Dark side of Ascott REIT

As a hospitality S-Reit heavyweight, Ascott REIT offers a form of passive income stream and exposure to a geographically diversified portfolio. Henceforth, for a period of time, I was very tempted to invest in this REIT supremo as revenue for Ascott REIT surged from $357 million in FY2014 to $496 million. Net income powered from $122 million to $214 million in the same period.

Indeed, it appears to me that investing Ascott REIT is an absolute safe bet. But certain aspect of its business strategies made me changed my mind. In this article, I will share my insights on Ascott REIT.

Profile of Ascott REIT

Since its establishment in 2006, Ascott REIT has grown into a top S-Reit with market capitalization of $2.33 billion and total assets worth a cool $5.3 billion. As a leading serviced residence player, its investment moat lies in having 11,430 apartment units across 37 cities.

Part of the reason for the success story of Ascott REIT is its unique business model of maintaining a balanced “stable income” and “growth income” management contracts for its property portfolio. I also love its growth strategies of acquisitions from its Sponsor (20 pipeline properties via ROFR) and the continuous asset enhancement initiatives to increase the market value of its properties.

On the surface, the financial performance of Ascott REIT would surely made a compelling investment case. However, the showstopper for this counter has to be the relentless rights issues and private placements. The thirst for capital resulted in depressed yield, Return on Equity (ROE) and slump in unit price.

Ascott REIT

On 20 September 2018, Ascott REIT announced its first development project with acquisition of a Singapore prime site, Nepal Hill, for $62.4 million. While this is not really a colossus sum of money, investors may be left wondering if it …

Read more

DBS stock rallied on issuing of $1billion perpetual securities

It is the return of DBS stock. On 21 September 2018, DBS stock surged to a month’s high to reach $26. The performance of DBS stock is remarkable, given that the counter rose by 7% within 10 days. The rally followed the recent issuance of $1billion perpetual securities.

While DBS stock is still some way off the record high of $31 seen on 31 April 2018, recent data suggested that DBS stock may have been oversold. It is still too early to suggest that DBS stock price is poised for another bull run but recent recovery was supported by several factors.

As the bellwether of the economy, DBS stock price is obviously very volatile and sensitive to market conditions. Thus, I view DBS stock more of a growth stock instead of looking at it from a dividend stock perspective. In this regard, my opinion is that this counter is good to invest, but not ideal to invest and hold. Due to the volatility of bank stocks, the key to making money out of DBS stock is to set appropriate entry and exit strategies.

DBS stock

Then again, there are many critics who may argue that I should not advocate short-term investing or even trading. Well, to each his own. As far as I am concerned, the golden rule when it comes to investing in stocks is don’t lose money. There are numerous investors who chose to buy and hold stocks but ended up catching a falling knife.

$227 million shares buyback

In my previous article, “DBS share price lost gangbuster form” I wrote that it is not the style of DBS management to resort to shares buyback to prop up share price. Prior to the recent correction, the bullish form of DBS share price in the past two …

Read more

Crazy Rich Mapletree Logistics Trust

From a high of $1.36 in January 2018, unit price of Mapletree Logisitics Trust plunged to the current $1.24 level. The correction must have caused much agony for investors even if the DPU of $0.06 issued in 2018 had been factored in. In my humble opinion, the fall of Mapletree Logistics Trust unit price could be attributed to the equity fund-raising exercises in recent months.

Private Placements

On 19 September 2019, Mapletree Logistics Trust launched yet another private placement to raise estimated proceeds of about $475 million to fund the acquisition of the 5 logistics properties from CWT International Limited. A total of 309,917,000 New Units will be issued pursuant to the Private Placement, at discounted price between $1.196 and $1.234 per new unit.

