Summary of February 2020 Transactions

Today is a special day (29th February 2020). Instead of the usual 28 days, we have 29 days in this month of February 2020, which is also called the leap year. We are also in the second month of the COVID-19 outbreak where it causes disruptions or instability to the current economy.

Earlier this month, the stock market seemed to have ignored the impact of the COVID-19 to the economy. This is based on my observation on the Straits Time Index (Read more: Impact of COVID-19 to Straits Time Index) However, just a few days ago, I observed that the stock market started to react to the impact of the COVID-19 outbreak. It is hard to tell whether the downtrend is short term or long term. The Straits Times Index (STI) closed at 3,011.08 yesterday.

The current situation has proven that we should always have some form of emergency funds that can tide us over 6 months or more should we get retrenched due to financial crisis. Thus, I continued to purchase Singapore Savings Bonds monthly even though the interest rate has fallen. The average interest rate of March Singapore Savings Bond is 1.71% if you hold it for 10 years. Singapore Savings Bonds currently makes up 17% of my entire investment portfolio.

I did not make any stock purchases this month but definitely I am looking around as the stock prices of many counters in my watchlist has fallen this week and they provide an attractive dividend yield in the long run. Some examples are Singtel, SPH REIT, Suntec REIT, Mapletree North Asia Commercial Trust.

Singtel

Closing Price: S$3.00, Current Dividend Yield: 5.83%

SPH REIT

Closing Price: S$1.01, Current Dividend Yield: 5.54%

Suntec REIT

Closing Price: S$1.70, Current Dividend Yield: 5.59%

Mapletree North Asia Commercial Trust

Closing Price: S$1.10, Current Dividend Yield: 6.57%

 

Last but not least, here is a quote from Warren Buffet.

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”

– Warren Buffet

Warren Buffett

 

SPH REIT 1QFY20 Financial Results

The share price of SPH REIT has came down recently from S$1.07 to S$1.03. This has got me worried whether if I missed any bad news on SPH REIT which caused the share price to be on a downtrend. If you are aware of any, please post in the comments below. I have also noticed that I have not reviewed SPH REIT’s 1QFY20 financial results that was released on 10th January 2020.

Investors should know that COVID 19 is not a long term situation but such short term situation does cause panic in the stock market. We all know that retails REITs are impacted by the current COVID 19 situation but could there be any bad news that I have missed for SPH REIT that affects the fundamentals?

Let us take a quick look at SPH REIT’s 1QFY20 financial results.

1QFY20 Financial Results

1QFY20
(S$’000)
1QFY19
(S$’000)
Change
Gross Revenue 60,137 53,805 11.8%
Net Property Income 46,964 41,786 12.4%
Distributable Income 35,800 34,602 3.5%
Distribution Per Unit (“DPU”) (cents) 1.38 1.34 3.0%

Occupancy

Total portfolio occupancy stood at 99.3% which is very healthy.

Debt

The gearing ratio stood at 26.8% as compared to 27.5% in 4QFY19. One of the positives for SPH REIT is that its debt level is very low as compared to other REITs.

Current Dividend Yield

Like I have shared, the share price has came down due to the current COVID 19 situation. Based on the historical dividend of 5.6 cents and current share price of S$1.03, this translates to a current dividend yield of 5.44%.

My Opinion

A quick check shows that the fundamentals of SPH REIT is still intact. This means crisis such as COVID 19 poses an opportunity to buy into SPH REIT when its share price starts to fall because of panic in the market. Of course I believe there will be disruptions due to the fell in tourist and shoppers at its malls but this should be short term.

Where Should My Dad Put His 100K? OCBC Fixed Deposit vs UOB Stash

My dad, a retiree who is 69 years old was lamenting about the petite interest rate that he is currently receiving from 100K that is sitting in his savings account. I tried to recommend CIMB fixed deposit to him as CIMB currently offers the highest interest rate of 1.75% p.a.

I have also told him that I have done a fixed deposit placement recently via internet banking. Being not so technology savvy, he is very resistant to open an account via the internet. He is the kind who still prefers to make a trip down to the bank and queue. He became even more reluctant when he heard CIMB only has two branches, one at Raffles Place and the other at Orchard. He prefers banks where there are branches near your neighbourhood like POSB, OCBC and UOB. These are bank names known to old folks like him.

He asked me if it is better to put his 100K in OCBC fixed deposit which now offers 1.55% p.a. for a 12 months placement or open a UOB Stash Account as he heard UOB Stash offers an interest rate of 1% p.a. and there is no lock in period.

UOB Stash Account

Below is how UOB Stash Account interest is computed. You can check out their website.

Account Balance Base Interest
(p.a.)
Bonus Interest
(p.a.)
Total Interest
(p.a.)
First S$10,000 0.05% 0.00% 0.05%
Next S$40,000 0.05% 0.75% 0.80%
Next S$50,000 0.05% 0.95% 1.00%
Above S$100,000 0.05% 0.00% 0.05%

Using the calculator available on UOB Stash Account website, I entered 100K every month.

The total interest that my dad will earn if he put 100K into the UOB Stash Account from February 2020 to January 2021 is S$825.12.

OCBC Fixed Deposit at 1.55% (12 Months)

The interest that you will earn if you place 100K in OCBC fixed deposit at 1.55% p.a. for 12 months is S$1,550.00.

The conclusion is that my dad should park his S$100K with OCBC fixed deposit for 12 months at an interest rate of 1.55% p.a. as he will receive S$1,550 when his fixed deposit matures instead of UOB Stash Account.