Commercial Property

I had a chat with one rich friend of mine recently. Her family run businesses and properties are part of their small investment. The conversation flip my mind and made me realised that instead of aiming for 2nd residential property, I could also consider 1st commercial property.

She introduced me the idea of commercial property after I shared that it is unlikely that low/middle income people like me will be able to pay the downpayment of 40% for a 2nd residential property if I did not fully paid up my first HDB loan for my first flat.

I did a search online and discover that at current prices, a typical 220sqft/21sqm shophouse/shop cost around 600k to 700k (around $2700psf). For the loan, one typically needs to pay 20% downpayment with loan period of 15-25 years (Financing margin of up to 80% of the purchase or valuation price, whichever is lower). Thus 20%*650k = 130k upfront payment is needed. This is actually much more affordable than 40% downpayment for a residential property which may cost around 200-300k for a studio condo. Rental income for this kind of commercial propery could hit around $3-4k per month and hopefully this should be able to cover the monthly installment amount and provide some minimum cashflow.

It is always good to know more and learn more and not restrict our knowledge to what one already know. Guess now I have another area to explore and learn more.

Any expert has anything to share on commerical property? Please correct me if you feel that any of my calculations or research or assumptions are wrong above.

Thanks in advance!

(Disclaimer: Personally, I think current price is too ex but I am noob in property investment. Thus, don't trust me.)

Neratel declare 4c interim dividend!

Neratel declare 4c interim dividend after St Engineering failed its takeover at $0.45(actually is $0.39 after minus 6c dividend if the privatisation went through).

Its last price closed on friday 13 July 2012 is 0.41. Wonder what price will it open on monday? 

Huat ah! To all past shareholders as well as those who bought last monday!

Record date: 24 July 2012
xD: 20 July 2012 (3 working days before record date, inclusive of 24 July 2012)
Payment date: 3 Aug 2012

Neratel Q2 2012

Breadtalk sharebuyback

http://info.sgx.com/webcorannc.nsf/AnnouncementLast3Months/D715C4FA238B82F7482579FF0037AB28?opendocument

Breadtalk sharebuy back today.

200,000 at 0.48

Noble Round 2

It been many weeks since I last post anything and months since I last bought anything.

Today bought Noble at 1.155. Pray hard. Usually after I bought it will go down more, see this time happen again or not.

haha.

News - Breadtalk

SGX source
From 9.61 % To 7.00 %
Sell through an open market transaction by Keywise Greater China Opportunities Master Fund.

Keywise Capital Management (HK) Ltd is the fund manager of Keywise Greater China Opportunities Master Fund, which holds shares in BreadTalk Group Limited.

Fang Zheng is the sole shareholder of Keywise Capital Management (HK) Ltd.

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The above fund have been selling breadtalk share since year till now. Why do they keep selling? Do they know something which we retail investor don't know?

I am not guess and don't need to guess because current price is not the price which I will enter.

Traits of Good Companies

 "Stocks do well or poorly in the future because the businesses behind them do well or poorly - nothing more, and nothing less."
[Some famous investor said this phrase, you know who? I hope you know :)]

• Cheap Valuation - P/B, P/E, discount to NAV etc
• Business Economic Moats - high barrier to entry, unique product(s) or service(s) such that the company will always be needed and still be around for decades
• Growth - sustainable consistent growth
• Profitability -  ROE, ROA, increasing FCF NOT net profit only, net profit margin
• Financial Health (net cash or little debt, unless company got high earning powers to offset)- see gearing, debt to equity, quick/current ratio, interest coverage ratio
• Dividend - 2-3% p.a. with <40% dividend payout ratio. History of increasing dividend payout ratio over the years as business grow
• Risks - think of negative aspects of business
• Management assessment - compensation(executive pay is linked to company performances), character, experience

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Extracted and updated the above bullet points from my ex-page. If you manage to find good companies, please feel free to share :)

FA Valuation?

In FA, there are many ways to value a stock. P/B, P/E, cash return, DCF etc. Some investors also look at things like net debt/net cash, free cash flow, ROE, ROA, dividend payout ratio, EPS growth rate etc for the financial health of the company and the total return of money to investors. Some also look at economic moats of the companies business, managers, CEOs of the companies for the qualitative aspects. Personally, I kept one excel sheet to keep my calculation of these terms simpler. I am lazy to press calculator everytime. Haha!

Regardless of which method you use, its important to understand the meaning of these terms and acknowledge the fact that these are "tools" to help you and they are not the "holy grail" to investment success.  Personally,  I believe emotion is the hardest to manage.

