Cory Diary : Experience in New Private Apartment enquiries

Like to record my experience on my property enquiries on a new private apartment. Using $1M amount as a reference calculation on the loan and fees needed. Recorded to the best of my memory re-collection using one hour of my morning time today to type. Hopefully no error in my understanding and re-collection.

Property Agent
An agent Trust Worthiness is important. Diligent and supportive are key criteria. Willingness for long term relationship will indicate his character clearly. Getting the right person is the first step in my property search. He is also the key person i ask about home procedures, lead time and industry practises.

In Principle Loan
Getting support from the bank on how much I can borrow and criteria to meet are important especially for those who are based oversea. We do not want last minute surprise risking the initial 5% deposit of the property value if we decide not to proceed with the deal. Provide as much information as possible for correct assessment by the bank.

Paper Work
Each bank may have slightly different expectation that I need to provide. Need to get ready and available on the moment notice. Talk to the bank. Credit Card statements, Salary Statements, Employment and Income Proof etc.

Booking
Ideally we like to be present to preview, ask questions, sign and handover our cheque for the home we want to buy in the show room. However you can ask someone else to sign for your intention if you are not available and trust their advice. There is a 5% booking fee that can be use to offset the initial 20% for first property. There maybe penalty on specific amount of the 5% if you fail to follow through on the purchase.

Initial Amount
I need to pay up 20% of purchase price for 1st property. Using $1M, that's $200 K in Cash and OA CPF. So if you find difficulty even at raising this amount maybe that property is not for you and need to adjust your expectation accordingly. Personally it should be well above my budget and above allocated emergency funds for housing.

Loan

Need to prepare to take a loan of $800 K. There is small sum of processing/valuation fee.
If you are oversea, time your returns to settle loan matter and lawyer. At least 3 weeks.
I included consideration on job security and emergency fund amount in my decision of the property value I would like buy. There is also age restriction on the tenor period i can borrow which will affects the monthly re-payment amount. 

Another key consideration is Interest rate. A Low interest rate is a double edge sword. You pay lesser for your borrowing cost but you may find yourself in over-leverage territory easily due to the low base of the rate. A small hike may impact your ability to continue to service your loan or affect your quality of life. Although the regulatory requirements and banks have built-in some safety measures we need to do our sum.

Personally to me, low interest rate stability for the entire loan term is important as I may not want to re-finance, and need to meet a host of criteria again. So sudden jump in interest rate due to board rate mechanism will not work well for my case especially in low interest rate environment.

Declaration

I also need to do declaration on other loans such as car loan, housing loan, provided guarantee to someone, over draft and credit cards etc. You maybe surprise they can directly hit the amount you are allowed to borrow quite significantly. So be careful on this and be prepared for buffer. I have a well paid relative who have to borrow money from poor me because they mis-calculate the amount needed and need to tie over short-term cash flow problem.

Fees

In-addition to the 20% purchase price amount at minimum for those with first property, need to be prepared for the following

Booking Fee : 50 K. Get your cheque book ready. I am a little uncomfortable handing over blank cheque to the developer to signal our intention to purchase. Is done on-site and widely practised afaik. Authority should prohibit this practise with strong penalty against developers. There is room for issues and also put buyers at a disadvantage in pricing of development. I hope someone can bring this up to appropriate authority as it does not make logical sense.

Lawyer Fee : 2.2 K. Their service is worthy. Make sure the firm is in your bank approve shortlist.

Stamp Duties : 29 K. May varies with individual condition. So check up with your agent and lawyer.

Cory
20160723

Cory Diary : Selling a Dream

A Dream is Mathematically Insane. Practically Impossible. Is Basically Irrational.

Toto Strike assumes $1 M. Someone drawing 100 K annual income get 1 Toto strike every 10 years surely. Those drawing 250 K annual salary will reduce to 4 years. Can strike Toto 10 times in 40 years !

Want to get out of rat race ? Work hard and Smart. Study hard if you can. Save and Invest I like. Marry up also can. Will make it easier. Is not sure win but the path to success is there.

Want to vote for a dream because it is so attractive, addictive and memorising and hopes. A chance for the few. We need to realise. Is the gambling in us. The laziness in us. The wilfulness in us. The greediness in us.


Beware of people who sell you a Dream. Keep Dreaming.

Cory
20160720

Cory Diary : Reading DBS GROUP HOLDINGS LTD First Quarter 2016

DBS Stock Price 8th July '16 : $15.70 since the low of $13.02 Feb and high of $21.43 July last year. That's +17.1% from bottom and -36.5% respectively from top. That's more than one third drop in price.


DBS First Quarter 2016

Retail income increased 29%. Loan and Deposits up 35%. Investment product flat.
Strong results. Used 8th July price to compute below.

