Singapore REIT Monthly Update (Mar 04 – 2021)

  • Post author:

Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 877.59 to 826.65 (-5.80%) compared to last month update. Currently the Singapore REIT index is moving sideway after a false breakout at the resistance of 874.

  • As for now, Short term direction: Sideway.
  • Immediate Support at 825, followed by 775.
  • Immediate Resistance at 874.

Previous chart on FTSE ST REIT index can be found in the last post Singapore REIT Fundamental Comparison Table on Jan 24, 2021.

Fundamental Analysis of 40 Singapore REITs

The following is the compilation of 40 Singapore REITs with colour coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio.

  • Note 1: The Financial Ratio are based on past data and there are lagging indicators.
  • Note 2: This REIT table takes into account the dividend cuts due to COVID-19 outbreak. Yield is calculated trailing twelve months (ttm), therefore REITs with delayed payouts might have lower displayed yields, thus yield displayed might be lower.
  • Note 3: REITs highlighted in blue have been updated with the latest the Q4 2020 business updates.

(Source: https://stocks.cafe/kenny/advanced)

Do sign up for the REIT screener at only ~$8.33 per month! (limited time only). Normal price $120 per year.

  • Price/NAV decreased at 0.98
    • Decreased from 1.01 in January 2021
    • Singapore Overall REIT sector is at about fair value now
    • Take note that NAV is adjusted downward for most REITs due to drop in rental income (Property valuation is done using DCF model or comparative model)
  • TTM Distribution Yield increased to 5.68%
    • Increased from 5.45% in January 2021
    • One Third of Singapore REITs (13 out of 39) have distribution yields of above 7%.
    • Do take note that these yield numbers are based on current prices taking into account the delayed distribution/dividend cuts due to COVID-19, and post circuit breaker recovery.
    • Exclude Eagle Hospitality Trust due to suspension.
  • Gearing Ratio at 37.44%. 
    • Reduce from 38.19% in January 2021.
    • In general, Singapore REITs sector gearing ratio is healthy but started to increase due to the reduction of the valuation of portfolios and increase in borrowing.
  • Most overvalued REITs (based on Price/NAV)
    • Keppel DC REIT (Price/NAV = 2.28)
    • Parkway Life (Price/NAV = 2.09)
    • Mapletree Industrial Trust (Price/NAV = 1.55)
    • Mapletree Logistics Trust (Price/NAV = 1.45)
    • Ascendas REIT (Price/NAV = 1.34)
    • No change from January 2021 for top 5 overvalued REITs ranking
  • Most undervalued REITs (based on Price/NAV)
    • Lippo Malls Indonesia Retail Trust (Price/NAV = 0.36)
    • First REIT (Price/NAV = 0.42)
    • OUE Commercial REIT (Price/NAV = 0.63)
    • Starhill Global REIT (Price/NAV = 0.64)
    • BHG REIT (Price/NAV = 0.67)
    • Sabana REIT (Price/NAV =0.73)
    • Suntec REIT (Price/NAV = 0.73)
  • Highest Distribution Yield REITs (ttm)
    • First REIT (19.76%)
    • KepPacOak US REIT (9.16%)
    • Prime US REIT (8.73%)
    • Manulife REIT (8.42%)
    • Sasseur REIT (7.65%)
    • Reminder that these yield numbers are based on current prices taking into account delayed distribution/dividend cuts due to COVID-19.
    • Some REITs opted for semi-annual reporting and thus no quarterly DPU was announced.
  • Highest Gearing Ratio REITs
    • Eagle Hospitality Trust (65.5%) * Filed for Chapter 11 Bankruptcy Protection *
    • First REIT (49%)
    • ARA Hospitality Trust (48.2%)
    • Suntec REIT (44.3%)
    • Lippo Malls Retail Trust (42.4%)
    • ESR REIT (41.6%)
    • Mapletree NAC Trust (41.3%)
    • OUE Commercial REIT (41.2%)
  • Total Singapore REIT Market Capitalisation = S$104.9 Billion.
    • Decreased from S$107.2 Billion in January 2021.
  • Biggest Market Capitalisation REITs:
    • Capitaland Integrated Commercial Trust ($13.91B)
    • Ascendas REIT ($11.64B)
    • Mapletree Logistics Trust ($8.48B)
    • Mapletree Commercial Trust ($6.73B)
    • Mapletree Industrial Trust ($6.70B)
  • Smallest Market Capitalisation REITs:
    • BHG Retail REIT ($296M)
    • United Hamsphire REIT ($327M)
    • First REIT ($328M)
    • ARA Hospitality Trust ($380M)
    • Sabana REIT ($400M)
  • Eagle Hospitality Trust is currently suspended

