COVID-19, ComfortDelgro and the new normal.

This blog is my reply to a reader's question on ComfortDelgro.

My reply:

All types of public transportation businesses are under immense pressure from the crisis created by the COVID-19 pandemic.

The worst hit sub sector is, of course, the airlines as they are heavily leveraged and have enormous CAPEX and OPEX.

The airlines can also be considered less essential compared to land transport businesses.

So, I am reasonably comfortable with holding on to my investment in ComfortDelgro which isn't bleeding as compared to an airline like SIA, for example.

After all, ComfortDelgro is operating essential public transportation businesses and, of course, also VICOM.

Having said this, until a safe and effective vaccine for COVID-19 becomes widely available, we will not see such businesses recovering to pre COVID-19 levels anytime soon as people should be avoiding crowded places as much as possible.






It follows that although ComfortDelgro remains in my portfolio as an investment for income, realistically, I should be prepared for a reduction in income generated from this investment.

If we add to our investment in ComfortDelgro as an investor for income, we have to keep this high probability possibility in mind.

As for whether the current price is a reasonable one to invest in ComfortDelgro, as you probably know, I have avoided answering such questions for a long time now.

What I would say is that, as investors, whether we think a stock price is reasonable or not should logically be guided by what we can reasonably ascertain in terms of its earnings visibility.

For investors for income, the willingness of a business to distribute a part of its earnings to its shareholders is also a pertinent consideration.

See this blog on my past assumptions which led to me investing in ComfortDelgro, for example:

An incomplete analysis of ComfortDelgro.






At the start of the COVID-19 crisis, I expected things to progress very much like it did during the SARS (i.e. Severe Acute Respiratory Syndrome) crisis in 2003 but, as things turned out, it didn't.

The situation we are in now is surely much worse than the SARS crisis ever was.

Just look at the billions of dollars our government has dished out to rescue workers and businesses so far.

In comparison, the SARS crisis was significantly less costly a crisis.

The crisis caused by the COVID-19 pandemic is global and it also simply refuses to go away.





I don't know how long it will take before we see things going back to the old normal.

Honestly, I doubt that anyone really has the answer except for Donald Trump.

However, it is reasonable to assume that the longer we have to wait for a safe and effective vaccine to become widely available, the longer the new normal we have now will stay.

The longer the new normal stays, the more it becomes entrenched.

Working from home and less going out for any reason will surely reduce the need for public transportation in all forms.

The Singapore government has even said that anyone who can work from home should continue to work from home even after Circuit Breaker restrictions are lifted.

That is ominous.






I am much more cautious during this crisis compared to the Global Financial Crisis (GFC) because the damage to many businesses is surely more devastating and the deleterious effects could be long lasting this time.

Since I am less sanguine about ComfortDelgro's earnings now than I was just a few months before, I might add to my investment only when its stock trades at its NAV or a discount to its NAV because that provides me with a greater margin of safety.

This is a real possibility and would mean we could see ComfortDelgro's stock price at a lower low than what was formed on 23 March 2020.





Looking at the charts, the weakness in ComfortDelgro's stock price is stark.

The 50 days moving average is still declining.

The MACD, a momentum oscillator, is still in negative territory and has just formed a bearish crossover.

The downtrend is very much intact and there is no sign of a trend reversal.

Of course, like I always say, technical analysis (TA) is about probability and not certainty.

Have a plan, your own plan.

In the meantime, do the responsible thing and help to keep everyone safe.

We are #SGUnited.





Related posts:
1. Investing in ComfortDelgro and locking in gains.
2. Buffett thinks it is going to get worse.

ComfortDelgro is one of my Dividend Machines.

I have received a number of messages from readers regarding the decline in ComfortDelgro's share price.

Mostly, the question is whether it is a good time to buy.

Regular readers know that AK will avoid answering questions like that most of the time.

However, I can say a few things to myself regarding the situation right now.

If we subscribe to what Warren Buffett says that we should be greedy when others are fearful, then, we should know what to do.

Is the Wuhan coronavirus going to be a permanent fixture?

Are we never going to recover from this crisis?

Well, I am inclined to believe that the CEO of DBS is correct.

Things will improve come summer as the virus will not do well in warm weather.

Simply put, we will recover from this Wuhan virus crisis just like we recovered from the SARS crisis.

It will take time, of course, but I do not doubt that we will recover.

What?

Cannot call it the Wuhan virus?

The official name is COVID-19?

Alamak.

Why not call it the Chinese Flu so that we know where it is from?

If you ask me, I think the WHO has to give China face lah.

Before beating the dog must see who is the owner, right or not?

Why can have Spanish Flu but cannot have Chinese Flu leh?

Ahem.

Anyway, I still think that ComfortDelgro is a good Dividend Machine.

I have nibbled at ComfortDelgro as its share price declined.

I hope I am smart enough to buy more if Mr. Market goes into a deeper depression.

On that note, in case you missed my blog on Dividend Machines or if you are thinking about signing up but have yet to do so, please note that application for the class of 2020 closes this weekend.

