Riding Waves

The graph below shows the weekly price chart of the SGX counter Hotung Inv from November 2011 through April 2016.

 

  

  

Looking at the graph, it does conjure an image of a string of ocean waves rushing to the shore.   There are the highly distinguishable crests and they can be seen to occur at regular intervals around April or May each year.   Each of these peaks is invariably followed immediately by a big drop in May.   The graph then stays low after that until it moves up to another peak the following year.

 

The behaviour of the graph can be easily explained by the fact that this counter goes ex-dividend in May each year.   As the day of ex-dividend gets closer, the price of the stock goes up and this gives rise to the peaks or crests of the waves.   When the stock subsequently goes ex-dividend, its price drops and this is reflected in the falls in the graph.

This phenomenon provides an opportunity to ride the proverbial wave as the price of the stock moves up to its peak.   The strategy is to capture the pure capital gain by picking up the stock before its price moves up, riding the wave of its ascent to its crest and selling it before its price falls.   Let me call this the 'ride the wave' strategy.
 

The time to get ready to ride this wave is before the price of the stock ascends.   It is never possible to pick the lowest price for entry but it can be seen from the graph that some low points of the price do occur in the months of October, November and December each year.   Hence, an entry can be made in any of those months.    The action plan is to buy the stock at the end of the year, hold it through the new year and then dispose of it on the day before the stock goes ex-dividend in May.
 

This strategy is tested on the 4 waves (from November to May for each wave between November 2011 through May 2015) shown in the graph.   The closing price on the last trading day in November is arbitrarily used as the purchase price.   The selling price is the closing price on the last trading day before the stock goes ex-dividend.   The returns obtained are shown in the table below:

	Closing Price  on the last  trading day  in November ($)	Closing Price  on the last  trading day  before ex-D ($)	Date of ex-D	Capital  Gain / Loss ($)	Capital  Gain / Loss (%)
Nov 2011 - May 2012	1.220	1.470	7-May	0.250	20.5%
Nov 2012 - May 2013	1.460	1.630	6-May	0.170	11.6%
Nov 2013 - May 2014	1.470	1.620	22-May	0.150	10.2%
Nov 2014 - May 2015	1.510	1.540	25-May	0.030	2.0%
Total				0.600
Simple average				0.150	11.1%

 

From the table above, it can be seen that by 'riding the wave', the total capital gain is $0.60.   The average capital gain per 'wave' is $0.15 or 11.1%.   The individual capital gains of the first 3 'waves' are above 10% each but the average per 'wave' is dragged down by the capital gain of the last 'wave'.

Will the wave repeat itself this year?

Looking at the right-hand side of the chart, the graph is now already in the process of making a new wave.   It can also be seen that if one had bought the stock last November, one would already be holding some capital gain.   The actual capital gain as of 29 April 2016 is $1.58 - $1.36 = $0.22, representing some 16.2%.   This is already above the average gain of the last 4 'waves'.

The month of May is approaching fast.   Let's watch the development as it unfolds. 

 

Note:
1. The total dividends for the same period from November 2011 through November 2015 was $0.48.   The closing price of the stock on 30 Nov 2015 was $1.36, giving a capital gain of $0.14 (= $1.36 - $1.22).   The total returns (capital gain + dividends) obtained by holding the stock throughout the same period was thus $0.62 (= $0.14 + $0.48).

2. There was a 10 into 1 share consolidation on 4 December 2015.   All relevant prices and dividends above have been adjusted accordingly.


 

 

 

31st Annual General Meeting of Telekom Malaysia Bhd

I attended Telekom Malaysia Bhd's 31st Annual General Meeting at the Menara TM in Kuala Lumpur today as a proxy.   The meeting commenced at 10:00am and I left before it ended.

 

Upon registration, I was given a gift coupon with which I exchanged for the gifts.   These were what I got as gifts:

 

 

 

  

Breakfast was provided.   It included nasi lemak, some kuih-muih and coffee, tea and mineral water.

 

 

 

 

The meeting was held at the Kristal Hall of the TM Convention Centre.   A picture of the meeting in progress is shown below.

 

 

 

 

 

Performances of S-Reits over the Short, Medium and Long Terms

This post takes a look at and compares the performances of 35 S-Reits, in terms of annualized return, over several time-frames of past years.

The return shall include capital appreciation and distributions.   The distributions are, however, not re-invested.

 

Four groups of data with each covering a different time-frame are analysed.   The time-frames for the groups are as follows: 

• Group 1: Last 2 years (from 1 January 2014 to 31 December 2015)
• Group 2: Last 5 years (from 1 January 2011 to 31 December 2015)
• Group 3: Last 10 years (from 1 January 2006 to 31 December 2015)
• Group 4: The entire existence of the Reit (Since the Reit makes its debut on the SGX till 31 December 2015)

For the first 3 groups, only Reits that are listed before the respective start date are included in the corresponding group.   The last group includes all 35 Reits, irrespective of the length of time the Reit has been listed.

