Portfolio Update: Oct 2017

Divestments: Guocoland

Most of the good news already priced in with only Martin Modern left.  I divested at 2.38 on a flat day but overnight the stock rose to 2.46. :X

Note to self: Timing your selling point is difficult and only time will tell if it was a fair price point. Trust your valuations but you can maximize the stock gains by selling only when a bearish signal is given

Added: Straits Trading Company

Solid fundamentals, and I like the “securitization of property” strategy think it’s found its legs in the US and remains to be seen if it can be replicated in Asia. This is a long-term play until ARA relist somewhere in the future.

**On another note I am on track to meet the SA+MA target of 40k come next year Jan. IAGW**

The tide rises

We are moving into the reporting season for the 3rd quarter and I must say that if markets were rising in the middle of the year, they are absolutely flying now. Property counters across the board have risen and it remains to be seen how long this will continue.

Personally, I am quite conflicted on the overall outlook for the property sector. For developers, the en-blocs will probably make them money, as they are most likely to intensify the use of the plots. However, I don’t know how the individual homeowner would stand to benefit from this? I think overall prices psf might not rise as optimistically as people think.

Overall, I think it remains to be seen if the property sector is likely to soak up a lot of the liquidity left over from the recession in the last few years.

Smart Alec: Kwek Leng Beng

Two years ago, when I was still a wide-eyed intern working at Republic Plaza, I remember vividly that many of its long-term tenants were vacating it in favor of Guocotower. I recall wondering how CDL would be impacted and how challenging the situation was at that time. Fast forward two and a half years and Republic Plaza is having a $60mn facelift and CDL share price has skyrocketed >30% given the bullish sentiments in real estate and aided by the latest proposal to privatize its sister company Millennium & Copthorne Hotels (M&C).

What really surprised me was the speed at which the bulls pushed up prices. What really helped this time around was the record number of enblocs at record valuations. Property developers are a good bet after a prolonged market downcycle, as their lumpy earnings and initial capital outlay drive down sentiments in a property downturn. However, during a recovery they are also usually the first absorbers of conserved liquidity.

Counters missed: Tuan Sing, Far East Hospitality trust, Straits Trading Co.

Learning point:

  1. Real estate with good locations form a prime moat around a company.
  2. Valuations should take a 3-5year time horizon, waiting for that 10-20 cents drop in prices can be pennywise but pound foolish. “When to buy” should not overrule to “buy or not”

In 4 years

  1. Amberpark enbloc was a good deal for CDL. If the market goes into depression it would be a good time to take a look.