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Showing posts from 2011

Reflections in 2011-2012

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Merry Xmas to all my readers!

It's the end of 2011 and a new 2012 awaits us. Looking back, I must say it has been a fruitful investment journey for me, primarily of 2 main reasons:

Passive income from dividends
I have reached my intended objective in regards to my monthly dividend. The rewards of buying into income-producing assets and earn extra money in bearish times. Build my dividend portfolio early via accumulation of shares, getting into a mix of companies & Reits that pay you quarterly, semi-annually and once per year.

Cycle forecast
I learnt that the planned cycle forecast may not be what I expect, in fact far off the mark. There should be a buffer in between based on historic data, discounted off the high and low over the past 3-5 years. Obviously, there will be some assumption involved when comes to hypothesis but the target price to sell could be adjusted when signs of trouble are brewing - one needs to be sensitive, talk to more people in the industries apart from bei…

Ho Bee earnings potential

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I have added on shares of Noble Group & Ho Bee to my portfolio.

Acquired Noble Group when share price was battered down heavily due to the resignation of CEO Ricardo Leiman and the company first quarterly loss in 14 years. Buy when there is fear and sell when there is greed!

Altough we are facing the eurozone crisis and China risk of default in loans, I am not sure how markets will react to Noble Group in the short-mid term. But I am prepared to average down when Noble Group is priced near to $1 per share. After all, commodities is cyclical and there will be a time the cycle moves upwards. We can review past historic movement from the available commodity indices.

On the other hand, I purchased shares of Ho Bee due to 3 key reasons:


1. Attractive Valuation

P/E is 2.87x using today's last done price of 1.25. P/B is 0.56x @ NAV 2.22 per share. NAV was increasing in the past 5 years but Mr. Market is not rewarding the business. Comparing peers and past historic P/E plus the fact th…

Top 5 trends in Asia

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Year end is approaching. In a blink of an eye, we will welcome 2012. New resolutions with new targets. The question is, which sector/s should I concentrate next?

Hence, I decide to consolidate the top 5 trends in Asia (as a snapshot) based on my personal opinion and forecasts.

* All investments contain a level of uncertainty and carry specific risks. Please seek your licensed Financial Consultant first before making your decisions.

1. Healthcare

As we know, in the past months, we have seen several acquisitions such as Thomson Medical Centre bought over by Mr. Peter Lim and Khazanah Nasional Bhd took Parkway Holdings private. In addition, Fortis Healthcare plans to be a dominant player in Asia. Companies are expanding and capturing market shares in the region.

Indeed, with better living standards and rising life expectancy across Asia, there is a demand for higher quality healthcare - a possibility where the need outstrips supply. The wealth of the Chinese & Indonesians are fast incr…

ARA Asset Management

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Last Friday, I divested GRP (I may buy in again) and bought shares of ARA Asset Management with a longer time horizon. At the moment, ARA Asset Management is trading to new one year low with P/E 15x. For me, I am planning to buy in batches and average down should the price of ARA Asset Management becomes more attractive.

About ARA
ARA Asset Management is an Asian real estate fund management company focusing mainly on the management of REITS and private real estate funds. ARA currently manages REITS listed in Singapore, Malaysia, and Hong Kong with a diversified portfolio of retail, office, industrial and logistics; private funds investing in real estate and real estate securities in Asia.

Here are quick 5 pointers why I chose ARA Asset Management:


1) Growth of Asian REITS
According to industry chamber Assocham, Asian REITS currently accounts for 10.6% of global REITS and expected to grow to US$500 billion in 8-10 years time, a projected figure of USS$100m billion from 2010. Majority of re…

The "buy & hold" mentality

I used to have this thinking that if one adopts the "buy and hold" strategy, our returns are superior due to the compounding effect.

While this is true, however, due to the complex world that we are living now, things can be unpredictable at times when the bear market comes. Your gains are wiped out completely or if not, in great drastic effect - for instance S&P downgrade of America AAA status causes worldwide markets to panic, the fear of a double dip recession, just 3 years after 2008.

When this happens, your equity (i.e. stock) can be way under your average/last purchased price when the indices fall. Unless your pockets are deep to average down, otherwise the emotional and mental aspect can impact you to a certain degree, no matter how much you try to convince yourself (hey, humans have feelings eh?). You start to see paper losses. You tell yourself it's temporary - after all market will shoot up. You start to seek advises from Professionals or re-affirm yourself t…

My 3 pointers on Man United IPO

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Manchester United possible listing in our local stock exchange has prompted me to share my humble 3 pointers from an investor point of view:

1) Paying off debts

I believe everyone knows that the reason for the listing is to pay off the huge debts incurred by the US-based Glazer family, the Owner of Manchester United. They did poorly in the debt management of the club ever since the takeover. Not least driving the club to better financial success; but pulling it down, causing unhappiness to the Manchester United fans who at one point of time want them out.

