Comparing Local Banks

Recently, Prof Aswath Damodaran has an video on banks valuations. In final part of his video, he compared US banks using serveral indicators in a table.

I compared our three local banks using the indicators in his table. I did not include the '% of assets held to maturity' as there seems to be little info on it in our local banks' statement and it is probably not material.

From the table, OCBC seems to be cheapest among the three banks, while DBS seems to be dearest due to its higher ROE (or growth). 

If I am interested to buy the cheapest bank, I will probably look at OCBC . Nonetheless, I am not buying bank shares now. 

Thoughts on UH Reit, KORE and Cromwell Reit

 United Hamsphire US Reit (UH Reit)

I started buying last year and added more recently.

Jun 2022	Initiate a position of X shares at USD$0.61
Aug 2022	Dividend of USD$0.025, 4.77% yield on $0.61
Aug 2022	Collect the dividend in shares at USD$0.55 price
Mar 2023	Dividend of USD$0.0297, 4.86% yield on $0.61. Incl Div in Aug2022, total 9.6% dividend yield
Mar 2023	Collect the dividend in shares at USD$0.485 price
Apr 2023	Add X/2 shares at USD$0.465
May 2023	Add X/2 shares at USD$0.43

My thinking is UH Reit holds mostly properties anchored by neccessities/supermarket. These tenants have long lease duration. Hence, its rental income is stable.

The downside is rising US interest rates. And the annual rental increase is likely small.

Its 2023 DPU should be lower, due to rising interest rate. This is likely priced in its current price. If interest rate continues to rise, its DPU will continue to fall. If Fed cut interest rate, its DPU should rise.

Keppel Pacific Oak US Reit (KORE)

Aug 2022	Sold all KORE position at USD$0.65, at slight loss
Mar 2023	Initiate a position at USD$0.37

It's an US office reit. As many know, US office reits are in trouble due to falling physical occupany, falling demand, higher interest rates and tighter lending requirements for CRE (Commercial Real Estate). People expects more trouble for office landlords down the road i.e. slow moving train wreck. 

The upside is that the above issues are likely priced in at its current price. If things are not going to get worse than expected, the current price is pretty ok to me. 

The downside is that things can get worse than expected. 

I will keep my position at KORE small, so that if prices fall further without permanant issues, I can add more. If there are permanent issues with KORE later, the losses will be kept small due to small position size.

So far, KORE office properties have held up better compared to MUST and Prime US Reit. 

Cromwell European Reit

Have not bought into it. 

Similar to US reits, it is facing rising interest rates. Unlike US Fed whose rate tightening is likely ending, the ECB interest rate is expected to keep rising given high Euro inflation and its interest rate is not as restrictive as US's.

We see how rising interest rates affect US reits last year. I expect that rising Euro interest rates will affect Cromwell similarly. 

Cromwell should be interesting to look at, when ECB rate tightening cycle is ending.