Non-Performing Loans (NPL) 1.0%
Past quarters increased from 0.9% to 1.0%. Percentage increase 11%.

NAV $16.39
Increases $1.09 from $15.30 2015Q1. That's 7.1% up.
BV will be 0.96.

EPS
$1.92 annualised. That's 12.2 % earning yield. PE 8.5.

Dividends
Regular Dividends assuming 60 cts (Yield 3.82%,  Shares 2,502,742,178) that will be at least $1.5 B annual distribution. 1Q16 earning alone is $1.2 B. Attractive room for Capital Growth.

Conclusion
Overall appears the company is doing well. The steep drops in stock price is puzzling to me. The current price is trading at $16.10.


Cory
20160719

Cory Diary : Middle Income Crisis

Gross Monthly Income From Work
Median Gross Monthly Income From Work of Full-Time Employed Residents for Year 2015 : S$3949

Monthly Income
After deducting Employer CPF : S$3375

"The variable portion of your wages can include the 13th month bonus or Annual Wage Supplement (AWS), bonus and variable payments. These payments are not compulsory, unless they are in your contract."

Assuming 3 months including AWS, Annual Income including employee CPF : $50,625

If you are drawing annual income in the range of $100,000, do you still consider yourself "Middle Income" ?

Cory

20160718

Cory Diary : Frasers Centrepoint Trust 3Q16

3Q16 Results Highlights

The main theme is North Point on-going AEI. Not to be mistaken by the picture, 3/4 area from the right is the up coming malls below North Park Residences ( Integrated Condo ) which will be attached to North Point of FCT in the left 1/4 area. The whole area will be the future north star of Singapore with integrated facilities such as library, community centre, mrt, bus interchange ground, garden, condo with lots of pools, Cinema, Food courts, malls and more malls. Hospital and schools nearby and a bridge connected to the hinterland.

Financial performance

• 3Q16 DPU of 3.04 cents, up 0.1% year-on-year (3Q15 DPU: 3.036 cents)

Some pressure to maintain the continue DPU growth or same (0.1% up) especially from the statement that 3Q16 distribution to unitholders includes $2.1m from cash retained in the previous quarters. It would have been negative per the Net Property Income of $31.2 million, 5.1% lower year-on-year which translate to annualised 5.3% yield instead of 5.7%.

North Point AEI reduced income by $1.74 M. Cushioned by rental increase specifically Causeway point 9.x% rental revision which is nothing to shout about considering we are comparing to average rental 3 years ago. Looks to me Phase 1 upgrading has much more impact than Phase 2 so FY2017 quarter reports should expects to be better. One more quarter of AEI bottom i suppose.

• Net Asset Value per Unit of $1.90 as at 30 June 2016 (31 March 2016: $1.91)
Share price last $2.12. Book Value is 1.11.

• Gearing level at 28.5% as at 30 June 2016 (31 March 2016: 28.3%)
Which i kind of like it.

Moving forward, I would rate high chance of interest rate hike soon with DOW breaking 18 K level clearly this week which may affects borrowing cost as currently FCT interests is just 2.259%. Do note large lease expiry in FY2017 and FY2018 so retail and sg economy will matters then.


Cory
20160716

Cory Diary : Equity Dividends 2016 Q2

Still in the atmosphere of Brexit, market is roaring back. So much on the fallout !At the same time Telco has a good run with talks on the 4th Telco viability. Seems like everyone has forgotten about the slow growth of major economies. True to my prediction, it is exciting time !

(updated for privacy) 

Year to date (Q2 '16) (updated for privacy) .  There will be challenge beating (updated for privacy) in 2015 due to I have taken profits on a number of counters and with more to come if the market continues to pick up.

 I have done some mitigation by re-balancing some of the returns to fixed instruments. And am now exploring for other opportunities on the remaining cash. New risk will be Indonesia and deeper risk will be China.

Cory

20160712

Cory Diary : Reading UOB Bank First Quarter 2016

UOB Stock Price 8th July '16 : $18.15 since the low of $16.81 early this year and high of $25 last year. That's +7.4% from bottom and -25% respectively from top. That's a wide range of pricing so what's are the fundamental change during this period ?


UOB First Quarter 2016

Let start with loans and operating performance by Country information. What I find interesting is Greater China information which records S$28 M profit reduction. Indonesia registers strong profit growth which maybe at a huge price which i will come later.

Gross Loans

Operating Profits

Non-Performing Loans (NPL) 1.4%
Past quarters increased from 1.2% to 1.4%. Percentage increase 16.7%. Greater China has a reduction from $218 M to $158 M. Indonesia has significant disproportionate amount of S$564 M accounting for 20% of NPLs. This raise the question of how well Indonesia is performing.