This is the third private placement by Mapletree Logistics Trust in a row since August 2017. In May 2018, Mapletree Logistics Trusts launched a $220 million private placement to fund the acquisition of a 50.0% interest in each of 11 Hong Kong special purpose vehicles. Prior to that, in August 2017, a massive equity fund-raising consisting of private placement and preferential offering of $670 million was launched to fund the acquisition of Mapletree Logistics Hub Tsing Yi, located at 30 Tsing Yi Road, Hong Kong.

Mapletree Logistics Trust

It certainly seems that Mapletree Logistics Trust has no problem attracting investors because each of the three private placements was oversubscribed and saw strong participation from institutional, accredited and other investors. Presumably, this was due to the strong support from major shareholder, Temasek Holdings.

In the latest private placement, Temasek Holdings, through DBS, subscribed 1.8 million new units. The May 2018 exercise saw Temasek Holdings accumulating only 417,000 new units while the August 2017 exercise saw Temasek Holdings snapping up 7.5 million new units.

Valuation of Mapletree Logistics Trust

With a …

Read more

StarHub share price to plunge after being boot out of STI?

Can it get any worse for StarHub? On 6 September, FTSE announced that Starhub will be booted out of Straits Times Index (STI) on 24 September. With this latest development, I fear the worst for StarHub share price.

In recent years, there had been a few cases of local blue chips suffering from terrible fate after being booted out of the prestigious STI. Examples are SIA Engineering and Noble Group. In this regard, is StarHub share price poised for another major correction? Should investors sell everything and run for their lives?

In this article, the dynamics of the local telco industry are examined and the outlook for StarHub share price is discussed.

StarHub share price

Another wild ride for StarHub share price?

Drawing from recent cases, shareholders should brace themselves for another roller-coaster ride of StarHub share price. Shares of aviation heavyweight, SIA Engineering, went on a tailspin after being kicked out of the STI, dropping from $3.50 in September 2017 to the current $2.90. And let’s not even talk about Noble Group. After bowing out of STI in 2016, Noble Group had been in financial wilderness, going from crisis after crisis. Currently, Noble Group’s shares are almost worthless.

According to Infocomm Media Development Authority (IMDA), the mobile penetration rate in Singapore is about 150%, making Singapore one of the most well-connected countries in the world. This means that some of the subscribers may be using more than one line. For a telco that focuses its growth solely in Singapore, the outlook is indeed worrying for Starhub. Indeed, Starhub share price plunged from $3.90 in 2016 to the current $1.67 after news of fourth telco broke out two years ago.

Since 2005, the total dividends dished out by StarHub is a staggering $2.40, making StarHub one of the best dividend stocks in the …

Read more

mm2 Asia to self-destruct or win big?

In 2014, mm2 Asia debut in Singapore Catalist with minimal fanfare. But in 2017, the share price went on an unstoppable bull run when the share price increased 7 fold in value, creating immense wealth for shareholders. To top it off, it also got upgraded to the SGX Mainboard list, an impressive feat for a company that just got listed in Catalist in two years. For a penny stock, mm2 Asia is certainly a very interesting stock but in recent months, the share price got bombed out.

What on earth has happened? Is it the end of the party for mm2 Asia?

In my previous article, “The Outrageous Story of mm2 Asia“, I wrote that I would enter this counter at $0.35. On the basis of the current form, the share price of mm2 Asia seems likely to reach this price level soon. However, I have decided to stick to my strategy of not investing in a stock which IPO within 5 years. There are three reasons which I would like to share in this article.

mm2 Asia

Pre-IPO investors

Being a TV and film production company, mm2 Asia occupies a very niche area in Singapore stock market. As a content producer, I like mm2 Asia’s business model because this is an evergreen field that can never be made obsolete by technology. mm2 Asia also owns animation company, Vividthree Productions (which is going to IPO) and also event and concert company, UnUsuaL (which had been listed).

Through mmCineplexes, mm2 has its own cinema chain in Malaysia. And not to mention the $230 million acquisition of Cathay Cineplexes which was completed in May 2018.

