March 2021 Portfolio Review

Straits Times Index Fund: +10.41%
Hong Kong Tracker Fund: +5.97%
S&P 500 Index Fund: +8.26%

My Portfolio Returns: +13.26%

Transactions:

1) Increase in Centurion using CPF funds

I think Centurion, while risky, is worth a small bet. The investment property are conservatively valued, although one has a case that Centurion stands to earn less in a post-COVID world.  if there is any thing optimistic to take away from the COVID affected years, I think a business like Centurion would not go away soon.

2) Complete divestment of  Emperor Entertainment Hotel

The parent, Emperor International group (EI), has sold a couple of properties to EEH, and, in my opinion, decided to declare a special 5% yielding dividend to EEH holders as a form of appeasement.

The balance sheet would consist much less of liquid cash and more of hotels, which is not likely to be beneficial. COVID-19 aside, this move would mean EEH should be valued more on its earnings from hotels. This is not great since EEH's earnings has been on a decline over the years.

Disappointingly, EEH has been buying back and cancelling shares, but a company full of hotels is not what I am looking forward to.

Gains are about 10%, down from about 20%, post announcement.

On an unrelated note, Stamfordland, which controls a huge amount of hospitality assets in Australia, is considering to move to an asset-light model. 

Could this come a little too late, and is this timing advantageous to share holders? This is yet to be seen, but Mr Ow is known as a very shrewd businessman with impeccable timing in his dealings with Singapore Shipping. So I hope value do get realized for Stamford Land shareholders.

Commentary on the Capitaland Restructuring

Capitaland is privatising its development arm, distributing cash, partial shares of Capitaland Investment Commerical Trust, and renaming itself to Capitaland Investment Management.

I had a quick, back of the envelope calculation on this proposal.

This amount to a net of $2.6 for each share of CLIM.

Capitaland does not disclose the earnings of its lodging and financial arm (CL Financials and CL Lodging) pre-2018. The annual reports of 2019 reveals some useful details, but they dont look enticing. Do note that these figures does not include finance costs, which means it is likely lower.

 

Based on current 4549 million shares, the EPS is about $0.04 (2019) and $0.057 (2018). Hence I am not sure if it deserves $2.6 a share. Property development earnings are lumpy, but it is not a definite thorn like Sembcorp Marine's business in Sembcorp Industries' financials.  CLIM is arguably more scalable, but I am unsure if $2.6 is a bargain?

Hence I am staying out. However, feel free to spend some effort to look over the earnings of the REITs it manages during the sunny times... it might reveal itself as a bargain.

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There is a lack of investment ideas at my end. I apologize for the lack of ideas... hopefully April would be better.