Friday, March 1, 2024

Portfolio Summary for February 2024

As of 29 February 2024


Security # shares Price S$ %
DBS 400 33.33 3.91
UOB 400 27.95 3.28
OCBC Bank 700 12.98 2.66
SGX 3,200 9.45 8.86
ST Engineering 6,900 3.98 8.04
Powermatic Data 8,500 2.95 7.35
Micro-Mechanics 18,400 1.68 9.06
Sheng Siong 19,100 1.55 8.67
TheHourGlass 19,600 1.55 8.90
VICOM Ltd 21,500 1.43 9.01
Credit Bureau Asia 14,300 0.915 3.83
HRnetGroup 21,900 0.725 4.65
Nanofilm 36,100 0.705 7.46
China Sunsine 41,800 0.39 4.78
TalkMed Group 14,500 0.375 1.59
Kimly 27,000 0.31 2.45
HC Surgical 35,500 0.29 3.02
Silverlake Axis 37,100 0.23 2.50
Portfolio Value = S$341,367
YTD Dividends Received = S$1,000
YTD SBL Fees Received = S$20

- Bought 500 shares of SGX.
- Bought 4,200 shares of Micro-Mechanics.
- Bought 22,100 shares of Silverlake Axis Limited.


Security # shares Price S$ %
DBS 100 33.33 2.64
UOB 200 27.95 4.43
SGX 1,300 9.45 9.74
ST Engineering 3,000 3.98 9.46
Micro-Mechanics 5,400 1.68 7.19
Sheng Siong 8,700 1.55 10.69
TheHourGlass 5,000 1.55 6.14
VICOM Ltd 5,500 1.43 6.23
Credit Bureau Asia 5,700 0.915 4.13
HRnetGroup 7,500 0.725 4.31
Nanofilm 12,500 0.705 6.98
China Sunsine 10,800 0.39 3.34
TalkMed Group 5,800 0.375 1.72
Kimly 5,800 0.31 1.43
HC Surgical 19,500 0.29 4.48
Silverlake Axis 6,000 0.23 1.09
NetLink NBN Trust 24,000 0.84 15.98
Portfolio Value = S$126,166

- Sold 900 shares of OCBC Bank.
- Bought 24,000 units of NetLink NBN Trust.

Singapore Savings Bonds

Security Amount (S$) Avg Yld %
GX22120S 14,000 3.47
GX23010Z 15,000 3.26
GX23110V 20,000 3.32
GX23120Z 20,000 3.40
Portfolio Value = S$69,000

Speculative Play

Security # shares Price US$
Kep Pacific Oak REIT 70,000 0.125
Portfolio Value = US$8,750

- Bought 70,000 units of Keppel Pacific Oak REIT.

The Lunar New Year came and went in a flash.  My family did not do many visits, as my older son fell sick on the second day.  It pains my heart to see him coughing away through the night and had to miss school for one whole week.  While staying home, I had spare time to spring clean (yes, on CNY Day 1-3) and do some reading.

The Singapore bank stocks found a second wind at the start of the month.  DBS, UOB and OCBC soared in price before retreating in mid-February.  All three banks announced record earnings and a higher final dividend.  DBS also announced a 1-for-10 bonus stock issue, Ex Date: 22 Apr 2024.  I did not manage to buy any bank share at my intended price.  Will continue to monitor for suitable opportunities.

Meanwhile, I accumulated shares in SGX, Micro-Mechanics Holdings ("MMH") and Silverlake Axis Limited ("SAL").  SGX fell out of favour with institutional investors, which caused its price to decline significantly.  MMH and SAL had reported less than stellar results, which saw their prices retrace accordingly.  Nonetheless, these companies remain profitable and I believe they will be able to grow their business over the long run.

I also executed an unscheduled trade in February.

Keppel Pacific Oak REIT ("KORE") suffered a massive 40% price plunge when the Manager announced that it will suspend distribution to unitholders till 2H2025 (see company filiing [here]).  The aim is to retain the income for recapitalization of KORE's balance sheet.  As of 31 Dec 2023, KORE has aggregate leverage of 43.2%, primarily due to lower portfolio valuation.  This is a whisker away from the 45% limit, which may make lenders unwilling to provide further financing.  The Manager has evaluated various options, including equity fund raising, divestment of properties and reduced distribution to unitholders.  All were found to be unfeasible.  Continued capex is also required to keep the properties attractive to current and prospective tenants.

