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May 2023 Portfolio Updates

Portfolio allocation as of May '23.

• SG Shares: CDG, DBS, Haw Par, SGX, Valuetronics

• SG Reits: Syfe Reit+, DigiCore Reit



May was an excellent month for capital deployment - making up for the lack of portfolio activity in April. For ETFs, I bought 2800HK and SCHD. I initiated a new position in Haw Par ($9.35) and averaged down on Valuetronics (avg. $0.53). I also continued my DCA into Syfe Reit+. 

Valuetronics reported positive results this week and announced a dividend of 0.20HKD, which includes a special dividend. The company holds $0.41 per share of cash and with a share price of $0.53, gives a 77% cash to market cap ratio. It has benefitted from higher rates, as interest income increased nearly 10x vs FY22. With an EPS of 29HKD, the ex-cash P/E ratio stands at 2.4x. The company intends to continue repurchasing shares as part of its 250M HKD buyback programme, and currently holds around 5% of total shares. I believe that as long as the shares trade below NAV of $0.56, share buybacks make sense and will benefit shareholders.

Haw Par is another largely ignored stock - it is mainly an investment holdco but has a healthcare segment which generates c.40M of profit before tax. Even if we exclude the healthcare segment, the holdings in UOB and UOL are worth c.2.6bn. With a further 334m in cash and 295m in debt securities (mainly SG T-bills), less 28m of debt, these add up to c.3.2bn, vs its current market cap of 2.05bn... that's a considerable discount. Of course there's a natural holdco discount applied, and the question of whether holding that much cash is efficient - but in a high rates environment there's a benefit to this as well.

At a portfolio level, my exposure to SG shares has increased considerably, thus I am unlikely to add to individual SG positions in the near term. Building steady dividend income continues to be the top priority, with a preference for ETFs to "buy-and-forget". As I posted yesterday, dividends YTD stands at c.1.6k SGD - working towards the 6k annual target but this is also largely dependent on the market.

Follow me on Instagram @alpacainvestments where I post more frequent updates!

FIRE musings

There was a post on the SingaporeFI Reddit community about "How do you stay motivated and not lose sight of the goal (to achieve FIRE)?".

Having embarked on the FIRE journey for more than a year, those negative feelings come to me at times, which makes me feel that the goal is far away and dreading the process.

I wrote my reply on the thread, reproduced below with the addition of some afterthoughts:

I totally understand what you're saying because I feel that way all the time too. Here are some ways I look to address those feelings:

Striking a balance between living in the moment and delayed gratification.

I think one of the misconceptions regarding FIRE needing to be extremely frugal. I think it's up to individuals to strike that balance between spending now so that you don't feel deprived of experiences (you'll never be in your 20s again), while staying on track to your longer term goals. As long as you spend reasonably and invest consistently, you will get there.

Having a range hobbies also helps as it takes your mind away from work, which already takes up most of your day. Given that once you achieve FIRE, you'd have way more time on your hands, developing hobbies that truly interests you now will reduce the likelihood of feeling "lost" once you've reached early retirement. I believe that there are many hobbies that are free or relatively low cost in Singapore - walks in the park, exercising, learning new skills and so on. Life is meant to be lived - live life, not work. 

Think of FIRE as a journey rather than a destination.

Some people see FIRE as the be-all and end-all, as if it will magically solve all problems. While I do believe that FIRE will eradicate many issues for me, at the same time I think it is important to build healthy relationships, develop hobbies and live life well, along the way to FIRE.

Not sure what's your FIRE number and timeline, but for example if I had a $5M Fat FIRE target by 50, I think I would definitely feel that is too far away. My view is to strike a balance between what's realistic and achievable, while also being able to enjoy life as soon as possible.

Personally, I feel that Barista FIRE is a good balance for me, and I hope to achieve it as soon as possible (ideally mid-30s). I think that once I achieve some form of financial safety net / financial security, I might be willing to take a pay cut to do something that I'm really interested in, and live that Barista FIRE life.

People often misunderstand me when I say I am pursuing early retirement, thinking that I'm aiming to retire to sit by the beach all day... In reality, there are many things I'm passionate about, and therefore I believe that Barista FIRE presents the sweet spot for me - I enjoy working, only on things that I'm truly passionate about, and I'd also rather work while knowing that there's no financial pressure, no unrealistic obligations and with full autonomy to say no to tasks that I feel are meaningless. In short, I see Barista FIRE as an ongoing journey which allows me to explore a range of "jobs", rather than a destination. 

All the best!

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