Monday, February 29, 2016

Sustainability of dividends- Investment mistakes

Some are common sense mistakes, but here goes.

1) Not taking into account minority's interest. HPHT has Yantian that is not wholly owned. I did not discount that in my cash flow calculation.

2) Blind by occupancy rate. Sabana used to have all its tenant in triple or master leases. Hence, it's occupancy rate is 100%. It's tenants no. increased so I assumed occupancy rate will hold even when it become multi-tenanted. I was wrong. AReit has many multi-tenant leases too, it is not a problem per se, but it highlight the risk when such 100% occupancy leases are up for renewal. You won't know if there is a nasty surprise coming your way especially if that building form a significant part of revenue.

3) Underestimating the impact of currency. When vested in LMIR, I simply look at the footnote of the AR and conclude the impact of devaluation of rupiah can be offset by growth. 

The devaluation of rupiah hit not only loans to be repayed in sing dollars but also dividends to be paid in Sing dollars. Operation revenue all took a hit too. 

4) Not following the market cycle rule. I looked at Oand G sector, including the charter rate and utilitisation of rigs and conclude that we are nearer at the peak than bottom. But when sembcorp Singapore utilities business fall and resulted in a sharp drop in share price, I started my first shot. I fell into the trap of anchor effect of recent share price.

5) Rights and placement are all bad? It is not true. Almost all reits do fund raising in one way or another. But the discount when it happens and the deal the raised fund fianced is important. Reputation once stinks stick with the company. Look at LMIR, after Alvin Cheng takes over, the acquisition is yield accretive, yet share price continue to be sluggish even when dividends grow and rupiah stabilizes. I would have bought more, but given there is another acquisition coming, I will wait for it to announce a rights/placement and for the market to over-react before I add more. 

6) Buying for a short term spike in dividends. I knew Lee metal will give a bumper crop of dividends in 2014 due to Austville profits recognition. Subtract that away, my yield is still close to 6%, which is what I am comfortable with. But I should be trading rather than holding. When that dividends materialize it share price did improve for a short while. And now the subsequently fall is rather dramatic although 2 cents dividends is still maintained. But including dividends, I just break even or win lose a bit? Didn't really count. (SMOL, can laugh ... I buy to make money not break even LoL) 

What lemons you had?

Sunday, February 28, 2016

Random thoughts: Love my job, even if it hurts

I begin to understand why my job is so different from last year. 

Because I tried to do my best for my work. I actually hate "myself" for delivering snoopy work more than I hate my work. 

Of course, it is not a bed of roses, there are people you rather not work with, lessons that are flops, conflicts with pupils etc.

But, I think we should love our job. Here how I do it:

1) Remind myself it pays for my stable and comfortable life. LOL. 

I have seen the reverse, I just had a close friend who borrowed money from me to attend to some emergencies. That loan is overdued but I have already decide to write it off the moment I agree to lend the money. 

I meet people who told me there are many working as hard or even harder than me but earning half my pay. 

I don't take things for granted. Call me lazy, and that I should aim for FI. I just wanted to keep my passion in work alive.

2) Deliver value in whatever I do.

I want to value add, there are many a times I don't meet others' expectations or I made mistakes. 

I have learn to forgive myself for not doing a wonderful job, but I am now very mindful not to whin and cherry pick my work. Even if something is not related to teaching, I try my best to look at it in terms of pupils' holistic development or angle of organization excellence and do
My best. I no longer want to "go through motion"

Recently, I was asked to sit in the panel for selection of head prefects. I used to find it a waste of time and just read off mostly from the notes provided. But after thinking about it, I decide I could value add by understanding them better and guiding them for this role. I went totally off the script and talk about various issues, asking difficult questions to check their composure. My colleague told me I asked very good questions. It's just that moment of "mindset" that decide if that another "hateful" office experince or a meaningful experince.

3) Don't be calculative over hours worked

As fixed salaried workers, the more hours we worked, the less pay per hour. Screw that thought! If I need to lose some
Sleep so I can prepare a lesson better, so be it. If I have to work over the weekend and during the holiday to organized myself thoughts, so be it. However, I forget myself if I still make mistakes. 

4) Be frank and honest.

Office politics? I am not sure how bad it is, I just be myself and say how I genuinely feel about issues objectively. If I offend someone along the way, too bad. I think second guessing or trying to please my bosses is futile as I have hit my ceiling. 

5) Look at my pupils 

Looking at them just make my day. The cute ones, the love able ones, the "poor ones", even the irritating or ungrateful ones.

They are children and innocent, mostly. Some are quite clueless. Human spirit at its purity, rub off some positive energy. 

The laughters, the energetic "黄老师”. Of course, they are pupils who give u a black face, or worse see you as transparent, but they are the minority. 

It is easier, for me, since I am a bad egg when I am in primary school. 

Do u love your work? 

Friday, February 26, 2016

Sustainability of dividends

For dividend investors, we all wanted the above. How do you determine if dividends are sustainable beyond simple numbers like FCF, and NP above distribution? 

I like to share mine, and hope readers generously share theirs. I am
Talking about absolute sum of distribution not yield as yield is a function of price. Distribution amount can be the same or even increasing but yield falling due to runaway prices.

Determine "will" to give:
1) Track records and whether owners owned a significant stake (>35%)
2) Case of even in a bad year, dividends is maintained. While some might consider as imprudent, I see it as a good will gesture. Examples include Venture and CMPH 

2) Level of buffer of FCF
Dun just take FCF as OCF - Capex. Take tax away too, there are some reports that add back finance costs in OCF. Take that away too. 