 

The table below shows the annualized returns and capital gains or losses of the 35 Reits under the different groupings.

		Annualized Return (%)				Capital Gain / Loss ($)
		Since debut	Last 10 Years	Last 5 Years	Last 2 years	Since debut	Last 10 Years	Last 5 Years	Last 2 years
1	AIMSAMP Cap Reit	1.1%	-	11.0%	7.5%	-0.510	-	0.278	-0.003
2	Ascendas Reit	11.1%	6.6%	8.0%	9.5%	1.275	0.320	0.205	0.079
3	Ascendas-hTrust	1.4%	-	-	8.4%	-0.140	-	-	0.020
4	Ascendas-iTrust	-1.4%	-	4.0%	19.4%	-0.680	-	-0.060	0.190
5	Ascott Reit	5.6%	-	6.0%	5.5%	0.060	-	0.002	-0.020
6	Cache Log Trust	6.7%	-	6.9%	-0.7%	-0.045	-	-0.055	-0.205
7	Cambridge Ind Tr	5.1%	-	9.0%	-1.9%	-0.087	-	0.046	-0.125
8	CapitaCom Trust	8.3%	7.7%	3.2%	2.4%	0.465	0.315	-0.150	-0.100
9	CapitaMall Trust	9.4%	7.2%	4.6%	6.2%	0.944	0.437	-0.020	0.025
10	CapitaR China Tr	2.4%	-	9.5%	12.6%	-0.310	-	0.250	0.160
11	CDL HTrust	10.3%	-	-2.1%	-3.2%	0.445	-	-0.755	-0.315
12	Croesus RTrust	-2.5%	-	-	8.4%	-0.239	-	-	-0.025
13	Far East HTrust	-4.0%	-	-	-4.6%	-0.285	-	-	-0.175
14	First Reit	13.0%	-	17.4%	13.4%	0.587	-	0.495	0.140
15	Fortune Reit HKD	10.6%	10.9%	19.0%	18.3%	4.505	3.905	3.900	1.660
16	Frasers Com Tr	1.7%	-	15.0%	7.2%	-0.311	-	0.445	0.000
17	Frasers Cpt Tr	10.5%	-	9.8%	9.3%	0.795	-	0.345	0.085
18	HPH Trust USD	-4.3%	-	-	-0.5%	-0.420	-	-	-0.145
19	IREIT Global	-3.5%	-	-	-	-0.072	-	-	-
20	Keppel DC Reit	11.9%	-	-	-	0.050	-	-	-
21	Keppel Reit	4.5%	-	0.1%	-4.8%	-0.157	-	-0.369	-0.255
22	Lippo Malls Tr	2.8%	-	2.8%	-4.8%	-0.175	-	-0.100	-0.095
23	Mapletree Com Tr	14.1%	-	-	11.5%	0.420	-	-	0.110
24	Mapletree GCC Tr	1.6%	-	-	11.6%	-0.115	-	-	0.075
25	Mapletree Ind Tr	11.2%	-	13.1%	14.7%	0.360	-	0.430	0.185
26	Mapletree Log Tr	6.2%	5.7%	6.8%	3.9%	0.105	0.035	0.025	-0.065
27	OUE Com Reit	0.3%	-	-	-	-0.069	-	-	-
28	OUE HTrust	2.7%	-	-	3.5%	-0.083	-	-	-0.079
29	ParkwayLife Reit	12.2%	-	11.7%	4.6%	1.140	-	0.680	-0.020
30	Religare HTrust	13.2%	-	-	22.0%	0.190	-	-	0.225
31	SoilbuildBizReit	10.7%	-	-	8.2%	0.055	-	-	0.000
32	SPHREIT	3.4%	-	-	4.5%	-0.030	-	-	-0.025
33	StarhillGbl Reit	6.1%	7.0%	9.6%	4.5%	0.055	0.105	0.130	-0.030
34	Suntec Reit	7.9%	8.8%	6.0%	6.4%	0.450	0.470	0.050	0.010
35	Viva Ind Tr	7.8%	-	-	8.7%	-0.051	-	-	-0.047
	Average	5.7%	7.7%	8.2%	6.6%

 

In the table above, some boxes are filled with a background colour.   The various colours and the respective information they serve to highlight are as follows:

• sky blue - a return that is of at least 10%,
• rose - a negative return (when the capital loss more than offsets the distributions),
• dark brown - a capital loss and
• light yellow - the Reit has capital gains in all groups it is in

Group 1: Last 2 years

There are altogether 32 Reits in this group.   8 of them have delivered annualized returns that are more than 10% over the last 2 years.   They are:

• Ascendas-iTrust (19.4%),
• CapitaR China Tr (12.6%),
• First Reit (13.4%),
• Fortune Reit HKD (18.3%),
• Mapletree Com Tr (11.5%),
• Mapletree GCC Tr (11.6%),
• Mapletree Ind Tr (14.7%) and
• Religare HTrust (22.0%).  