When it got initially listed in Catalist, mm2 Asia had a group of pre-IPO investors, consisting of PAPOF (16.1 million shares), Wong Li Foon (880,000), Cornerstone Pictures …

Read more

Devastating crash of ThaiBev share price

In the good old days, it was considered to be prestigious for a listed company to join the Straits Times Index (STI). It still is. But nowadays, it seems that being in the local benchmark index carries the unwelcome added risk of being prime target for short-selling attacks. Many components of STI had a torrid run so far this year. ThaiBev share price is no exception.

But is short-selling attacks the real culprit for the devastating fall of ThaiBev share price? I honestly doubt so.

In this article, I will share my perspective on the key reason behind the meltdown of ThaiBev share price and also explain why the current price level may represent a good window of opportunity for investors to accumulate ThaiBev shares on the cheap.

Currently trading at dividend yield of 4.12% and Price/Book Value of 3.03, ThaiBev share price may seem attractive for investors seeking yield. But then again, I view ThaiBev more of a growth stock, rather than a dividend counter. In this regard, I feel investors should have a strategy of setting the appropriate entry level and aim instead for capital appreciation.

The message I am putting across is that there would be pocket of opportunities for investors to make money out of the ThaiBev share price volatility.

ThaiBev share price

ThaiBev profile

Although ThaiBev’s business is concentrated in Thailand, it may be a mistake to think that this SGX mainboard-listed company’s growth focus is limited to Thailand. The founder of Thaibev, Charoen Sirivadhanabhakdi, signalled his ambition to build the largest F&B empire in South-East Asia when he conquered Singapore’s 100 year-old F&N back in 2013. The stunning takeover of F&N means that ThaiBev is an exciting long-term Pan-Asia project and investors must adopt the right strategy to make money out of this counter.

Listed on SGX …

Read more

SingTel share price on course for explosive meltdown?

For the past two weeks, SingTel investors must be feeling wretched as SingTel share price free fall from $3.26 on 30 August to $3.10 on 11 September. The shares had not reverted to the dismal 6-year low witnessed on 3 July 2018 yet. But given the bearish trend, I will not be surprised if SingTel share price experienced yet another explosive meltdown and crashed to below the $3.00 mark in no time.

Although SingTel is the second largest cap in Singapore stock market, investing in this leading light of STI is not easy because this counter is susceptible to short-selling attacks. Unlike local banks, it is also not Temasek Holdings’ style to defend SingTel share price through aggressive shares buyback. Instead, it appears to me that the management of SingTel prefers to let the financial results of the company do the talking. Due to these factors, SingTel share price is expected to experience much volatility in the coming months and investors must have the stomach to withstand the roller coaster ride.

SingTel share price

Seeking the truth from facts

In my previous article (24 July), I wrote that “SingTel share price destined to collapse after ex-dividend day”. In that article, I shared that it is not a matter of whether SingTel share price would drop but by how much it would plunge after ex-dividend day. Based on past years’ data, SingTel share price never fail to correct in the second half of the year, the traditional period after the issuance of SingTel final dividends.

On 28 July 2017, SingTel share price collapsed from $4.00 to reach $3.68 in September 2017. Prior to that, SingTel share price fell from a high of $4.30 on 22 July 2016 to a bottom low of $3.65 on 31 December 2016. The year 2015 was another …

Read more

OCBC share price encountered “earthquake”

From a high of $14 in May, OCBC share price suffered a major “earthquake” and corrected 25% to reach a dismal level of $11.10 on 6 September. The plunge in OCBC share price also led to the dividend yield to reach the alluring level of 3.51%. Incidentally, OCBC issued a SGD1 billion perpetual securities with coupon rate of 4% in August. In the past, OCBC had also issued preference shares as well.

OCBC perpetual securities was issued at a time when investors were hungry for yield in a highly volatile environment. Being ranked senior than ordinary shares, perpetual securities are usually considered to be a safer investment product as compared to the shares of the same company. But it is interesting to note that the coupon rate of OCBC perpetual securities is 4%, slightly higher than the dividend yield of 3.51%. If OCBC share price drops further, the dividend yield will increase further.