Exposure of Asset
5.9% Greater China, S$19.5 B of which half in RMB. There are $15.9 B Customer deposits in Greater China. Profit $69M (6.4%). Unable to locate clarity on RMB exposure but with local deposits there will be natural hedge against currency fluctuation which is critical.

4% Oil and Gas and 3% Other Commodities

NAV $18.22
BV using share price $18.15 will be 0.996. Not expensive.

Loan to Deposits Ratio
LDR using net loan over deposits has comes down from 81%-84% to 80.7%. This is on the back of increasing loans. Lot's of cash in the system.

EPS
$1.84 annualised. That's roughly 10.1%. PE 9.8.

Dividends
Regular Dividends assuming 70-75 cts (Yield 3.85% ~ 4.13%,  Shares 1,607,291,000) that will be at least $1.125 B annual distribution. 1Q16 earning alone is $766M. With the payout ratio less than 50% of earning, Capital Growth will be strong plus factor. 5% growth translate to $0.90 potential capital gains annually.

Conclusion
Overall is still a healthy and profitable business even though there is a a little slow down. One thing to know is Indonesia. Will UOB throws more into it. Whats up that we don't know about ?

By the way, UOB first half 28th July'16 report coming up.


Cory
20160709

Cory Diary : Read up on Retirement

The whole idea of Investment is so that we have more money. People who say they don't probably already have enough. That's the reality unless we are trying to poke holes into exceptions.

Instead of re-inventing the wheel I should tap on other brains. There are plenty strong logics out there as anonymous I like to share.

Here you are.

Cannot imagine that after working hard for 30 - 35 years, you would want to cut back everything and live like a hermit upon retirement?

Retirement is a time to take back your life and live! Do the things you want to do, travel to places and experience other cultures and pamper yourself.

When planning for retirement, always plan for more. For eg., if you think you would only require $84k pa ($7k pm) in retirement, aim for $100k pa ($8.5k pm).

It is better to continue working now as long as you can, than having to re-enter the job market at 60 when you find that your money runs out!

I think these comments about retiring early at 40 or 50 are coming from middle-class folks stuck with average income in jobs they hate, and they spend their time online dreaming about retiring early cos they can't in real life. 

What's wrong with working until 60 or even 65? The wise are happy to contribute back to society and nurture the younger generation. Some people like me enjoy every day at work.

The irony of working towards retirement: the higher the person's salary, the faster the wealth accumulation process, and the earlier one can retire. But the opportunity cost of retiring is also higher, and it becomes so much harder to retire.

I'm a retired millionaire who've worked very hard for many years. Long hours, frequent travels. It's good to finally stop my rat race. Made millions from my salary, bonuses and investment gains. Time to smell the roses. Also to take better care of my body. I was at a high risk of heart attacks and stroke had I continued my rat race.

Life now is so much more peaceful and serene. No more getting stuck in early morning traffic and late nights. Can spend a lot of time exercising in my condo gym and swimming pool. I can also do ad hoc projects and volunteer at charitable organisations which I choose. 

Life is much more meaningful now. I've never been happier in my life. My passive income from my portfolio of investments gives me more than what my family's needs.

Choosing the right high paying career and being excellent in investments are key ingredients towards financial success and financial independence.

So much Collective Wisdoms and Experiences out there. Hope you enjoy  !

Cory
20160706

Cory Diary : Preference Shares Viability

Preference Shares investment only make senses if the company payment is sustainable. This is an important logic. And the compensation amount varies within this defined scope of risk.

For Bank Preference Shares, dividend payment to common share holder is a norm especially in our local situation and where bank stability is utmost important. Therefore PS holder has much less risk to accept non-cumulative condition. For others, cumulative criteria will be required. Nevertheless we need to understand the risk in both.

In the uneventful situation of corporate bankruptcy, even though PS holders rank higher than common shares, in reality i am doubtful it will be much better off. In such restructure, most likely debts, and bonds if any, would have taken most of the piles in the new entity leaving little or nothing to the rest.

Therefore when we invest in PS, the rationale of why companies issue as such is important. In bank situation they need to meet regulatory requirements. PS to them is a cost.

For some companies that value cashflow due to market dynamic, they like to avoid situation of technical default. Therefore PS instrument will be ideal. I will be wary if is not cumulative for such cases. The company will still be able to pay up later. So a good record of dividend payments to common share holders are important. Even then it will not exceed 5% of my portfolio.

If there is risk in payment in the future, PS price would likely be adjusted along the way to detrimental of PS holders who attempt to get out if listed in SGX for trade. Therefore the only recourse is to cutloss provided there is liquidity or hope uneventful will not happen.

