After attending the various AGMs and coupled with the latest quarter business updates, I decided to make some adjustments to my portfolio. With no additional cash input, I need to sell some of my holdings to fund some purchases in the next few months.
My selling has no bearing on how well the counter will do in the future. In fact, often I have little luck with timing. As seen from my sold price, AEM, SGX and Sheng Siong have raised even more today after I sold them. Here’s briefly why I decided to sell the above counters.
Capitaland China Trust is likely to do well this year as it will benefit from China’s reopening. Based on a response from their IR to my email, they are getting rental revision of +1.6% for their business parks and +3.1% retail malls in the first quarter. What I am uncomfortable about is the short lease that they are getting for both their business and logistics parks. The new and renewed lease for them is around 1 to 3 years with an average of about 2 years. So this is lower than the average WALE of above 3 years that is seen in CaptialandAscendas REIT, Mapletree Industrial REIT and Mapletree Logistics REIT.
I guess this is how it is in China and obviously CLCT can’t do much about it. To me, it does feel like tough work and more uncertainty. Hence even though the management might be able to do a good job in filling up the space, I just feel that it’s not for me.
I have only a very small stake in Frasers Logistics and Commercial Trust. I have not spent much time learning more about it since I bought it 10 months ago. So divesting it frees up some capital and time for me. Ditto for Sheng Siong. Though she should benefit from the ramping up of BTOs in the coming years, I just preferred the opportunities from other companies in my porfolio.
SGX has been a steady dividend player in my portfolio. However, her current yield and dividend growth rate pale when compared to others. Divesting it so that I can have more available CPF to invest in the other 3 counters when opportunity arises.
AEM was an opportunity play. Originally, I bought AEM with CPF but due to the 35% CPFIS stock limit, I could not add more when the price plummeted below $3 two months ago. It was then that I decided to swap UMS with AEM. You can read more about my decision in this post Switching from UMS to AEM and Venture.
With some luck, the counter has rebounded over the past two months. Given that I will have available fund in my CPF soon to add on to it later, I decided to take the profit in my cash account. I really did not expect today’s rally! If only I have waited for a few more hours, I would have booked another 1k profit! Oh well, have to be grateful for whatever gain.
The partial divestment of Micro-Mechanics is due to the recent announcement of her Q3 results. I was already expecting a weaker quarter but it looks like weakness will continue into Q4.
Based on the above statement, it is likely that dividend will be cut for year end. I am not against the board’s decision but given that shareholders have gotten used to the high dividend, a cut in the final dividend will probably rattle some of them. Also, given that there is a transition in leadership, the group might be taking a different direction on how much dividend to dish out from next year onwards.
It might not be a bad thing as the group can use the cash for further growth but it does mean greater uncertainty. So I decided to sell half of my holdings and continue to observe what will transpire over the next few quarters.
What do I intend to buy?
Not new counter but I will add on to some of the counters in my portfolio. I am still thinking about it and hopefully opportunity will arise in the next few months for me to deploy the fund.