MIT 3rd Largest Tenant Cyxtera gone Bankrupt!

As mentioned in my previous post on Headwinds for Mapletree Industrial Trust (MIT):

Headwinds for MIT (Hint: Cyxtera Technologies)

This news has now been announced with MIT's 3rd Largest Tenant Cyxtera Technologies entering the Chapter 11 Bankrupcy process

https://www.straitstimes.com/business/mapletree-industrial-trust-s-3rd-largest-tenant-enters-us-court-supervised-chapter-11-bankruptcy-process

Cyxtera has contributed 3.2% of gross rental income for MIT as at 31 March 2023. While blue chip MIT boasts of a well-diversified tenant base, this negative news would inadvertently be a drag to its share price

With prices closing in to short-term Oct22 lows of $2.13 and long-term Covid Mar20 lows of $2.10, hopefully these price supports would hold the sellers at bay.

Bearish trend continues with the purple weekly MA50 sloping downwards and even acting as a resistance point in Apr23.

Other affected reits included Digital Core and Keppel DC, all putting up brave fronts to soothe shareholder sentiments.

It only goes to show that with new seemingly lucrative Data Centre businesses, risks do abound with every new investments that are outside of traditional property strengths of Reits.

Also with rising and persistant high interest rates, MIT and Reits being highly leveraged companies, will continue to face strong headwinds in the months ahead.

What are some of your thoughts of MIT moving forward? Let me know in the comments section below

Disclosure: I am currently vested in MIT  😅

Bounty May Dividend $26,191

 

The month of May saw a bountiful amount of dividend $$$ as many companies close their Financial Year and distribute their profits to their faithful shareholders 😎

Apart from taking some profit from Sembcorp Industries and nimbling Wilmar, UOB and tbills, it was quite another boring month *yawn*

See also:

Uneventful Apr $8,437

On Target for 6-Figures 2023 Income

My 7-Figures Singapore Portfolio

Also looking at the S&P500 and USA Debt Ceiling, which is approaching the final line. I entered a buy queue for IVV.US at $410 but was unsuccessful. On hindsight, should have been more decisive in buying up the S&P500 index, as the US markets seem amazingly strong, considering the many political and social issues that they have. I guess though democracies have its cons, at least we are able to openly see these issues, as compared to other closed autocratic countries. In the long run, these issues should iron out through the system, though not perfect, for the economic success of US to continue over the next decade

Coming back to Singapore market, as usual kiasu investors are probably jittery over US defaulting and the lack lustre China reopening data. UOB and DBS banks retrace back to their short term supports of $28 and $31 respectively

Could not resist nimbling abit due in part to boredom 😂 and to hopefully earn some kopi money to exercise my brain. Another interesting thing is that I have started to also use Yahoo charts instead of InvestingNote and other brokerage account charts, as their share prices are adjusted for dividends/rights etc. As I consider dividends as part of the opportunity cost of owning a share, would prefer these price levels to be unadjusted as the original share prices

With the upcoming month of June, hopefully things would be more interesting and profitable in the weeks ahead!

T-Bill 3.78% vs HSBC EGA 4.55% (May 2023)

The latest t-bill BS23109E has been a respectable 3.78% for our hard earned monies 😂 Was actually expecting it to be slightly lower at around 3.5% as some of the new CPF monies pour into this t-bill auction for the new month of May, so as not to lose another additional month of CPF interest for April. Seems more people are bidding the t-bills more sensibly now, which benefits more people in the long run. 

For me, I have not been bidding t-bills for a few months because of the new HSBC EGA account which I have opened in March. With the EGA account moving to the 3rd month, I will no longer be eligible for the extra 1% Everyday+ Rewards. Still it's a respectable 4.55% slightly higher than the current t-bill of 3.78% yield. Probably it's time to look for a better yield instrument in the month of June.

