Wednesday, June 3, 2009

My Stock Portfolio as at 29 May 2009

My Stock Portfolio:

#StockWeightWACCurrent PriceReturns
1Keppel Corp26.3%S$3.90S$7.20+84.6%
2Sembcorp Marine18.6%S$2.792S$3.05+9.2%
3Ascendas Reit13.0%S$1.224S$1.34+21.2%
5CapitaMall Trust4.9%S$1.60S$1.33-16.9%
8Keppel Land2.1%S$2.32S$2.46+6.0%
11Noble Group1.9%S$1.60S$1.58-1.3%
13Ascendas India Trust0.9%S$1.18S$0.70-40.7%
15Yongnam W1212140.2%S$0.03S$0.075+150%
16Investable Cash6.5%

Notes to above table:
1) Weight: Weightage of stock in my stock portfolio.
2) WAC: Weighted average cost
3) Current Price: Price as at 29th May 2009.

My Comments:

My portfolio underperformed the STI Index for the month of May 2009 (+19.80% vs +21.29%), and YTD performance is also in-line (Portfolio +33.64% vs STI +32.22%).

During May, I've sold off most of Noble Group and bought Keppel Land early in the month. In the middle of May, I've bought Sembcorp Marine for trading pruposes and also added more to Ascendas Reit on price weaknesss on 22 May.

Subsequent events: I've subscribed to the Keppel Land rights issue (including excess rights) on the 2 Jun and also took profit on my entire Sembcorp Marine stake today 3 Jun (realising a 3.5% gain).

Sunday, May 10, 2009

My Stock Portfolio as at 30 April 2009

My Stock Portfolio:

#StockWeightWACCurrent PriceReturns
1Keppel Corp26.8%S$3.90S$5.98+53.3%
2Noble Group17.5%S$1.14S$1.30+13.9%
3Ascendas Reit10.0%S$1.224S$1.34+9.5%
5CapitaMall Trust5.6%S$1.60S$1.25-21.9%
11Ascendas India Trust0.8%S$1.18S$0.54-54.2%
13Yongnam W1212140.1%S$0.03S$0.030%
14Investable Cash15.3%

Notes to above table:
1) Weight: Weightage of stock in my stock portfolio.
2) WAC: Weighted average cost
3) Current Price: Price as at 30th April 2009.

My Comments:

My portfolio performed in-line with the STI Index for the month of April 2009 (+12.90% vs +12.96%), thus outperformance was sustained YTD (Portfolio +13.25% vs STI +9.01%).

During April, I bought SingPost and sold off ST Engineering prior to earnings announcement.

Friday, April 3, 2009

My Stock Portfolio as at 31st March 2009

My Stock Portfolio:

#StockWeightWACCurrent PriceReturns
1Keppel Corp28.9%S$3.90S$5.01+28.5%
2Noble Group20.6%S$1.14S$1.19+4.3%
3Ascendas Reit11.7%S$1.224S$1.22-0.3%
6ST Engineering4.7%S$2.45S$2.46+0.4%
9CapitaMall Trust2.5%S$3.16S$1.32-58.2%
11Ascendas India Trust1.0%S$1.18S$0.525-55.5%
13Yongnam W1212140.1%S$0.03S$0.015-50.0%
14Investable Cash4.8%

Notes to above table:
1) Weight: Weightage of stock in my stock portfolio.
2) WAC: Weighted average cost
3) Current Price: Price as at 31st March 2009.

My Comments:

My portfolio underperformed against the STI Index for the month of March 2009 (+3.81% vs +6.59%), but year-to-date was still favourable. YTD: Portfolio +0.81% vs STI -3.50%.

I've made quite a few transactions this month. Firstly, I've switched from OCBC to SGX in the financial portion of my portfolio. Secondly, I've disposed of Hupsteel at a hefty loss. Thirdly, I've added CapitaLand for the property section of my portfolio. Lastly, I've trimmed a big portion of Ascendas Reit and used the proceeds to participate in the CapitaMall rights issue. But unfortunately, just found out today that I only got around 10% of the total excess rights that I applied for. Very disappointed!

I've still yet to add SingPost as the "Consumer staple" portion of my portfolio, and was also considering adding to SMRT on weakness. Target to add at between $1.40-$1.45 for SMRT and $0.74 for SingPost (Yes! I've increased my target buy price for SingPost).