Another situation that i can think of is in REITs due to regulatory debt ratio requirement. Therefore issuing PS may help to bypass it to allow larger profit for distribution. We need to understand in detail why not through placements or rights. In CMT case ( correction: actually a retail bond), the company background can command cheaper cost without facing dilution I believe. Is an exception rather than a norm in my opinion.

Beyond such risk level, I will not easily accept as logicially it does not make sense. The litmus test will be ... is the issuer desperate. If it is, i would avoid. I will need strong justification to part my money where the potential to earn a lot more from common stocks are so much higher and at lower risk relatively.


Cory
20160704

Cory Diary : Portfolio Design Re-Make

Everyone has problems they need to handle regardless big or small. I have my own set of issues too. One of my nudging problem is the shower head. Yes ! Minor things do frustrate the life out of me in a slower ways but they do. The shower head is always slanted at an angle and I have to stand shower at an angle. I could not have it friction locked properly for weeks. Finally one day something strikes me to act on it with a solution. I rotate the shower head providing a counter torgue to the piping attached to the head and the problem solved in seconds.

I should make a laundry list of all my problems down to minute detail and work on it one by one or leave it hanging as future actions. Maybe i would kill all creeps in my life. :P Thanks to the hot Taipei weather recently i have enough spare time generated by staying at home with boredom. And something strike me again.

Have been looking for ways to improve my method to increase my capacity and decision making. I like to do it with realistic perfection and enjoys the process of constant improvement. So i took an hour to revamp my portfolio sheet design on how i like to track my sg stock investments better.


Portfolio Summary Page

This is the summary page of all my Singapore Stocks. It tracks summary of each counter. Portfolio performances of all counters ytd by xirr and actual returns. Support/Resistance level. Exposure/Risk level. Yield. Business sector. Released P/L and unreleased. Dividends and theoretical max.

Counter Trading Page

This track every trades by counter. Including rights, dividends, split etc. It also measure counter level performance over the years and year-to-date (ytd). Expense made and notes. Is a minor tweek this time to support more notes comment to support my decision making and action process.

Everyone has a way to track their trades and I am sharing with my Diary.

Cory
20160703

Cory Diary : Last day of week after Brexit

After 2 days of dramatic drops across the world after Brexit, the market has rebounded and returned to normal. It has proven that many doom day experts are just mere mortals. And monkey can decides as well.

As of today XIRR YTD hits 5.2%. (Performance from  Jan'16 till to date ). It would have been much better have I not mitigate my exposure taking profits on some counters. Meaning, do nothing. Nevertheless is still a relieve nothing worst has happened which we all should appreciate.

I have taken the opportunity to buy back CDL and acquired more bank shares. And hopefully get something cheap to replenish my portfolio. I am still a little careful in case there is fallout later.


Cory
20160701

Cory Diary : Britain voted to be out of EU

Could not comprehend why is it so bad about it. In fact I did not even put it as something to watch that can cause another Lehman moment. Some News commentators said is a Black Swan Event which i disagree.

I do not think is hard at all for BreExit vote as below pic but stock market sentiment cannot be under estimated. So I took profit in CDL which has large exposure in GB prior to the vote. I did not anticipate significant impact to others. Dow drops more than 600 pt. My feeling now is there will be more impact coming Monday in SG market. Now my leg is a little shaky because I should have done a little more to mitigate it. Always room for regrets LOL.

BreExit comment

CDL Trades

When Singapore was kicked out of Malaysia Federation, many people think this is the end. LKY cried. The other side was hoping we will failed and down the road we will begged for return at their terms. We didn't. We succeeded beyond the wildest dream.

We need to get back to basic. What's the purpose of a Country ? To have a population that can work together. Policy and government that serve them. Democracy in place. EU takes away all that.

To make it worst, EU immigrants policy alienates the population similar to situation for the Singapore gov when they open the doors too wide that we lose our cultural and togetherness as a nation. They did crawl back and we see the 70% support votes. Unlike Singapore, EU Leaders did not. The British citizen don't even know who they are yet they are the one that decides EU immigrant policies and so i heard.

Leaders today are politically correct to avoid being branded racists and doing the right thing but they forgot about Nation Building. Is not just about Economic. Is about happiness. Is about emotion. Is about togetherness of the Citizens in the country ! And this takes effort and time to integrate and be accepted. Only when we get all this right, then there is value in economy. I am proud of the British people recognising this despite all odds against their parties, institutions and the famous. Just like in America, Trump represents the frustration of Americans. He did not so to speak, "Influence" them. He just represented them. The sooner leaders understands their population and the ground not grass root, they will lead better.

