Largest investments updated (3Q 2019).

It has been almost a year since my last blog on the largest investments in my portfolio.

Since then, in the following months, I added to some of my investments such as 

1. OCBC at under $11.00 a share, 

2. ComfortDelgro at under $2.20 a share 

and 

3. SingTel at under $3.00 a share.





Not much activity on my part, really.

Most of the time, I was just collecting dividends while waiting for Mr. Market to recover from his depression.

When Mr. Market did recover, I waited to see how euphoric he could get.

(To be totally honest, mostly, I was adventuring in Neverwinter but you know that, of course.)

After my recent blog on selling into the rally while staying invested, a reader asked if I could do an update on my largest investments.

I suppose I could.





$500,000 or more:
CPF.

Do I hear laughter?

While the CPF is not an equity and isn't a bond in the purest form, I do consider it an essential part of my portfolio.

I consider it essential as it is the risk free and volatility free component of my investment portfolio which pays a relatively attractive coupon.

I decided to include my CPF savings to remind readers that I am able to take a bit of risk in the way I invest because my CPF savings is a very significant safety net.

Well, for me, it is very significant.

When we invest, remember, we have to take into consideration our personal financial circumstances and not simply ride on other's coattails.

I hope that you had a good laugh.

More importantly, I hope you are also aware that this isn't all a joke.







From $350,000 to $499,999:
AIMS APAC REIT
(formerly 
AIMS AMP Cap. Ind. REIT)

This should not come as a surprise, of course.

My investment in this REIT is already free of cost and there is no compelling reason for me to fiddle with something that has worked so well for so many years.

There has been talk of a takeover of this REIT and, to be honest, I hope it never happens.

Many good income producing investments in my portfolio have been taken away from me and it is difficult to find equivalent replacements.





From $200,000 to $349,999:
ComfortDelgro
Centurion Corporation Ltd.

From being unloved, ComfortDelgro has become much desired by Mr. Market.

I like ComfortDelgro too. 

Even after trimming my investment in this rally by more than 20%, ComfortDegro still stays in the same bracket because the market value of my investment has gone up by more than 30%.

As an investment for income, ComfortDelgro is probably more reliable than Wilmar and its dividend is probably more sustainable than SingTel's.

Having said this, if Mr. Market should have a feverish desire to pay a much higher price for ComfortDelgro, everything else remaining equal, I would probably accept the offer.





Centurion Corporation Ltd. moved into the same bracket as ComfortDelgro because I added to my investment as its share price languished at about 40c a share.

Centurion Corporation Ltd. is undervalued and there continues to be persistent insider buying.

Peter Lynch said that there are many reasons why insiders sell but there is only one reason why they buy.

I like being paid while I wait and a dividend yield of almost 5% is not too shabby.





From $100,000 to $199,000:
Ascendas H-Trust
Accordia Golf Trust
Development Bank of Singapore
OCBC Bank

Ascendas H-Trust will probably be replaced by a new entity and I shared my view about the proposed combination with Ascott Residence Trust in two separate blog posts earlier this month.

As for Accordia Golf Trust, it still has the potential to increase DPU significantly in the next few years and I blogged about this before. 

I am quite happy to be paid while I wait, as usual.

Development Bank of Singapore is doing well and I would like to build a larger position if there is a meaningful correction in its share price.

New addition to the list is OCBC Bank.

This is the result of several rounds of accumulation at under $11.00 a share as I felt it offered relatively good value for money.





As for SingTel and Wilmar, after reducing my exposure significantly, my positions in SingTel and Wilmar are now worth less than $100,000 each.

Not part of my largest investments now, SingTel and Wilmar have been removed from the list here.

If Mr. Market should tempt me with better offers, I am likely to give in to temptation and sell what remains.

Remember, I am just doing what makes sense to me.

Remember, you have to do what makes sense to you.

Have a plan, your own plan.

"We must understand our motivations for investing in the stocks we are invested in.

"The tools we employ and the attitude we have must be appropriate to our motivations.

"That way, we will stand a good chance of doing better with a consistent strategy and this is so both financially and emotionally!"
From: 
Rules for investing in difficult times.




Recently published:
Sell into the rally and stay invested.

Related post:
Largest investments in 2018 (Part 2).

