Wednesday, May 31, 2023

Portfolio Summary for May 2023

As of 31 May 2023


Security # shares Price S$ %
DBS 400 31.33 3.33
UOB 400 28.06 2.98
OCBC Bank 700 12.22 2.27
SGX 2,700 9.25 6.64
iFast 5,700 4.51 6.83
ST Engineering 6,900 3.73 6.84
CapitaLand Investment 7,400 3.40 6.68
SATS 8,200 2.63 5.73
Powermatic Data 8,500 2.66 6.01
TheHourGlass 5,000 1.99 2.64
Micro-Mechanics 14,200 1.84 6.94
VICOM 14,000 1.78 6.62
Sheng Siong 13,000 1.62 5.60
Nanofilm 15,400 1.49 6.10
Genting Singapore 11,700 1.02 3.17
Credit Bureau Asia 14,300 0.95 3.63
HRnetGroup 21,900 0.75 4.39
TalkMed Group 14,500 0.43 1.66
China Sunsine 41,800 0.41 4.61
HC Surgical 35,500 0.40 3.73
Kimly 27,000 0.34 2.44
Silverlake Axis 15,000 0.29 1.18
Portfolio Market Value = $376,403
YTD Dividends Received = $6,490
YTD SBL Fees Received = $694

- Bought 100 shares of DBS.
- Bought 100 shares of UOB.
- Bought 2,200 shares of VICOM.
- Bought 3,100 shares of Micro-Mechanics.
- Sold 11,200 shares of ComfortDelGro.


Security # shares Price S$ %
DBS 100 31.33 2.14
UOB 200 28.06 3.84
OCBC Bank 900 12.22 7.52
SGX 1,300 9.25 8.23
iFast 2,100 4.51 6.48
ST Engineering 3,000 3.73 7.65
CapitaLand Investment 2,600 3.40 6.05
SATS 3,800 2.63 6.84
Powermatic Data 3,400 2.66 6.19
Micro-Mechanics 5,400 1.84 6.80
VICOM 5,500 1.78 6.70
Sheng Siong 8,700 1.62 9.64
Nanofilm 5,500 1.49 5.61
Credit Bureau Asia 5,700 0.95 3.72
TalkMed Group 5,800 0.43 1.71
China Sunsine 10,800 0.41 3.07
HC Surgical 19,500 0.40 5.27
Kimly 5,800 0.34 1.35
Silverlake Axis 6,000 0.29 1.21
Portfolio Market Value = $146,186

- Bought 100 shares of DBS.
- Bought 200 shares of UOB.
- Bought 800 shares of VICOM.
- Bought 2,300 shares of Micro-Mechanics.
- Sold 6,900 shares of ComfortDelGro.

Singapore Savings Bonds

Security Amount ($) Avg Yld %
GX18070N 12,500 2.63
GX22120S 14,000 3.47
GX23010Z 15,000 3.26
Portfolio Market Value = $41,500

There is an old adage to "sell in May and go away, come back on St. Leger's Day." (St. Leger's Day refers to a horse racing festival in Britian, happening on 14 to 17 September this year.) It was meant for investors to avoid the stock market's seasonally weaker performance between May and October.

Contrary to this advice, I bought more shares than sold this month. As prices retreated, I added DBS, UOB, VICOM and Micro-Mechanics. I must admit - I'm not smart enough to buy at the bottom. I just thought that at current levels, I can start nibbling bit by bit. We will never know how far (down) the prices can go, so I set aside some capital to buy the shares at pre-set levels. If the market turns up, great because the value of my position increases; if the market continues to tank, no problem too. I get the chance to buy at better prices.

DBS reported another set of record-breaking result [here]. 1Q23 total income was S$4.67b, up 44% YoY. Net profit was S$2.57b, up 43% YoY. ROE improved to 18.6%, up 5.5% YoY. NIM gained 8 bps QoQ to 2.69% while NPL remained stable at 1.1%. 42 cents DPS was declared. CEO Piyush Gupta wrote that the NIM has likely peaked in 1Q, and guided full year NIM to be around 2.05-2.10%. In its latest Investor Day presentation [here], DBS CFO Chng Sok Hui made a bold prediction that DBS will achieve "earnings of $10b+ and ROE of 15%-17% in the medium term, assuming interest rates do not return to unusually low levels".

OCBC reported a good set of results too [here]. 1Q23 total income was S$3.35b, up 27% YoY. Net profit was S$1.88b, up 39% YoY. ROE improved to 14.7%, up 4.1% YoY. NIM dropped 1 bp QoQ to 2.30% while NPL improved 0.1 QoQ to 1.1%. No dividend was declared. CEO Helen Wong guided 2023 NIM to be in the region of 2.2% and loan growth around low to mid single-digit. She also assured that OCBC's robust capital position can support the targeted 50% dividend payout. In a Business Times interview [here], the CEO is confident that OCBC is in a good position to capture wealth and trade flows given its strong links between Greater China and the ASEAN region.