If you are really interested in learning about investing for income in a structured manner, sign up now or you would have to wait till next year for the next intake.

Find out more or sign up: HERE.

Related posts:
1. CPF and Dividend Machines.
2. Incomplete analysis: ComfortDelgro.

Recently published:
AK tries streaming on Twitch.

Largest investments updated (4Q 2019).

From my last couple of blogs, readers would be able to get an idea of what might have changed in my portfolio.


Since the last blog, however, I have made another significant investment or, more accurately, reinvestment.

What am I talking about?


Clue:

Some readers might remember that I reduced my investment in Wilmar significantly in 3Q 2019 in the month of July, booking a pretty decent capital gain in the process.

Wilmar lost its position as one of my largest investments in 3Q 2019 as a result of that move.


I explained that the move was based on technical analysis (TA) and not because I thought Wilmar was no longer a fundamentally good investment.

That meant I would be building up my investment in Wilmar again when the time is right.

I still like Wilmar as an investment today and if you are curious as to the reasons, you might want to read the following:

1. 3Q 2018 passive income: Wilmar.

2. Accumulating Wilmar...

My investment thesis remains, more or less, unchanged.

Wilmar is an amazing business that has gone unappreciated for a long time.

With the IPO of its Chinese subsidiary in the works, Mr. Market is beginning to appreciate the value that is locked within Wilmar.

Since reducing my investment significantly in July, I have been waiting to increase my investment in Wilmar again. 

Although I wondered if we could see $3.10 or even $3.00 a share again, using TA, I decided that buying at $3.60 a share or lower might be a good idea.








This is because even though Wilmar's share price has retreated, the 200 days moving average (200dMA) in its chart is still rising.

The 200dMA is a long term moving average and as it is rising, it should provide a stronger support.

The rising 200dMA is at $3.54, approximately.

Of course, TA simply shows us where supports could be found.






TA cannot tell us if the supports would be tested or not.

So, what to do?

Start buying at $3.60 a share, maybe.

TA also cannot tell us if the supports would hold or not.

So, what to do?

Make sure we don't throw in everything including the kitchen sink.

Anyway, informed by some simple TA, making use of Mr. Market's current depression, I significantly increased my investment in Wilmar so that it is again one of my largest investments.

So, together with Wilmar, what are my largest investments now?







$500,000 or more:
*CPF.

If you are laughing, I hope it is for the right reason.

Read:
Largest investments updated (3Q 2019).

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

Nothing has changed here.

Yes, AK is so boring.





From $200,000 to $349,999:
*ComfortDelgro.
*Centurion Corporation Ltd.
*Accordia Golf Trust.
*Development Bank of Singapore.
*OCBC Bank.
*IREIT Global.

So, from having only two members, this group's membership has tripled in size, now boasting six members.

Increasing my investments in Accordia Golf Trust, DBS and OCBC meaningfully moved them up from the lower bracket.

The fourth new member, IREIT Global, made the biggest jump as it makes its first appearance in this list by skipping the lower bracket altogether.

Read related posts at the end of this blog if all these sound new to you.

From $100,000 to $199,000:
*Ascendas H-Trust.
*Wilmar International.

Wilmar returns as one of my largest investments by joining the lowest bracket in the list.

If Mr. Market continues to feel depressed about Wilmar, I would probably be buying more.



Now, remember, when we invest, we have to take into consideration our circumstances and not "suka suka" ride on other's coattails.

What?

Cannot find AK's coattails?

That is because AK doesn't wear a coat lah.

La la la la... lah. ;p

On a serious note, remember to "eat bread with ink slowly."

Don't know how?

Read:
How to have peace of mind as an investor?

Yes, peace of mind is priceless.





Related posts:
1. 3Q 2019 passive income: Numbers.
2. 3Q 2019 passive income: IREIT.

3Q 2019 passive income: Numbers.

It has been a while since my last blog and I hope everyone is doing well.

So, now that 3Q 2019 has ended, an update on what I did in the quarter is due.

Well, in terms of my investments, apart from collecting dividends, regular readers know that I sold quite a big chunk of my portfolio earlier in July.

See:
Sell into the rally...

And for what it was worth, I also provided an update on the largest investments in my portfolio.

See:
Largest investments...






Then, after that, I was mostly just adventuring in Neverwinter and taking it easy in RL (which stands for "real life"), collecting dividends from my RL investments.

Although readers should hopefully be used to the rather long breaks from blogging I have been taking as I spend more time on other activities, I would like to reiterate that this is the new normal.

If you leave comments in my blog and expect a timely response, you could and very likely be disappointed.






In fact, for the whole month of October, Neverwinter will be running the Neverember Recruitment Event which will reward the leveling of any new character created during the event.

This is not only a perfect opportunity for anyone who wants to give Neverwinter a try, it is also great for veterans to create new characters (up to a maximum of two) to get their hands on the rewards which are very generous, rewards which would have cost RL money to buy otherwise.

The Level Cap in Neverwinter is 80 but to get all the rewards from the event, we only have to hit Level 59, if I understand the event correctly.

