Recent Actions - Plife Reit/SPH/FCOT

I made some small divestments for Plife Reit and SPH in my portfolio today.

For Plife Reit, I have sold off 3 lots at a market price $2.54. Based on my average purchase price at $1.85 which I bought in Sept 2012 and including 3 rounds of dividends which I have received in Sep 12/Jan 13/May 13, my gains would be at 41.6% over the course of 10 months.

For SPH, I have sold off 1 lot at a market price of $4.39. Based on my average purchase price at $4.29 which I bought in Jun 2013,, my gains would be at 2.33% over the course of  a month. SPH remains my top 3 holdings in my portfolio with 6 lots.

On the buy side, I have gone long on 11 lots of FraserCommTrust (FCOT) at $1.35. Based on this price, the yield for the stock would be around 6.5%. The stock will go ex-dividend tomorrow and I will be entitled to the dividends at $0.02185/share. The reason I purchased FCOT at this time is because it has reported impressive results recently and I foresee the office rental to trend up further (currently at ~ $7/sqfeet) within the next year or two. Though worries of supply is surrounding the office sector, the improving economy and the B-grade sector should see an improved rental for their office in the next 2 years.

McDonald's way of Money Management Practice

So you've heard of Mcdonald's latest gift innovations? No, I'm not talking about the Hello Kitty nor the Minions. I am talking about the Mcdonald's way of practicing money management skills.

If you want a latest of the guide, you may download them via pdf:

http://www.practicalmoneyskills.com/mcdonalds/documents/McD_Journal2.pdf

"At Mcdonald, every day and every dollar makes a difference"

 

Boustead AGM - 26.07.13

This evening's Boustead Annual General Meeting (AGM) was held at the Roxy Square and as I happened to attend this event, I would like to summarize and recap what has been discussed to fellow and potential investors who might be interested in the company.

 

This is also my first time seeing the Chairman of Boustead, Mr. Wong live in person. He seems to be very humorous, joyful, fun and light hearted towards the shareholders. Definitely one of the more fun-going Chairman I have witnessed in the AGM.

 

Without further a due, we'll begin with the Q&A sections of the EGM and AGM.

 

 

 

As the EGM was scheduled ahead of the AGM, the one and only resolution was to pay in scrip-dividend method. One of the queries asked was why Boustead continued to elect for a scrip-dividend when its take-up rate is low and which may take up unnecessary admin costs. The reply given to this from the Board was that the admin fee costs are very minimal (<S$10K), but they would consider to cancel off the scrip-dividend method in the future if response are unfavorable.

 

The next question relates to the Real Estate division and as expected the query for REITS came out. One of the shareholder asked about the direction Boustead is going to take the Real Estate division moving forward - whether the company is moving into the direction of building a non-industrial design facility to sectors like Rolls Royce or building industrial properties to have it eventually inject into a REIT. Mr. Wong responded by saying that the company would still take up contracts unrelated to industrial design because of its attractive returns. As for the REIT, the one thing Mr. Wong had regretted about it was that Boustead had sold industrial properties to Mapletree group in the past, only to have them listed as what investors now known as the "Mapletree Industrial Trust (MIT)" with former Boustead industrial properties. If they had set up a REIT back then, he would have not sold off its properties to competitors in order to raise cash.

 

The next question to the Board was at which direction and profit margin is Boustead going to focus on its 4 core businesses in the next couple of years. Mr. Wong responded by saying that the Energy Related division is always going to be the drive for Boustead and foresees a growth of 10% year on year on the Energy related division. As for the Water & Wastewater Engineering division, order book has been piling up but margins are low and competition is higher, thus resulting in a low growth division compared to the other 3. The Real Estate division is tricky because it depends on the lumpy orderbook but just having said this, Boustead has managed to secure a mega $100m contract for Seagate which is something the company can look out favorably for. The company is also in the midst of negotiating a couple of other mega contracts in the process.

 

There was also one shareholder who raised the question on gain/loss on available-for-sale investments on Notes 31 of the Annual Report. The Board responded by saying that the company has invested in an Australian-listed stock and made a minor gain realized on its books. IMO, I'm quite unsure why Boustead is moving into all these share investment. Is that even necessary at all?

 

The next question was raised on the Libya project. Whilst the total project and losses are already written off in the book, the company is still in the midst of legal claims sued by banks on non-performing loans. If find liable, the company will have to pay off $28m for the claims. The Board however, assured investors that the company is most likely to win the battle and with that they did not make any provisions to their books.

 

Last but not least, Mr. Wong has assured shareholders that Boustead is moving into the right direction with all the growth related divisions making good progress over the last couple of years. The huge pile of cash Boustead is holding right now will be invested in a low risk blue chip bonds such as CapitaLand and Biosensor. When opportunity arises, Boustead is going to reap its rewards from it.