Let me introduce some of these terms:

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 P/B ratio, I guess many have heard of this ratio before. Anyway, this is one way of valuation of stock to see if you are paying a premium to its book value.

 What is price to book ratio?

A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. Book value is basically net tangible asset value which is total assets - intangible assets - total liabilities. This ratio also gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately.

Good read below:

http://business.asiaone.com/Business/My%2BMoney/Building%2BYour%2BNest%2BEgg/Investments%2BAnd%2BSavings/Story/A1Story20091005-171848.html

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 Enterprise value

A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. Think of enterprise value as the theoretical takeover price. In the event of a buyout, an acquirer would have to take on the company's debt, but would pocket its cash. 

Some use FCF/enterprise value to see if the companies are generating good FCF from its enterprise value. 

FCF = free cashflow = net cashflow from operations - capex 

(Credits to investopedia for the definition of these terms)

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Window Dressing

Came across this phrase very often in Cbox recently. Decided to look up the meaning of this word.

From investopedia,

A strategy used by mutual fund and portfolio managers near the year or quarter end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders. To window dress, the fund manager will sell stocks with large losses and purchase high flying stocks near the end of the quarter. These securities are then reported as part of the fund's holdings.

http://www.investopedia.com/terms/w/windowdressing.asp#axzz1qaZw08rC


In short, BBs are trying to beautify their funds/portfolio by selling losses and purchasing high flying stocks so that it look nice.

So Smart!

Patience

The market has been raising for past few weeks. For those who are in the market, congrats! Huat ah! May you huat more!

For those people like me who still has lots of cash, this will be a good test for your patience. Do you feel that your money is rotting in the bank with the pathetic interest rate? Feeling heartache and got desire to re-enter the market to join in the fun and earn some kopi money? Sometimes I still has this desire and it is not easy to overcome this greed, but must train!! Patience!

However, I hope that the market can rise up further although I still have lots of cash rotting in bank :)

As for why I hope so even though I have lots of cash? Guess?

Reminder for myself

Will you jump from a job with higher pay to a job with lower pay?
Will you jump from a job with higher prospect of career advancement to a job with lower prospect of career advancement?
Its a struggle between $, career prospects and life.

I will if current job cause me to drag feet to work but the future job has potential to be better.  It is a risk because you never know what lies ahead. The next job might be worse! (I experienced this before. Next job is worse.) But life is a gamble isn't it? If you don't try, you will never know. Go read "Who moved my cheese?".

You need to spend at least 2/3 of your waking hour for 5 work days a week, much more waking hour then you can spend with your loves one during weekdays, thus it is better to be in a job which you like. It may be of lower pay but you will be happy. You only live once and youth once only.

$$$ can be earned. Don't be overly obsess with $ and just aim to save lots of $, invest and use it for retirement.

If you die before you can retire; if you are unhappy over work everyday, what is there to say about retirement in future? You cannot even LIVE YOUR PRESENT.

Won't it be great if you can earn some $, save some $, while enjoying your present life?
Isn't it better to sacrifice some pay for a better life during your working hour?

If you have a choice in life, do you prefer your youth with no $$ or your $$ without youth?
If you have a choice in life, do you prefer a meaningful current life with no $$ or lots of $$ with no life at the present moment?

Perpertual Securities again?

Perpertual Securities must be the latest "in" thing in SGX.

Genting - PROPOSED ISSUANCE OF SINGAPORE DOLLAR-DENOMINATED PERPETUAL SUBORDINATED CAPITAL SECURITIES 

http://info.sgx.com/webcorannc.nsf/AnnouncementLast3Months/437539A8F0980037482579AC00372AFC?opendocument

Be discipline

Did you notice that you always change your buy and sell price very easily because you got influence by something or someone? In the end, you either missed or buy/sell at a bad price.

I used to do that and still have the tendency to do that, but I am trying to change.

Few strategies which I adopt:

• I know that I cannot be a discipline frequent trader that keep buy and sell. However, I always has to desire to buy and sell to trade/speculation. (bad me!) Thus, I ensure that no more than 10% of my portfolio per trade. This makes me sleep more peaceful at night.
  (My savings and thus investment captial will grow overtime, hence the majority of capital will still be for growth/undervalue stock with decent yield.)
• Only speculate bluechips. Fast in fast out. Chances of bluechips bankrupt is lower. (for speculation only.)
• Write down all my buy and sell price in my handphone. Hp is something which I bring around everywhere and touch it most often everyday, thus it would be the best equipment to remind me that I must not be so emotional.

