Welcome

Welcome to my investment blog where I share with you my analysis of REITs in Singapore.

I hope that my investment philosophy will bring me a steady stream of income apart from my job. I am aiming for at least $3,000 per month which can sustain the current expenses of myself and my family.

Do enjoy reading my blog and post any comments that you have. I welcome them because it is a time to learn from each other.

When I am looking at investing in REIT, here are some of the guidelines that I am looking at. Feel free to comment on it. I am willing to listen to ideas.

-> at least 8% yield.
-> Price that is lower than its NAV.
-> Low gearing (if possible)
-> High secured NAV.

Current Dividend income is $3,800/month.

Friday, January 4, 2019

Analysis of Hutchison Port Holdings Trust - Would it be the same as APTT?

Current Price on 28th Dec 2018 = S$0.335
  • Yield = 8.77%  
  • Price-to-book Ratio = 0.434
  • Assets per unit = $2.138
  • Debt per unit = $1.366 (including current liabilities and non-controlling interest)
  • Gearing = 63.9%
While reading and refamiliarising myself with HPH Trust, I realize that there is a substantial non-controlling interest appearing as equity in the balance sheet which unitholders don't own. Thus, it affected the price-to-book ratio which I have always been using to calculate so now I am including it as liabilities for ease of comparison for people like us. Here are the statistics.

With 8.77%, it is yielding high although I think it is not high enough considering that it is a port trust rather than a real estate investment trust. Its price-to-book ratio is rerated to be 0.434 which means wer are buying at less than half the price even after re-rating. Including all other equities as liabilities in the balance sheet, we see a gearing of 63.9% which is extremely high. This is probably the reason why it is trading at a depressed price.

With the crash of APTT (which wiped out my earnings), many people are saying that HPH Trust is next. I won't say so. The reason is that Port assets are still valuable, visible and more stable compared to pay tv business where it face fierce competition and probably will die down. Of course, I realize it too late and got burnt earlier. But I don't think it is the case here. Port business is still relatively stable with high requirements. I think the problem is earnings margin which is very low. A small change in percentage of business is likely to have a large impact of its earnings. This one, we need to watch out.

I am holding on to 200,000 shares which gives me a yield of $500 per month. However, unless there is an upturn in the business, I don't think there are any room for upside. Nevertheless, the yield is high enough for me to hold on for long term.

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