with the impending rights issue by IREIT Global, the size of my war chest will shrink significantly.

Also, I still want to increase my investments in the local banks.

I will be nibbling at Centurion Corporation though.

Competition for very limited resources is real.

AK71 said...

Hi Steven,

I don't know if you remember but it was a year or more ago when I said I would not be blogging as much.

I was still active in Facebook back then.

I thought just one blog per quarter as an update might be what I would do.

Blogging is a hobby and for a long time it was my favorite hobby.

So, I was spending a lot of time blogging.

For a while now, I have been enjoying a new favorite hobby. :)

AK71 said...

Hi Blur Sotong,

It was very clear to me that some of my investments would be very badly impacted by the COVID-19 pandemic and, more than once, I said ComfortDelgro would be one of them.

I hope that we do not get a second wave or a third wave and that things will get better in Singapore but for ComfortDelgro to recover strongly, things will have to get better globally.

Crossing fingers.

AK71 said...

Hi garudadri,

Sounds like you have a plan.

It is always good to have your own plan. :)

AK71 said...

Hi Sunny,

2020 has turned out to be a terribly disruptive year one way or another for most of us.

Sorry to hear about how COVID-19 has derailed your plans.

Well, some insurance we need.

Some insurance we we don't need.

H&S insurance, we definitely need.

As for investments, I like to believe that COVID-19 is not staying with us forever. ;)

AK71 said...

Hi Elaine,

Well, I certainly hope that this is not a sign that something fundamental has changed in Wilmar's business.

Could it be that ADM needs the money somewhere else?

keng said...

Hi AK,

You may be interested in this video chat with Kong Chee Min, especially the Q&A.

https://youtu.be/e9IKVQcGDi8

AK71 said...

Hi keng,

Thank you very much for sharing this. :)

Unknown said...

Hi AK. Will you be talking to yourself soon

Darren said...

Hello Ak, are you selling the SMM issued shares?

AK71 said...

Hi Unknown,

It has been a long time since my last blog but I don't have anything I really want to blog about.

Neverwinter's new campaign is keeping me busy and I have also moved to a higher leadership position in my guild.

Having said this, I will still check ASSI from time to time.

A quarterly blog is also something I will be doing as long as it remains interesting.

So, I should be blogging end Sep or early Oct. :)

AK71 said...

Hi Darren,

I am inclined to hold on to the SMM shares given out by SCI to shareholders.

This is because the business is cyclical and it is currently in the depths of its down cycle.

Also, it isn't a large investment for me and I feel comfortable enough to hold.

Unknown said...

Hi Ak,
Would you buy more SMM shares given its current share price?

Rae said...

Hi ak

Will you be buying more rights to buy ireit at 49c in the open market?

Thank you

iwimsasl said...

Hi Ak,

You still hold LMIR Trust?
Looks like a 6cts 160-100 RI is coming, will you participate?
Your decision of passing the APTT RI I noticed was joined by Temasek holding, looks like a correct decision so far.
Kindly share some light to LMIR RI, thanks.

Desmond said...

Hi AK,

Curious about your thoughts on IRIET rights subscription.

Winnie said...

Hi AK,
What do you make of ireit rights issue which is not DPU acretive? Will you be selling the rights or subscribing for it?

iwimsasl said...

Hi Ak,
Will you participate in Lmir RI?
Why? Kundly talk to yourself, thx.

AK71 said...

Hi Unknown,

I am OK to holding but not adding.

I don't know when the down cycle is ending for SMM and I don't want a larger speculative position.

AK71 said...

Hi Rae,

You might want to see my latest blog for more on this:
3Q 3020 passive income.

AK71 said...

Hi iwimsasl,

I blogged about how we should be wary of LMIR many years ago and I no longer have an interest in this.
See: Cutting losses in REITs.

AK71 said...

Hi Desmond,

You might want to see my latest blog for more on this:
3Q 3020 passive income.

AK71 said...

Hi Winnie,

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

Elaine said...

Hi AK

May I know what are your thoughts on Wilmar?

It was assuring to see the Chairman acquiring 2m shares at $4.41 in Sept. But despite the overwhelming response of Yihai Kerry Arawana, Wilmar prices dropped to a low of $4.15 today:-(

Many thanks in advance!

AK71 said...

Hi Elaine,

There is no accounting for Mr. Market's mood swings.

I feel that Wilmar is worth a lot more and if the insider purchase you mentioned is anything to go by, Mr. Kuok agrees. ;)

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