4Q 2018 and FY 2018 passive income.

It has been a pretty long break since my last blog.

I have also been spending a lot less time engaging readers both in my blog and on Facebook.

I know that many readers are not used to this.

However, this will continue to be the case as I devote a lot more time to other activities.

This was something I talked about before and it is the new normal.

So, please don't be surprised if you do not hear from me for weeks (or months) at a stretch in 2019.

Now, with that out of the way, I shall wrap up 2018 with a blog on my full year passive income.







Mr. Market went into a depression in 4Q 2018 and made me too many tempting offers.

Spoilt for choice, with my limited resources, I added to my investments in several stocks in 4Q 2018 even as I sold my entire investment in First REIT.

To understand why I sold my investment in First REIT, please refer to related post at the end of this blog.




Stocks (with hyperlinks to my earlier blogs where available) which I added in 4Q 2018:

1. Accordia Golf Trust.

2. Centurion.

3. ComfortDelgro and SingTel.

4. OCBC.

5. APTT






Due to the fact that I sold my investment in First REIT as its unit price bounced up when it went CD, my 4Q 2018 passive income from REITs reduced.

Readers who have been following my blog for many years might remember that I didn't share details of my passive income from non-REITs until it became a more significant percentage of my total passive income a few years ago.




As my passive income from REITs have steadily declined in recent years as a percentage of my total passive income, I will consolidate the numbers for both REITs and non-REITs, henceforth.

4Q 2018 passive income (REITs and non-REITs):

S$ 38,884.64






As I have blogged about the reasons why I added to my investments in Accordia Golf Trust, Centurion and ComfortDelgro in 3Q 2018, I will not repeat myself.

I also did an update on APTT as its unit price plunged and also explained more in detail during "Evening with AK and friends 2018" the rationale for buying at what I thought was a distressed price.

In the list of stocks above, I have hyperlinked those blogs for anyone who might be interested in reading or re-reading.






As APTT's unit price plunged under 13 cents a unit after it went XD, I took another bite.

Accepting an offer from what I believe was an overly pessimistic Mr. Market, it was quite simply a price I would not have sold at.

Readers who have been following my blog for many years would know how I size my more speculative positions.

With this last purchase, I would stop increasing my position in APTT as I keep it at a size that my passive income could cover within a year or less.

If you do not know what I am talking about, please read this blog from 2014:

How to size our more speculative positions?




Now, I will briefly explain my decision to add significantly to my investment in OCBC.

With interest rates rising, logically, banks will do better.

Already invested in DBS and OCBC at lower prices two years ago, I have been waiting for another opportunity to increase my investments.

In 4Q 2018, I increased my investment in OCBC significantly.

Why OCBC?







OCBC's stock experienced stronger selling compared to DBS and UOBs'.

A back of the envelope calculation indicated that OCBC was trading at a much smaller premium to NAV while DBS and UOB were trading at a richer premium to NAV.

The same back of the envelope calculation indicated that OCBC's dividend payout ratio is about 40% which is very undemanding and is the lowest of the 3 banks.




OCBC also had the lowest PE ratio.

So, I took several bites of OCBC as its share price plunged in 4Q 2018.

The funds from the sale of my investment in First REIT certainly came in handy.

Of the three banks, OCBC just seemed to be a better value for money offer at the time.






Some people asked me for a forecast of what 2019 has in store for the stock market.

Honestly, I don't know.

I cannot predict.

I can only prepare.

Remember?

However, what I can say is that, a bit more or a bit less, I will probably be receiving a meaningful amount of passive income from my investment portfolio.




Regular readers know I really am more concerned with receiving a meaningful stream of passive income from my investments than whether stock prices are moving up or down.

As long as my investments continue to pay me, I am usually quite happy with holding on to them.

The best investments could be those that I don't ever want to sell because they are able to pay me year after year.

Peace of mind is priceless.







How much did I receive in FY 2018?

FY 2018 passive income (REITs and non-REITs):

S$ 188,735.86

On average, about $ 15,727.00 per month.

I was also fortunate to have more capital gains than losses in 2018.


So, 2018 has been a pretty good year for me and I hope 2019 will be kind to me too.





Remember this if you choose this path.

I do not know if stock prices are going up.

I do not know if stock prices are going down.

