In August 2018, I also received questions about APTT as its unit price plunged.
In one way or another, I was asked whether I was buying APTT again like I did when its unit price plunged in the past.
Regular readers might remember that I said APTT's 6.5c DPU was unsustainable and a more realistic DPU was 4c.
When I bought more APTT in the past, it was based on what I thought a reasonable and sustainable DPU would look like.
The purchase was not premised on what APTT was distributing at that point in time.
Please keep this in mine as I continue talking to myself.
Although APTT's very high debt level and the fact that they are running a deficit is worrisome, again, I remind myself that all investments are good at the right price.
The last time I bought into APTT, my premise was a realistic distribution yield of around 10.5% based on a sustainable DPU of 4c.
If we were to consider the higher risk that comes with an environment of rising interest rate, shaving 10% off what I thought was a more sustainable DPU then is not unreasonable, given APTT's highly indebted nature.
Now, a DPU of 3.6c is surely more sustainable.
Then, if we were to demand the same 10.5% yield like before, we would only be buyers at about 33.5c a piece (or lower).
Therefore, I wasn't interested in buying APTT in August 2018 as I didn't think it was priced attractively enough.
I also had a feeling that APTT's unit price might drift lower upon going XD as Mr. Market was feeling rather pessimistic.
Finally, weeks later, in late September, I took a bite of APTT.
If I didn't have anything else to invest in, I would have taken a bigger bite as I believe closer to 30c a piece, APTT compensates me sufficiently for the risk I am taking.
Having said this, everything else being equal, I would probably be accumulating APTT if Mr. Market should make me even better offers in future.
APTT is not going to implode anytime soon.
A safer distribution yield in excess of 10.5% is rather difficult to ignore.
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3Q 2018 passive income (non-REITs): APTT.
Tuesday, October 2, 2018Posted by AK71 at 1:40 PM 2 comments
Labels:
APTT,
passive income
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