The Hour Glass Benefits From Revived Demand From Chinese Shoppers

The Hour Glass has been suffering from the downtrend in the luxury goods market in both Hong Kong and China due to the clamp down of corruption from the Chinese government since 2015. This can be seen from the share price where it fell from its highest peak of S$0.88 to around S$0.71. And yes, I was vested prior to the plunge in share price.

The Hour Glass currently makes up 3% of my entire stock portfolio. Re-capping my reasons to stay invested:

  • Simple luxury watch business
  • Good management
  • Consistent dividend
  • Consistent profitability and performance (Revenue, Profits and NAV)
  • Low debt servicing ratio

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What To Invest Now?

Previously, I wrote about re-investing the money I gotten from the sale of Suntec REIT. This puts me in a dilemma as I do not know which REIT in my stock portfolio should I increase my position. Thus, the best way to find out is to compare their current dividend yield for better decision making.

The minimum criteria for my next REIT selection is that the current dividend yield should be better than Suntec REIT which currently yields 5.21% based on the current price of S$1.92.

From the below table that I have tabulated, ParkwayLife REIT is definitely out of the game as it current gives a dividend yield of 4.93%. I have also eliminated CapitaMall Trust as its dividend yield is 5.26% which is very much close to Suntec REIT’s dividend yield of 5.21%.

I have also eliminated OUE Hospitality Trust due to its poor 2Q2018 financial results. (Read more: OUE Hospitality Trust 2Q2018 Financial Results – Still Awaiting The Jewel) Read More

Goodbye Suntec REIT

Suntec Logo

I do not know why but without much hesitation, I have sold off Suntec REIT today. Total profit was 54.3%. If I include the dividends collected over the years, total profit was 105%. I have sold off Suntec REIT not because of its slight decline in DPU in 2Q2018 but because it only makes up only 2% of my entire stock portfolio.

I invest in REITs mostly for their dividends and we all know that the more units we held, the more distribution we get every quarter from the REITs. Since the share price of Suntec REIT has appreciated much over the years since IPO, selling it seems to be the right decision. I can invest the money from the sale into other REITs. Yes, I am going to do that but I have yet to make up my mind which REIT to invest in using the capital gained from the sale.

Based on the historical distribution of 10.005 cents in FY17 and current price of S$1.92, the dividend yield is 5.21%. Personally, I felt the current dividend yield is low as compared to other REITs, so if you intend to invest into Suntec REIT, you should wait for the correct price to enter.

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