Despite the stellar results, the local bank stocks took a beating in May. The Street consensus is that NIM has peaked and NPL may increase as the economy enters a recession. Some asset managers are even expecting a rate cut by the U.S. Fed in the second half of 2023, which in my opinion, seems to be a premature call at this point in time. This stands in stark contrast with St. Louis Fed President James Bullard's comment [here] that he expects two more rate hikes in 2023 to quell inflation.

And then there is the U.S. debt ceiling drama during mid-month between the Republicans and Democrats. No one truly believes the United States should default on its debt obligations, just that each party tries to leverage on the situation to advance their own agenda. The tussle generated volatility in the market, which is good for opportunistic buying.

May is a good month where I received cash dividends from several companies. Total amount received year-to-date in my CDP portfolio is $6,490.29. Not a lot of money, but it is one step closer to my goal of generating cashflow from investing in fundamentally strong companies.

I signed up for SGX Securities Borrowing and Lending (SBL) Pool some years ago [here]. I can see some of my shares being lent out to other investors. I earn interest (plus owed dividends) after the short sellers return the shares. If you meet the mininum requirements, I recommend to sign up for this programme to earn side income.

I sold my shares of ComfortDelGro (CDG). The rationale was covered in my April blog post [here]. I want to consolidate my capital and make more concentrated bets. CDG share hasn't performed well post-pandemic. With this sale, I'm officially divested of this public transport operator. By the way, CDG recently announced their 1Q23 result [here]. Revenue climbed 2.1% YoY to $906.4m, but Operating Profit dropped 51.6% YoY to $50.9m. The decline was attributed to inflationary cost pressures on Public Transport Services.

I have two AIA saving policies maturing in May and June respectively this year. I signed up for them when I was in N.S. The annual premium was a small sum that I faithfully paid, even when I was hard on cash. I am glad for being disciplined on this commitment throughout my university days and working life. The principal and compounded coupons are a welcome boost to my dry powder for stock investments. (Truth be told, I had forgotten why I took the policies in the first place!)

I had received some units of CapitaLand Ascott Trust from the last dividend corp action of CapitaLand Investment. Quite a hassle to sell odd lots. Will try to offload them at the right time.

Money matters aside, I visited a few secondary schools' Open House this month. I thought it might be good to check out what those schools have to offer. I'm intrigued by the Integrated Programme (IP) [link] as well as the Direct School Admission for Secondary Schools [link]. I hope my boys will be able to qualify for these programmes.

Until next time, take care!

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Thursday, May 11, 2023

Buy Now, Pay Later for Groceries

I was reading through Bloomberg Businessweek when I came across an article titled, "Americans Go Deeper Into Debt as They Use Buy Now, Pay Later Apps for Groceries" [link].

My impression of BNPL is that it is typically spent on clothing, fashion accessories, electronic gadgets and the like. But this is the first time I've read of people resorting to BNPL for grocery supplies. This speaks volumes of the dire straits that some people are currently facing.

Unlike clothing and consumer products that may still have some residual resale value, there is none for groceries since they are meant for literal consumption. One is getting into debt just to put food on the table.

In Singapore, we have government financial assistance for families living at the poverty line. There are also welfare organisations that provide needy families with help. Admittedly the support is targeted and some families, while barely making ends meet, may not qualify, or the amount isn't enough. Hence, BNPL and payday loan may appear as attractive alternatives.

According to Investopedia, BNPL volume could exceed $3.5 trillion by 2030 [link]. From what I understand, there are lower hurdles to getting BNPL financing compared to credit cards.

I hope the BNPL culture does not spawn another debt crisis in the future.

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Wednesday, May 3, 2023

Challenging Times for Reit Managers Ahead

The Business Times published an opinion article today titled, "Reit managers, take note: General mandate to issue new units is least popular resolution at S-Reit AGMs" [link]. It described how Sabana Industrial Reit unitholders rejected the resolution for the Reit Manager to issue new units and to make or grant convertible instruments without the expressed approval of unitholders.

Sabana Industrial Reit has been embroiled in a hostile battle between the Reit Manager and one of its investors, Quarz Capital. But having a resolution voted down is rare. Other Reit Managers ought to sit up and take notice.

Since the GFC, Reits have prospered in the ultra-low interest rate environment, where debt can be obtained at a relatively low cost. Consequently, Reits have been able to provide enviable returns to investors. With the rapid ramp-up of interest rates, this era of cheap debt is over. The cost of capital is going to creep up, regardless of how much Reit Managers tout that a major portion of their debt is in 'fixed' rates. Eventually, more of the revenue will be needed to service interest expense.

Reit Managers may also face scrutiny when trying to raise money via private issuance of new units.

If Reit Managers cannnot raise rental rates correspondingly at the risk of losing anchor tenants, then investors will have to settle for less.

The next ten years will be nothing like the last ten years.

Do take note.

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