Summary of January 2020 Transactions

We started the first month of the year 2020 with the Wuhan Virus. With the recent outbreak, many stocks have been sold down due to investors panic. Two REITs that I have noticed with properties in China are CapitaLand Retail China Trust and Sasseur REIT. (Read more: CapitaLand Retail China Trust and Sasseur REIT Closes Malls Due to Wuhan Virus)

I have not found any good picks yet. In fact, I am looking at Frasers Commercial Trust but the stock price has not yet came down to a satisfactory level that I will add more of it to my stock portfolio. In times like this, I think investors with a ready war chest will grab the opportunity to buy quality good stocks are cheaper prices.

I continue to purchase Singapore Savings Bonds even though the interest rate has came down. One of my goal for 2020 is to purchase 8K worth of Singapore Savings Bonds.

I have started my fitness routine however this was disrupted by a sudden flu followed by high fever earlier this month. I am glad I recovered before Chinese New Year. In the month of January, I managed to stretch myself to run a total of 40.49km. This is slightly more than my target of 25KM per month.

With the outbreak of Wuhan virus, Health is also Wealth. Don’t you agree?

CapitaLand Retail China Trust and Sasseur REIT Closes Malls Due to Wuhan Virus

With the outbreak of the 2019 Novel Coronavirus (CoV) in Wuhan, there are two REITs that I have found that the share price was impacted by the virus outbreak. They are CapitaLand Retail China Trust and Sasseur REIT.

CapitaLand Retail China Trust has 13 malls in China. CapitaMall Minzhongleyuan in Wuhan is closed and will reopen when local conditions permit. The mall represented less than 3% of CRCT’s portfolio value as at 30 September 2019 and contributed approximately 0.5% of CRCT’s net property income for the first nine months of 2019. The remaining 12 malls located in various cities such as Beijing, Shanghai, Guangzhou and Chengdu are operating shorter hours, in line with local government guidelines.

The share price of CapitaRetail China Trust has fell to as low as S$1.53 on 28 Jan 2020.

Sasseur REIT, which has 4 malls in China has implemented temporary closure of the malls in Chongqing, Bishan, Hefei and Kunming. Chongqing and Bishan Outlet Malls have been temporarily closed from 26 January 2020 while Hefei and Kunming Outlet Malls have been temporarily closed from 27 January 2020. The Manager has mentioned that due to the unique business model of Sasseur REIT, the Manager is of the view that the financial impact, if any, to Sasseur REIT should not be material if the crisis is resolved in the short term.

The share price of Sasseur REIT has fell to as low as S$0.79 on 28 Jan 2020.

My take is that the share price has not plunged too much yet. If you have noticed, both the share price has not broken their 52 week low.

Crisis or Opportunity?

Investors should do your own diligence before catching the falling knife.

Mapletree Commercial Trust 3QFY19/20 Financial Results After MBC II Acquisition

Mapletree Commercial Trust has announced their 3QFY19/20 financial results on 22nd January 2020. There are no surprises as all financial results are positive. Income available for distribution increased by 18.0% while Distribution Per Unit (DPU) increased by 5.6%.

It was mentioned that the strong financial performance was driven by the newly acquired Mapletree Business City II (MBC II).

Here are the 3QFY19/20 financial results compared with 3QFY18/19.

3QFY19/20
(S$’000)
3QFY18/19
(S$’000)
Change
Gross Revenue 131,336 112,543 16.7%
Net Property Income 103,298 87,868 17.6%
Distributable Income 79,049 66,992 18.0%
Distribution Per Unit (“DPU”) (cents) 2.46 2.33 5.6%

Debt

As of 31st December 2019, the gearing ratio stood at 33.4%. The average term to maturity of debt is 4.4 years.

Occupancy

Overall portfolio committed occupancy stood at 98.9%.

One of the things that worry me is the decline of shopper traffic. As you can see, shopper traffic declined by 2.2% while tenant sales decreased by 0.5%.

Mapletree Business City II (MBC II)

The acquisition of MBC II seems positive. Below are the increase in DPU, NPI yield and NAV per Unit after the acquisition.

Summary

Overall, Mapletree Commercial Trust has delivered a set of decent results after the acquisition of MBC II. However, I think it is still too early to make a judgement whether the acquisition can continue to be DPU accretive or slow down the growth of the DPU.

Mapletree Commercial Trust currently makes up 11% of my stock portfolio.