What do you think of the Glazer family as business owners of Manchester United?

In the name of reducing the debt, to put in a positive footballing sense, Manchester United is able to free up money for player acqusitions, so that the team can compete with fierce rivals like Roman Abromovich wealth-driven Chelsea, Champions League winner Barcelona and the star-studded squad Real Madrid, who form the popular and expensive club brands gl…

Buying Spree

Recently, I have purchased shares for:

Dividend
1) Sabana REIT - valuation and yield are attractive
2) New - Singapore Post

This should be in line with expanding my dividend portfolio.

Growth
3) New - Noble Group
4) Boustead

On the other hand, I have included Noble Group for my growth (short to medium term) portfolio, mainly due to commodities sliding down which present a chance to buy.

It will be interesting to keep watch on the global stock markets for the next few months, taking into account the events unfolding and investors' fear of the next recession, driven by a host of factors such as the unstable debt nature of USA.

Meanwhile, in times of crisis, opportunities come by and it's always good to have a ready war chest to maximize opportunities.

Not to forget the counters in your watchlist. I have kept a close tab on some stocks.
Remember - do not deplete your savings or emergency fund.

Happy Hunting!

Do you have a plan to maximize opportunities?

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Monday, 8 Aug 2011 - global stock markets hit badly after ratings agency S&P (Standard & Poor's) downgraded the United States credit rating, the first in history.

Tens of billions of dollars of value was wiped off the value of markets from Sydney to Hong Kong and Tokyo. Singapore's market was among the worst hit, nosediving by 3.7%. The Straits Times Index (STI) tumbled by 110.78 points to close at 2,884, a 13-month low. At one point, it had crashed by almost 5 per cent.

Panic investors are charging for the exit amid growing alarm the US is sliding back into recession although G-7 group of major industrial powers vowing to act decisively.

What does it mean to you, as a retail investor?

To me, on Monday, 8 Aug 2011, I view it as a buying opportunity and I load up more shares to my current holdings - Sabana REIT and Boustead.

One of my objectives by end this year is to increase my monthly passive income to a certain amount. Since I have sold MapleTree Industrial at 1.1…

Using ratios to assess my financial position

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If we analyze companies using financial ratios, I believe we can adopt the same concept to keep track of our financial health.



The personal financial ratios aim to serve as warning signals and help detect any deterioration in my financial position. And if situation arises, I can take any necessary actions such as altering my expenditure pattern or evaluate my goals.

Here are some ratios to use which I have classified them accordingly:

1) Solvency

Purpose - indicates the probability that an individual will become bankrupt
Equation - net worth / total assets
Implication - the higher the ratio, the stronger is my financial position
Warning bell - negative = insolvent

2) Liquidity

Purpose - measures my ability to pay off the short-term liabilities
Equation - current (liquid) assets / current liabilities
Implication - the higher the ratio, the stronger is my current financial situation
Warning bell - lower than 1.0

3) Savings

Purpose - measures the proportion of my income saved in a year
Equation…

Bought Sabana REIT

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Recently, I have added Sabana REIT to my passive income portfolio. According to REIT data (http://reitdata.com), a price of 0.905 fetches yield of about 9.7%. Attractive preposition to me if we compare all Industrial REIT.

A quick introduction - Sabana Shariah Compliant REIT is a Singapore-based REIT, established principally to invest in income-producing real estate used for industrial purpose in Asia, as well as real-estate assets, in line with Shariah investment principles.

Sabana REIT is the world's largest listed Shariah Compliant REIT and the first listed REIT to adopt stricter GCC-standard Shariah Compliance.

In addition, Sabana Shariah Compliant REIT distribution policy is to distribute 100% REIT taxable income and tax-exempt income, if any (after deduction of applicable expenses) for the period from listing date (26 Nov 2010) to 31 Dec 2012.

Distributions are made on a quarterly basis - 31 March, 30 June, 30 September, 31 December each year for the three-month period endi…

GE 2011: My comments post election

Firstly, congrats to WP! It's heartwarming to hear the opposition has won a GRC, for the first time in political history since GRC was formed.