Near term there will be volatility in the market due to sentiments but it also mean opportunity from fear. Cascading effects will only create more opportunities so I need to go slow in my entry.


Cory
20106625

Cory Diary : What Expenses to cut ?

Expenses have been talked about for some time among bloggers. We know saving is important. Ability to grow our income is even better. Taking care of our owns family cannot be forsaken. Neither can we do away with insurance.

What if I have multiple or huge loans and I got retrenched and I do not want it to be a life style changing event ? Here i will go about it. Total up my lifestyle expenses, work out the cash flow and finally filtered out the options.

EXPENSES

Monthly Expenses

Parent Allowances : 600 ( at minimum )

Hospitalization Insurance : 100 ( Saving/Life $250 )

Housing Loan : $1000 Interest ( $4000 Principal ) (arbitrary)

Utilities/Telco Bills : $200

Clothing : 200

Transport : 220 (Multiple of wife/kid will roughly be a car expense )

Food : 620

Cable TV : 50

Newspaper : 30 ( Prefer to read from paper. To me is quality of life )

Hobby : 50 ( Personal Interests )

Sports : 70 ( Exercise and Meeting with Friends )

Groceries : 180

Annual Expenses

Home Decoration and Appliances : 2000 (arbitrary)

Computer and Home Equipment : 1400 (arbitrary)

Travel : 2000 (arbitrary)
Medical : 500 ( Clinic )

Special Meals : $1200

This works out to  S$3912 monthly expenses after tax to support.


CASH FLOW

Monthly Cash Flow is important because some of our investments takes a longer term return path such as housing loan and "Saving" Insurance which requires monthly payments.

-3912 Expenses

-4250 Housing loan and Insurance
+2100 CPF Deduction to support home loan assuming i have a sizeable sum of cash inside.
+2600 Dividends ( Based on my current Passive Income )

I will need income of minimum $3462 monthly to support the above if I am retrenched. Luckily my dividends and CPF buffered the problem. Can you imagine without ?

What are my other big ticket options.

1. Find a job/ Part time that can fulfilled the gap at minimum. ie. Potential.
2. Married a hardworking wife ie. hmmm do i have to wait till retrenched ? Married up shiok right. Not an option since this negate the problem itself even though it is an option if you have options to choose a life partner. LOL
3. Increase my investment to double my dividends. ie Possible. Required large saving. I should work on it asap.
4. Get a cheaper home. ie. Down grade lah. Sian man. Move it lower. "Desperate" option. Can last some time.
5. Divest investment property. ie. Maybe can consider based on market condition. To sell at right time maybe important.
6. Borrow from Relatives and Friends ie. Not small sum ... Matter of principle not to tap them unless i have gone through desperate measures ie. Cut expenses ... and still not enough
7. Retrenchment Benefits. ie. Choose companies that values employee. This may mean going to Civil Service and MNC first in my early career. ie. if 1 year service equate to 1 month severance. 15 years is 15 months of salary. This can buffer many years of cash flow.

LIFE STYLE

Why am I not cutting down on expenses ? Back to the top. I want to maintain my lifestyle.
Need to anticipate to avoid this decision altogether in later life because is painful after a life time of work. So it comes to Saving and getting a job options. But I can't get another job if I am still with one now. That's left with me the only Option that is Saving. Obvious enough. :(

These narrowed to a few things I could focus on.

Saving => Increase Dividends
Extravagance must be avoided in my early years. Fewer travel. No car. Take bus. Fewer restaurants. No expensive celebrations. No smoking and drinking. No gambling. No expensive clothing. Don't buy unproductive things that will be kept in the store room.

Cash Flow => Increase Dividends

No wonder there is advise not to pay up our housing loan. Is the cheapest loan we can get to bump up dividends to support it. Cash is King only when we can use it.

CPF => Buffer home payments when needed. Meantime getting good interests and additional insurances.

Retrenchment Benefits => Good benefits is important. Choose your company wisely. And use the benefits to support your dividend income when possible. The last thing we want is to spend on holiday trip unless you have enough.

What others ? Tell me leh.

Cory
20160620

Cory Diary : FRASERS CENTREPOINT TRUST

Home Work

Noticed a significant drop in FCT yesterday. This caught my eyes as I have been waiting for a good time to re-enter. A check in regular sources have no obvious news. Some retailers attempt to collect. There is a rather large selloff after trading hours at $1.89 which appear to be from a single entity. Do note some time back there is news of CEO change.


Previous Trades

May have to click the picture below to see the details. Recorded rationale on the trades that time.
I like the Mall Business at suburb which rental is not impacted. AEI keeps me a little awake which i blogged earlier.

