$$$ KPO and CZM $$$

Monday, April 6, 2020

Portfolio - February 2020

Early last month, we tried to postpone our May Europe (12 Days 9 Nights Scandinavia & Finland) tour with Hong Thai Travel Agency and was asked to pay $200 admin fees per pax. We refused and disputed but it was only when the whole COVID situation had gotten worse/more serious (1-2 weeks after we asked to postpone), they finally allowed us to change to an "open" tour without any charges.

We were also supposed to fly to Japan in June but that will have to be postponed too, just waiting for Alaska Airlines to allow free cancellation/postponement for people travelling in June. So much for planning in advance - Quick Update - Too Busy to Blog.

Our portfolio decreases by 2.82% to $442,216 - $4,817.28 of capital injection and $17,672.14 of capital loss.


If you prefer to look at numbers, this is the raw data used to generate the above bar graph. These numbers are as of the last day of the month.


"Cash Flow" is the amount of money being injected/withdrawn from the portfolio (buying stocks = +ve cash flow while selling stocks and collecting dividends = -ve cash flow)

SOLD
None

BOUGHT
- STI ETF (3 x 500 units) @ $3.15, $3.14 and $3.10
- IWDA (12 and 13 units) @ US$62.53 and US$57.19

Buying STI ETF has always been part of our plan but we stopped when the price got too high. Seeing it drop, we decided to start buying some again.

Apart from our regular monthly investment into StashAway and Endowus, we have decided to invest SGD $2,000 every month into IWDA (iShares Core MSCI World UCITS ETF) which is an accumulating (does not distribute dividends) world ETF managed passively by iShares. This has multiple purposes:
1. Capital Growth - Determine if simply buying a diversified world ETF will outperform StashAway/Endowus
2. Leverage Collateral - It has 70% LTV which will increase eventually increase our ability to borrow more or prevent a margin call

Anyway, IWDA is highly recommended by ShinyThings from HWZ. You can refer to this summarized version here.

Dividends
The total dividends collected this month is $2,554.64. The breakdown is as follows:

Company PayDate Amount Shares Total
SSB Aug 2019 1-Feb-20 0.0084 500 $4.20
Ascendas Hospitality Trust 10-Feb-20 0.012 15,000 $180.00
Ascott Residence Trust 10-Feb-20 0.0418 11,000 $459.80
STI ETF 24-Feb-20 0.056 13,000 $728.00
Mapletree Commercial Trust 26-Feb-20 0.0185 2,500 $46.25
Parkway Life Real Estate Investment Trust 26-Feb-20 0.0334 2,000 $66.80
CapitaLand Commercial Trust 28-Feb-20 0.0386 2,000 $77.20
CapitaLand Mall Trust 28-Feb-20 0.0311 7,000 $217.70
Frasers Commercial Trust 28-Feb-20 0.024 7500 $180.00
Soilbuild Business Space REIT 28-Feb-20 0.00925 21,000 $194.25
Starhill Global Real Estate Investment Trust 28-Feb-20 0.0113 12,000 $135.60
Suntec Real Estate Investment Trust 28-Feb-20 0.02347 5,000 $117.35
Thai Beverage Public Company Ltd 28-Feb-20 0.013408 11,000 $147.49

Total dividends collected for 2020: $2,832.12
Average dividends per month for 2020: $1,416.06

StashAway

KPO

CZM

Capital: $28,750‬.00
Current: $‭‭‭‭31,499.66

Endowus


Capital: $4,000.00
Current: $‭‭‭3,705.00

On a side note, Endowus has reached out and offered a masked referral link for our readers! You will get S$10,000 managed free for 6 months ($20 equivalent) and we will get $20 too! Shall start doing monthly statement updates for it soon too!

You might be interested in these blog posts too:
Portfolio Performance in 2019
2019 Net Worth
Portfolio - December 2019 - $463,297
Portfolio - January 2020 - $455,071
- Portfolio - February 2020 - $442,216

Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right --> Unfortunately, you can't see it on mobile.)

Friday, March 27, 2020

Coronavirus (COVID-19) Presents An Opportunity For Cheap SIA Rights/Shares But Is It A Good Deal?

SIA halted yesterday and has resumed today with an announcement for more cash through a mixture of rights issue and convertible bonds. A few friends came asking if it is attractive (opportunity to enter at $3) since it is our national airlines with the government backing/support right? I glanced through the announcement, there was no fundamentals/numbers presented, so I decided to calculate them instead and have extracted the important information below.



The rights shares will be issued at an issue price of S$3.00 for each Rights Share (the “Issue Price of the Rights Shares”) on the basis of three (3) Rights Shares for every two (2) existing ordinary shares.

The Issue Price of the Rights Shares represents a discount of approximately 53.8 per cent. to the last transacted price of the Shares on the Official List of the SGX-ST of S$6.50 on 25 March 2020, being the last trading day on which trades were done on the Shares prior to this announcement, and a discount of approximately 31.8 per cent. to the theoretical ex-rights price (“TERP”), of S$4.40 per Share.

Before I even start the calculations, a general rule of thumb is that heavily discounted rights issue is a red flag. Regular readers will know that I have a rights issue calculator so let's just use that - KPO Rights Issue Calculator but we will need a few information (NAV, DPU, etc.).


The latest NAV I found was $10.25 from their FY2019-2020 Q3 presentation slide.


The current number of issued shares is 1,183,665,134 based on their FY2018-2019 Annual Report. We need this number to calculate the new NAV and PB after the rights issue.