What are your strategies?

BreadTalk’s revenue grew 20.8% to $365.9 million in FY2011

• Group’s revenue grew 20.8% in FY2011 to historical high driven by broadbased
  growth across all businesses and geographical segments.
• Excluding one time gain on sales of property in FY2010, profit after tax
  attributable to shareholders jumped 63.1% in FY2011 supported by higher
  operating profits across all business segments.
• Proposed ordinary dividend of 1.0 Singapore cent and special dividend of 0.5
  Singapore cent.

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 Using my excel to chun some numbers:

If we look deeper into its numbers,

• The company is in netcash position of 46.6m (down from 51.8m)
• Cash and cash equivalents up from 71.1m to 87.0m
• Total debt increase from 19.3m to 33.5m
• FCF before divy up from 8.9m to 11.8m 
• FCF after discounting divy up from 6.1m to 7.6m
• With special divy of 0.5 (total divy 1.5c), the dividend yield at price of 0.575 is 2.61% (first time paying special dividend!)
• Dividend payout is at 36.32%

2.61% dividend yield may not seems great but the company is slowly growing in term of revenue and net profit. Given its netcash position and dividend payout of 36.32%, it definitely has room to give more dividend in future.

Currently I am not a shareholder yet but I will be waiting for the right time to enter, perhaps putting 10% of my portfolio to slowly grow with the company.

Where is the bear? Hope it will come after I sell finish :)

Perpetual Cumulative Securities

Singpost - 23 Feb 2012, Proposed Issue of Singapore Dollar-Denominated Senior Perpetual Cumulative Securities
http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_93D6940B13E37BEF482579AC007D8E62/$file/SGXAnn.pdf?openelement

Olam - 23 Feb 2012, PROPOSED ISSUE OF S$275,000,000 7 PER CENT. PERPETUAL CAPITAL SECURITIES
http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_A7F1BBB0C11D1FE1482579AC00806992/$file/23Feb2012-SGDPerps_SGX.pdf?openelement

How come nowaday so many companies issue this thing?

Did a google but couldnt find information on this.

Closest which I can find is :

A type of preferred stock that has no maturity date. The issuers of perpetual preferred stock will always have redemption privileges on such shares. Issued perpetual preferred stock will continue paying dividends indefinitely.

http://www.investopedia.com/terms/p/perpetual-preferred-stock.asp#ixzz1nBOuhDSb

Perpetual Cumulative Securities  - Pay coupons with no call date?

Does account size matter?

Does account size matter?

Yes it does! Very often, we would say we earn a return of capital of example 6% after this trade of xxx days.

This 6% seems simple but it is not exactly simple.

6% of 10k = 600
6% of 100k = 6000
6% of 1 mil = 60000
6% of 10 mil = 600000 = 600k
......and so on.

DO you get the story?

Two different investors may say that they have 6% gain, but their absolute gain is different.

Investor A may have 100k in capital and earn 6000 in that trade. However, investor B may have 10 mil in capital and earn 600k gain for 6%. 600k - 6000 = 594000 which is much more than the capital of investor A. In extreme case, even if investor A manage to pick multibaggers and earn 100% in trade, it is only 100k as compared to 600k.

In addition, don't forget that you can diversify or plan the allocation of money easier if you have huge capital. Assuming that you only plan to have no more 10% of your entire portfolio in any stock and each purchase is example 10k.

With huge capital (10 mil), you can keep buying at ALL supports. If this support breaks, you can buy at next support and the amount of money you allocated to this stock still never exceed the planned 10% of your portfolio. Once the market starts to recover, you can slowly sell in batches at different resistance and huat. However, if you have limited capital (100k), you can only buy at one support. If this support break, you cannot add more as it may exceed 10% of your portfolio and need to wait very long to repent and earn profit.

That's why you see some bloggers can keep buying and keep selling at many levels of supports and resistance while some cannot. Ops! who am I referring to? :)

Thus what is the moral of the story?

Account size does matter!!!

Work hard and increase your account size when young! Delay gratification? Don't get marry? eat bread drink water?

Which method(s) should I use?

Many of us including me are always wondering which is the best method to invest/trade? Which books should I read to learn more? Which guru's seminars should I attend so that I can invest/trade better? Which blogs should I visit?

SO the QUESTION is:

Which method should I use? FA? TA? value investing? value growth investing? dividend investing?

