Mapletree Logistics Trust Plummeted Close To Another 5 year low of S$1.410 Per Unit.

This is a short post for my own reference and also sharing. Today, Mapletree Logistics Trust ("MLT") has plummeted to an astonishing low point of S$1.410 per unit as of 20 March 2024. The only worse period than this is during the COVID crisis in March 2020 (S$1.362 per unit before a V-shaped recovery in unit price then). There seems to be an abundance of extreme pessimism permeating throughout the current SREIT stock market segment. Based on its last quarterly DPU of S$0.02253 per unit and annualising it, we will get a distribution yield of 6.4% now based on S$1.410 per unit. This is way better than the beginning of the year 5.3% at the price of S$1.710 as at 2nd Jan 2024.  

1. SG 10 year risk free bond for benchmarking of premium

The current 10 year bond rate is 3.114% as at 20 March 2024. Hence the current distribution yield of 6.34% is approximately +3.23% higher than the risk free rate. Personally, I thought this is a more decent return relative to the 5.3% yield in earlier part of the year.

2. Script dividend election price for recent distribution is S$1.524 per unit.  

Another interesting point to note is that the re-investment price for those who opted for the script dividend are getting new units at S$1.524 per unit. With the weak market price of S$1.410 per unit, this is a further 7.4% discount to the re-investment plan price.

3. Aggregate leverage ratio of 38.8% and 83% of debt hedged with fixed interest rate.

MLT leverage ratio for Q3 FY23/24 is at a healthy 38.8% (below my personal 40% red line as well as MAS 45%) . Moreover, 83% of its debt are hedged into fixed interest rate which gives stable and clear visibility for the next 3.7 years. 

Parting thoughts

In view of the above plus points and also the indisputable fact that MLT has a very strong sponsor in Temasek Holdings, I have taken up additional 4,000 MLT units @ S$1.42 per unit this week using my Tiger Brokers account. I have an upcoming S$12K dividends by end of March 2024 for adding on to MLT next week if the price were to suddenly plunge further after the Fed Reserve meeting. 

Betrayal by Friends and Spouse and Handling Dispute At Work.

The former Night Owl Cinematic ("NOC")  Sylvia Chan is back and hitting hard. Unless you have been living under a rock, the NOC saga has been dragging on for 3 years now. For those wondering what this is about, I will leave the link to her latest YouTube videos here. Today's post is not about the NOC saga, rather, it is on dealing with similar situation in commercial or voluntary organisations where you have Party 1 and Party 2 going after each other throats and where you are being drawn into the "Dirty Messy Fiasco".  I will just share my thoughts on the handling of such situation in event that you are being drawn into the quicksand or is actually part of the warring party. 

1. If possible, don't get drawn in at all.

Avoid taking sides or joining any camps if you encounter such disputes/fights going on between Party 1 and Party 2. Don't ever just listen to one side, always listen to the other side also for their version of what actually happened. You will find that most of the time, there are no obvious right and wrong over what had happened. 

The only thing of certainty is that those participating (and if you are caught in it) in such fiasco end up either worsening the already ugly situation or making even more enemies. 

2.  鹬蚌相争，渔翁得利 （The fisherman takes advantage from the fight between the snipe and the clam).

I have seen this happened in my home's residential committee. 2 groups of residents levying breach of statutory act by the other group or accusation of fraudulent use of funds or abuse of power. The 2 groups were so busy fighting one another that the subcontractors/vendors got away with slacking on the job as the committee overseeing them were too busy with infighting. End of the day, it is a lose lose situation for all.

3. The Narcissist will not listen- His/Her viewpoint is always supreme and right over others.

If you are dealing with a narcissist out on a war path against you, don't waste your time. Try to avoid that person or speak directly to his/her boss to directly override him/her. If unfortunately the person with narcissism is your boss, then maybe better to just resign and look for new job as nothing much you can do.

Note: Narcissistic personality disorder ("NPD") is actually a mental illness which involves a pattern of self-centered, arrogant thinking and behavior, a lack of empathy and consideration for other people, and an excessive need for admiration. Others often describe people with NPD as cocky, manipulative, selfish, patronizing, and demanding.

Parting thoughts

A lot of time, lack of communications or misunderstanding lead to many conflicts. In addition, always show proper respect to ensure that the other party does not lose too much "face" during communication even if the other party is "wrong" in your own opinion. Sometimes, ego is the root of all evil. 😎 

Frasers Logistics and Commercial Trust Acquisition of Germany Logistics Assets From Sponsor- My Quick Thoughts.

Frasers Logistics and Commercial Trust (“FLCT”) announced on the morning of  March 15, 2024 that it will be acquiring 4 logistics properties in Germany from its Sponsor, Frasers Property at a 5.1% discount to professional valuation at a purchase consideration of S$189Mil. However, FLCT price dropped by close to 2% from previous day in line with the rest of the general SREIT market price upon the announcement. I was a a bit surprised at  the decline in market price despite the deal being yield accretive since it will be 100% financed by debt. Nevertheless, this reflects investors current risk appetite and sentiment towards SREITs.