As a bank stock, OCBC share price is obviously very volatile because banks are the bellwether of the economy. Thus, like DBS and UOB, OCBC share price is very sensitive to the changes to geopolitical and global financial health. In this regard, it may not be appropriate to view OCBC stock as a dividend counter. Also, using dividend metric as a valuation tool for OCBC shares may not be sound.

OCBC perpetual securities

In the investment world, I know it is important to compare apple to apple. Fundamentally, it may be flawed to compare the dividend yield of a stock to the coupon of perpetual securities issued for the same issuer. Both are different asset classes that come with different risk-return profiles. But if given a choice, I will still prefer to invest in OCBC shares, which is more liquid. Furthermore, besides receiving dividends, shareholders of OCBC …

Read more

Can Raffles Medical share price ever rock again?

From a high of $1.50 in 2016, Raffles Medical share price plunged to a low of $0.99 on 6 July 2018. What a horror ride! Previously in 2017, I have written a few articles highlighting that the time was not ripe to invest in Raffles Medical shares. Also, I had set a personal entry level between $0.60 to $0.80 for Raffles Medical share price, which many investors scoffed at.

Can the embattled Raffles Medical share price rise from the ashes like a phoenix or should investors run for their lives before the Raffles Medical share price got bombed out again?

Raffles Medical share price in limbo?

My views had, at that point of time, touched on many readers’ raw nerves and might have riled many investors. There are also quite a number of readers who dismissed my strategy and claimed that my valuation of Raffles Medical share price was flawed. But I guess the performance of Raffles Medical share price in the past two years vindicated my viewpoints.

Those who had bought at the high side of $1.50 would be staring at massive paper losses now. Of course there is no point in crying over spilled milk but there are important lessons to be learned for those who suffered losses from this counter.

The intriguing meltdown of Raffles Medical share price is indeed puzzling because it happened against the backdrop of increasing revenue and net profits in recent years. However, the plunge in Raffles Medical share price could be attributed to falling Return-on-Equity (ROE), which had plummeted from 13.4 in FY2014 to a dismal 9.6 in FY2017. Why is ROE a key factor in the movement of Raffles Medical share price, if you may ask? Read on if you are interested to know whether Raffles Medical is a value trap …

Read more

Perfect storm for StarHub share price

Nowadays, investors of StarHub cannot sleep well. From a high of almost $4.40 in 2015, StarHub share price crashed like a fallen star to reach the abysmal level of $1.64. The stunning decline of StarHub share price caught many investors off-guarded and caused much wealth destruction to many long-term investors. At the rate of decline, StarHub share price is definitely spiralling out of control. How low will it go?

On looking back, StarHub has managed to punch above its weight since it was launched in 2000. With share capital of only $300 million, this telco has managed to generate amazing Return-on-Equity (ROE) in the past. Henceforth, given its track record, it may be too early to dismiss the long-term potential of StarHub share price.

StarHub share price

StarHub share price lost form

The intriguing meltdown of StarHub share price must have left investors slapping their foreheads in astonishment. It seems so surreal as investors reminisce those good old days when StarHub was one of the leading lights of SGX.

Of course, nobody in his right mind would have predicted Starhub share price to suffer such a devastating run. This counter is, after all, considered one of the brightest blue chips that has consistently paid out handsome dividends. Against the backdrop of plunging StarHub share price, is it time for investors to cut losses and run for their lives?

The strategy for making money out of the volatile StarHub share price should be setting appropriate entry and exit levels. This is of course the sensible thing to do. Nonetheless, there are wealth builders who may advocate buying on the dip and accumulating the shares for purposes of dividend. Such an approach may not be flawed but it is built on the premise that StarHub share price will turn. However, there is no guarantee that …

Read more