However, I do know that I am collecting more dividends and the total amount has increased year after year.






Finally, remember that the best time to start is always now.

It is never too late to start walking the path to financial freedom.

If AK can do it, so can you!

Watch this video on what Gurmit Singh has to say about his income and what he would have done differently:





Related posts:
1. 3Q 2018 income from non-REITs.
2. Sold First REIT.

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

In 3Q 2018, I decided on many things in the non-REIT space and this will be the first in a series of blogs on my decisions.

Several times in 3Q 2018, I managed to add to my investment in Centurion as its price declined closer to 40c a share.

It is my belief that a dividend of 2c a share is sustainable because it represents a payout ratio of only around 50%.





Centurions's cash flow also remains strong and relatively predictable.

An almost 5% dividend yield from a business run by a savvy management with a good track record is comforting.

Throw in a strong potential to grow further and the investment is even more attractive to me.

Then, plus a big discount to NAV, at closer to 40c a piece, Centurion became a very compelling investment for both income and growth to me.





Centurion's insiders probably agree if the insider buying activity is anything to go by.

Insiders bought more in the months before I decided to increase my investment in the business.

They paid higher prices to add to their stake.

I paid lower prices to add to mine.

That makes me happy.

Money from RHT Health Trust past and future. (We are responsible for our own financial future.)

I want to share an interesting video before starting on the blog proper.

There is a lot of wisdom in this 5 minutes video clip and, unless we are born with a spoon made of some precious metal in our mouth, everyone, especially the young, should watch it.

1. Delay gratification (i.e. discretionary consumption),

2. understand the danger of taking on too much debt,

3. save money (that is what 401K means in USA and, for us, it would be the CPF and SRS),

4. start investing early,

5. let time and compound interest work their magic!

We are responsible for our own financial future.






This blog is in response to a recent comment from a reader:

AK says...

Hi Ruby,

For RHT, I believe that it will become a shell company just like what happened to Saizen REIT after they sold their portfolio of assets, if you remember.

RHT's shareholders will receive the bulk of the proceeds from the sale of the Trust's assets but RHT would still be around.






In the case of Saizen REIT, it was finally liquidated and any remaining money was distributed to shareholders.

It could happen to RHT in future or it might not.

Just have to wait and see.

But this deal really helps to crystalise for RHT shareholders on what each unit in RHT is worth.

So, if readers bought into RHT like I did in more recent times at 72c per unit thereabouts, they will be OK.





We should also bear in mind that there is still residual value after the proposed special dividend to be paid to shareholders.

What about investors who got in earlier?

Well, I expect that their investment in RHT would have done quite well.

Of course, you would remember that I first bought into RHT at 88c a unit back in August 2015.






That earlier investment has received income distributions over the years and also a special dividend of about 25c per unit in 2016.

We booked a very nice capital gain back then.

This time, an estimated 76.6c per unit will be distributed.

If not for the rather weak Indian Rupee, the number would be higher.

Without taking into consideration the regular periodic income distributions received in the past, the two special distributions together amount to more than a dollar per unit.

Like before, there is capital gain for us in this proposed special distribution but it would also include the return of our investment capital.

The returns are not stellar like in the case of Saizen REIT or Croesus Retail Trust, but, the outcome is not a bad one.

Investing in good income generating assets is comforting because our investments should become safer over time.






Related post:
1. Increased investment in RHT (Early 2017).
2. Initiated position in RHT at 88c (2015).
See announcement by RHT:
Disposal of assets.

I should have invested in Bitcoin.

Reader says...

I should have invested in Bitcoin when my brother in law told me years ago.

Really regret.

AK says...

I think you mean you should have "speculated" in Bitcoin. ;p

When we buy something with nothing more than the hope that we would make money from it (i.e. that its price would go up), we are speculating and not investing. :)

(Actually, the same goes for selling something. Think stock market. Think short sellers.)

It is like buying 4D, TOTO or Big Sweep.

Yup, if you have bought some Bitcoins, you would have won the lottery.

That is what it is.

A lottery.

I don't mind a bit of speculation but we have to know what we are doing.

We have to know that we are speculating and not investing.

I see even financial bloggers getting a bit mixed up sometimes.

Sometimes, we see a blend of investing and speculating going on which isn't anything wrong per se.

