Good points. However, yield is important. Otherwise we would be looking at growth stocks instead or just leave in the money in FDs.
So in essence Reits is a compromise between growth and yield. Yield reflects the price you are paying for such DPU that you expect.

On point 1. Therefore it's important to look at the quality of the properties as well.

On point 2. Even health care may be affected in bad times. No guarantees.

All I have said are repeated by RHB Analysts in article below, published yesterday, but reached me this afternoon. Earlier, I did not know the Book Value of the O&M segment though,... now I do :-

The price rout has gone too far, analysts say.

Investors have shunned Keppel Corp’s shares ever since the oil price crash began. As though adding insult to injury, the stock took a fresh beating last week on news of Sete Brasil’s looming bankruptcy. However, analysts from RHB Research noted that the steep decline may have finally gone too far.

RHB argued that at current valuations, it appears that Keppel’s offshore and marine (O&M) division is now valued below zero. RHB says that despite its current troubles, Keppel’s O&M segment still has a value of $5.56 per share.

Apart from that, RHB said that the absence of rig orders does not mean the absence of work for Keppel. The group can still snatch contracts for LNG vessels, floating production, storage and offloading (FPSO) conversions, fixed platforms, other specialised vessels, and vessel repairs.

“We expect the O&M division to continue generating cash and delivering ROEs well above the cost of equity. Even if O&M earnings halve this year, a 20% ROE still deserves a healthy premium to book value,” said RHB.

“The market is treating Keppel like a pure play on oil & gas, ignoring all the other divisions in this diversified conglomerate. Key short-term risk is a potential Sete Brasil bankruptcy, with a 40% impact on the orderbook, but this looks largely priced in,” the report added.

Further comments : At a Book vAlue of $5.56 per share, KepCorp is now trading at a heavy discount to this Book Value. Bear in mind that $5.56 is the Book Value for ONLY the O&M segment, and is not inclusive of the other,... three or four business segments of KepCorp.

BUY when the your targetted price hits.

I looked at my Stocks Radar today, and noticed that all, practically all counters are in the red, with 2 or 3 being unchanged or not traded,... AND ONE counter that has appreciated by 3.4%, and is the sole green counter today on my radar screen.

The counter is Sembcorp Marine. The reason fro this is as here :-

January 19, 2016:

Singapore’s Sembcorp Industries Ltd may inject funds into Sembcorp Marine Ltd or buy full control of the drilling rig builder to replenish finances strained by a collapse in oil prices, people familiar with the matter said.

Sembcorp Industries – almost half-owned by state investor Temasek Holdings Pte Ltd – is the parent of Sembcorp Marine which analysts said is at risk of writing off assets and cutting its full-year dividend.

“It’s quite clear that financial support has to come in and a take-private is one of the easier options, but ultimately there needs to be a long-term solution,” said one of the people, who were not authorised to speak publicly on the matter and so declined to be identified.

Sembcorp Industries owns 61 per cent of Sembcorp Marine which services an oil industry plagued by oversupply. The plunge in oil prices to multi-year lows has led to a drop in orders for rigs and cancelled contracts.

Sembcorp Industries could therefore benefit from selling the rig builder and focusing on its profitable utilities business, analysts said.

One buyer could be larger rig-building rival Keppel Corp Ltd, 21 per cent owned by Temasek.

“The natural buyer and a merger candidate clearly is the offshore marine business of Keppel,” said one banker, who declined to be identified.

“But the issue with any combination necessarily is that the upside there is cost-cutting.”

Bankers involved in the sector said a single domestic champion could make sense to counter competition from China and South Korea. However, the likely option is for Sembcorp Industries to take full control of its subsidiary.

Sembcorp Industries, Sembcorp Marine and Temasek declined to comment. Keppel, which is due to report earnings on Thursday, also declined to comment.

Order Cancellations

Since the beginning of the millennium, Singapore’s two rig builders have risen to dominate the global market for jackup rigs, which drill in depths of as much as 122 metres (400 feet). Sembcorp Industries and Keppel discussed a merger in 2001.

But with the drop in oil prices, Singapore’s US$10 billion rig building industry faces a dearth of new orders, while some orders are at risk of cancellation.

For instance, the bulk of orders at both Sembcorp Marine and Keppel are from Sete Brasil, an indebted affiliate of state-run Petroleo Brasileiro SA Petrobras. Sete Brasil has paid neither since late 2014.

Both Sembcorp Marine and Keppel are trading at their lowest valuations in at least 13 years, Thomson Reuters data showed.

I have Plife reits too, the only green counter in my portfolio today

See those in bold? tells you this ANALyst know squat.
These are the vessels most hurt by low crude prices. No one is going to invest in these vessels when oil price is low and you have Onshore facilities churning out 1.5mil barrels in excess of demand daily.

PLife seems to be holding-up well,... FY2015 reporting on Jan 26th., 2016,... we can get a better idea of its resilience from there....