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Workshop here to learn how to choose a fundamentally strong Singapore REIT for long term investing for passive income generation.

Top 20 Performers of the Month (Source: https://stocks.cafe/kenny/advanced)

SG 10 Year & US 10 Year Government Bond Yield

  • SG 10 Year: 1.391%
  • US 10 Year: 1.45%

Summary

Fundamentally the whole Singapore REITs is close to fair value now based on simple average on the Price/NAV. Below is the market cap heat map for the past 1 month. In general, the Singapore REITs sector is going through a correction now caused by a spike in 10 Years US Treasury Bond Yield due to  the fear of inflation. However, I think it is still too early to talk about inflation now as the world is still at the early economy recovery phase. This is probably a knee jerk reaction to let go some weak investors. This correction presents another entry opportunities for investors who miss out the entry during the market crash in Mar-May 2020. Next US FOMC meeting is on Mar 17, 2021 and it is 95.2% probability the US fed will keep the current low interest rate.

(Source: https://stocks.cafe/kenny/overview)

Yield spread (reference to 10 year Singapore government bond of 1.391%) tighten from 4.449% to 4.289% . However, the risk premium are still attractive to accumulate Singapore REITs in stages to lock in the current price and long term yield after the recovery. Moving forward, it is expected the increase of DPU due to the recovery of global economy.

Technically the REIT Index is currently trading in a sideway consolidation after the false breakout. However, current macro factors such as low interest rate environment, aggressive M&A for future DPU growth and recovery of global economic support the bullish breakout.

Note: This above analysis is for my own personal research and it is NOT a buy or sell recommendation. Investors who would like to leverage on my extensive research and years on Singapore REIT investing experience can approach me separately for REIT Portfolio Consultation.

Kenny Loh is a Senior Consultant and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Symposium and Invest Fair.  You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement

Continue Reading Singapore REIT Monthly Update (Mar 04 – 2021)

Singapore Trading Festival 2021

  • Post author:

New Normal, New Opportunities.

As the Covid-19 pandemic changes the world as we know it, traders continue to face unprecedented risks while discovering new opportunities in the markets.

Join us at this full-day virtual summit at Singapore Trading Festival to hear the experts share their new trading strategies of navigating the volatile markets.

Plus, pit your skills against fellow traders in the 5-day trading simulated challenge and stand a chance to win exciting cash prizes!

新常态,新机会

随着新型冠状病毒改变我们所知的世界,很多投资者在股市里面临着前所未有的风险,然而股市里也涵盖着很多新的机会。

赶紧参加这次的股市交易峰会,一起聆听专家们分享他们的新投资策略,以应对动荡的股市。

与其他投资者在为期5天的投资模拟大赛里一较高下,高达S$5,000的现金奖励等你来赢取!

Register for Summit here!

注册峰会

I will be moderating this panel discussion. Come and learn how other investors started their investment journey successfully and what are the challenges they encounter in the journey.

会谈:创造第一桶金的旅程

A talk by | 演讲嘉宾 Kenny LohAnson Tan and Joo Yee
Bullbearbursa and Bullbearbursa

See you in Singapore Trading Festival 2021!

