Investments explained (always updated)

Intent
Fundamentals do not change so quickly; to review it every once in a while.
Instead of reposting it every week!

Investment Holdings
DBS. Entered on 2nd week of 2019 as income investment with element of growth. The thinking behind initiating a position is documented here & here. I wanted to enjoy good dividends while i waited for capital gains to be realised.

Entry was because of:

• Management. Comparatively better management than the other banks, proactively absorbing technology to avoid disruption.
• Attractive dividend yield (5%, $1.2) that is sustainable.
• No foreseeable disruptive technology in sight.

Exit will be:

• when dividend cannot be sustained above 2.6%
• Foreseeable disruptive technology to its business spotted

Olam. entered on 3rd week of 2019 as an income investment with element of growth. The thinking behind it is documented here. I wanted to enjoy good dividends as i wait for capital appreciation.

The idea is for entry:

• Good sustainable Dividend of ~4%
• Better cashflow than its peers
• No foreseeable technology disrupting its business

Exit will be when:

• Dividend cannot be sustained due to negative news
• cashflow drops below its peers
• Creditable disruption to its business appears.

QAF. Entered on 13th week of 2019 as income investment, with high yield and potential upside. The idea is that declaring 4c dividend (consistent with yield since 2012) quashed the perception that it will cut dividends for following months due to the earlier drop in profitability and forced selling of high returns business in Malaysia.

Entry was because of:

• maintained dividend yield ( DPU 5c)
• attractive dividend yield 6.1% entered at 81.5c
• no foreseeable disruptive technology

exit will be:

• when there are indicators that dividends have to be cut
• disruptive technology in the horizon, but no corporate action to adopt it

Singapore O&G. Income investment. There was a bit of FOMO, because just as i was about to buy after considering so long, it suddenly breakout higher, then of course at the end of the week... price headed down. But it is alright, because i am looking at this for a longer horizon.

Reasons why i was looking to buy this counter was:

• net cash counter
• sustainable dividends
• high value service
• near IPO price
• higher dividend than other similar counters

Downside:

• Disputes/unhappiness among partners/doctors.

The dividend is above 4% and there is room for more growth. Will exit when capital appreciation outstrips dividend growth, or when there are long-term decisions by the company management that reduces profitability (e.g. enter into related businesses).

Exited this position at 30.5c, i sustained a $2K loss after considering dividends.
reason for exit was that the CEO left after a short stint. 
this was not a "planned" exit because no one was chosen to succeed.
this is likely due to some difficulties in the job (their key Doctors maybe very demanding?) but whatever the reason, seems to be some internal strife.
perhaps better to look for other counters instead.


Purchased counter with yield above 5% for Q2 2019 to increase the yield

Mapletree Industrial Trust. Income investment (5.6% yield). Reasons for buying in:

• based on properties owned, they have the least ratio of properties in the far west of Singapore, compared to Ascendas reit, Aims Amp, Sabana, ESR, Soilbuild. properties in west of SG are quite challenging to rent out.
• price-trend has been upwards for a long time.
• DPU trends upwards
• With its closest comparable (ascendas) market has priced them similarly.
• exposure to data centre business (in demand)

downside

• unexpired land lease of its properties are 37.2 years whereas ascendas is 45.5 years.

Just a side note, my after buying analysis actually shows Ascendas is the better reit to buy ... so maybe that will be explored later in the year.

CapitaR China Trust. income investment (6.6% yield at cost). Looking at the overseas retail reit market for some diversification away from pure SG market. concentration risks. Compared with the overseas retail reit (less Lippo malls trust because of the uncertainty in indonesian policies), such as Mapletree North Asia Commercial Tr. Reasons for buying:

• larger number of properties under its managements compared to the others
• price is uptrending
• DPU is slightly uptrending over the years
• like-for-like comparison with MNACT, it has a significantly better yield; if compared with fortune greater difference

downside:

• China-US trade conflict
• Chinese penchant for ecommerce

not the cheapest buy but it is hard to catch the lowest. might as well start accumulating dividends.

IREIT Global. entered 2nd week of Oct as income investment (7.4% at cost). Looking at overseas office reit for better yield,as local reit play has become unattractive in yield ( under 5%). I might as well buy DBS which is giving nearly 5% yield with quarterly payouts, and significant upsides, instead of local good quality REITS. Reason for entering:

• concentrated in Germany, Europe's economic power house.
• fully freehold
• stable prices over the years
• DPU stability

Down sides are:

• concentration risk ( 5 properties, all in germany)
• Forex risks, especially strong SGD
• slack management (european style?)

Hoping with CDL entering as a significant shareholder, they will be more growth oriented.

I also made comparison with Prime REIT, Manulife Reit, Cromwell. and IREIT came up tops.

• Prime REIT was immediately not considered because too many parameters were too short to make meaningful comparison.
• Manulife had comparable number of properties, but was lower yield.
• Cromwell was better in terms of spread of risks by having many properties. but i didn't like that they had significant properties in Italy (weak economy), and its yield was lower.