Saturday, February 28, 2009

My Stock Portfolio as at 27th February 2009

My Stock Portfolio:

#StockWeightWACCurrent PriceReturns
1Ascendas Reit26.8%S$1.52S$1.26-17.0%
2Keppel Corp25.3%S$3.90S$4.37+12.1%
3Noble Group18.8%S$1.14S$1.08-5.4%
6ST Engineering4.5%S$2.45S$2.31-5.7%
8CapitaMall Trust2.8%S$3.16S$1.43-54.7%
11Ascendas India Trust1.0%S$1.18S$0.52-55.9%
13Yongnam W1212140.0%S$0.03S$0.01-66.7%

Notes to above table:
1) Weight: Weightage of stock in my stock portfolio.
2) WAC: Weighted average cost
3) Current Price: Price as at 27th February 2009.

My Comments:

My portfolio extended its outperformance against the STI Index for the month of February 2009 (-2.89% vs -8.68%). YTD: Portfolio -3.14% vs STI -9.46%. The only transactions I've made in February was to participate in Ascendas Reit's rights issue. I've successfully gotten all the lots I've applied for.

My portfolio was lifted by Keppel Corp (+7.9%)& Noble Group's (+2.9%) positive performance during the month. On the other hand, OCBC is the significant underperformer, down 13.0% for Feb.

Saturday, February 7, 2009

My Stock Portfolio as at 30th January 2009

My Stock Portfolio:

#StockWeightWACCurrent PriceReturns
1Keppel Corp24.4%S$3.90S$4.05+3.8%
2Ascendas Reit23.4%S$1.65S$1.46-11.6%
3Noble Group19.0%S$1.14S$1.05-8.0%
6ST Engineering4.6%S$2.45S$2.28-6.9%
7CapitaMall Trust3.2%S$3.16S$1.60-49.4%
11Ascendas India Trust1.0%S$1.18S$0.515-56.4%
13Yongnam W1212140.1%S$0.03S$0.015-50.0%

Notes to above table:
1) Weight: Weightage of stock in my stock portfolio.
2) WAC: Weighted average cost
3) Current Price: Price as at 30th January 2009.

My Comments:

My portfolio performed slightly better than my benchmark of the STI Index for the month of January 2009 (-0.16% vs -0.86%). Best performing stocks that are lifting up my portfolio are Ascendas Reit (+10.1% MTD div adjusted), Noble Group (+2.9% MTD), OCBC (+3.2% MTD) and SingTel (+4.3% MTD). Underperforming is Keppel Corp (-6.5%), dragged down by concerns over order cancellations.

I'm very comfortable with my portfolio allocation and am also looking to add Capitaland & SingPost to it. Target buy price is $2.00 for Capitaland and $0.70 for SingPost.

Thursday, January 22, 2009

MAS gives Reits a New Year gift

Refinancing of maturing debt facilitated; clarity on leverage ratios


(SINGAPORE) Reit managers here have been given more breathing space on borrowing limits by the Monetary Authority of Singapore (MAS), which has clarified how downward revaluations of properties should be treated.

Basically, MAS has said that Reits need not worry if their leverage has increased because properties have been revalued and are now worth less.

Under MAS's Property Fund Guidelines, an S-Reit's total borrowings and deferred payments (the 'aggregate leverage') should not exceed 35 per cent of its deposited property. This maximum limit is set at a higher 60 per cent if the Reit obtains a credit rating and publicises it.

In a circular to Reit managers and trustees earlier this month, MAS confirmed that if the aggregate leverage has gone up because of a decline in property values, it will not amount to a breach of leverage limits. MAS also made the important point that refinancing of existing debt by a Reit is not to be construed as incurring additional borrowings.

'So if at the point of refinancing, a Reit has to revalue its assets (which lenders will require), and so long as the refinancing is of existing debt, MAS will not consider this as additional borrowing and hence the Reit will not be in breach of the statutory leverage limit,' says Giam Lay Hoon, group general counsel of Oxley Capital Group, which owns a stake in the manager of Cambridge Industrial Trust.

MAS also said that it will permit Reits to raise debt for refinancing purposes earlier than the actual maturity of the debt to be refinanced, without having to include such funds raised in the aggregate leverage limit. However, this is 'provided that the funds are set aside solely for the purpose of repaying the maturing debt'.

'The trustee must place these funds in a separate trust account which shall be drawn on only to repay the maturing debt,' MAS said in its circular.

Oxley Capital's Ms Giam welcomed MAS's responsiveness to tight credit market conditions. The CFO of a Reit manager told BT that the MAS clarifications would 'give some breathing space for some Reit managers with high gearing and with properties in danger of being substantially depreciated'.

This, he said, would ease the pressure on these Reits to recapitalise through raising fresh equity and reduce pressure on the unit price of these Reits.