Here are my key thoughts after the election fever has ended:

1. Before the election and over the past years, it is clear the young has already shown some discontent towards the ruling party for obvious reasons. The common medium used is via forums, social media etc.. but I am not sure if PAP realizes the impact fully or have they not really pay much attention to? It's a case of whether PAP has literally put a listening ear to the young, talking to them deeply and understanding issues such as purchase of new flats. Based on the voting results shown (of 60% psychological benchmark), perhaps one of the factors swinging away from PAP support is the young. Hence, the young should not be taken too lightly in the FIRST INSTANCE? Post election, PAP may have plans to win the young minds. How the PAP engages the young will be interesting to see f…

GE: Mr. Mah comments and my questions

Normally, I do not post other matters, apart from finance and investment. This is my very FIRST time. Hopefully, it will be the LAST. However, after reading the mainstream media today, I can't help but feel surprised about Mr. Mah Bow Tan comments, prior to our GE (General Election) results tomorrow.

Please read below and pardon me if I am voicing this out. I am just a normal goody-two shoes Singapore citizen hoping the best of our nation in regards to affordable public housing.

Case 1
Today Business Times quoted (Fri May 6) from Mr Mah in relation to the point from NSP that a 30 year mortgage period is too long. Mr Mah said that buyers can choose a shorter payment period if they want to. He further elaborate "look at the car parks. It's full each night....do you see only Suzukis and Hyundais? No. You see Mercedes, you see BMWs. So how is all this possible if our flats are supposed to be unaffordable?

I am appalled by his narrow-based comparison:

Point 1 - in the first plac…

Trend Investment

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To maximize the short to mid-term investment opportunities, it is interesting to ride on the next trend, just like the Singapore IR (Integrated Resort) story.

We are not talking about technical charts, neither following the hedge funds but industry/sub-sector trends. Years back, we communicate through letters. Technology advances and we have emails and now social media.

During the financial crisis, I was at East Coast and noticed a large number of idle container ships floating around. Now, you can hear the "poo poo" sound if you stay there, signalling that the cargo vessels are ready to move off. Good for the shipping industry as a whole.

So the question is this, "what is the NEXT trend that is going to happen"?


While this involves some element of speculation; nonetheless you can conclude and paint a visual picture in the future based on publicly available quantitative and qualitative information such as brokers' reports, newspaper clippings and other press rele…

Sold ICBC (1398.HK) at a small profit

I sold ICBC - Industrial Commercial Bank of China (1398.HK) at HKD6.68 on Thursday, the day before Good Friday as it climbs up higher based on the charts. Take profit first due to the short term volatility.

This will be my 3rd time trading ICBC - at a profit. A good counter to trade in HKSE.

Still, I remain optimistic on Chinese state-owned banks, primarily the international expansion of ICBC pushing across boundaries. Maximize the growth trends. 10 years ago, I will not expect a Chinese ATM in Madrid or Milan. Now, it's different.

I will buy in again should Mr. Market offers me at a better price. My next "buy" target is somewhat around HKD5.60 and below.

We'll see.

Establish a system

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In Singapore, we have systems to follow such as buying a train ticket, booking a movie ticket online etc. This goes the same as our personal lives. We have a basic system of survival - breakfast, lunch, dinner.

In your personal financial aspect, do you know your system well at your fingertips? For example, where your monthly income goes to and where does it gets funnel out?

A system to ensure that:

(a) Account A is used for emergency funds
(b) A % of your monthly take home pay goes to a savings account that is untouched?
(c) Extra MSI (multiple streams of income) goes to account C for specific purposes
(d) Dividends earned from shares channel back to ??? or kept for a reason?
(e) Monthly fixed expenses are debited from a separate current account?
(f) An account setup for big ticket items in the near future or for hobbies?
(g) Capital gains from investment, royalties & others get directed back to ???

In other words, create a system for disciplined cash inflow, cash outflow, savings, emerge…

Multiple sources of income - the origin

I am always on the look out for MSIs (multiple sources of income) to increase my wealth position. Hopefully, I am able to reach my targeted financial goal.

The MSIs should be consistent with steady inflow over one calender year and not a one-off gain or lumpy earnings.

After much thoughts, I decide to list down the places where money is able to work for me harder and not I work for money always:

(a) Savings
(b) Bonds
(c) Shares that has potential for capital appreciation
(d) Investments that generate dividends - (e.g. shares)
(e) Real estate investments
(f) Rental income from properties
(g) Owning my own business
(h) Commissions
(i) Referral fees
(j) Franchising fees
(k) Consulting
(l) Endorsements (e.g. celebrities)
(m) Royalties (e.g. books, CDs, seminars, games, inventions, software etc.)
(n) Network marketing
(o) Online - (e.g. affiliate programs, per click etc.)