I agree with both of your points 1. and 2., hence, the close observation that I need to put in in times like this,... the quality of properties will decide if the REIT has pricing power and is able to hold its rent or increase rent in times of economic slowdown. Being in the healthcare industry is certainly advantageous in times like this, but again other factors may hamper the performance too, even if the entity happens to be in a defensive sector.

As for yield,... I do agree that it is important. However, the way that I look at things is : I don't focus on the yield of a counter in a direct sense, meaning, I don't hope for the yield to be high. What I hoped for is for the DPU to be resilient and for the market-value to be mis-priced. If these two attributes can be achieved in a positive sense, then, like I said earlier,... the yield will take care of itself, ie it will be high enough for me to buy-in.

It does not mean that if someone does not follow the yield path, then he should look at growth stocks and not value stocks anymore. An investor can look at an instrument in many ways.

Perhaps we are looking at things from different angles here, meaning you will start with the yield, then work your way downwards to the DPU, because like you said, your yield reflects the price you pay for a particular DPU.

For myself,... I focus hard on the DPU and the market environment which hits. The yield will take care of itself.

Well, the analyst did mention too that even if O&M earnings halve this year, a 20% ROE still deserves a healthy premium to book value. I suspect they still have remaining activities on other rigs besides the ones contracted with Sete Brazil, since they always mentioned that they will still be busy for the next two years.

KepCorp's reporting is on coming Thursday at 5.30 pm. Let's see what outlook that they have for this year, and if they will support the analyst's theory that there are still FPSO contracts out there, and if these contracts can be 'snatched' from competitors. Yes, I would agree that these high-value contracts should be almost none in the world by now. Maybe the ones that are available are more towards repair and refurbishment projects for these rigs, in preparation for the upswing in oil price.

Does your 1.5Mil barrels of excess oil daily include the contribution from Iran soon ?

First of all, the first thing to get hit in a low oil price reversal is the exploration sector. This means drilling rigs in general. If you happen to go to Labuan there must be more than 30 drilling rigs laid up there.

Busy for next 2 years? Sure thats what they said (to the media)?
Being busy in other things maybe like maintenance works. But these are low margin activities.
Certainly not offshore facilities like FPSOs, jackets, topsides,etc.
The projection for FPSOs is only like 2 in this region! In 2014, Keppel was like having 10 to 12 conversions in SG alone at a time!

Yes 1.5mil includes the 0.5mil from Iran. Saudi is doing 1mil excess daily now. All these are ONshore cheap production cost oil.

So in essence, the analysts have got the O n G fundamentally wrong.

whoever made money with stocks in the last year or so can pat themselves on the back.

Pat yourself on the back and say " Good job, all the money you've earned is now contributing back to the market."

Not really, overall, myportfolio is very much still in the green. What about all the dividends that I have collected last year ?

Just returned from the FY2015 AGM for Frasers Centrepoint Trust - overall,... very positive, and very confident. Worst performance last year was Bedok Point, and the mgr has plans to turn this around.

No mention at all of the current economic situation possibly pulling-down her performance for FY2016.

BUY !

My last purchase price was 1.815, still waiting the price to go down further a bit to add more.

I believe FCT is still a solid choice.

wow, good for you. How long was your portfolio? more than 5 years or 10 years already?

I think if one started in SGX 3 yrs ago, overall should be still positive

that, should be.

i entered sgx 2 yrs ago but only reits, still positive.

definitely very positive in rm terms.

the issue was 2015-now.

whether regular stocks or reits, i doubt anything bought in that period is positive at this time.

same with usa, hk, china, bursa stocks.

esp bad with oil/energy/commodities stocks.




the question is will 2016 be just as bad?

YCK,...yes, i.815 is a very good price. You should be in the green very much now for FCT. Congrats,...

Unfortunately, for me, I entered last year, and am currently in the red for FCT. But I'm not that worried though, I'll just wait for the price to dip, and to target properly before averaging down.

Yes, as to what AV said, chances are those counters bought last year would be in the red now,... spot-on,... I'm a very good example of this 'red',...

AV,.. errm,.. not all are in the red,... YCK, for one, bought at very good prices for FCT,... he is in the green now for FCT. I observed that FCT's price is very resilient, it does not drop much. Really... no chance for me to average down these few months.

Well,...I hoped 2016 will be bad too,... so that I have a chance to average down. Otherwise, I'd have unrealised capital losses in my books,...

Based on my tracking since I first researched on and studied this counter, the divvy payout for the previous corresponding quarter in 2014 was 2.75 Cts per unit. For the same quarter in 2015, the divvy has been announced on this evening to be 2.87 Cts per unit, hence, the DPU growth is 4.4%, y-o-y.

......even during the tumultuous times of 2015, so,...what the board claimed this morning, that the economic conditions in 2015 has not affected FCT is proven to be true. The DPU has even grown for the same corresponding period compared to 2014.

This post has been edited by Hansel: Jan 21 2016, 07:58 PM