 

I haven't been able to summarize all the discussions over the AGM but hope I have put out the overall picture there. Boustead isn't the easiest business to understand (you might disagree with me) and with lumpy contracts, earnings are not going to be easy to project and recurring. For fellow shareholders who went to the AGM this evening, appreciate if you could share more on the discussion on Boustead.

 

*I apologize if any of the above stated is incorrect.

FCT - Another Record DPU

FraserCenterPoint Trust (FCT) announces its Q3 FY2013 results on strong operational performance with record-high gross revenue and DPU.

 

 

 

Gross Revenue and NPI

 

• Q3 2013 gross revenue grew 12.4% year-on-year to a new high of $39.97 million, while NPI rose 15.4% year-on-year to $28.5 million.
• This growth was bolstered by higher contributions mainly from anchor CausewayPoint and Northpoint.
• Growth factors include higher occupancy after completion of AEI, positive rental growth, higher turnover rents and improved car park income.

Balance Sheet

• Balance sheet remains solid with gearing level stabilizing at 30.4% as at 30 June 2013.
• Effective interest rate is at 2.72% (higher than SPH Reits which stands at 2.35%) on its average maturity term at 3.10 years.
• Interest Coverage is at 6.25x and one of the better performer amongst all other REITS.

Portfolio Occupancy

• Overall occupancy improved from 98.2% to 98.4%.
• Best performers are CausewayPoint and Northpoint - both which attributed the most to the NPI.
• Yewtee Point occupancy are dropping to the low 90s%.

Outlook

• Substantial portion of leasing for CausewayPoint and Northpoint are subject to lease renewals in FY2014 and FY2015. These two accounted for 76% and 79% of the total gross rental revision.
• Higher lease rentals are expected to match the recent AEIs completed for both occupancies.
• Suburban malls may face competitions from the likes of recent suburban malls built - Bedok Mall, Seletar Mall, JEM, etc.

My take

 

I think the active management approach from FCT are contributing favorably to its investors. Two of the most contributor to the NPI - CausewayPoint and Northpoint are subject to lease renewals within the next 2 years. Assuming the same rate they are leasing, investors can expect a steady 10% growth on its DPU. Dr. Chew, CEO of FCAM, mentioned that investors can take good heart from the fact that two of the largest contributing malls are expected to underpin FCT's performance going forward.

 

I don't think the acquisition for the Changi City Point will happen anytime soon. I think the management will take a cautious approach towards stabilizing the NPI and DPU growth, which is what they are good at. With the bulk of the debt maturing in FY2016, the management will want to make sure that this is tackled first before including FCT 6th malls into its portfolio.

SPH Reits Results - Unsuccessful IPO Bid

The results many investors are awaiting for is out finally. As expected, both the public and private tranche were over subscribed by quite a number.

 

 

 

 

At the lower bands, the chances are actually greater than the higher bands by quite a bit, which is why the percentage of total number of units are slightly skewed to the left. If you are one of those who bids 1 to 49 lots, chances are you are more likely to get them as the percentage is more than/equal to 50%. I think with this result, we could see lesser people trying to flip tomorrow when market opens as they were only allocated 1-3 lots, which does not make it worthwhile to flip them.

 

I am, of course, writing this as one of the unlucky people who was not successful in the bids. My intention was of course to flip this quickly to make short term profits. With FCT and Starhill leading the retail packs to report good results today, we could see SPH Reits doing really well tomorrow on its first day of trading.

 

Good luck to all successful investors of SPH Reits.

 

Recent Action: Ascendas Reit

I divested my Ascendas Reits at S$2.35 today, after buying them at S$2.17 last month. This is my first capital gain of the month, considering that the market has been volatile recently. Including a dividend of S$0.0355/share (the stock has gone ex-dividend on 22/7), I have locked in gains of around 10% over a period of slightly more than a month. That's not too bad in my opinion.

Ascendas Reit has recently reported good numbers on its latest results and this trend is set to continue given the management statement that further AEI can be expected in the next set of results. My only worry stems from further QE tapering news again which we may hear from the Feds. Within a few months, we've seen Ascendas hit as high as 2.80 and as low as 2.08 recently. Selling at S$2.35 on market strength today certainly gives a little room for profit taking and realized profits on the pocket. Should the share revisit my buying price again in the short-term, I would be a buyer again.

SPH...OUE...And now Boustead next to venture into REITS

Boustead Singapore is getting ready to venture into the next hottest phenomenon out there....REITS. This news came out after the successful listing of the recent SPH and OUE Reits.

 

Mr. Wong, Chairman and CEO of Boustead Singapore, is determined to press on with the idea of creating a REIT, where he believes will benefit the shareholders of Boustead Singapore through capital recycling and corporate tax savings on the dividends.

