Economy Commentary
Singapore market and essentially the world markets all face severe pressure in the past months, mainly from Fed interest hikes, trade war and geopolitical risks. STI went down 6.6% YTD, and world indices dropped 9%.
In local markets, we saw the implosion of Asian Pay TV Trust (risk of blindly chasing yield without consideration of sustainability), value destructing rights issue from KBS UBS REIT (stock price fall to rights issue price, highlighting the importance of good management) and Lippo Malls (risk of foreign REITs).
Performance Review Highlights
A falling tide sinks all boats, and our portfolio was not spared. The crash of Kimly was a massive blow to our performance and taught us valuable lessons. YTD, our portfolio is down almost 10.2%. The absolute figure is much more terrifying compared to the correction back in 2015 when our asset size were much smaller.
Lessons Learnt:
We knew Kimly was a speculative position (but still based on fundamentals) right from the start, and we made money initially. Instead of cutting losses after the tide turned, we stupidly held on. Cut your losses as soon as you are proven wrong. Don't 心存侥幸 and "hope", especially for such a substantial position.
Evaluating What To Do Now:
While the investigation was unfortunate, Kimly fundamentals actually did not change at all. They are still basically debt free, sitting on mountains ($70m) of cash and still very much profitable (slow growth). The criminal case will no doubt be a huge hangover on the stock price. With with same business, 30% lower price, and no indication of something serious like dishonest management/falsifying accounts, etc... there is really no justification to sell.
The management subsequently released a long list of initiatives, probably meant to calm investors. Centralized kitchens, tablet ordering at zi char stalls, customer rewards programme, own brand of coffee/tea, etc... pushing on with their growth strategies. They are all good, but action speaks louder than words - It all depends if they can execute and show results now.
On the good news side, we distributed $1200+ dividends in Q4 for a record-breaking year!
Operating Highlights - IncomeWe reached new heights once again, attaining almost 10% higher income than last year - driven by higher base salary (same bonus multiple) and passive income. SG Bonus and IPPT Pass with Incentive were the icing on the cake.
Operating Highlights - Expenses
No special one-time expenses aside from usual Tax and new Insurance payments.
Regular expenses were slightly higher due to several items: Renewal of Stocks Cafe membership for 7 years, health checkup package, and a new pair of Creative Gigawork speakers (could not resist the 12/12 deals).
Utilities cost will increase significantly going forward due to higher recontract mobile and fibre plans.
Acquisitions & Developments
We traded Capitamall Trust one more time to earn some loose change ($600+), and also fire a bullet on STI after the recent drawdown .This is the closest STI has been to 3000 for more than a year, and valuations are definitely on the cheaper side. Not dirt cheap yet, but a fair price to pay.
As of now, we are most concerned with Singtel and Kimly, and will be monitoring them closely.
We traded Capitamall Trust one more time to earn some loose change ($600+), and also fire a bullet on STI after the recent drawdown .This is the closest STI has been to 3000 for more than a year, and valuations are definitely on the cheaper side. Not dirt cheap yet, but a fair price to pay.
As of now, we are most concerned with Singtel and Kimly, and will be monitoring them closely.
All good times must come to an end - Citibank finally caved in to the raising SIBOR and admended the terms of Maxigain account (from 80% of SIBOR to 70%).
Despite this, calculation shows that we am still able to get at least 2.3% interest (compounded) which makes it competitive against other products and even SSB.
Good for you Citibank, but do not take it too far.
Outlook
