Jan 11, 2016

Cory Diary : War chest

Even though Chinese Stock Market has been my primary concern in my earlier blog  ( link ) near end of last year. Never would I expect the Chinese Stocks to come down so fast and furious. Artificial brutal control do not work well in a capitalist market structure where there aren't good fundamental to support it. Is a good thing that they removed the newly introduced circuit control as this can allow the market to quickly stabilize to the right sustainable level. Question will be what is the Right Level ? If we look at the Shang Hai Index chart, there are few support level bands ~ 29xx, 26xx and 24xx. Considering China economy has not been growing well for more than a year, shooting to 5200 is really crazy. Now with correction on-going, back to 24xx level is not impossible. Whether authority will allow them to fall to that range is another matter. This is also complicated with local stock trading market conditions, de-valuation pace and market size.

In Singapore local context, is a double blows. In addition to China related issues, low oil price impacts are another serious concern. Huge industries and services are basically in a life damaging event. However all this issues may provide a life line to the local property sector. And I anticipate some of the curbs will be softened or removed. And despite poor Chinese export, import by America is not significantly reduced. In fact US GDP and Job Market are growing well. What this may mean is that other countries probably have eaten up China share of export. So I believe the world is still doing ok. Yuan will have to continue to devalue to make themselves cheaper. This process will stop the bleeding but will take years to reverse noticeably.

Therefore further drop in Singapore Market is likely sentiment and temporary. Soon we will realise we are over sold and STI will bounce back to a more reasonable stable level.

Below my War Chest Pie Chart ~ CPF, Pension, Property and Insurance info removed. Having tapped on 10% of my reserve, I am ready for more battles as it comes !


Jan 2, 2016

Cory Diary: Reading Frasers Centrepoint Trust Annual Report 2015

Just received the latest annual report this week. Taking some notes.

Titled "SUSTAINING LONG-TERM GROWTH". This tells me something or am I reading too much into it ?

Financial Highlights
Share price is below book value.  6.3% Yield. Less impacted by the poor retail environment.

Northpoint - 2nd largest mall in the portfolio will undergo AEI in phases over 18 months. There's hint on possible acquisition of new assets in their sponsor's portfolio. Nevertheless I look forward to the NPI number due to the AEI impact !

Occupancy and Expenses
84.2% occupancy in Bedok Point. Maybe they should sell it than holding the baby for the parent. Anyway is only 3.8% of the Reit. Changi Point will be something we need to understand in next few quarters. Overall expenses increased 14.9% which is above Gross Revenue and NPI growths.

Gearing 28.2% at 2.4% cost. If interest go up to 2.8%, cost may increase by $2.9M for $718M loan. Most of the debts (38.7%) is less than a year which means around $1.11M hit. NPI for Q4 alone is 31.7M. So impact looks minimal less market sentiment.

Northpoint NPI is $36M for FY2015. The integration and key spots upgrades will be nice and strategic. Let's put a $3M price tag to operation. Is the figure realistic ?

Headwinds are interests cost, lowering rental revision and reducing HEKTAR income. If another acquisition comes in 2016 this will further boost the distribution considering there is still some room to gear.