Kenny Loh is a Certified Financial Planner and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Symposium and Invest Fair.  You can join his Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement

Continue Reading Singapore Trading Festival 2021

4 Advantages of Optimizing Your Life Insurance System

  • Post author:

Amber Williams

One must have a certain amount of grit, willpower, and determination to adapt if they work in the insurance industry today. In the past decade alone, insurance carriers have been extra challenged to align their legacy values and systems with extremely modern consumer sensibilities. In the wake of the health-related and socioeconomic impact of the COVID-19 pandemic, customers’ attitudes about life and annuity insurance have also changed. They may be more cautious about enrolling in insurance programs than members of the previous generation were. If they do sign up for either insurance or annuity, they seek higher standards of service and engagement than what was once asked from carriers.  

A question worth asking yourselves is this: do you want your insurance brand to keep succeeding in the long haul? If your answer is a resounding yes, then the first move that you should make towards securing your future is pursuing life insurance innovation. The time is ripe for you to revisit your life and annuity policy administration system and optimize it for the delivery of digital insurance services. Here are four advantages of exploring new technologies, like a cloud-based life insurance platform, and leveraging them to meet the insurance challenges of the future. 

You’ll Equip Your Company to Do Business in the New Insurance Landscape

The first thing you should know about delivering life and annuity products in this era is that your customers value technological prowess in their carriers. The new insurance landscape is one in which many carriers have invested resources into digital insurance delivery. Do you want to be left behind by your peers, or do you want to remain the carrier of choice?

It’s in your best interest to find a platform that can cushion you from the initial stresses of modernization and prepare you for further innovation. There will also be less of a need to keep adapting and re-adapting processes from your legacy system if you choose to optimize now. 

You’ll Reduce Your Steep Operating and Compliance-Related Costs

Another strong argument for optimizing your current life insurance system for digital delivery is the amount of money you’ll save from operations. With a new platform, your operations won’t be as dependent on work done in business headquarters. Since vital insurance data will be on the cloud, that technically means that you can operate your business from anywhere. It also means that you won’t lose money from the threat of service interruption, even if you aren’t at HQ. 

Modernizing your insurance system will also optimize processes like underwriting. You’ll spend even less time and labor arriving at the correct policy prices for your customers. You may also end up having a better grip over your compliance since it will be easy to manage huge swathes of compliance-related data. Ultimately, you will worry less about paying steep penalties for gaps in your compliance and stay in the good graces of your regulators.

You’ll Synergize with Other Partners in the Delivery of Your Insurance Products

It isn’t only insurers who feel the pressure to innovate. The same goes for other parties in the life insurance and annuity provider network, such as hospitals and clinics that accept health insurance. These institutions are doing their part to modernize their services for your shared clientele. Doing the same will enhance your synergy with them in rolling out your insurance program. 

There are several specific advantages to getting on the same page, tech-wise, as your partners in the provider network. An optimized system can help you smoothly advertise and implement bancassurance products with a partner bank. You may also be able to use information technology, like APIs or application programming interfaces, to link up with a healthcare provider’s patient portal. Because of that linkage, it may be easier for your patients to cover their healthcare expenses through your policy online. The possibilities are extremely promising and, most importantly, extremely helpful to your clients. 

Your Brand Will Resonate with a New Generation of Policyholders 

If you’re looking for a way to reinvent your insurance business as the ideal partner for a new generation of policyholders, optimization is the answer. Optimizing your system gives you the chance to develop new insurance products or rework old ones in a fraction of the time it took before. That means that you may be able to simplify or unbundle all-in-one insurance programs and manage piecemeal policies instead. You may also consider offering the insurance product catalog as a service on its own and launching it through a digital campaign. 

Actions like these will attract the attention of a new breed of policyholders, many of whom are tech-savvy millennials who value experiences and investments. You can make insurance look less intimidating than it did for their parents’ generation while also presenting it as something worth spending on given current times. If your brand can resonate with this demographic of policyholders, much of the battle to stay relevant will have been won.

Conclusion

The economy that drives the insurance system may not let up anytime soon, but carriers can choose to be tough, smart, and resilient regardless. The insurance business that stays ahead of the times has the best chances of living on and serving hopeful new generations. If you take the steps to optimize your life insurance system for the current landscape of the industry, you won’t regret it. Explore your options and upgrade to a system that can serve your current and future needs!

Continue Reading 4 Advantages of Optimizing Your Life Insurance System