HSBC 5.55% EGA Savings Account

The month of June brings some volatility as the USA Debt Ceiling croaches near, and political brinksmanship comes into obvious play. It's just concerning that Parties become more important than Country, as Right vs Left idealogy clash. Still I hope that at the end of the day, clear minds prevail as both sides agree that Default is not the option. 

Maybe this could be good opportunities to buy into local bank stocks or S&P500 index. Savings account and T-bills should just be temporal sandbox to park our excess funds to capitalise on better investment opportunities. With core inflation at 4%, it basically just matches the current purchasing power of our cash today. To build wealth, unfortunately we still need to do some calculated risks to overcome high inflation moving forward.

The local bank stocks have been feeling jittery over the upcoming USA debt limit, and are showing first signs of pullback, as usual from kiasu Singaporean investors 😅 S&P500 instead is still holding pretty well. Let's see if next week brings more volatility. I recall hearing some Economist from Bloomberg stating that usually investors tend to react 2 weeks before the deadline, as in 2011 when USA credit rating was downgraded from AAA.

USA Republican Convention

Can only pray for true Leaders to rise up and save the political situation! 😇

Headwinds for MIT? (Hint: Cyxtera Technologies)

 

Mapletree Industrial Trust can be considered as one of the blue-chip Reits of Singapore. Part of the reasons include a strong govt linked sponsor, well established history, diversified portfolio of properties in Singapore and USA (which includes lucrative Data Centres).

It recently announced a slightly disappointing Q4 & FY22 results, which saw a slight dip to 3.33c in DPU. As seen from the chart below, MIT had a previous solid history of increasing DPU since FY10, with the exception of FY20 due understandably to Covid pandemic, though it has since recovered strongly to increasing payouts again. However in recent years of FY21/22, we are seeing a plateau and even worrying decreasing trend of falling DPU. Are the best years of MIT over?!

Of course with the previous 9 interest rate hikes since Mar 2022 till now, Reits being a leveraged business is not spared from the increase interest rate expanses to its loans. Though 75% of its debt is in Fixed rates, the impact on DPU can still be seen with the increase in base interest rates. To be fair, no one would have honestly thought in early 2022, that the USA Fed would increase the interest rates so quickly and so frequently.

Another area of concern could be with MIT's 3rd largest tenant (3.2% rental income) rumoured to be Cyxtera Technologies. Even MIT CEO commented on the 2023 outlook to be "a challenging year with increased risk to global financial stability due to the banking crisis and geo-economic fragmentation."

Conerns of Cyxtera Technologies:

1. Posted US$355M loss for 2022 and cancelled earnings call amid ongoing efforts to extend maturing debt

https://www.datacenterdynamics.com/en/news/colo-q4-2022-results-cyxtera-posts-a-355m-net-loss-for-2022-cancels-earnings-call/

2) Moody's downgraded Cyxtera from B3 to Caa2, rated as speculative grade investment of  poor quality and very high credit risk

https://www.theedgesingapore.com/news/reits/cyxteras-long-term-debt-us853-million-matures-2024

3) Price of Cyxtera plunged from $15 to just $0.325! (Nasdaq: CYXT)

Looking at this scary price chart below, it seems the company is heading towards Chapter 11 bankrupcy filings

Do u have any thoughts or insights to Cyxtera or MIT? Let me know in the comments section below 😅

Disclosure: I am currently vested in MIT  

Buy T-Bill when Inflation is 6%?

 

There has been much talk about T-Bills for the past few months, as High Inflation & Interest rates surge globally. Singapore being a small global city is also not spared with the large winds of financial change. Headline news of High Inflation continue to bombard Singaporeans in everyday lives. But with inflation hitting 6%, is it worth investing in T-bills of around 4%?

https://www.straitstimes.com/business/singapore-core-inflation-holds-firm-at-55-in-february#:~:text=The%20official%20projections%20for%20the,per%20cent%20from%20Jan%201.

