Friday, May 17, 2019

Coporate updates of Silly InC

Dear readers, Silly Inc has sold all it netlink shares and make its maiden investment into capitaland.

Netlink has play out mostly as the board wanted. Dividends increase, growth in profits, etc. However, the growth is too slow to offset the 45 mio in loans that are used in distributions.

The board would be more hopeful had the growth be more impressive. Going forward, Capex will.most likely increase and if the rate of growth is to continue, netlink could, at best, offset the 45 mio in distribution but they could hardly increase dividends anymore without either CONTINUING WITH THE LOANS DISBURSEMENT OR INCREASE LOANS TO DISBURSE as dividends.

APPT is a good lesson and reference. While the 2 companies are different with different growth sectors and Netlink seem more likely and also competent to capture the growth, it is never a great idea to use loans for distributions.

What happen if Netlink do not use loans anymore? The fall in shares price could be drastic. But Netlink won't do it, they are not stupid. They have enough debt room and cash flow to be on morphim for a long time and hope for growth to come to the rescue.

However, enjoying a 6 pecent yield while facing with such risk seem illogicial. Silly inc had APPT for 11percent  yield and manage to offload it for capital gains yeARS ago. The riSK reward profile do not seem attractive.

With the increase in cash, there are several potential companies that silly inc would like to accumulate at the right price.

The company bought Capitaland not based on ratios but the fact that many did not realise the Capitaland will be a very different animal after the merger.

First, there will be a significant ARA type of fund management business. There are many ways to cash in the cow. Put all the reits under one managemENT and IPO it.

Offload different assets to different reits to recyle capital.

Last but not least, it will be able to truly build a whole township without the need to subcontract. Vietnam is industrial towns hot bed, capitaland can build hotels, malls, factories and homes, and also manage it, and sell it for any governmemt overseas.

Capitaland is not a value or turnaround play, but is a good concept play, and the possibities to cash in after the merger is quite aplenty, and those coporate actions make good story headlines.

As for the recent headlines grabbers on tradewar etc. The company is in the view that all investments should take into considerations the downturn of market. We hold a considerable amount of cash, close to 50 percent, as risk management. There also other funds like CPF OA and SRS that are hardly utilize as of now.

So silly Inc will just continue to do the silly thing of prospecting companies with growth prospects and wait for the right price instead of worrying of trade war or otherwise as a market correction and a gentle bear is already planned for in company cause of action. The company do fear a prolong Winter Bear as company has no experince with it. 

There are already a few counters close to purchase price and silly Inc has made a few bids with no avail. Silly Inc will.update as and when there are deals made.

Silly Inc would.like to assure interested readers that it will continue to be prudent and would like to share The portfolio excluding cash is still doing well, with only 2 counters trading below cost 

Saturday, May 4, 2019

SillyInc corporate update : First Reit Accumulation

Silly Inc recently double the holdings of FR in portfolio. The Average price is 97 cents including costs.

The board is in the view that default risk by Lippo K (Biggest rental income customer 87%) is non-existence, since the rights exercise by Lippo K (yet to materialize)

However, since then, First Reit has been falling from above $1 to the low of 93 cents recently. All the known risks have been reduced, yet FR fall instead of rise.

Lets visit the risks:

1) Execution of Meikarta Project by Lippo K (Top management did not get indicted, and there is no adverse updates since then)

2) Default Risk (Almost non existence now, if they raise the fund like they say they would. 1 billion would have wiped off all the loans the parents company had, but of course, 200 mio will be earmarked to develop Meikarta

3) 2021 lease renegotiation to be in Indonesia Currency instead of Singaporean dollars. Well, it will expose one to currency risk indeed.

4) Asset dumping by OUELH or Lippo K. The troublesome and lawsuit laden China projects from OUELH cannot be dumped due to the litigation going on. Japanese home is likely dumping candidate. Hence this post is to provide some numbers for this high probable dumping.