(updated for privacy)

There is some resistance around 2.00 to 2.02.  I am a poor timer, quite busy recently due to company re-org, fear of losing and no insider. So decided to sell FCT without waiting for the next dividend distribution.


Next Step

Bre-Exit is round the corner. US has another major gun incident. Market quite shaky. Our local economy still in the muddy water. With the FCT AEI still in the midst. Will wait for reports and better opportunity. I really like this Mall counter.


Cory
20160618

Cory Diary : Misconception in numbers

Prefer penny stocks because i can buy more lots ?
While it may makes speculative senses that penny stock may have higher price variations by percentage term, buying large priced stocks only means fewer lots. The returns from penny or large cap stock for same percentage amount change will still yield same absolute returns mathematically.


Do highest dividend pays ?
A stock price $1 with 5% dividends will distribute 5 cents. To achieve 10 cents return in a year few things can happen.

a. Company has higher returns increasing dividend to 10%
b. Company made a lost, stock price drop to $0.50. Dividend will increase to 10% too.


Do averaging down works ?
Stock Price $2. Company report bad result and price drop to $1.5. That's -25% losses.
Buy equal amount at $1.5 again. Total cost is $3.5 now. Magically -14.3% loss. Feel good right ?

What happen Company report another bad news and price dropped to $1. Loss will be (-1-0.5)/3.5.
That's -42.9% loss ! Double edge sword. Like to guess absolute loss ? That's how a gambler starts to chop fingers. That's why margin trading is risky too.


Dividend Strategy takes forever. Market Crash will eliminate all my returns !
Each year 8% dividends. On the 5th year is 40% returns. That's buffer you for another Global Financial Crisis like 2008 scale. We are in our 8th Year now.


Cory
20160614

Cory Diary : Hyflux Hyflux 6% PerCapSec

Notes on my investigation on Hyflux recently listed (corrected term) Hyflux 6% PerCapSec

Hyflux 6% PerCapSec
The recent Hyflux Hyflux 6% PerCapSec# is listed in SGX. Therefore is similar to buying equity through your brokerage. The returns is like a bond in the sense we get fixed returns. And is distributed to your bank account if you have setup like your dividends. The key difference is Hyflux need not have to pay those dividends if they are in bad situation for example in financial distress which unlike bond will result in default.

Why Hyflux issues Hyflux 6% PerCapSec ?

Here the reasons I believe.

1. Need to roll over their earlier issued PS else higher rate
2. Need larger amount now to continue growing
3. More expensive to obtain loan from bank
4. Fewer restrictions and need for flexibility
5. Technically no default if they fail to distribute
6. Not considered debts
7. SCA Business Model required intensive capital investment and Cash flow support

Investment Rationale - Hyflux 6% PerCapSec
Rate is 6%. The good thing about this Hyflux PS written term is that they are cumulative. This means if they fail to pay me this time, the interest will be accumulated and compounded. In-addition, the company will not be able to distribute dividends to their shareholders. There is also a call date 4 years later else there will be stepped up terms. This will encourage Hyflux to re-call and likely issue new PS as needed.


Key Items in my thoughts

Will the company go bust ? I see no reason why the government will not let it happens. If water supply is critical, they can ensure operation continues while the company restructure. If there is no left over after debts, this will only means existing shareholders and PS holders have nothing in the new company. And this is the risk we need to be prepared for. Other scenario will be the traded share may comes down significantly and not recalled after 4 years. Can there be negotiated hair-cut ?

Cash Flow is the key risk which is why I think Hyflux makes the right decision to go via the PS route to allow them have flexibility in managing their cash flow considering the size and complexity involve. They also need a lot of money to scale and support the current business model to grow quickly.



Their focus on Growing recurring income to build a sustainable business with scale is the right one in my opinion. It has been developing and growing predictable and recurring revenues from O&M services, asset returns and membrane sales. Their technology is proprietary.

From the looks of it, the Business Model long term has a strong case. In fact, the mother share will be interesting too at opportune time. An attractive asset to Temesek to invest in the future.

Overall Hyflux 6% PerCapSec seems safer than I previously thought it will be. There is still risk which I need to be prepared mentioned above and the unknowns. Also to bet on the success of a business, 6% is not a lot of money. But if I am convince the success is high, then the compensation maybe reasonable. I think it should do well but we can never be sure.


Cory
20160612

Cory Diary : Cory Portfolio 2016 0607

Portfolio Management

has been my key strategy for a long time which includes Safe Bonds and Preference Shares. I am able to stomach losses and keep me sane. Most importantly I have the mental coolness to make the right decision of Re-Balancing my stocks. This is another key strategy in my investment plan. The recent years strategic addition which I mentioned a few times in my earlier notes are the Dividend Strategy introduction and inclusion of STI index.

