Singtel Announced Shocking S$3.1 Billion Impairment Losses!

On 29th April 2024 (Monday) before trading commences, Singtel Group just announced that it will be taking up impairment provision of approximately S$3.1 billion for its 2nd half financial year ending 31 March 2024. While these non-cash impairment does not impact current cashflow or upcoming dividends, a huge chuck of net assets per share has been wiped off. Previous CAPEX and investments have declined in valuation due to drop in fixed carriage revenue generation and the associated plunge in future cashflow. 

1. Optus main culprit

(i) The Optus Enterprise segment has been badly hit due to the prevailing Australian market. As a result, Optus reported steep declines in its fixed carriage revenue. It will be taking up <S$470Mil> impairment for its Enterprise fixed assets.

(ii) The plunge here further triggered Singtel impairment review of its goodwill in Optus. Goodwill refers to the excess over the book value of Optus during its acquisition back in 2001. Coupled with higher discount rate and softer macroeconomic outlook in Australia, a whopping <S$2 billion> is being wiped off here.

2. Other impairment hits

(iii) Singtel also took another <S$340Mil> impairment for goodwill of its Asia Pacific cyber security business due to lower corporate spending in the region.

(iv). Singtel will also take a hit of <S$280Mil> of goodwill impairment provision for its business vested in NCS Australia.

3. Some good news amidst the impairment losses shockwave-Network sharing deal with TPG

Optus announced the good news that Optus has inked an agreement with Australia TPG Telecom on network sharing by providing TPG with access to its regional radio network.

The non-exclusive network sharing agreement has an initial term of 11 years and include an option for TPG Telecom to extend the agreement for a further 5 years. Optus will receive +A$1.6 billion (S$1.4 billion) over the duration of the 11 years term.

Summary

Due to the above, Singtel will be announcing a rare loss for its 2nd half of its financial year ending 31 March 2024. Nevertheless, Singtel expects itself to be overall profitable for the whole financial year performance taking into account its 1st half results. 

Buy More Keppel DC REIT or Sell Off All? Mixed Signals From Analysts And Market Noise After Q1 2024 Results.

Keppel DC REIT ("KDC") is now a faint shadow of its former glory. Its fall from grace begin when tenants default and a high interest rate environment broke the myth of invincibility and resiliency which many investors previously harboured for data centre REITs. Some even compare holding on to data centre REITs as a safe bond-like haven. Today, I will touch on my thoughts on whether one should buy more of KDC or simply just dump all units and move on to other investments with more upside potential. 

Please see below for my latest video on YouTube channel. Going forward, I will be posting various exclusive investment contents onto my YouTube channel only. Please subscribe to my YouTube channel also to get the latest content for sharing.

Using Hospitalisation & Surgical Insurance To Get Free Medical Checkup and Medical Treatment at Private Specialist Clinics- Beware of the Consequences.

Yup, you folks read the topic and subject header correctly- it is not a typo. What the heck am I talking about? Apparently, there are a number of people out there who has found a hidden "hack" to make use of their Hospitalisation & Surgical ("H&S") insurance plan to get free health check-up or medical treatment by specialist clinics. According to my friend (let's call him Kenny for the purpose of today's sharing session), as long as you know the right doctors at the private hospitals, they will know how to write in their medical report for one to file a H&S claim against their insurance companies to cover their medical examination costs and also 5 star hotel stay equivalent at A Class ward in private hospitals.

1.  "It is stupid to spend your own money on medical checkup. Make use of your H&S plan"- per Kenny.

My "friend" Kenny is a very street smart guy. A few months back, when I mentioned that I had recently spent S$1.5K in medical consultation and treatment for my chronic illness (asthma) at a respiratory specialist clinic, Kenny immediately commented that I should have consulted him earlier for alternative route. He and his spouse never waste their money for health-checkup or specialist treatment. As aforesaid mentioned, Kenny asserted that he knows of ways to be able to make a claim on H&S. He also remarked that "It is stupid to spend your own money on medical checkup. Make good use of your H&S plan". 

Coincidentally, Kenny has some chest pain issues then. So, he checked himself into a private hospital for 1 day to do a battery of tests which came up to S$13K in total bill. The results of the tests did not reveal any medical issues. True enough, the insurer approved the entire H&S claim of S$13K and made a full payment on behalf to the private hospital (The H&S plan of Kenny was purchased many years back hence it is the only one that I knew of that still covers "all charges" if one has bought the Extra Rider under the old scheme while rest of insurers such as NTUC Income Insurance Limited had already forced a co-payment in cash by policy holders under the old H&S scheme). 

2. Insurance Companies are not stupid- they have safeguards in place to mitigate such occurrences and deal with folks with these mindset for claims. 

To continue with the above story, Kenny got a shock when his H&S insurer wrote to him that due to this claim, they will be increasing his premiums by  three-fold for 1 year which amounted to increase of S$2k-$3K per annum. Kenny was very upset and told his insurance agent that he will be terminating his H&S with the insurance company. Currently, he has asked for quotes from a few other H&S insurers in the market for H&S replacement coverage.

It turns out that there is no free lunch after all. The consequences just came in a bit later.    