If you are wondering how the theoretical ex-rights price (TERP) is calculated, simply take the existing number of shares multiply by the current price and add the new rights/shares that will be issued multiply by the issued price divided by the total number of shares. Similarly, we can use that to calculate the new estimated NAV which fell from $10.25 to $4.09! Having said that, the actual NAV is probably lower because they took on more debts, hence highly likely to be < $4.


Now we enter the relevant information to the calculator to determine if it is a good deal. What is a good deal? I look at it in 2 ways - yield on cost and PB on cost. Assuming that there is no rights issue and SIA does not have any cash flow issue, based on the current/entry price of $6.30, my yield would have been 4.7% and the PB would have been 0.615.

However, after the rights issue, my assumption that dividends will remain constant (we know that is definitely not happening. In fact, there will probably be no dividend this year) which would be diluted due to more shares meant a drop of dividend yield to ~1-2%. In addition, with the significant drop in NAV, without oversubscribing the rights issue, I would end up buying the shares at a premium or much more than the initial 0.615 PB. As you can see, the calculator is simply screaming bad deal everywhere.

I would also like to point out that the above calculations did not take into account the convertible bonds. To put it simply, it means that the bonds can be converted into shares which means more dilution in the future...


Last but not least, if we were to look into the purpose of the cash call, unlike REITs, SIA is not expanding the business or buying more property, the cash is used for their operating expenses and to repay other debts. If the coronavirus (COVID-19) pandemic does not end soon, with fixed operating cost and no way to generate revenue, will history repeats itself (more rights issue)? Sorry to dash some of your hopes but SIA has been trading around its NAV historically, hence it will never go back to $10 or anywhere near it anymore with this rights issue.

Yes, we love playing the miles game to take SIA First/Suite/Business flight but definitely not as a shareholder. Personally, I would rather put my precious cash in REITs now. On the bright side, this is a renounceable rights issue which means you can sell the rights or sell the shares now.

All the best to the shareholders!

Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right --> Unfortunately, you can't see it on mobile.)

Tuesday, March 17, 2020

StashAway - January 2020

Freddy wrote another interesting piece of insight here - Markets Remain Turbulent as the World Fights a Pandemic which explains why there was no re-optimization given the current state of the market and what should one manage their investment.

According to him, a bear market doesn’t start with a bang. Instead, a bear market is a gradual decline of 20% and more in asset prices over a prolonged period of time and investors have ample opportunities to react to the changing market environment. Given that the latest decline happened in a span of less than two weeks, what we’re really witnessing is a correction that has morphed into a market crash.

The data suggests that we are in a market crash, not a bear market. This means that we expect the market underperformance to be short-lived, not lasting more than a few months. As such, we’re managing your portfolios through the crash by keeping your asset allocations unchanged. 

When you have a long-term view of your investments and you’ve already prepared your investments to suit your risk appetite and your financial goals, it’s easier to maintain a level head to ride out the current uncertainty. If you react to the short-term noise and sell your investments, you’ll struggle to get back into the market when the recovery happens, and you will end up pocketing losses. Instead, focus on the long-term and take advantage of the dip in the markets by continuing to dollar-cost-average into the markets.

Do take a look at his article for more information.

Anyway, we have 3 portfolios on 2 accounts now due to our new strategy - New Strategy: StashAway + Supplementary Retirement Scheme (SRS):
KPO and CZM Cash - StashAway Risk Index 22%
KPO SRS - StashAway Risk Index 36%
CZM SRS - StashAway Risk Index 14%

1. PORTFOLIO SUMMARY (as of the last day of the month)

KPO

CZM

Based on the statement (31 Jan 2020), KPO made $‭‭‭140.81 and CZM made $‭‭‭35.11 for the month.

As of 17 Mar 2020, these are our portfolio performance:


KPO and CZM Cash - StashAway Risk Index 22%: $‭21,487.89 (-8.19% - Capital: $22,500)


KPO SRS - StashAway Risk Index 36%: $3,526.30 (-34.89% - Capital: $4,250)


CZM SRS - StashAway Risk Index 14%: $2,819.15 (-11.68% - Capital: $3,000)

From here, you can see the difference in volatility/losses based on both our SRS accounts which started around the same time but with vastly different risk.

2. PORTFOLIO DETAILS 
Note that these are reported in USD.

KPO and CZM Cash - StashAway Risk Index 22%

KPO SRS - StashAway Risk Index 36%

CZM SRS - StashAway Risk Index 14%

3. FEE CALCULATIONS


The fee stated is based on the monthly-average assets SGD $13,367.34 x 0.8% / 366 days * 31 days = $9.06.


The fee stated is based on the monthly-average assets SGD $2,675.21 x 0.8% / 366 days * 30 days = $1.81.

We used Grab points to redeem for StashAway credits last year (1,200 points for $5 credit) but I believe it is no longer available.

StocksCafe


Looking at the time-weighted return (-16.30%), we can see that StashAway Risk Index 22% is "outperforming" the STI ETF (including fees) in the sense that it is not losing as much. In addition, it has a lower max drawdown. Interestingly, this is the first time we see higher volatility for the StashAway portfolio.


Similarly, StashAway Risk Index 22% is also outperforming the SPY (SPDR S&P 500 ETF Trust) with much lower volatility and max drawdown.

Which is the best? Only time will tell :)

StashAway Referral Link for Our Readers
Here you go: KPO and CZM Referral Link

If you are interested in the smart portfolio tracker (StocksCafe) which I am using as shown above, sign up using my link for a discounted rate :) Refer to our Referrals page for more information.

You might be interested in previous months update too:
- StashAway - January 2020 - $31,742.42

Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right --> Unfortunately, you can't see it on mobile.)