We just have to know what is going on.




Anyway, read this blog to have an idea what I am talking about:
Centurion Corporation to double in price!


(And also this blog:
Investment philosophy and property market.)

"I cry as I see how much the price has gone up."

Reader:
Thanks for always mumbling to yourself.
Have always been looking forward to your post daily.

Since i chosen to write to you, I really must say I appreciated your writings n enlightenment most times if not all the times 'cause sometimes I also got lost with your numbers crunching off the records.




Ok, back to your latest post on "To invest or not in Centurion Corp",

After reading the whole thing, at 54c a share n dividend yield of 3.88%( taken from your calculations), even though you mentioned ,"...on Guoccoland n Tuan Sing, a dividend yield of 2.37% is still relatively decent", I'll not bite simply due to the uncertainties in the market right now with many factors like the north korea, trump, etc

But if i"d bought at the same price like you at 38c with a dividend yield of 3.37%, I may consider adding more at 54c now since the yield has increased though my base price may have gone up after averaging, believing that it's a growth stock.






I know i may miss an opportunity but I dont have a big warchest like you :) :))

The last time I read your vested interest in the above company, I've questions about is imminent expiry of its warrants n possible dilution.
Hence, I hesitated.






Now, I cry as i see how much the price has gone up :((

May I hear you talking to yourself about market directions and your holdings.

I know that one cannot time the market but dont you want to cash out since you're sitting on very good profits.

N hope to catch the next wave again with bigger warchest?

AK:
Don't cry. There will always be other opportunities. Mr. Market is not lazy like AK and will never retire. ;)

OK, I am going to show you how lazy I am again. Read this:
http://singaporeanstocksinvestor.blogspot.sg/2014/11/sell-stocks-now-and-wait-to-buy-back.html





Related post:
To invest or not to invest?

To invest or not to invest in Centurion Corporation?

I only became a shareholder of Centurion Corporation Limited in February this year and, since then, its share price has gone up by quite a bit. 

A question I have been asked more than a few times recently was whether Centurion was still good to buy?

Of course, regular readers know that, for a long time now, I don't answer such questions. 

Even if I do answer, it is usually cryptic which could be quite valuable an answer looking at the trend in cryptocurrencies now.

What? Not funny? Alamak.

The thing to do is always ask what do we want out of something, see if that something does the job and we will know if that something is suitable for us.




What I do in my blog is only to share my thoughts and how they guide my decisions. Think of my blogs as simply sharing an approach and not the answer.

I don't know if there is any value in this but I like to think that there is some value from learning someone's approach, good or bad.

Ultimately, your decision should be guided by your own thoughts and not someone else's.







With that out of the way, I am going to talk to myself a bit about Centurion.

Almost all my investment decisions have investing for income as a consideration. 

When I looked at Centurion earlier this year, this was also an important consideration as I was looking for reliable income generators to replace certain income stocks which I voluntarily or involuntarily sold in the recent past.




I am prone to repeating myself as I grow older. 

So, if you are interested in my initial analysis on Centurion, please see related post #1 at the end of this blog.

Of course, what I did not know was that Centurion was planning a dual listing on the HKSE which was approved earlier this month. 

I see this as a good thing. See related post #2 at the end of this blog for some speculative flavor.





Centurion is heavily in debt but it is good debt because they are using borrowed funds to generate more earnings from their investments. 

However, debt fueled growth can be dangerous as my misadventure with a certain locally listed O&G related company constantly reminds me.

So, raising funds from a secondary listing to help fuel their growth in the student hostel business in Australia instead of borrowing more money is a good idea. 





Of course, there were other reasons given for the decision to have a secondary listing in Hong Kong but I zoomed in on what I thought was more important to me as a shareholder, as an investor for income.

A larger equity base without any increase in borrowings would mean a lower gearing level. 

A stronger balance sheet is a good thing especially for an entity as highly geared as Centurion.

However, when there are more shares issued, something must give. 

We cannot have our cake and eat it too, after all.







Centurion is preparing to offer another 36,000,000 shares in Hong Kong. This will lead to some dilution for existing shareholders. 

On a per share basis, earnings would be impacted, everything else remaining equal.

So, is my original thesis to invest in Centurion for income still valid?

