Thursday, January 23, 2014

2014 Portfolio Component Change (23 Jan)

Today marks my 1st portfolio change for the year. I have initiated the following changes to my portfolio:
  • Divested Sabana REIT, Hafary Holdings and SingTel
  • Added AIMSAMPI REIT and 2ndChance

In an earlier blog post, I have mentioned my plan to try to minimise changes to existing counters invested from past years without good reasons.

Sabana REIT has just announced its latest DPU of $0.0219 for Q4 2013. This is a 7.9% decrease from last quarter and 9.1% lower than the same period last year. It could be said that this drop in DPU is expected due to the disappointing performance. The management managed only to renew just 1 out of the 5 expired master leases, and their decision to buy a half vacant property from AMD only adds on to the amount of vacant spaces. Furthermore, their divestment of stake did not help to inspire confidence that the performance is aligned to their interest. That said, the situation for the REIT could be still recover in the future if they are able to fill up the vacancies. But why take the chances when there are currently better choices available in the current market conditions?

Thus, I have decided to swap my industrial REIT exposure to AIMSAMPI. Currently, the REIT is trading at a 6.5% discount to NAV of $1.52. At my entry price of $1.415, I can look forward to more than 7% yield (which is only marginally lower than Sabana). With its ongoing development projects at Defu Lane and Gul Way as well as recent announcement to yield accretive acquisition of 49% interest in the Optus Centre, DPU could be improved.

I have also decided to divest SingTel to fund purchase for 2ndChance. My entry in SingTel was motivated by search for non-REIT dividend stocks due to interest rate concerns on QE tapering. 2ndChance Properties which started out as a retailer of traditional Malay clothes and gold jewellery, has since grown its businesses to include retail of gold jewellery, fashion apparel and property investments. The company has demontrated a long history track record of consecutive dividend growth. Dividends have grown by an annualised rate of 9% per year since 2005. At my entry price of $0.44, yield is expected to be around 7.7% which is comparable, if not higher than most REITs.

Lastly, I have divested Hafary Holdings to fund the above purchases instead of further capital injection and conserve my cash holdings. I have reservations regarding the Hafary's ability to maintain consistency for its high yield. With the divestment, taking into accounts the dividend received, the realised loss on my capitial is 0.46%. I will view it as a premium to pay for strengthening my portfolio.

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