 

 

 

"We don't need an external partner to do it, but we are looking for a partner to share risk and help us build our portfolio"

 

"Finding yield-accretive acquisitions is more difficult, with yields going up. So, this will play to our advantage"

 

"We are the pioneers in Singapore for industrial properties leaseback . With our design capability and leaseback model, we will be able to continue to create a pipeline"

 

"Our competitors don't have the expertise. They just make acquisitions and float them. They make money because they are good managers, but they have no pipeline".

 

At current price, Boustead is trading at a 5% yield and 11 times forward earnings. NAV stands at 60 cents. The company is scheduling its AGM on the 26th July 2013.

 

 

"When HE buys, I buy too..."

Should you follow to buy the shares of a particular company if the CEO or Director of the company is buying the company's shares? The idea that insider trading activity may signal some sort of bullishness may be true. After all, they know well enough about the profits and loss and the direction of the company better than normal retailers like us. They have the most up to date information and companies' prospect much earlier before the flow of information goes to the public.

But before you follow blindly, here are some things to look out for in such situation:

• Employee stock options or awards- You need to examine carefully whether these insiders are buying the shares in an open market transaction or via employee stock awards. Most Directors level and above are granted stock options as part of their compensation package when they joined the company. These stock awards can only be vested upon exercising a certain number of years within the company. The former option (i.e purchase via open market transaction) is a better assessment of the bullishness relating to the prospect of the company.

For instance, CEO of First Reit, Dr. Ronnie Tan, has been purchasing its shares via open market transaction consistently in the recent months.

Director of Elec & Eltek, Mr. Chan, is another who has consistently been buying its own shares via open market transactions in recent months.

• Vote of Confidende - In times of bearishness, we may see CEO buying their own company's shares in order to give the investors a vote of confidence as well as providing support to its falling price. This is almost the same indication as a company's share buyback purchase which aims to provide support and reduce outstanding shares in the market whenever good opportunity arises.

Noble Group Chairman, Mr. Richard Elman, bought its own company's share price at a dollar during the recent down market in order to provide support to its price. Unfortunately though, it did not succeed and the shares continued to drop amidst the purchase from the CEO.

• Long term committment - CEO/Directors buy shares of their own company because of a long term committment. They usually have a longer time horizon than most retail investors and so are better at achieving equilibrium throughout the bull and bear market cycles.

To conclude, insider activities are easy to track due to the mandatory disclosures but hard to crack. As with all things in life, no one can guarantee that you will make profits by following these transactions solely. However, combining these factors with some diligent research, it will bring you a better decision on whether you should invest.

"Jul 13" - SG Transactions & Portfolio Update"

Counters	No. of Lots	Average Price (SGD)	Total Value (SGD) based on average price	Market Price (SGD)	Total Value (SGD) based on market price
FraserCT	25	1.87	46,700.00	1.925	48,125.00
SPH	7	4.18	29,310.00	4.29	30,030.00
Vicom	6	4.84	29,060.00	4.77	28,620.00
First Reit	10	0.89	8,900.00	1.205	12,050.00
Ascott Reit	9	1.305	11,745.00	1.33	11,970.00
Neratel	20	0.46	9,200.00	0.82	16,400.00
SembCorp Ind	2	5.44	10,880.00	5.11	10,220.00
Boustead	7	1.15	8,050.00	1.36	9,520.00
PLife Reit	3	1.85	5,550.00	2.40	7,200.00
Ascendas Hosp. Trust	7	0.89	6,250.00	0.85	5,950.00
Second Chance	12	0.43	5,160.00	0.44	5,280.00
Ascendas Reit	2	2.17	4,340.00	2.24	4,480.00
Noble	4	1.02	4,080.00	0.905	3,620.00
QAF	3	0.71	2,135.00	1.03	3,090.00
Total SGD			181,360.00		196,555.00

I am getting closer to my goal of S$200K this year in my stock portfolio and this is due to a combination of stronger market, profit-taking, reinvested dividends and picking out winners.

 

For this month, I've accumulated more of Vicom and FCT due to the recent small market correction we had in the month. I thought the price for both wasn't extremely cheap to buy, even with the market correction, but it was reasonable. After all, my plan is to even out the purchase and picking out companies with strong balance sheet and good management. If it gets cheaper, then it becomes a bargain and I will accumulate more.

 

I also accumulate more Noble this month after a more than 10% dip in the last few months. The reason why I purchase it during this time is because I believe the issue with Noble is a cyclical market issue with its commodity price which will improve over time. Unlike with Vard, which I happen to dispose all this month, I trust and like the way the management for Noble operates and believes it has the experience to turn things around. I certainly hope I will be rewarded as a long term shareholder.

 

This month we will see a lot of companies reporting their earnings for the quarter. And that means that many companies are going ex-dividends and dividends are coming in again!!! I just love the way my current cash-flow is running right now and letting compounding works its magic ;)

Student, 14, gets BMW for junior high graduation

We see more younger and younger generation these days gets spoiled by parents. This is another one of them.