On the left, is my current proportion of my asset.
As you can see, my Cash and FD are still a little high. I am a conservative guy ! It takes me a long time to bring down my cash/FD to this level.

Together with my CPF, Property, Basic Insurances, Pension, Fixed Deposits and Cash, they form a net web of safeguards. With this, DIY Investment is a very viable plan to me and this model has works for more than a decade.

Invested amount has been growing steadily since 2011(roughly) if I remember correctly. XIRR is similar to annualized returns for each year.

Cumulative XIRR  continues to slip down from 15% to 6.3%  due to recent mute years. A 6.3% Cumulative XIRR means compounded returns of 6.3% and for me already achieved for almost 10 years per below chart. For every $1 invested in 2007 will be roughly $1.45 today. This data is as raw as it is. No hidden cost, no mark up, no time based tricks that you often seen over marketing materials. Real returns right into my account if I sell everything into cash. No accounting trick or mark-up valuation model.

DIY Equity investment

My believe is I can only Trust myself to take care of my own money and retirement. So I have strong interests to make sure I succeed. And the real fear is I do not want to wake up one day to find out my Fund Manager is no longer in normal operation due to fraud, redemption issue or receive poor performance excuses. Their operation are total Black Box to me and this option is logically unacceptable.

Neither is it acceptable to me that my money in them  has low returns. Needless to say, losses. Some maybe desperate enough to provide guarantee. Even if they say they will, what's make you think they can when the uneventful comes ? Neither performance based rewards make sense to me as their zero fees are irrelevant to my losses.

Whatever printed document they can update me or articulate holds no water. This is real issues which is a big concern and which I can and should control. And this start my DIY journey of learning to do on my own as Equity Investment today is relatively easy to learn and understand, in my personal opinion. I can continuously tweak and improve my model with time. I am rather conservative and I constructed it as such into my plans. Really glad and never look back.

Happy Investing !


Cory
20160607

Cory Diary: Net Worth, Equity and Market Outlook

Net Worth

Rather conservative in my money so far in 2016 mainly due to the poorer economic expectation. However I am not entirely convince there will be a major crisis in the scale of 2008 Financial Crisis that requires me to pull the plug in my investments.
















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Trending up much YTD (Year to date) with the increase due to higher cash position not allocated to investment. Chart is rather flat for past one and half year due to larger increase in property expenses,  spending to support a better Lifestyle ( yeah ! ), China Market Crash ( Shock ! ) and Taxes Paid  ( sad ... ).


Interim SGX Equity Investment

XIRR: +3.84% YTD (Today compared to 31 Dec'15)
STI Index: -3.36% YTD (Today compared to 31 Dec'15)

Quite please with the current returns compared to Index. I still makes a number of conservative "mistakes".

1. Being slow in reducing unprofitable positions
2. Not in larger amount movement in my portfolio
3. Holding too much cash. Cash/FD hits 40% of my total worth (excluding property).
    Opportunity cost is a little draining on me.

Continues .... to avoid sector in

1. Commodity
2. S-Chip
3. Shipping
4. Oil Support and Service

and please with,

1. Financial sector allocation
2. Cutting losses on some Industrial sector counters
3. Dividends Strategy


Outlook to watch

1. Oil Price
2. SG Property Measures
3. China Debts
4. SG Telco Markets


Cory
20160601

Cory Diary : Dividend Investing ( Cap Rate, Convertible Bond and Capital Distribution )

This is my 2nd part on the topic of Dividend Investing. This week note is about Cap Rate, Convertible Bond and Capital Distribution which I did a quick exploration from recent reading of Suntec Reit 1QFY16 Results.

Key Highlights
1. Completion of Suntec City Phase 3 and Suntec City Office
2. Higher distribution per unit of 2.371 cents which was 6.3% higher than 1Q FY15
3.Capital distribution of S$4.0 million from the sale proceeds of Park Mall.

More cut and Paste from previous announcements that I manage to find.

• "consideration of S$411.8 million (the “Divestment”),"
• "Park Mall Investment Limited (“JVCo”) of which Suntec REIT has a 30.0% interest has been set up, to redevelop Park Mall into a commercial development comprising two office blocks and an ancillary retail component (the “Redeveloped Property”)", 
• "Suntec REIT’s 30.0% interest in the JVCo", 
• "As the consideration is based on the latest valuation of the Property, there is no gain on the Divestment when compared to the latest valuation of the Property."

The dividends it can generate based on 2,506,484,326 units have it not been sold is roughly  $13,961,117 for a year. If we apply to 1Q16 units using 2,526,912,798 number, this would have been reduction of 0.138 cents dividends.

