Sunday 5 March 2023

Accounting for Keppel Corp’s disposal of Keppel Offshore & Marine

Sembcorp Marine acquisition of Keppel Offshore and Marine (O&M) was great news for Keppel Corp shareholders. I was please seeing Keppel Corp go asset light and cutting off their O&M business. But this whole scheme of things was so complicated! I had a really hard time trying to account for this transaction.

The proper way to account properly on paper was to do the following:
a) Sell Keppel Corp at $7.34, which is its closing price on 22 Feb 2023;
b) For every 1 unit Keppel Corp owned on 22 Feb, buy 19.085033835 units of Sembcorp Marine at $0.134, its closing price on 22 Feb 2023; and
c) Buy back the exact number of units of Keppel Corp you sold at $4.7826. ($4.7826 because it is the adjusted-for-distribution price; $7.34-(19.085033835*$0.134))

But because I want to track when my different tranches of Keppel Corp transactions will be freehold, I had to use a different method. Since I sold off my Sembcorp Marine stocks on the very first day (i.e. 1 Mar 2023), I could use the value of that sold transaction for this accounting. I treated the value of the sold transaction as cash dividends and accorded them to my Keppel Corp holdings. 

The flaw is that my dividends recorded in stockcafe is now inflated by this. I need to mindful and remember to take note of this. 

Which method did you use to account for this or did you use other methods? 

Wednesday 1 March 2023

My Investment Portfolio - SG (End Feb 2023)


Transactions made:

- Added 2,000 units of Mapletree Industrial Trust at $2.39
- Added 500 units of Keppel Corp at $5.66
- Added 500 units of Keppel Corp at $5.40

February was an exciting month as I made three purchase transactions and the local banks released their results announcing dividends increase. DBS even announced special dividends. Companies such as Wilmar, Raffles Medical and even Comfortdelgro announced dividends increase. This is getting so exciting. At the same time, I am mindful that we cannot celebrate too early as we will not know how the full year will be. But these increase in dividends will help mitigate the decrease in dividends announced by REITS.

Whether the USA Fed Bank cut interest rates this year or in 2024 or even later, my personal view is that I am well positioned to ride this out. If interest rate remains high, banks will continue to earn high profit through NIM. On the other hand, if interest rate is cut and low, REITS borrowing cost and gearing will trend downwards. So having a diversified portfolio is important.

As I was reviewing my portfolio, I was surprised that Mapletree Industrial Trust (MINT) accounted for 14% of my portfolio. I need to watch what I purchase next. But frankly speaking, MINT still looks so  attractive . Moreover, I participated in MINT's Distribution Reinvestment Plan (DRP), opting for partial shares and cash. I am also likely to opt for Lendlease's DRP. I hope there is an opportunity for me to add to Ascendas REIT, MLT and ST Eng in the near future.

Dividends received* during the month: $39.80 (Suntec Reit)

Total dividends received in 2023: $39.80

Average dividends per month^: $3.32

Total Portfolio Market Value: $339,541.57

* 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, T-bills and Foreign Stocks
Divided by 12 months regardless of month of the year.