 

"Did you receive a gift after completing your Secondary 2 exams?

 

Even if you did, you would have probably would have been rather grateful with a vacation as a reward.

 

However, Tariq, a 14-year-old who just graduated junior high in Palembang, Indonesia, received a car, a BMW 1 Series, which his father paid for in cash, he proudly told the website Indoboom.

 

The young teen chose the particular model because there is only one other unit in the whole of Palembang.

 

While he's still being chauffeured to school as he is not allowed to drive the car, he has already spent US$21,200 (S$ 26,798) pimping his ride up with accessories from Germany."

 

 

Riding on the strengthening of the USD impact on companies

As the news of the tapering of the QE begins to roll out, many investors are cautioned that interest rates may somewhat increase sooner than later. One potential result out of this is the strengthening of the US Dollars, which have been declining since the Fed announces the beginning of the QE in 2010. You may think that the impact on the exchange rate on a company's margin is immaterial. But that is often not necessarily the case. Investors need to understand the effect that exchange rates can have on the financial statements, especially if the company you are investing have its earnings or costs denominated in USD.

 

 

 

One company which will benefit from this strengthening of the USD is ST Engineering. Based on report from UOB Kay Hian, every one-cent increase in the USD will lead to about $20 million increase in revenue and $2 million increase in Profit Before Tax (PBT). As ST Engineering has a hedging practice in place as usual, the impact is minimal.

 

Another beneficiary of the strengthening of the USD is SIA. Based on the report from UOB Kay Hian, a 1% increase in the USD would raise SIA PBT by 8.5%. That is a huge impact on its earnings. I wonder whether SIA has a hedging tools in place at the first place knowing that their earnings would be very much impacted by the foreign exchange movement all over the world. Surely, they must have put this into practice already.

 

Venture, SIA Engineering, HPH Trust and Ezion are some other companies I can think of which may benefit from the appreciation of the US Dollars. Can you think of any other companies?

Is it possible to hit S$100K on your portfolio by the age of 30?

Today on Sunday Times, there is an article on whether it is possible to hit S$100K on your portfolio by the time you age 30 years old. There have been some intense discussion on FB on whether this is plausible or not, and to most extent external factors such as the age you start working or the income you earn do play a part in it. To me, it is possible and I am going to list a few of my fellow blogger and friend's stories who have been there and done it.

 

Drizzt - ~ Blogger of the widely known investmentmoats earns S$4k/month on his active income. He is currently single and saves 50% of his income which translates to about S$2k/month or S$24k/year. His investment motto has always been on good investment moats companies with decent risk vs reward yield returns. Extensive research was done on the companies he purchased which he often shared on his blog. He has managed to hit a 6-sum portfolio figure by the age of 30.

 

Uncle CW888 - An experienced investor who has been through multiples bull and bear cycles of the stock market. His resilient buy and hold picks on some of the biggest conglomerates such as Keppel, DBS and SembCorp over the past 10 years have earned him huge returns on his investments. He chooses to focus on a few stocks in his portfolio but monitor it closely with his eagle hawk eye everyday.

 

SMOL - A carefree man who is currently on a sabbatical leave from work (I've always envied him). At 42, he has gone through the bull and bear cycles of the stock market and is someone who has a vast investing experience and not shy from sharing his experience with the others. Again, he is someone who has been there and done it before.

 

AK71 - Another popular blogger who has earned 6-digits of passive income per year but choose to live as frugally as ever. He often blogs about how reducing your expenses in addition to managing good portfolio income is often a sure way of achieving financial freedom. He should have bypassed a 7-digits portfolio by now.

 

DW - His blog name says it all. A blogger who has achieved high personal success from investing in REITS and dividend paying companies. Through his dedicated investing in income yielding companies, together with his frugal savings attitude, it is always cashflow coming in rather than the opposite.

 

Mr. IPO - A blogger who uses his SRS fund to purchase good stocks which yields income. Not only does he manages to earn the returns from his investments, the SRS funding has also allowed him to reduce his overall taxes on it. Definitely something to consider of.

 

To achieve financial freedom, the beginning is always the hardest. But one traits in common which all the above blogger had achieved and successfully done is that they have "started" on their journey. Never say never in life and never count luck out of your way, for a dream can become a reality in a matter of a lifetime. Have you started on your journey?

Anti-theft lunch box

Are you the type that brings your sandwich or lunchbox to work but afraid it will get stolen?

 

Afraid no more. You may now purchase this anti-theft lunch bag below.

 

Anti-Theft Lunch Bags are zipper bags that have green splotches printed on both sides, making your freshly prepared lunch look spoiled. Don't let a sticky-fingered coworker or schoolyard bully get away with lunch theft again!