My next aim is (e) and (f) - what about you?

Dividend Watch - Nera Telecommunications

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Lately, I have been busy with my work, especially career coaching. Still, I manage to find some free time to sniff through some interesting companies.

Allow me to introduce a company which in my opinion is worth taking a second look for pure dividend handout:

Nera Telecommunications - NeraTel

Nera Telecommunications is a premier solutions provider with the technological expertise to provide proven solutions. They deal in microwave solutions, satellite communication, wireless broadband, broadcasting solutions, optical solutions, IT solutions, retail solutions.

Nera Telecommunication serves the markets of Singapore, Malaysia, Thailand, Indonesia, the Philippines, Vietnam, Brunei, Laos, Cambodia, Myanmar, Taiwan and Korea through its headquarters in Singapore. With communications technology opening gateways to increasing possibilities, NeraTel is ready to provide its clients with exciting solutions from the convergence of telecommunications, information technologies and broadcasting industr…

Divest CapitaMallAsia to Ho Bee

Divest CapitaMallAsia to Ho Bee just recently. Made a small loss as my average price is 1.85. Believe the future capital gains of Ho Bee will offset and reap in better rewards.

Initially I was optimistic on CapitaMallAsia prospect, given that they had plans to expand in China and that the price was trading below IPO of 2.12. On hindsight, I could have sold at $2 for minor gains when the price shoot up.

Though we understand the retail market in China has untapped potential especially the inner cities (consider the demographics, income and expenditure patterns of the mid-to high income Chinese - luxury goods purchases for example), however I expected the time frame to be longer for CapitaMall Asia to reap in realized profits. At the moment, the ROE back to investors is single digit, lesser than 10%.

On the other hand, there was country risk (i.e. China) and element of unknown into uncharted retail waters (not proven success) amongst some of the challenges involved. This included changing…

Buy assets to create wealth

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Recently, I have round of drinks with my friend, Terry. Terry works in the FMCG sector. He is single and stays with his parents.

One of the topics we touch base upon is wealth creation.

Terry says "Hey Ken, do you know I have a pay raise of 10%?"
Sounding happy for him with eyes light up, I reply "Great! Now your earned income base rises!"

Terry retorts back "As delighted as I am, strangely I just do not feel satisfied"
My voice chokes back - "Is it you want more? Humans are not easily contented financially"

"It's not that. It seems my personal wealth depends very much on my take-home pay. There is a price to pay when the management gives me a pay raise; that is I have to perform and meet my new responsibilities. I will work hard but the problem is, I am worried about my main source of income being cut should my boss finds me redundant. It's very competitive here. Also, my salary is taxable. I hate taxes!"

"You see Ken, I am …

My opinion on AIMS AMP Private Placement

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On Valentine's day, AIMS AMP Capital Industrial Reit publishes an announcement that they will like to buy NorthTech through a Private Placement exercise.

The brief details:

Purpose:
To acquire NorthTech, a 4 storey high-tech facility with underground parking and loading/unloading facilities from Prime Properties.

Funding:
Private Placement - Gross proceeds of S$43.5 million
Debt Finance - $30.9 million

Issued price to institutional investors:
Between S$0.1976 and S$0.2041

Aggregate leverage:
Pre transaction: 32.7%
Post transaction: 33.6%

NPI yield
AIMS AMP existing property portfolio: 7.2%
NorthTech: 7.6%

Therefore, it is yield accretive with gearing about 33.6% after the private placement exercise. The units are sold to a discount of about 8%, given the last done price is 21.5 cents today. Post-exercise, DPU (Distribution Per Unit) will be diluted.

Advanced Distribution to existing shareholders is estimated to be 0.285 cents; books closure date is on 22 Feb and payout on 28 Mar.



So do you …

Top 5 Personal Finance Tips

In my opinion, I will like to post my top 5 personal finance tips:

1. Pay yourself first

I think this is one of the most important. You will commonly find this advice in finance books, newspaper articles and magazines.

For me, at the current moment, I pay myself 40% of my net income (after 20% CPF deduction), leaving the rest for extra savings and the reminder includes a mix of fixed and variable expenses.

And this amount paid (40% of my net income) should be left untouched till my financial objectives are met. I do keep track on the records.

Should it be used for share investment purposes, it will be recorded in my personal financial books as "Accounts Payable", meaning it will be paid off once profits realized or if not other sources of income streams.