Actually regarding of which methods you use, just make sure it suit you and it works!!

How to know that it suit you? -> make sure you can sleep well every night without worrying about the buy/sell
How to know if it works? -> like what cw always said, measure your performance!

As a summary: 

不管是黑猫还是白猫，能够捉老鼠的就是好猫！

Sold AIMS

Sold AIMS today.

Decide to sold AIMS as it hit resistance of 1.025 and forgo the dividend since today is the last day before xD.

ROC: 6.95%

Will re-enter again when time is right.

(As a personal reference pt, this is the first day where my personal account turns positive with healthway still have xxxx loss!)

For those who felt lost in life

There was a motivating poster of a cat talking to a kid. 

The kid says, "the meaning of life is eat, sleep and sex." and the cat said, "that's what i found out too.

(Its a pity that I did not manage to find the poster as mentioned above. I got the quote from someone.)

Investment Grading

Recently, many people would came across with the headliners in the news that state, S&P downgraded XXX country to AA grading or BB grading etc. I guess many people do not understand what it really mean.

I did a search and found the following:

‘AAA’—Extremely strong capacity to meet financial commitments. Highest Rating.
‘AA’—Very strong capacity to meet financial commitments.
‘A’—Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
‘BBB’—Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
‘BBB-‘—Considered lowest investment grade by market participants.
‘BB+’—Considered highest speculative grade by market participants.
‘BB’—Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
‘B’—More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
‘CCC’—Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
‘CC’—Currently highly vulnerable.
‘C’—Currently highly vulnerable obligations and other defined circumstances.
‘D’—Payment default on financial commitments.

Hope that the information will be useful when you read financial news in future. 

Property - HDB Loans

There are many schools of thoughts regarding paying up your loans for your housing. This post serve as a summary of what I heard about what people did with their HDB housing loans of 2.6% p.a.

(1) Should borrow as much as possible since it is only 2.6% p.a. It is the cheapest and safest loan around. If one has extra money, should not pay up, should use it to get investment return of greater than 2.6% p.a.

(2) Should pay up as soon as possible. Pay whenever you got lump sum so that you can be debt free as young as possible. A debt free person is a carefree person.

(3) Should pay up with anything in excess of 20k in your CPF OA account. Base on current CPF rules, you will earn 3.5% (2.5% + 1%) for the first 20k in your account, anything above it earn 2.5%. 3.5%-2.6%=1.9%. You are earning 1.9% p.a for keeping 20k in your account.

Which is your choice? Please feel free to suggest if you could think of other options!

Just to add, regardless of which option you take, please remember to keep at least few months of your installments money in your CPF just in case that you lose your job due to whatever reasons.  Example, if your monthly installments are 1000, please keep at least few times (6000, 12000) of it according to your comfort/risk level.

金玉良言（2） - correct?

multibagger follow cw, reits follow ak

Good news for cma? or expected news

Westgate – The new landmark in Jurong, Singapore’s largest regional centre
• Only development to be directly linked to both Jurong East MRT interchange
and Jurong East bus interchange
• Shopping mall to welcome shoppers by Christmas 2013 while office ready for
occupation in late 2014

Singapore, 12 January 2012 – CapitaMalls Asia; CapitaMall Trust Management Limited, the manager
of CapitaMall Trust; and CapitaLand1 are pleased to mark a key milestone by breaking ground for the
shopping mall and office tower at Jurong Gateway today.

The development will be a new landmark in Jurong Gateway, continuing the transformation of the Jurong
Lake District into a key regional business hub. The ground-breaking ceremony was graced by Minister
of State for Trade and Industry & National Development, Mr Lee Yi Shyan. The 400 guests at the
ground-breaking included prospective tenants at both the upcoming mall and office tower.
The name Westgate reflects the development’s location as the gateway to the Jurong Lake District and
its excellent transport links, which make it a gateway connecting people to and from Jurong Lake
District for both work and play. Westgate has direct connectivity to both the Jurong East MRT and bus
interchanges as well as neighbouring amenities such as the upcoming Ng Teng Fong General Hospital.

金玉良言

In general: Blue first to crash in bear but first to chiong in bull!

But not all blues follow the above rule, becareful the blues which you choose!

SIPS test

Those who are interested to take the test but scare that after you read you will forget the answers to the questions, you can refer to http://sgmarketwatch.com/sgx-online-education/ while taking the test.

Anyway I only took the test for fun, I guess at most I will only trade ETFs.

My result.