'However, ratings agencies will continue to be nervous about property depreciation as that may reflect sliding rents and occupancies and a rise in tenant-default rates,' he added.

Stan Ho, Fitch Ratings' senior director and head of Non-Japan Asia structured finance, stressed that 'any downward revaluation of the underlying property would raise the loan-to-valuation ratios as far as banks lending to Reits are concerned, and this would need to be considered in our ratings for Singapore Reits'.

Kathleen Lee, vice-president and senior analyst at Moody's Singapore, also pointed out that while a downward revaluation may not breach MAS's statutory aggregate leverage limit for S-Reits, 'lenders to Reits can set their own covenants and a downward revaluation could trigger a breach of some of these covenants and that could also lead to a re-rating of the Reit'.

In a separate development, MAS is understood to have sought feedback recently on whether the current minimum distribution payout ratio for S-Reits should be lowered, from 90 per cent of distributable income currently to, say, 75-80 per cent. Some Reit managers are lobbying for the cut. 'Cash is a premium today and Reits may want to conserve their cash for a host of reasons, including servicing loans, reducing debt or just as general ammunition,' an industry player said.

However, a rival disagreed, arguing 'this would go against the fundamentals of why the S-Reit market was created'.

Reits have a high degree of transparency and investors have a high level of certainty of distributions from Reits. 'So when you give more flexibility to the Reit manager in terms of how much of distributable income it has to pay to unit holders, it creates more uncertainty for the investor. Investors like clarity,' he added.

Tuesday, January 6, 2009

Reit model under pressure

SINGAPORE-listed real estate investment trusts (Reits) are now victims of their own success.

Over the past three years, most Reits here have taken an aggressive growth path, snapping up expensive properties and pushing up rentals in their properties as they took advantage of the property boom. This has allowed them to increase net property incomes and deliver good dividends to their unitholders.

But now, the good times have come to an end, and it is unclear how these Reits will deliver the kind of returns shareholders have gotten used to.

When reporting their Q3 results, the Reits admitted that growth through acquisitions will slow, what with the current credit squeeze making merger and acquisitions (M&As) more difficult and expensive across all sectors. The Reits said they will look to organic growth, such as enhancing their existing lettable space in search of higher rents.

But how much organic growth there can be under these conditions is debatable.

Retail Reits, for example, increase their property incomes in three ways - from acquisitions, through rental increases after they enhance their properties, and increased sales from their tenants, which they typically take a cut of.

But now, all three avenues for property income growth appear to be blocked. Acquisition growth, as mentioned, is no longer as viable. Retail sales are expected to take a beating this year as consumers cut back on spending as concerns over job and wage security take hold. Because of this, landlords, who typically take a percentage of turnover as part of the rent, will also see takings fall.

And rents will fall, as tenants try to bring landlords back to the negotiating table to ask for more manageable rates. 'A prolonged depression in consumer spending could affect retailers' ability to service their rents and we think it is possible that more retailers would renegotiate for lower rental rates, and retail mall managers may have to give in to avoid a high turnover in tenants,' noted OCBC Investment Research in a recent report. As one market observer put it, 'Reits can't really squeeze the tenants anymore or they will just simply close shop.'

In 2009, CB Richard Ellis reckons that prime Orchard Road rents could contract 5-10 per cent in just the first half of the year. At prime suburban malls, a 2-3 per cent decline is likely, the property consultancy said. Prime Orchard Road rents fell 1.9 per cent quarter-on-quarter in Q4 2008, while prime suburban rents shed one per cent, the firm's data showed.

The same trend holds true for the office and industrial sectors. CBRE's data showed that average Grade A and prime office rental values in Singapore are estimated to have slipped about 20 per cent in Q4 2008. More falls are expected this year. Likewise, rents for industrial space could see double-digit percentage falls, analysts have said.

With retail, office, and - to a lesser extent - industrial Reits, having raised rentals quickly over the last few years, tenants are finding themselves in a tough spot during these trying times. Office rents, for example, nearly doubled in 2007, rising 96 per cent in the Grade A category and 92 per cent for prime space. That was on top of gains of 53 and 50 per cent respectively posted in 2006.

What this means is that tenants, who have been paying jacked-up rentals over the past two years, will in some cases lack the reserves to withstand the current crisis. They are also more likely to push for substantial rental decreases, which could affect the Reit model.

Jannie Tay, president of the Singapore Retailers Association, called for a drop in retail rents - in light of weaker sales - as early as September last year. Recently, she again asked retail landlords to cut rents by between 30 and 50 per cent. Reits are going to face pressure to give in.