2. Monitor your budget for specific key areas and put a ceiling if there is a need to

I do place a budget limit for my credit card and debit card expenses. Unless there is a one-off need to spend (for example medical bills an…

Bought ICBC (1398.HK) - Industrial and Commercial Bank of China

Bought ICBC - Industrial and Commercial Bank of China (1398.HK) on Monday, 1 Feb 2011- specifically to ride on the overseas expansion plans. I have blogged an article on ICBC.

To my opinion, I believe there is more room to grow, given the fact that Chinese companies are setting up offices worldwide. ICBC is able to offer familiarity and value-added banking services to the local Chinese firms or state-owned enterprises. On the consumer banking segment, we do see a trend for rich Chinese consumers buying up international luxury goods and high-end properties. There is demand which ICBC will be happy to fill in. Hopefully in the long term, ICBC could grow to be a well-received and valuable brand, not only catering to the Chinese but all nationalities round the world. It is not easy, given the sticky in-country banking regulations, the Chinese government intervention and policies, the trust and confidence, corporate governance and structure etc.

Risks assumed, I have made a decision to in…

China - the market to tap on

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China - the new growth market in Asia, the country that led the global economy out of doldrums in 2008, driven by the stimulus packaged offered by the local government

Why is it attractive?

1. One of the world most populous nation
2. Largest internet market users in the world
3. High demand for coal, iron ore and minerals - inbound & outbound
4. Infrastructure growth, production and development of raw materials
5. The need for clean water and proper sanitation facilities
6. Growing affluence of the Chinese to spend on luxury goods
7. Property - under-developed 2nd and 3rd tier cities into mega-malls/business hubs
8. Widespread need for quality health care services

The list goes on and on...

I am keen to enter into the China market via paper assets such as equities, mainly into shares. There are, of course, other options such as bonds, ETFs and other asset classes/instruments to consider. Please consult your Financial Adviser :)

Let's focus on shares. 3 ways to gain exposure:

(a) Buy in…

GRP Ltd

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Company background at a brief:
The Group's main activities can be categorised into 4 main operations: hose & marine specilaists, measuring instruments/metrology, uPVC pipes & fittings, and industrial property. The customer base is predominantly oil and gas related, both on and offshore.

Why it is attractive:
- Average of 9% yield
- Positive free cash flow over the years
- Net cash position
- Historically, on average, stable dividend payout over the past 3 years

Summary of disadvantages:
- Limited and boring growth prospects
- Margins may be indirectly affected through the industries via their customer base
- A case of too much cash being idle, waiting for acquisition which may not materialize?
- Lack of substantial interest - a case of not being noticed? undervalued?

Dividend table - 2006 to 2010
Source: ShareInvestor



Financial snapshot
Source: ShareInvestor



For growing my passive income via dividends, my first investment foray into GRP Ltd starts in Jan 2011. Remain vested.

My investment philosophies & personality

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My 10 investment philosophies:

1) Buy into companies that have future growth potential – Growth Investing
2) I do not like short-selling/contra (I tried before - such financial game is not for me)
3) Know your companies – preferably circle of competence
4) Believe in Cycle & Trend Investing – Properties: buy at down-trough, sell at peak
5) Averaging down to slowly accumulate more shares
6) Do not get influenced by Mr. Market, Fund Managers & Analysts.
7) Solid management with clear vision help make better informed investment decisions
8) Never invest based on emotions or be a total price slave!
9) Never believe in being too overly too diversified. Be focused on key areas (e.g. properties)
10) Believe in Joseph cycle – 7 years bear & bull

My investment personality:

P = patience
D = discipline
C = commitment

Patience to wait for greater returns, discipline to my personal investment framework (cycle/trend, capitalize on growth etc..) and committed to reach my investment goals.

Out of t…

Why we spend on common goods

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Interestingly, we spend our money for a variety of reasons. It can be a gift for our loved ones, a get-together meal with family members, a round of drinks with closed friends or an item to pamper ourselves/make our lives better.

Whatever the reasons, there is always a time to spend. If spending adds value to us, then the cost of returns back, as perceived by us, will be worth the investment. However, if spending has always been a hasty decision or if you are a total spending freak, then you may want to evaluate the reasons behind it. To do this, take into the shoes of the Retailers.

So before we take out a wad of dollar bills, ask yourself - what has Retailers done to us? There are a number of gimmicks, promotions and packages to win your consumer dollar. They could financially rob your wealth if you are not disciplined and do not take total control.

Here are 3 common tactics used:

1. The magic word - FREE

Do you like FREE? For me, of course! This goes without saying. Buy 2, get 1 FREE.…