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Saturday, 31 October 2009

Cut loss on United Food and Ocean Sky, invested into Suntec REIT on 28 Oct 2009

United Food Holdings

Mistakes are mistakes, no matter how they are packaged. United Food Holdings is one of the most spectacular value destructing business on my portfolio. Starting with a huge cash horde which translates into a large cash per share, it can easily qualify as one of my best cigar butt. But as time go on, the management demostrated outstanding capability to drain it with seemingly failed but huge investments (land, soya beans).

Ocean Sky International

Unlike United Food Holdings, I did not classify Ocean Sky as a cigar butt in the beginning. However, just like any typical manufacturers hit hard by the falling orders due to the ongoing economic recession, they are driven into quarterly losses.

Suntec REIT

Looking at the falling office rents, sliding occupancy rates, Suntec REIT might not seem to be a good investment option. However, even at current dismal rents and occupancy, Suntec REIT already offer nearly 10% yield based 3Q DPU and the price I bought.

Going forward, I have reasons to be optimistic about rising rents, occupancy rates and hence DPU. Looking at the Prime Grade A Office Rental Trend posted in the 3Q presentation slides, rising and falling rents just mirror cycling economic trends. As such, once the economy regains firmer footing, the demand for office space and retail space will resume, and especially after the completion of Marina Bay financial centre and Sands IR that further bring more vibrancy into the area. But in the short term, rents and hence DPU for Suntec REIT could worsen before it get better.


I can choose to sit on United Food and Ocean Sky, especially the latter, and wait for them to recover with the broader economic situation. But going through my options, I see more potential in Suntec REIT than Ocean Sky, in terms of recovery.



Blogger Musicwhiz said...

Hi Market Uncle,

Just curious, what price did you manage to buy Suntec at? Seems you and me are now both shareholders of Suntec REIT.

Latest news is that it has been made mandatory for REITs to hold AGM from 2010, so I will probably be attending my first Suntec REIT AGM since I bought it at IPO back in 2004. Haha.


12 November 2009 at 00:29  
Blogger Market Uncle said...

Hi Musicwhiz,
I got vested at 1.18, not that far from you too :). anyway, my family just got a new member (my daughter), so I won't be able to update my blog as often I as hope to. But will still try to reply :).

Guess it'll be more difficult for me to attend AGMs now, cos I'll be saving my leave for my child, but will resume once she is more independend... until then..., i'll just have to read your blog and annoucements for updates. :)

12 November 2009 at 18:05  
Blogger Musicwhiz said...

Hi Market Uncle,

Congrats to you ! My bundle of joy also came this year, and she is now a few months old. I am relying on my wife and parents to hold the fort while I continue to work and blog as well. Haha.

Take care.


12 November 2009 at 19:15  
Blogger Market Uncle said...

Congrads to you too, Musicwhiz! I have support to hold the fort too...but need time to readjust... hopefully after a few months, can cope like you :)

13 November 2009 at 09:57  
Anonymous financialfreedom said...

I also lost a lot of money on Unifood.

Stupid was the first stock that I bought in my entire life..

16 November 2009 at 01:51  

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