So, I will be extra busy in Neverwinter as I will level two new characters to Level 59 and still be adventuring with the three Level 80 characters I have now.

Neverwinter is free to play (F2P) and lots of fun for anyone who enjoys the High Fantasy genre and is "giam siap" (not offering a translation for this) like AK.

Can barely see the word "Shift" and the letter "W" on my keyboard. 
Bad AK! Bad AK! ;-p

Anyway, total passive income from my investments in REITs and non-REITs in 3Q 2019:

S$ 31,789.91

This amount would have been much higher if I did not reduce my investments and rather significantly too in SingTel, Wilmar and ComfortDelgro back in July.

I say this as a matter of fact to explain why the amount is smaller than what some might be expecting and not because I regret my decision to realise gains, reducing investment exposure pretty significantly in the process.

After all, the capital gains from reducing exposure to the businesses mentioned were much more than what I would have received from them in dividends otherwise.








Also, it is almost never a bad thing to have more cash as it gives us options which include the ability to pounce on opportunities when they present themselves.

As it turned out, opportunities knocked in the following months as stock prices experienced a correction.

I added to my investments in a few businesses such as:

1. DBS

2. OCBC

3. ComfortDelgro (CDG)

The list doesn't end here, of course. 





As Centurion's stock price and Accordia Golf Trust's (AGT) unit price languished, I also added to my investments in these entities as my investment theses are unchanged.

I believe that they are undervalued and it doesn't matter to me that if their share or unit price continue to move sideways as long as they keep generating meaningful income for me.

In 3Q 2019, I also took part in CRCT's rights issue, taking up my entitlement and applying for excess rights at $1.44 a unit.

This bumps up my investment in the REIT but not by much as it is a relatively small rights issue.

Finally, I substantially increased my investment in IREIT Global as its unit price declined rather significantly.





I shall not explain my decisions to increase my investments in DBS, OCBC, CDG, Centurion or AGT again.

Anyone who is interested to find out more or in having a refresher can refer to my earlier blogs on these entities.

As for CRCT, I blogged about why I thought it was a well run REIT with a relatively attractive yield before.

See:
CRCT added in Jan 2017.

My view has not changed and there is no reason why I wouldn't take part in its relatively small rights issue to help expand its AUM.





I have also blogged about IREIT Global before and why I avoided its IPO.

This was back in 2015.

See:
IREIT: What is a more realistic distribution yield?



Of course, all investments are good at the right price and I invested in IREIT later on when its unit price declined sharply.

Adding to my investment in IREIT Global in 3Q 2019 meant paying a higher price than what I paid before, however.






Still, I chose to increase my investment in IREIT Global and I will share the reasons why in my next blog as this blog has become a bit too long.

I will try to do this within the next 24 hours because if I don't, I fear I might not do it once I seriously start to power up my two new characters in Neverwinter.

Yes, I know.

Bad AK! Bad AK!




For now, I will say that I am reasonably confident that all that I did to my investment portfolio in 3Q 2019 will better reward me in future.

What I did was consistent with my belief that investing for income is enriching and, so far, it has been the case for me.

Remember, if we do the right thing, everyone's life can be and should be better.

Investing for income can help us achieve financial security and, eventually, financial freedom.

If AK can do it, so can you!




You might also want to read:
1. Retirement adequacy 101.
2. Start with a plan to retire early.

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).

Special dividend from VICOM and financial freedom.

I just received a letter from LTA that my car is due for an inspection.

Wow!

Has it really been three years?

Time really flies.

This is something older people feel more keenly than the younger ones.





The younger ones think that they still have time to plan for retirement and they are probably right.

However, if they think that they can kick the can down the road, this could result in them regretting when they are older.

Many older people do regret not planning earlier for retirement.

Time and tide wait for no man. 

Before we know it, we are 55 years old.





We have but one life to live.

Take ownership.

Don't blame the system.

Don't blame fate.

Don't blame anyone else.

We should only blame ourselves if we cannot retire well in Singapore.





Anyway, when I was making payment to have my car inspected in VICOM, I noticed that the price has gone up but I was quite ZEN about it.

Why?

VICOM is paying for my inspection, after all.

I know.

Bad AK! Bad AK!





Regular readers know that I have a larger smaller investment in VICOM ($50,000 to $100,000) and receive regular dividends.

The fact that VICOM declared a final dividend of 23.17 cents and a special dividend of 8.62 cents means more passive income for me.

However, it is also good on another level as the largest shareholder of VICOM is ComfortDelgro and I have a relatively large investment in ComfortDelgro which also pays me dividends.





VICOM and ComfortDelgro together are probably bigger than my investment in AIMS AMP Capital Industrial REIT or similar in size.

They are all important passive income generators in my investment portfolio and they are pretty predictable ones too.

To all my readers on the investing for income path, keep at it because financial freedom is not a dream.

If AK can do it, so can you!

However, only Mr. Bean can do this.






Related posts:
1. Invested in ComfortDelgro.
2. Invested in VICOM.
3. Passive income all gone!

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.