Mapletree Industrial Trust Rapid Plunge in Valuation- Opportunity in Current Crisis or Value Trap?

Mapletree Industrial Trust ("MIT") recent market price has declined rapidly amidst the higher financing cost environment and Middle East troubles. Today, I will touch on whether the current crisis presents a good entry point for MIT and my recent additional investment this week.

Please see below for my latest video on YouTube channel. Going forward, I will be posting various exclusive investment contents onto my YouTube channel only. Please subscribe to my YouTube channel also to get the latest content for sharing.

Lendlease Global Commercial REIT- Aggregate Leverage Computation and Good Buy?

Lendlease Global Commercial REIT ("LREIT") market price has remained in the doldrum despite the major JEM acquisition. Today, I will touch on how to compute the Aggregate Leverage ratio stipulated by MAS as well as my personal thoughts on whether LREIT is still a good buy at this juncture. 

Please see below for my latest video on YouTube channel. Going forward, I will be posting various exclusive investment contents only onto my YouTube channel. Please subscribe to my YouTube channel also to get the latest content for sharing.

Singtel Trading HALT and The Perpetual Rumour of Optus Sales.

This is really weird. Singtel actually needs to call for a trading halt this morning (3 April 2024) to tell investors again that it is not in talk or discussion to sell Optus. Earlier this year as well as recently on 13th March 2024, Singtel had already vehemently denied that it was in a deal discussion with Canadian private equity firm Brookfield to sell away its strategic stake in Optus. 

The strange rumour is being perpetuated by the Australian media on an impending sales of Optus to a Canadian Private Equity firm and the eventual "latest breakdown" of the deal during negotiation is kind of absurd.  

Parting thoughts
For the past few weeks, a number of investors seemed to believe and harbour hope that there is "no smoke without fire" and Singtel is going to announce a big surprise with a sales of Optus. Singtel price declined by <-3.15%> from S$2.54 as at 2 April 2024 to S$2.46 at of 12pm, 3 Apr 2024 after the trading halt was lifted.

Investment Portfolios Updates (28 March 2024) - Net S$594K and Projected Annualised Passive Income of S$41K.

Gross investments (including deployable cash) is at S$880K. Net investment value is currently at S$594K (after margin financing) with projected passive income of only S$41K due to Keppel Pacific Oak US office REIT suspending dividends for 2 years. SREITs have again sunk to the bottom of the ocean after rising up in earlier part of the year. Going forward, I have included a "Portfolio Allocation" pie chart to keep track of my current shift away from intense SREITs focused investment portfolios.  I have been busy investing and diversifying into Bond Funds via Endowus before the official announcement of the widely anticipated interest rate cuts by the US Fed in 2nd half of 2024. 

(Note: Please also refer to my other Family Portfolio which is projected to yield +S$20K of passive income per annum).

1. Portfolio 1- Stocks held in SGX Central Depository 

(Note: This portfolio is designed to provide immediate dividends for use as it is under my own CDP account and the dividends credited goes directly to my bank account.)

I have sold off part of my DigiCore REIT units to buy into Mapletree Logistics Trust. In addition, I have also sold off all my holdings in Capitaland Integrated Commercial Trust and bought into United Overseas Bank when there was a decline in its price. 

2. Portfolio 2- Margin purchased securities

(Note: My margin purchased securities has grown to a sufficient scale to sustain itself and can pay off annual financing charges as well as to gradually pay down the margin loan through dividends generated.) 

(a) Bought into 3,0000 shares of China Ping An insurance group as its price has reached one of its all-time low. Bought it more for capital appreciation recovery play and its attractive 8% dividend yield (albeit a 10% withholding tax). I think that the high dividend yield will more than compensate the possibility of long waiting time for its stock price to recover by at least 50%. 

(b) Have also paid back some margin loan as well as converting more expensive USD loans to SGD denominated since my natural forex hedging strategy against USD assets held is no longer effective with the huge drop in valuation of US Office REITs. 

3. Portfolio 3 (with Tiger Brokers)- Venture into higher risk as well as capital growth stocks here

(a) For the last 1 week, I have been using Tiger Brokers and this portfolio to do some short term trading between UOB and Mapletree Logistics Trust and managed to make some side income of S$400. Will probably be taking this money out for spending on food. Inflation has been crazy for the past year.

(b) Added Ping An insurance group to this portfolio too.

(c) Added more into Alibaba when its price dropped below HKD70 a share. 

4. Portfolio 4 (Endowus & Other Investments)

(a) While others folks have bought into more REITs to exploit on their extremely low market prices, I have been building up my stake in bond funds via Endowus. The high interest rates lead to many bond trusts paying out higher distribution as interest rates rise. If interest rate were to be cut, bond prices should further appreciate. In addition, have also been buying into global equities fund for further diversification and long term capital appreciation.  

Summary

I used to have more than 90% of my overall investments concentrated in SREITs. It is still a long way to push it down further to my own targeted reduced allocation of 50%. With the expected cuts in interest rates by the Fed since the last Powell announcement, SREITs valuation are currently rallying again which is like a game of see-saw. It is also a long long way to go to re-build up my annual passive income distribution from the SREIT cut in dividends and higher borrowing costs.