Wednesday 3 February 2021

Portfolio Dissection EP 2: Far East Hospitality Trust and Far East Orchard

Here is the second episode of Portfolio Dissection and today, I will be talking more about Far East Hospitality Trust and Far East Orchard who is the sponsor. In Singapore, Far East Organisation is definitely not foreign to us as they hold many major property developments and own quite a huge amount of land.

Before we deep dive in, let's have an overview of the stocks in my portfolio, so I covered Nikko AM STI ETF and SPDR STI ETF in my previous video and in this week, Far East Hospitality Trust and Far East Orchard.

Far East Hospitality Trust

So let's first start with Far East Hospitality Trust, I bought Far East Hospitality Trust before the pandemic happened so with Singapore being a tourism/medical hub, I definitely saw a lot of potential in the hospitality sectors as our numbers for tourism has always been substantial. Far East HTrust provides hotels and serviced apartments in SG. Their portfolio consist of 13 properties, 9 hotels and 4 serviced apartments.

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With many of it's properties being centrally located, demand would definitely be there as tourists would like those centrally located. However 2020 proved to be a tough year as travel takes a halt.

We can see that the total returns from 1st half 2020 compared to 1st half 2019 is worse by about 61% as gross revenue has also fallen.

Cash holdings have also dropped quite significantly as asset enhancement work were carried out at Village Hotel Changi, Orchard Rendezvous Hotel and Village Hotel Albert Court. As of 30 Jan 2021, I currently hold about 1800 units bought it at an average price of $0.61.

In the short term, Far East HTrust will most likely not see much improvement as tourism will still remain in low numbers but I will still be holding on to it.

Far East Orchard

So after purchasing Far East HTrust, I came across Far East Orchard which is the listed subsidiary of Far East Organisation in SG. Far East Organization is the largest private property developer in Singapore besides property, FEO is also a major shareholder (49.5% stake) of the Asian food and beverage group, Yeo Hiap Seng Limited.

One point that I like about FEO is that their dividend payout has been very consistent.

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In terms of their portfolio, besides the hospitality arm, they also have residential projects, medical centers and also student accommodations. I would think that the medical centers and student accommodations might be affected due to the pandemic but of course, depending on the location of the property, it might differ. As of 30 Jan 2021, I have holdings of 2500 units at an average price of $1.18.

Considering the current price of $1.10, I would think of adding more units but with no spare cash, I would still not buy in yet. I like SG stocks because of the dividends and Far East Orchard is one that I would hold on to.

TBH I hold a lot of different SG counters because when I first started, I was like on a shopping spree and just bought whatever I like, depending on the dividend yield or whether I thought the company was good, it was really random but for Far East Orchard, having so many properties on hand for them is an advantage and I believe in the long run, this is a good counter to have in my portfolio. Most of the positions in my portfolio are for the long term except for a few which I will cover in future. Hope you guys enjoy today's video, don't forget to subscribe and hit the like button!

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