Sunday 22 November 2020

Stock Investment Portfolio Updates-22 November 2020





It is coming to almost the end of 2020. COVID seems to have become part and parcel of our lives. Everyday, seeing everyone wearing masks and the non-stop reporting of ever increasing 2nd or 3rd wave record breaking infections and fatalities overseas reminds us that the battle with the deadly virus is far from over. Even right now, the travel bubble between Singapore and Hong Kong which was supposed to commence today got postponed by at least another 2 weeks due to a new severe outbreak declared by the Hong Kong government. SIA and Cathay Pacific are most likely to decline slightly in the opening of the stock markets Monday morning.  I remain optimistic that the immediate emergency approval of Pfizer and Moderna COVID vaccine in December 2020 will pave the way for an eventual defeat of the COVID virus and revert back to our normal way of life by Q4 of 2021. Changes since my last update in August 2020.

1. Rally in DBS, UOB and OCBC share prices
My investments in DBS, UOB and OCBC under cash purchase portfolio and margin portfolio roared back into life with the announcement of the successful vaccines against COVID-19. I intend to sell off part of my banking stocks and switched them into Retail REITs which are likely to be the next counters in recovery as the vaccines will signal the end of devastating economic lockdowns. 

2. Investing into CapitaLand Integrated Commercial Trust ("CICT") at average price of S$1.78 per share
The plunge in REITs pricing provided a rare entry opportunity to buy into a good quality blue-chip in CICT. I immediately invested S$5K into CICT when its prices hit around S$1.80 per share. When it fell below S$1.80, I switched out of SingMedical and  invested the proceeds into CICT. 

3. Additional investments into Capitaland Retail China Trust ("CRCT")
CRCT has been an integral stockholding in my margin account portfolio. Pumped in additional cash when CRCT announced a change in their investment mandate to include also industrial and commercial properties. Thereafter on 6 Nov 2020, CRCT announced a 1 billion acquisition of 5 business park properties in Suzhou, Xi'An & Hangzhou as well as the remaining 49% stake of Rock Square retail mall in Guangzhou. I will be participating in the upcoming rights issue as CRCT undergoes a transformation from pure retail play into an integrated properties holder.  I expect further growth from the strong China pipeline of Capitaland. The holding of different asset classes will also provide good diversification in future economy crisis.  

4. Eagle Hospitality Trust ("EHT")- Notice served by Monetary Authority of Singapore ("MAS") to Trustee for removal of REIT Manager
This is one of my worst performing investment which I have been averaging down in buying in but got suspended due to defaulting of bank loan covenants. Subsequently, it also appeared that its REIT manager has breached various Securities Act as well as making decisions such as undertaking liabilities for its various leasee in direct conflict of interest with unit-holders. There was also a dubious COVID support loan taken out in USA under EHT but went to its sponsor Urban Commons instead. 

The current S$500Mil losses reported in 3rd quarter is due mainly to fair valuation losses of its investment properties under COVID adverse effect on the hospitality industry. How the future plays out depend on whether the MAS is firm in going ahead with the appointment of a new REIT hotel manager.  

If a new REIT manager takes over, it maybe worthwhile to wait a few years for the US hospitality industry to recover. But if the sponsor Urban Commons retains control of EHT, then I will choose an immediate exit option at whatever price upon removal of trading suspension due to management integrity issue.  Of course, the worse case here is the restructuring fails totally and EHT have to liquidate all investment properties at the latest valuation which means that investors will most probably get back at most USD 0.120 per unit assuming no further discount on the latest fair valuation of the hotels (and assuming no further hidden liabilities). 

In short, it does not make sense to liquidate/sell away any hotels at such lowly valuation as per the 3rd quarter report due to COVID. The best option for all stakeholders will be for a new REIT Manager to takeover the hotels and run it as a non-going concern business. 

(P.S: Please also "Follow" me on Facebook-Investment Income For Life.)

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