To try to answer this financial question, I guess it depends on what u are comparing it against and the timeframe. There is hardly anything that is absolute and everything is relative to something. In science, distance measurements are relative to origins and even time is relative to your frame fo reference, accordingly to Einstein's theory of relativity.

Math will tell u that 4% - 6% is equal to negative 2%, which mathematically means it's not worth it to invest as u would be losing 2% of your money value in a year.

However many things in life are not a simple straight line. Because it depends on what u would have done seperately with your money if it is not invested in T-bill. Would u spend it instead on a luxury bag for example? Hence getting a negative 6% return 😂

Or would u do nothing and left the excess cash in the bank earning 0.1% interest? Or put it into HSBC savings 5.35% or RHB Fixed Deposit 3.9% promotion!?

HSBC 5.35% Savings Account Promotion

RHB 3.9% Fixed Deposit Promotion

Or is it just a Bond Ladder placeholder to capitalise on better % Investment Opportunities?

S&P500 ETF

Is Wilmar at 3.94 a Good BUY?

Everybody's financial situation is unique and different, and there are many priorities that demand our everyday attention. Some find joy in shopping, like my wife and daughter, while I find joy in making them happy 😍  May we all choose to spend our time and monies wisely!

UNEVENTFUL Apr $8,437 *yawn*

 

In medical terms "uneventful" can mean a slight positive event. For example, the surgery  operation was uneventful. Which literally means nothing much extraordinary/unexpected happened throughout the surgery. 

The markets in April, were mostly sideways with low volume, plus my family was also down with Covid of mild symptoms (thank God!) So apart from collecting dividends from DBS, ESR reit and Bonds, there were really not much interesting activities (*YAWN*). Still that's kind of the beauty of a semi-passive income, where invested money works on its own to provide returns, while u are busy with other aspects of life and family.

7-Figures Singapore Portfolio

6-Figures Income

With a long weekend ahead and few days left in April, I easily tabulated my $8,437 gains (gave thanks) and look forward to a hopefully more profitable month of May ahead 😎 Though the saying goes to "sell in May and go away", this effect has been slowly waning as more trades can be done online even while away for summer holidays.

Personally, I think the USA markets seem to be slowly turning positive, with the S&P500 Moving Averages MA50 currently sloping upwards. Hopefully some good corporate earnings will act as a catalyst to start the ball rolling, as Interest Rates seem to have peaked. With positive USA markets, Singapore should follow slowly after. The Singapore market is usually the boring kiasu type 😂

Still if u have any interesting large/mid cap stock that u are looking at, pls feel free to comment below. Thanks  😊

FoxNews $787M Disinformation!

The USA court trial of Fox News vs Dominion ended with a settlement of $787M to Dominion Voting Systems. With this settlement, it spares Fox News the embarassing witness of its famous executives and news achors from standing in court to explain their intentions and actions taken. It is easy to lie in public (citing freedom of speech), but much more difficult & expensive to lie in court. Responsibility does need to go hand-in-hand with Freedom/Power. Remember this famous Spiderman quote "with great Power comes great Responsibility"?!

Misinformation vs Disinformation

Misinformation is false/inaccurate information. Disinformation is false information which is deliberately intended to mislead. The spread of misinformation/disinformation has affected public health (think Covid vaccinations) and  even how countries are run (election results/politics). It's scary to think moving forward, that half-truths are going to shape how many people think/react. Information War is becoming very real indeed!

As Investors, how we read the headline Financial news becomes very Important, as what we Think translates to what we Do. Modern day news tends to scream for our Attention, with big Bold words and Exclamation marks! Sieving through the rumours from the real stuff becomes a challenge, where some mistakes will be made, some learnt through painful experiences, and ultimately continuing bravely forward. Sticking on to our personal financial plans & convictions in certain Stock purchases, or reversing course and cutting loss, happens all in our Minds.

Personal Psychology plays a big part in investing. Containing Fear vs Greed are two keys emotions that need to be kept in good Control. Only by better understanding oneself, can we be better investors and as individuals 😊