Portfolio Activities for Oct / Nov 2017
October turned out to be a good month for the SRS Portfolio since my last update. As of last Friday, the SRS portfolio is valued at $232,501 (an increase of $22,991) due primarily to the increase in the value of UMS Holdings Limited. The decision to add on to the position in early September has turned out to be a good one. Below is the portfolio summary.
Fraser Commercial Trust
Fraser Commercial Trust announced a DPU of 2.41 cents for Q4 2017. The management presentation slides is here. Overall, my gut feel after reading the management slides is that the impact of HP not renewing its lease allows the Trust to rejuvenate its property. The REIT should continue to do well in the coming years as its asset enhancements initiatives bear fruit.
Mr Jack Lam, Chief Executive Officer of the Manager, said "We are pleased to have delivered a stable set of results for the full financial year despite the challenges present in the markets. We are also pleased to inform that we have initiated plans for the enhancement and repositioning of the retail podium in China Square Central, for a budget of around S$38 million. This asset enhancement initiative aims to update and upgrade the shopper experience and tenancy mix in the mall and increase its leasable area, among other things, to enhance its market positioning and long-term income-generating potential. This timely and forward-looking move will enable the mall to better capitalize on the uplift in human traffic and general activity level that will come about from the planned opening of the new Capri by Fraser hotel within the development in 2019."
Netlink also announced its results on 9 Nov 2017 where profit after tax for 19 June to 30 Sep is 4.9% ahead of its forecast at $13m. According to the announcement, it is on track to deliver the financial and distribution forecast in its prospectus. My IPO write up is here. No change to my portfolio for now.
Starhill Global REIT
Starhill announced a mediocre set of results where revenue and net property income decreased across the board. The DPU for Q1 is 1.20 cents, representing an annualised yield of 6.26%. The management presentation slides is here. While the outlook is not exciting (and even declining), the REIT is trading at a price to book of 0.834 (discount of 16.6%).
UMS Holdings Limited (SRS)
UMS Holdings continue to improve on its profitability whereby 3Q profits increased by 100%. While it seemed innocuous that the Company maintained its interim dividend of 1 cents, UMS had in reality, increased its dividend payout ratio! This is because it recently completed the 1-4 bonus issuance. If it maintains the 1 cent payout on the enlarged share capital, it will bode well for the shareholders.
In terms of outlook, the Company continues to be highly cashflow generative and cash flow for Q4 is expected to be improve further.
According to its press release, semiconductor shipments are currently at record levels, driven by proliferation of connected devices required for automotive, medical, wearables, and high-performance computing applications. Based on SEMI'S Forecast, 2017 fab equipment spending (both new and refurbished) is expected to increase by 37 percent to a new annual spending record of about US$55 billion. The World Fab Forecast also forecasts that fab equipment spending in 2018 will rise further by another 5 percentage points for a new high of about US$58 billion. The last record spending was in 2011 with about US$40 billion. The spending in 2017 is now expected to top that by about US$15 billion.
"These trends augur well for the Group and we expect to benefit further from the robust results of our major customer who has recently posted sterling 3QFY2017 results and has projected accelerated growth in the coming quarter. We will continue to reward our shareholders for their strong support with another interim dividend payout of 1 cent per share," said Mr Andy Luong, UMS' Chairman and Chief Executive Officer (CEO).
It was also announced on the same day that Andy and Stanley both purchased an additional 75,000 shares each in the Company.
As previously updated, I acquired this small 10,000 share position during its IPO. The Company has since announced a decent set of quarterly numbers where profits for the 9M jumped by 65%.
DBS Research also initiated a "buy" recommendation in the Company with a target price of $1.03. You can assess the 53 page report here.
Keppel KBS US REIT
I was allotted 50,000 shares during the recent IPO. The write up is here. The yield is attractive enough for me to hold this for the longer term.
During October, i received the following distributions:
- $800 from the quarterly dividend of UMS Holdings
- $2,331 from the semi-annual distribution of Perennial 4.65% bonds
Passive Income Update
I have blogged in Jan this year that one of my goals is to hit a passive income of $60,000 a year. Based on the latest set of results announcements and with the addition of 50,000 units in Keppel KBS US REIT, i re-underwrote my portfolio again assuming UMS is paying a higher dividend, REIT pays the last quarterly DPU and the semi-annual distribution of Keppel KBS US REIT is in Feb and Aug each year to create a nicer looking monthly chart. This is how it looks like and the annual income is around $49, 763 (or $4,147 per month). The blended yield on my portfolio is around 6.5%. Considering that this passive income is for 2 person, there is probably still some way to go...
That is quite a heavy post today, till next time... happy SRSing.... and for the lucky winners of SGX Bull Charge, don't forget the event is on this coming Friday. Yours truly will be there too!
Happy Bull Charging!