I have reviewed KORE's FY2023 earning result.  Gross revenue was US$150.8M (FY22: US$148.0M), +1.9% y/y.  NPI was US$86.1M (FY22: US$84.3M), +2.2% y/y.  As of 31 Dec 2023, net assets was US$723.2M (31 Dec 2022: US$846.1M), -14.5% y/y.  NAV was US$0.69 (31 Dec 2022: US$0.81), -14.8% y/y.  KORE's current liabilities exceeded its current assets by US$67.0M, compared to US$24.3M a year before.  KORE has an uncommitted unutilised facility of US$50.0M and a committed unutilised facility of US$18.1M.  KORE should have no problem rolling over the debt with its retained income and unused facilities.

I believe the pendulum has swung too far to the downside.  KORE is still in a healthy operating mode, albeit it needs liquidity to tide over the present challenging situation facing U.S. commercial real estate.  S-Reits are not my forte, but KORE's dramatic fall in price caught my eye.

Securities Investors Association Singapore (SIAS) organized a Zoom session with KORE management.  (You can access the Powerpoint deck [here].)  The deck showed KORE has US$25M debt due 4Q2024 and US$50M due 2025.

If KORE survives through these two years and its refinancing goes through successfully, its price should recover to close the 80% gap to its NAV.  This is a rare mispricing event.  Thus, I bought 70,000 units of KORE for my account.

My analysis may well be wrong.  Just how bad is the U.S. commercial real estate situation?  The short answer is: real bad.  Bloomberg did a short video documentary about it.  You can watch it [here].  In the worst-case scenario, KORE finds itself unable to refinance its debt, and declares bankruptcy.  Should this happen, I will lose my entire investment.  However, this is only a small sum relative to my net worth.  The loss will not have any material impact to my wellbeing.  I am comfortable taking this speculative bet, in which the potential reward outweighs the risk.  (Please DYODD.)

As mentioned in my previous month's summary [here], I am revamping my SRS portfolio.  I have started selling down my existing holdings.  At the same time, I have started to accumulate NetLink NBN Trust ("NetLink").  For someone who previously avoided S-Reits, why the sudden interest now in NetLink?  Well, I find NetLink has many attractive points: a stable unitholder base; recurring earnings visibility; consistent and healthy margins; as well as a low gearing ratio of 24.3%.  With the development of new HDB residential towns like Tengah, and the government's plan to upgrade the National Broadband Network (NBN) infrastructure so as to provide faster connection speeds for families, the revenue outlook is bright for NetLink, as it is the sole entity providing the connection service and maintenance of the NBN.  It is like owning a utility company, albeit one with a 6% yield.  The vision for my SRS portfolio is to be a money stash that compounds at a moderate clip.  Investing in NetLink can help in this aspect.

April issuance of Singapore Savings Bond (SSB) is estimated to have an average yield of 3.04%.  The coupon rate is trending up again, but this is still below my requirement, hence I will not subscribe for the SSB.

At the workplace, I have just completed my annual performance evaluation with my team leader and manager.  My coworkers had told me their 2024 increment ranged between 1 and 3+ percent.  Hence, I wasn't expecting any better.  So I was pleasantly surprised when I was given a 5 percent increment in total compensation.  My actual bonus was also 15 percent higher than the target amount.  I'm glad that my contribution was given due recognition by my boss, and I'm grateful for the above average adjustment.  But it also means they have higher expectations for me this year.  I hope not to disappoint them.

My kids have just completed their Term One weighted assessments.  We can finally take a breather from the intensive revision (imagine: the parents are more worried than the kids!)  My older boy is taking his PSLE this year, hence we are concerned about his progress.  That said, as I grow older, I have realized the importance of taking care of our own mental health.  Being under constant stress can be harmful.  I try not to pack my kids' schedule, though I want my kids to take personal responsibility for their own success in life.  On various occasions, I have emphasized to my kids that I am not asking for perfect scores in their exams.  All I want them to do is to learn from their mistakes, pick themselves up when they fall, keep moving forward and "be better than yesterday".  Tenacity coupled with a growth mindset and incremental improvement can go a long way.

Until next time.  Cheers!

Enjoyed this post? Never miss out new posts by subscribing here.

No comments:

Post a Comment