Aggregate Leverage Ratio Analysis

I did a quick high level check to find out whether this deal has a severe detrimental impact on FLCT leverage ratio. The S$189Mil deal makes up around 2.8% of its current investment properties portfolio. Its aggregate ratio would have grown from 32.4% as at September 2023 to 34.3% as at end March 2024 (expected completion date). This is still way below my personal conservative red line of 40% (the MAS one is 45%). There is thus still adequate debt headroom for buffer against further economic shocks from falling properties valuation as well as further yield accretive acquisition.

Parting Thoughts

I thought that the long WALE of 6.1 years and also reputable 3PL tenants such as Schenker for the 4 properties are an arguably good buy. Saying that, interest rate risk as well as stubborn inflation that are still above the Fed target are still downside factors to watch out. In addition, management of FLCT could have been more investor friendly to work out the details of the exact yield accretive impact for more transparent disclosure in their presentation materials. 

Prudential Dividend Funds- Weird Sales Cold Call By Personal Assistant of Unknown Agent.

Dividend paying funds seems to be the rage these days. Out of the blue, I suddenly got a cold call earlier this week from a personal assistant ("PA") of an unknown agent who asked me whether I want to find out more about their Prudential dividend fund. She is trying to fix me up on an appointment with her financial advisory agent to find out more about dividend paying funds. It was a bizarre and hard conversation with this curt PA:

Prudential PA: "Sir, have you heard of Prudential dividend investment fund?"

BK (me): "Sorry, may I know who's on the line and what is this call about?" 

Prudential PA: "Sir, what's your name, is it a good time to talk to you?" 

(Hmm, why she keep asking my name when she herself has not introduced herself or shed light on what this is all about?)

BK (me): "May I know who's on the line and what is this about?" 

Prudential PA: "Have you heard of Prudential dividend investment fund? Can you spare me 5 minutes?"

BK (me): "Nope, never heard before.  I got a meeting. But I can spare you a minute." 

Prudential PA: "WHAT's your name? HAVE YOU HEARD OF Prudential dividend investment fund? I will get my agent Sam to contact you. "

BK (me):" I already got a Prudential Agent lah".

Prudential PA: "But has your agent brief you on anything about our Prudential dividend investment fund? It also offer you insurance protection at the same time."

BK (me): "Nope, my current Prudential agent never brief me on this product."

Prudential PA: "Great. Then I will get my agent, Sam, to call you. WHAT's your name?!" 
(I can sense the lady getting impatient and irritated with me as her voice was raised".)

BK (me): "Ok, your agent can call me."

Prudential PA: " I will get my agent to call you". (Next moment, she just put down and cut off her phone abruptly without even saying goodbye).

Well, strange that the personal assistant is getting so desperate to want to get an appointment for her boss via cold calling but her brusque attitude over the entire tele-conversion is really out of the world. Also, is making a living so cut-throat now that they can just target a customer who already has an existing Prudential agent that has remain close in contact with me over the years? What makes this weird PA thinks that she can just wrest the business relationship away from the existing agent that easily? 

Endowus Investment and Management Fees Savings Hack of Up To S$600 per annum.

I have been using Endowus since end August 2023. So, I thought that it is a good time to take a look back at the use of Endowus platform for investment and to share my experiences. Overall, I like the easy to use mobile and web version of the platform. For today's sharing. I think I will touch on the fees chargeable by Endowus for access to their platform via cash investments.

1. Any Upfront Sales Charge or Transaction fees?

The unique thing about investing via Endowus platform (relative to direct purchase of Unit Trusts) is that there is no upfront sales fees and transaction fee. In addition, Endowus also provides a 100% Cashback on trailer fees. Hence, there is no point to buy unit trusts from the traditional route of banks or insurance companies Investment Linked Products ILP).

In addition, there is no charges for redemption/selling of units in the "Endowus Goal' being created.

2. Annual Fees of up to 0.6% per annum Chargeable by Endowus.

There are basically 2 types of recurring management fees here for buying into Unit Trust on Endowus. (i) The first one is the usual fund level management fees by the actual fund managers and (ii) Endowus level management fees, which is of interest here to us for the purpose of today's discussion.

If one is investing into the "Advised Portfolios" of "Core", "Satellite", "Income" or self-created Multi Fund portfolio, the Endowus level management fees will be between 0.25% to 0.60% per annum. The higher your investment quantum per goal, the lower is your fees. Note that quantum threshold to determine your fees is based on quantum of per investment goal you created in Endowus. Hence an Endowus user CANNOT combine all the balances in different goals to argue that he/she has reached the higher level tier to enjoy cheaper rate. 

3. Endowus Mangement Fees Hack- Go For Single Fund creation instead of multiple funds

Most retail and newbie investor will end up with this higher 0.60% management fees due to smaller capital being invested upfront in any single goal. If one invested just into one single fund, then this platform management fees will drop by half to only 0.30%. For a S$200K capital, this is a savings of +$600 per annum and +S$6K over a decade! 

Hence instead of creating a single goal with say multiple funds of 5 unit trusts, one can simply just create 5 goals with 1 unit trust in each goal. This will drop the platform management fees to only 0.30% since Endowus has a special single fund goal charges of a mere 0.30% per annum. 