If we look at related post #1, back then, I assumed an EPS of 3.7c a year. I also assumed a payout ratio of 40%. 

I decided that a dividend yield of about 4% from a growth company was attractive enough.




Centurion has about 737.4 million shares in issue. Now, with the offer of 36,000,000 new shares in Hong Kong, we would see EPS diluted to 3.5c a year.

If the almost 74.8 million warrants (with an exercise price of 50c per warrant) expiring on 27 October 2017 should be exercised as well, we would see EPS diluted further to 3.2c a year.

OK, math was not a strong subject of mine. 

So, I hope my calculations are up to scratch.




Anyway, if we go with the numbers above, a 40% pay out ratio would mean a DPS of 1.28c. 

Based on my entry price, that is a dividend yield of 3.37% and based on 54c a share, it is 2.37%. 

If you have read my blogs on Guocoland and Tuan Sing, a dividend yield of 2.37% is still relatively decent.







However, things have progressed quite a bit since February and Centurion reported an EPS of 3.5c for 1H 2017. 

Could we see a full year EPS of 7c?

In such an instance, after listing in Hong Kong and with all the outstanding warrants exercised, Centurion's fully diluted EPS could be 6c. A 40% payout ratio would give a DPS of 2.4c. 




Based on 54c a share, it would give a dividend yield of 4.44%.

Centurion is still in growth mode and it is very likely that the management will deploy funds from the warrants, if exercised, into new projects as well. 

So, debt is likely to remain high. 




It would be prudent to retain the assumption that I made in February that we could see 0.8c knocked off from its EPS from a future 1% increase in interest rate.

In such an instance, fully diluted EPS could be 5.3c and a 40% payout ratio would give a DPS of 2.1c. 

Based on 54c a share, dividend yield would be 3.88%.

What? 

Should you buy or not?




Alamak, how to buy 4D? 3.88. Only 3 numbers lah.

What? Wrong answer?

Aiyoh. I blur.

Related posts:
1. Invested in Centurion
2. Centurion to double?
3. Centurion's earnings sky rocketing.

Centurion Corporation's sky rocketing earnings.

I made quite a few new investments in the last six months to a year but, of these, the largest investment was in Centurion Corporation. 

I was attracted not just by their ability and willingness to pay meaningful dividends but also their clear and viable strategy for growth. 

With insiders eating their own pudding too, it was a vote of confidence which regular readers know I have always liked.

2Q 2017 was another stellar quarter.

72% rise in earnings is definitely nothing to scoff at.

However, what I am more impressed with is the gross profit margin which improved some 7% to 73% while gross profit improved 36%.


Much has been said about the increasingly difficult business environment with many more competitors sharing the Singapore foreign workers accommodation pie.

The stellar results tell me that Centurion's management are not only competent, they are also fast to move into a new growth area and they are masters in branding.



An interim dividend per share (DPS) of 1c has been declared and that makes me happy.

Although I had no idea that Centurion Corporation had plans to list in Hong Kong when I became an investor in February, if that should come to pass, we could see its share price going higher.

Of course, although less important to me than the investing for income angle, a higher share price would make me happy too.

Am I going to buy more now? 

You want to read related post #1.

Related posts:
1. Invest in Centurion Corporation.
2. Centurion Corporation to double.

See slides presentation: HERE.

Centurion Corporation Limited and pricing power.

Businesses can either be price setters or price takers. In a fiercely competitive environment where there is perfect competition, businesses are mostly price takers.

Customer:
"How much is this?"

Shop:
"$20.00"

Customer:
"Aiyoh, internet selling $10.00 only."

Shop:
"Oh... OK, $10.00."

If I were the shop owner and if this were to happen on a daily basis, I have something to worry about.

Of course, businesses could engage in anti competition moves and set prices if there are only a few players in the industry. 

So, in an oligopoly, there is always a temptation to fix prices. This, by the way, is illegal in many countries, including Singapore.

A business is in a sweet spot if they are price setters and consumers are willing to pay a higher price for what they offer.

Customer:
"How much is this?"

Shop:
"$20.00"

Customer:
"Internet selling similar for $10.00 only."

Shop:
"Then, you buy from internet lor."

Customer:
"No, I like this. OK, $20.00"

Ka-ching!

How does a business get to be in such a sweet spot?