Now the Maths:

Japan homes asset = 290 mio
Yield = 5.5 %
Rental revenue = 16.7 mio

Assumption: (All scenario based on market price of $1, the cheaper u get in, the better the deal)

1) 90 mio by debt, 200 mio rights/ placement (discount at 90 cents)

Future yield becomes 7.6%

2) All Debt. Yield accretive. 9%

3) All rights. Yield 6.9%

4) 140 mio debt (Almost Half), Yield 8%

Board in the view that all rights or all debts way to acquire Japanese Homes is unlikely.

So we are looking at yield at 7% upwards, asssuming they dun price too large a discount, and issue shares at below 90 cents.

Company did not calculate till 2 decimal place and readers are to do due dilligence. Company will most probably trade this counter and will monitor it closely with profit taking and loss cutting markers.

Thursday, April 25, 2019

Random thoughts:

Had been a few hectIc weeks.

However, I still offered to help train the volleyball teams every morning. I really enjoyed the sessions. I feel that the teacher IC is helping me more than I am helping her.

Today, the senior boys team became the national champions. A proud moment for them. There will be no more morning trainings, and I think I am really going to miss them.

At age 40, the last 4 weeks is really God send.  I felt I went back to my secondary school days. My school is a notorious school, but I have very fond memories of my CCA trainings.

The jumping and spiking hurt my ankle and knee. I need those guards now. I am no longer young, and the joints hurt. But I really miss those sessions, in fact, I am feeling rather down now.

Those days. Eh... training everyday. My team mates, our friendship.

Will I choose another secondary school? No.

Monday, April 15, 2019

随心笔:无思

有时真的不知道自己在做什么。
好像就随波逐流。

也不清楚自己的努力,是不是白费的。
更不清楚自己是不是在自欺欺人。

但是天还是要亮,
路还是要走。
就一步一步走下去吧

希望是柳暗花明又一村,
而不是跌入万丈悬崖。

或许,悬崖下,是清碧潭水。

脚步停一停,听一听。

不要太在意,
周围的环境,
不要太理会,
前方的路。
认定了目标,
走了冤枉路,
绕过来就是。

Friday, April 5, 2019

随心笔:回家

回家了,终于。
不管好坏,不论结果。

家,就算什么也没有。
就算能做的事,也没差。

我还是希望,
还是开心。

那个药箱,不会再空着了。

你不一样了。
你听不太懂我的话。

你要想一想,才记得我的名。

没关系。这是你的地方。
你安心休息。

你越来越像小孩。
你其实不再是你了。

你好好休息,开心一点。
希望能带你去吃点饭。

Thursday, April 4, 2019

随心笔:失去

不是离开了,才会失去。
握在手中,也不一定拥有。

不是活着,就是存在。

没有抓不抓得住,
只有做着想做的事。

失去,好好活在当下吧。

没有拥有,就不会失去是屁话。

好好拥有,活在心里。
眼前的,让他去吧

Random thoughts: Old age and money

Its less than 3 years apart since my mun passed away and there is a need of active givegiving for my dad.

I am closer to my dad. Hence, the last 3 months sometime do send my mind to a roller coaster ride.

There is a period of time, I worried for my single child. I thought of checking myself in to a community hospital or home and paying the expenses from my rental. There is no need for my son to worry about me falling, etc.

Having been to the hospital for 3 months. I know how it feels to be staying a hospital, community or otherwise. I rather die at home and is glad that my dad is finally going to be discharged. If lying on the bed 24 hours and wearing pampers is distressing enough, I would not want to stare at the fellow patients, each with different ailments.

I wonder how it would be when my tine comes.

Its a humbling experince. I think I do hope to see my son trying to make me confortable, and talk to me, when it is my turn.

Money, is really not at the back of my mind.

Anyway, talking about money. Do look around construction companies and construction supply companies. rWS and MBs spending 9 billions. Assume construction takes place over 3 years, and annual demand of construction in Singapore is in the range of |28 billion to 32 billion. Its 10 percent more, at the backdrop of continous govt spending on MRT lines.

Pan united is a big player in cement, and while MBS or RWS might use their own construction companies or overseas companies. No one is reallg going to ship cement from overseas.

Bye.