Friday 30 April 2021

DBS posted record Q1 21 profit. BUT high PB ratio 1.47 and low dividend yield 2.4%

I was certainly not expecting this. DBS reported record quarterly profit of $2 billion in the 1st quarter of 2021. DBS CEO Piyush Gupta said, “This has been an extraordinary quarter for our business as we fired on all cylinders." 

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A brief summary:

- Net Interest Margin stabilised at 1.49% (same ratio as last quarter - 2020 Q4).
- Net interest Income is the only one that dropped (15%) compared to 2020 Q1.
- Net fee and commission income, and Other non-interest income exceeded pre-covid levels (compared to 2019 Q1).  This includes wealth management, transaction service fees and card fees.
Net Book Value is $20.46.
- Dividends declared is $0.18. disappointing that MAS did not lift the dividends cap. 

The important ratios to take note of

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The ratios such as Return on Assets, Return on Equity, Non-performing loan rate, Common Equity Tier-1 ratio has shown improved.  

Based on its currently trading price of $30.10, the Price to Book ratio is 1.47 and Dividend Yield is 2.4% (if MAS does not lift the dividend cap in FY21). 

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If you look at the last 5 years of data, DBS is trading at high valuations. It is trading at a high PB ratio, reaching 2018 highs. In terms of yield, it is very low at 2.4%. If MAS lift the cap next quarter and DBS pay a dividend amount of $0.33 cents per quarter, the yield will be more decent at 3.9%. 

If we look back at past data, DBS  traded at PB ratio of 2.6 and yield of 2.1% in 2000. Is it going to trade a such valuations moving forward?

Thursday 8 April 2021

Foreign Portfolio Mar 21 Update - Bought TSM, QCOM & sold IBM

Transactions made in the month:

- Bought 100 units of Alibaba (HK) at HKD 232.80 (as shared in my earlier post on 3 Mar)
- Bought 19 units of Taiwan Semiconductor Manufacturing at USD113.70
- Sold 15 units of International Business Machine at USD131.00
- Bought 15 units of QUALCOMM Incorporated at USD135.50 (this was bought in Apr)

It was an eventful month for me, I have not made so many transactions since I started trying out the foreign markets. I doubt I will make so many frequent trades in a month moving forward.

For Alibaba, government regulatory factor is still something to look out for. I will likely add on to the share if it drops further as fundamentally the stock is still a growth stock unless Chinese government does something drastic. You never know. This is a risk I am aware of and willing to risk on.

For Taiwan Semiconductor Manufacturing, I saw an opportunity to buy it when it got sold down. It is the biggest semiconductor foundry player in the world. With the supply issue in the industry, need I say more? 

For QUALCOMM Incorporated, it is in the semiconductor, IOT and 5G industry. I felt that it got oversold and hence went into it. 

As for IBM, I sold it when it reached my target price of USD131. I had set the selling price a few weeks before it hit this level. It gave me a return of +10.1% after taking into of dividends and exchange rate. The stock went further up after I sold it, that is life. It is hard to time to sell at the highest.

These foreign stocks are mainly short term trades unlike my SG portfolio, since I am still learning them. Learning to how things such as withholding tax and exchange rate affects my overall returns.

Thursday 1 April 2021

My Investment Portfolio - SG (End Mar 2021)

Transactions made in the month:

- Bought 4,000 units of Mapletree Ind Tr at $2.61
- Sold 800 units of DBS at $28.93

- Got 7,500 units of Astrea VI3%B310318 at IPO (received more than that, other units were alloted to other portfolios

What a ride it has been for STI, it is now at 3,178 levels. I made several transactions including selling some of my DBS shares earlier in the month. I added on Mapletree Industrial Trust and was still queuing for more at $2.50, but the order did not get fulfilled. I had several buy orders for shares such as Raffles Medical, CityDev, CDG that were also not fulfilled. In the end, they all went up. I am not sure whether will I chase them or just be patient. It really depends on the context as the market sentiment is changing rapidly on a daily basis.  

As for Astrea VI3%, I was alloted 15,000 units. I decided to alloted half of it to other portolios (my spouse and children). Many retail investors state that the yield is too low. While I agree to a certain extend, I felt that this will help me diversify my portfolio further. Moreover, in the past when I suggested using Singapore Savings Bond (SSB) as a emergency fund, many felt that the interest rate of slightly above 2% was too little. They wanted to time and enter at a higher interest rate. Look at the current interest rate for SSB, its even lower than 1.5% now. 3% yield for Astrea VI is still good, just do not put all your cash into the same holding. 

I still have some funds to be deployed out to the market. I have been monitoring the foreign market and considering whether to shift these funds to foreign or local market. I had made transactions this month in the foreign market too. Will update them sometime next week.

Dividends received* during the month: $938.26 (Mapletree Logistics Trust, Lendlease Reit, Ireit, Mapletree Industrial Trust, Ascendas Reit, Keppel DC Reit)

Total dividends received in 2021: $1,353.19

Average dividends per month: $112.77

Total Portfolio Market Value: $285,664

*Dividends are recognised after payment date. Average dividends per month is calculated by dividing the dividends received by 12 months regardless of the month. 
Portfolio excludes Singapore Savings Bonds and Foreign Stocks