Parting thoughts

If one wants to go with the pre-set "advised" portfolios such as Income Portfolio recommended by Endowus, then there will be the higher platform management fees charge of 0.60%. This is well worth it given that Endowus investment team will monitor and give various recommendations to change the constituents of the portfolio to those better performing or drop under performing ones.

If one decides to DIY to create a portfolio of one's own favourite unit trusts and if one wants to save on the platform management fees of 0.30% differences per annum (as alluded to pt 3 above), one can simply create multiple goals with 1 single fund in it. The downside to this would be that one would need to manually track on excel one's recurring allocation per month into the different months and also perform one's own balancing.   

Interesting Posts of the Week In Our Blogosphere Community.

Hi Folks, this is going to be a short post for sharing. Recently came across 2 interesting and thought provoking posts in our Blogosphere Community:

1. "Coping With The 32% Decline In Dividends" (By Towards Barista FIRE)

I have been following Barista Fire here as both of us subscribed mainly to the dividend investing approach and he has been generous online in sharing his journey towards financial independence. Our mate from “Towards Barista Fire” has shared some strategic move execution in order to address the inevitable problem of dividends cuts that will sooner or later arise due to uncontrollable marco-economic events such as the (i) 2020 COVID pandemic on most businesses and (ii) the 2022 sudden interest rate hike environment that lead to devastating impact on REITs dividend distribution. 

For those who are about to embark on “Barista” Fire, it will be good to have a quick perusal on the 2 strategies that he has mentioned in particularly on the 2nd strategic execution method to address the volatility or lumpiness in the dividend investing approach- please see his interesting thoughts and post here. 

2. "Just sold at record high!" (By Property Soul)

Nice post and warning given by Property Soul especially with regard to the “myth” from news media that Singapore properties has always appreciate in value and keep setting new record high prices. She has also shared the forgotten mid-1990s era where many over-zealous property buyers bought at the peak of the property cycle and then took 20 years to break even their purchase. In addition, all the "hoo-hah" of ever record property selling price that appears in the media one should take it with a pinch of salt. 

I am apprehensive about the indomitable confidence of some property agents and property YouTubers in the buy and upgrade private properties to make money and achieve financial independence. Apparently, Singapore property will always appreciate in prices. It is also asserted that the purchase of 2 private properties (1 for own family living and 1 for rental investment income+ capital appreciation) is a “proven” way to succeed in Singapore. 

Parting thoughts

My current wishlist is for interest rate cuts to start materialising soon from the US Federal Reserve before most of my holdings in REITs start to disintegrate into oblivion. Powell has recently told the House Financial Services Committee that he expects interest-rate cuts to come this year. He echoed those comments on Thursday before the Senate Banking Committee, saying that cuts "can and will begin" this year- so let's keep our fingers crossed.

Hong Leong Finance Released Horrendous Set of FY2023 Results- Best To Head For the Exit.

 

Hong Leong Finance (“HLF”) just released a horrendous set of FY2023 results. Personally, I thought that from the result announcement deck, one can already see the lack of efforts by the HLF presentation team. There were no powerpoint deck prepared like other listed companies to “beautify” their materials. The presentation team can’t even be bothered to put up a content page listing down the summary and page number of key financial reports (you can look at Haw Par Corporation- at least they bother to do a simple content page). Why I am saying this is that every job is a self-portrayal of  one-self and one should always endorse it with excellence….this seems to give one a sense of the culture inside the HLF organization from the lack of further efforts in their basic presentation materials. Anyway, just my personal belief and impression.

Horrendous Set of FY2023 Results with Dividends Cut.

Now back to the FY2023 results discussion- please see screenshot extract below of the published materials: 

Overall, profits for FY2023 attributable to shareholders dropped a whopping <28.7%> from S$ 131Mil in FY2022 to only S$93Mil. This is terrible given that the local banks such as DBS, UOB and OCBC are reporting record profits for FY2023. HLF interest income increased by a mere 68.8% but its interest expense increased exponentially by 286.4%! 

Now, some folks will jump in and say that HLF cannot be compared to banks as it is a finance company. My point is simple, I will be better off investing my funds in the local blue chip banks rather than wasting the past year in HLF.

Another point is that the activities of HLF is a subset of what the banks provide- if management were to sell away their HLF business, the local banks will be potential bidders for it. 

Parting thoughts

Let’s call a spade a spade. My personal thoughts are that HLF management team has performed badly as alluded to the FY2023 financial performance which is shocking. Their senior management should take a leaf out of Joseph Tsai’s book on what he had done at Alibaba, that is replacing the executive team of its various business units if the old ones are running out of ideas on staying competitive and growing the business. Alternatively, just sell off the business to the local or international banks to realize the net asset value per share of S$4.59 relative to its last market trading price of S$2.48 per share as at 29 Feb 2024. 

(P.S: I have decided to sell off all my personal and family portfolios related holdings in HLF. Initially, I thought of going to the AGM to raise the above improvement points but based on my personal sensing of the culture in place, think it will be just a waste of my own time. So I voted with my own feet out of this disappointing investment foray into HLF.)