Religare HTrust is the best-performing Reit and it is also the only Reit that has given an annualized return that is more than 20%.

7 of the Reits in this group have negative returns.   They are

• Cache Log Trust (-0.7%),
• Cambridge Ind Tr (-1.9%),
• CDL HTrust (-3.2%),
• Far East HTrust (-4.6%),
• HPH Trust USD (-0.5%),
• Keppel Reit (-4.8%) and
• Lippo Malls Tr (-4.8%).

 

The average annualized return of all Reits in this group is 6.6%.   This is less than the average annualized distribution yield for this group, which is 7.7%.   It can be seen from the Total Capital Gain/Loss column that slightly more than half of the Reits in this group have incurred capital losses within this period of time.   These capital losses have dragged the average annualized return to fall below the distribution yield.

 

 

Group 2: Last 5 years

There are a total of 21 Reits in this group.   6 of them have delivered annualized returns that are more than 10% over the last 5 years.   They are:

• AIMSAMP Cap Reit (11.0%),
• First Reit (17.4%),
• Fortune Reit HKD (19.2%),
• Frasers Com Tr (15.0%), 
• Mapletree Ind Tr (13.1%) and
• ParkwayLife Reit (11.7%).  

Fortune Reit HKD has the highest return with 19.2%.

Only CDL HTrust (-2.1%) has registered a negative return.

The average annualized return of all Reits in this group is 8.2%.   This is higher than the average annualized distribution yield of this group, which is about 6.7%.   Two-third of the Reits in this group have registered capital gains within this period of time and this has lifted the average annualized return above the distribution yield.

Group 3: Last 10 years

There are a total of 7 Reits in this group.  

Fortune Reit HKD (10.9%) has the highest annualized return and is the only Reit that has a return that is more than 10%.

No Reit in this group has registered a negative return.

The average annualized return of all Reits in this group is 7.7%.   This is higher than the average annualized distribution yield of this group, which is about 6.0% as all Reits in this group have registered capital gains within this period of time.

Group 4: The entire existence of the REIT

This group includes all 35 S-Reits covered in this study.

Since making their debut on the SGX, 11 Reits have annualized returns that are above 10% while 5 of them have registered negative returns.

The average annualized return of all Reits in this group is 5.7%.   This is lower than the average annualized distribution yield of this group, which is about 6.7%.   18 Reits, which is just more than half of the total, have registered capital losses since they are listed on the SGX causing the average return to fall below the distribution yield.

The poorer performers in this group are mostly Reits that are listed on the SGX relatively recently.   There are 14 Reits that have been listed for less than 5 years.   Of these, 9 of them have returns that are below the average, 4 of them negative returns and 10 of them incurred capital losses .

Across all time-frames

Looking at the data across the various different time-frames, it appears that there are more S-Reits that have not been doing well over the short term.   Slightly more than half of the Reits have incurred capital losses over the short term and more than a handful of them have negative annualized returns.

 

In general, the Reits are found to have done better over the medium and long terms.   The average annualized returns of Reits over both the medium and long terms are higher than that of the short term and there is only a total of 1 Reit that has a negative return in the medium and long terms combined.

 

 

And the top performers are ...

 

There are a number of Reits that have performed well throughout their entire history as well as over all the short (2 years), medium (5 years) and long (10 years) terms.   Such Reits include Fortune Reit HKD,  Ascendas Reit and Suntec Reit.  

 

Fortune Reit HKD is the best performer among the 3, rewarding investors with more than 10% returns in all cases.   Both Ascendas Reit and Suntec Reit may not have yielded as much returns as Fortune Reit HKD in all cases but they have also been able to consistently top up their distributions with capital gains.

If you have invested in any of these Reits 2, 5 or 10 years ago, or since they made their debut on the SGX, you should be now be enjoying healthy returns from your investments.

There are Reits that may not have a history of more than 10 years to be considered for long term performance but nonetheless they have sparkled in their medium and short term performances.   These include First Reit, Mapletree Ind Tr and Frasers Cpt Tr. 

 

First Reit and Mapletree Ind Tr are the better performers among the 3, rewarding investors with more than 10% annualized returns.

 

There are Reits that have an even shorter history and are thus considered only for their short-term performance.   The best performers in this category are Mapletree Com Tr and Religare HTrust.

 

A newcomer and potential good performer is Keppel DC Reit.   This Reit is listed on the SGX for less than 2 years and thus is not considered for even a short term performance.   However, its performance thus far has been impressive, registering an annualized return of 11.9%.   Nevertheless, it still has yet to prove that it can be as impressive in a longer term.