4. Office portfolio stable in 2016
5. The debt-to-asset ratio stood at 34.7%
6. Construction of 177 Pacific Highway in North Sydney schedule to complete by the second half of 2016. More cut/paste from previous announcements that I could find. "Upon completion, the acquisition will be DPU accretive with a projected initial NPI yield of 6.9% in Year 1" , "Leighton Properties to pay a coupon of 6.32% p.a. during construction phase", "Leighton to provide a rental guarantee for 4 years for any vacant space upon completion"


Results

Note 1: S$280,000,000 of Convertible Bonds due in 2018 which are convertible by holders into units of Suntec REIT at any time on or after 28 April 2013 at a conversion price of S$2.111 per unit.
Assuming the bonds are fully converted based on the adjusted conversion price, the number of new units to be issued would be 132,638,559.


Thoughts
Well, is quite an amount of work to do which I did not anticipate when I started my investigation this round. Every topic in the title worth their own page. And there is more to learn and dig further. However time is an essence and we need to strike a good balance between time and risk.

Question 1 : Convertible Bond Logic
There can be Bond conversion dilution if share price hit $.2.11. Assuming all converted, roughly 5% or more dilution. Share price increase will be more than 20%. Good problem to have.


Question 2 : Parkmall divestment logic
The dividends loss is due to the sale for a consideration of $411.8 million. On first look, is a DPU falls if we ignore the Capital Distribution of $4M. However with this amount it can funds the distribution for 100 quarters theoretically assuming ...., had it not use for re-investment or loan reduction.

Divestment/re-investment strategy makes sense considering the cap rate for Suntec Reit is rather low. Therefore viewing the Reit using Cap Rate alone is myopic without considering it's ability to rejuvenate itself while realising shareholder value in key locations. Capital Distribution is part and parcel of Suntec Reit attribute in it's returns as a whole we have to be accustom to.

What is Cap Rate ?
Capitalization rate, commonly known as cap rate, is a rate that helps in evaluating a real estate investment. Definition: Capitalization rate, commonly known as cap rate, is a rate that helps in evaluating a real estate investment. Cap rate = Net operating income / Current market value (Sales price) of the asset.

As it stands based on $1.73 share price with relatively low gearing, Dividend+Capital Distribution is roughly 5.5%. Is a 9.5 cents on my annual returns and/or buffer for market volatility. Long run I feel shareholder value needs to be protected which is something everyone should watch in dividend investing especially in Reits. With current information insights I found, is this good enough for me ?


Cory
20160424

Cory Diary : Dividend Investing ( DPU - Dividend Per Unit )

Done some home work last weekend on Soilbuild Business Space Reit. Quick glanced through many of the quarterly reports while trying to decipher the recent results given by a few bloggers. Reason i am working on this is because of it's high dividend yield and past quarters stability.

There is mention about increasing absolute income for distribution and the annualized dividend is up.
Occupancy fell and the current DPU is down 4.7%.

I did found there's a a share placement prior year for a property resulting the total units differ between the two reported quarters. To get us into the right perspective before we all confuse ourselves with the numbers. We are talking about performance between 1Q FY16 and 1Q FY15.

Income for Distribution
Increasing income by itself is meaningless as this can be due to acquisition and when broken down to per unit, is what's matter. If there is share placement or rights issue, this will reflect as well in appropriate time frame.

Annualized Dividends
Annualized dividends is quite misleading too by itself because it's inherently tie to the share price taken from specific time or period. And a reducing share price can significantly push the yield up. In a deteriorating business environment, the capital loss can be so significant that long period of dividends could not make up for it.

Table - Lease Expiry

Finding of Interests

1. Between 1QFY16 to 1QY15: Unit increased by 15%
    Mainly due to private placement and some draw down for property acquisition

2. If we take DPU 1.633 cent of 1QFY15 and after acquiring the new property of which rental
    contribution is $7,870,000 annually. How much will it contributes quarterly to it ?

To simplify my calculation, assume minimal increase in loan cost since is mainly private placement.
And using the 1Q16 increased units as a base calculation, the formula will be
= 100*(7870000/4)/938010400 = 0.21 cents contribution to 1QFY16.

Without the property acquired, the distribution income of 1QFY15 contributed 1.42 cents to 1QFY16 assuming everything equal. This is also assuming increased units are solely due to the private placement which is likely not but for this exercise.

Adding both values we will get around 1.63 cents which is what we should expects assuming business stays level for 1QFY16. However DPU fell by 4.7% and this is on the back of 2% lower occupancy (from 96.8% to 94.8%). With more leases up this year and next (table above of 2016 and 2017 shown only) there will likely be continue impact.


Cory
20160419