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Doing Battle in the Great Singapore Sale


Le long Le long, screams the SGX.

Many have come to browse its wares; some cautious and wary. Others, egged on by a kiasu mentality, gobble up every single deal that appears vaguely attractive.

The STI has been on a punishing slide since May 2018, retreating from a high of 3615.28 (2 May 2018) to 3105.66 (today, 12 Sep 2018); nearly a 14% retreat. 

We are approaching the psychological resistance point of 3000 points.

The last time the STI sank below 3000 points was Oct 2015 and that rut lasted until Jan 2017 (a short rut by historical standards). 

It certainly seems like we are now heading back to that "not good, but not exactly bad" zone.

Dealing with the ebbs and flows of Mr Market is like fighting a protracted battle. Battles are won and lost over the short term but the objective, of course, is to win the war.

The initial wave of soldiers i sent to the front have unfortunately all perished.  Fallen valiantly in the battlegrounds of Singtel, Keppel and First Reit.

 

 no. of shares entry value current price change
Singtel 6000 3.15 18900 3.12 -0.95%
Keppel 2000 6.8 13600 6.42 -5.59%
First Reit 20000 1.29 25800 1.25 -3.10%
TOTAL

58300
-2.98%
 
Not to be cowed by the resistance of Mr Market, I sent in a second wave of troops on 5 Sep, this time twice the size of the initial battalion, targeting Thai Bev, Sasseur REIT and CapitaR China Trust.  It appears that the second wave of reinforcements have also run into difficult entanglements.



no. of shares entry value current price change
ThaiBev 40000 0.63 25200 0.625 -0.79%
Sasseur 40000 0.73 29200 0.715 -2.05%
CRCT 35000 1.44 50400 1.43 -0.69%
TOTAL

104800
-1.10%























It is absolutely necessary to have some depth when planning battle strategy. Although the reserves remain healthy, I shall bide my time and make further observations before sending a third wave of reinforcements.

In other words, 按兵不动. 
Meanwhile, one must learn to stay comfortable vested.  

CRCT and Sasseur are a play on the Chinese counters, which appear to have been unduly punished by investor pessimism brought on by Trump's trade war.  

CRCT is an old hand in mall management and may be expected to weather this short term pull-back. I believe the burgeoning middle class in China would continue to drive consumerism. At 1.44, the yield of CRCT is close to 7%. It's gearing is extremely healthy at 32% and it is currently priced at a discount to NAV of 0.87 (NAV per share being reported as 1.66). I am happy with a 7% yield while waiting for the bout of pessimism to pass.  

 Sasseur REIT is admittedly more of a punt. It is a relatively small reit with market cap of less than 1B and its portfolio only comprises a miserable 4 malls, with one of its malls in Chong Qing contributing up to >70% of revenue.  This was a pure numbers play. I liked the >8% yield at current price, a low gearing at 33% and a discount to its NAV of 0.81.  I don't like its asset concentration and its relatively short land leases.  I will try to exit this counter if a selling opportunity presents itself.

As for Thai Bev, there is nothing much to say except that I feel at 0.63 there is a reasonable margin of safety for entry.  

 My dividends for the rest of the year should be significantly boosted by recent purchases and I look forward to tabulating them for Q3 by the end of Sep. 



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