Differentiation. 

Better quality, better features, better design etc. Something that differentiates them from the competition in a positive way which makes consumers willing to pay a premium.

This is not an easy feat. 

It is even more difficult to maintain this edge these days because copy cats are fast to act.

What? You have a patent? 

Try telling the Chinese factories.

So, if it is a product, be prepared to see copies within a matter of months, if not weeks.

What about businesses which are providing a service?

Well, they are not safe from copy cats either. Business models can be copied too.

Some are worried about the competition faced by Centurion when it comes to workers' dormitories as more players jumped on the bandwagon. 

It is a valid concern and I did say that I would keep an eye on this relatively new investment of mine. So far, so good.

Of course, I am not the only one keeping an eye on Centurion and a reader recently sent me a report by PhillipCapital dated 19 May. 

I am sharing the stuff which I find more interesting here:

1. Higher occupancy for workers’ dormitories at Westlite Woodlands (c.95% in 1Q17 vs. c.90% in 4Q16) and ASPRIWestlite Papan (89% in 1Q17 vs. 75% in 4Q16). We estimate rental rates increased c.1%.

2. 1Q17 net profit margin improved to 33% compared to 32% a year ago. The improvements 
to net profit margin was due to ASPRI-Westlite Papan becoming more profitable in 1Q17 but
slightly offset by higher Cost of Goods (“COGs”) and higher interest expense.

3. Centurion continues to enjoy a high operating leverage where they will be able to grow revenue faster than costs through positive rental reversions.

4. Singapore Workers’ Dormitory Portfolio have almost hit full occupancy by 1Q17, well ahead of our expectation of hitting full occupancy by end of 2017. We expect the supply constraints in workers’ accommodation to continue while the strong pipeline of public sector construction projects which are expected to last till 2020 will keep Centurion’s Singapore workers’ dormitories fully occupied.

5. We are pleased to see Centurion’s ability to command a price premium for its Singapore workers’ dormitories and yet ramp up its occupancy faster than expected. All these despite
competitors slashing prices and weaknesses from the oil and gas industry that we have
witnessed in 2016.

6. ... expectation for stronger operating cash flow as a result of Centurion’s continued ability to exercise pricing power in its student and worker accommodation business across markets ...

In a competitive environment, we want to invest in a business that is able to retain pricing power.

Remember this blog?

My investment portfolio.

Centurion Corporation Limited is a relatively substantial investment for me and if I were to update the list:

From $350,000 to $499,999:
AIMS AMP Cap Ind'l REIT

From $200,000 to $349,999:
ACCORDIA Golf Trust
CROESUS Retail Trust
FIRST REIT

From $100,000 to $199,999:
ASCENDAS H-Trust
QAF Limited
WILMAR Int'l
Centurion Corporation Limited

What made me invest in Centurion Corporation Limited again? The answer is in this blog:

Added Centurion Corporation Limited to my investment portfolio.

Related posts:
1. Full year 2016 report.

2. Centurion to double in price?

Centurion Corporation Limited to double in price?

Reader:
Hi AK, I invested in Centurion Corp. 

I am thinking if I should sell or if the price will go higher with the dual listing in HK.





Chinese money floods into HK stocks.





AK:
Dual listing in HK doesn't change anything in terms of business fundamentals.

Centurion Corporation could be seeking what, to them, is a fairer valuation of their business.

The EDGE wrote that in 2007, Want Want China Holdings was trading at 15x PE ratio in Singapore and when relisted in Hong Kong, it traded at 45x PE ratio. 




Mah Wah Holdings was trading at 3x PE ratio in Singapore but trades at 16x PE ratio in Hong Kong.

Centurion is trading at about 10x PE ratio. 

Could it trade at 15x or 20x PE ratio, perhaps, even higher after the proposed dual listing? 

Looking for a calculator now? 





So, would it be 70c a share or 80c a share or 90c a share in future?

All in the realm of speculation but all quite possible.

When I invested in Centurion earlier this year, it wasn't because I had a crystal ball which told me that dual listing was on the way and that the share price was going up.




I know why I invested in Centurion.

I hope you know why you did too.

Related posts:
1. Added Centurion Corporation Limited.
(See updates in the comments section.)
2. Centurion Corporation Ltd. FY 2016 report.