3) Growth drivers.
It's easier for reits in this area. CCT has capital green, MIT has BTS project. 

But growth drivers can evaporate into thin air. APPT Taichung, CMPH jiurui are examples. APPT not only has Taichung, it has broadband and cross selling as growth drivers. So similar to Starhub. If one doesn't work out, still has the other 2. Well... 

Organic growth are even harder to determine unless you are a insider. Look how sexy aviation turn into MRO within 6 months. 

4) Management execution history
This is the easy part. Read AR for the last 5-10 years. What are their plans for expansion and growth? Did they pan out as planned? If not, why? ST engineering has quite a good record if not flawless record. I bought ascendas REIT for this reason too, I find the pattern of placement, sale of property for a newer property that is yield accretive very attractive.

5) Do stress tests and see if the company can continue their dividends. It is not rocket science and assumptions are rubbish in, rubbish out, but it does give u a sense. I did stress test for CMPH and CapitalComercical Trust before. If intersted, can refer to past posts.

6) Buy when industry is not doing well rather than when industry is doing well.
If give you the true earnings and if company can do well/ ok in a downcycle what are the chances in can't do well in a upcycle. But no one can predict the bottom. I thought I bought Sembcorp and Lee metals at a low. But low get lower. But maybe you shall not try to get something at a high? Perhaps high can get higher? Oops I am confused. 

I am done. What is in your bag?

Thursday, February 25, 2016

Quick review of CMPH and Venture Q4 results

will be done using the same format as the previous post. No flooding of numbers.

Hope to see:
a) 3.5 cents dividends maintained 
b) OCF of 1.8 - 2 billion HKD
c) Stable operating numbers for it roads, especially YTW

In reality:
YTW continue to do well but it's JVs are not doing so well. 3.5 cents dividends are  maintained but OCF is only 1.5 billion. 

Guixing and Guiyang are profitable and NP improving from previous management 

JiuRui operating numbers is still bad.

Management outlook is challenging and will have an impact on tolls and revenue due to lower economic activities. 

Management also announced scrip dividends scheme which will save the company cash of the owner opted for it but will end up diluting the stakes of Miniority shareholders.

Hold, will sell into strength if Mr Market likes the results which is highly unlikely. With the absence of anymore growth drivers to provide buffers, and general market sentiments, chances are this will be a panadol type of investment. 

2) Venture:
Hope to see:
a) continuous recovery in earnings
b) dividend of 50 cents maintained 
c) Better margin and FCF

In Reality:
I got what I wanted. NP and FCF now cover more than dividends payout with the balance sheet improving. 

Action: Hold

Tuesday, February 23, 2016

Brief Review of Q4 results of companies under my portfolio

The companies in my/ my wife's portfolio are APTT, FSL and Lee metals. 

I won't go into details or numbers, but what I am looking out for in their report.

Hope to see:
a) Tai Chung contributing, and/ or 
b) Better cross selling, with prenium TV ARPU and Rev improving
c) The above happening leading to a sustainable dividend payout

In reality:
None of the above happened. In fact, more bad news in the form of lower basic cable rate. Although the drop of 10-15 NT dollars is a small of 2-3% of ARPU, it's still a bad thing.

Capex will intensify due to new NCC ruling. I don't buy the management's statement it will lead to better bundling of products. 

Last straw is Taichung Execution is again dragging, this time due to negotiation with content providers. In their prospectus, they mention there is no killer content where there is a need to bid excessively. Yawn... 

Action: Cut Loss (Break even if dividends included)

2) FSL
Hope to see:
a) Resume of dividends
b) More tankers on fixed charters

In reality:
Both did not happen. Numbers are good and if they pay out all distributable income, it would be 3 cents. 

So, there could only be 1 reason, another acquistion in on the cards. 

1-2 quarters of review. If no acquistions and no payout/ clarity of payout, it is bye bye. Containers are expiring soon, which is scary 

3) Lee metals (lower expectations)
Hope to see:
a) no impairment to inventory
b) 1 cent dividend (excluding special dividend) to be maintained.

In reality:
Both happened. Earnings are weakened but balance sheet is stronger, FCF and NP both are able to support a yearly dividend of 2 cents, which is what I expected of management to deliver in the  down market.

Merchandising arm is almost non-existent now. Hopefully when steel recover, this arm will either contribute to bottom line or offset weakness in fabrication

Action: Hold. 

Sunday, February 21, 2016

Random thoughts: Weekend conversations

I have to correct my previous post, my sister is not an insurance agent but an financial advisor. Last year, I saw the book "The Intelligent Investor" in her room and is pleasantly surprised. I thought it is for her private consumption.

A few weeks ago, I had the luxury of time to chit chat with my sister. She told me she is rather stressed with the unit trusts' performance and is wondering if she should close the funds to cut loss for her clients. I asked "your client angry with you?" She told me that her client is cool and a nice guy, just that she is worried the fund might continue to under perform, and feel that she is letting her client down. She had checked with her seniors who also advised her to keep to the funds and not "cut loss" I asked if her client is savvy and does his own investment too, or that he might be in need of money soon. Both questions has a negative answer.

I told her since the purpose of the fund is for the quarterly payouts and for retirement cash flow, it is still fulfilling its purpose. I asked what fund is that. She told me bond fund. I had this sinking feeling. I said "If US interest rate normalize, and everything equal, bond funds should continue to under perform, and that problem with funds is there is no maturity date"

When I told her the risk and returns after costs do not tally, she asked me what to buy. I am tongue struck. But I told her there are some blue chip bonds doing 3-4% and the only cost is commission during purchase and sale.

She also told me about investment in Japanese Market, I am not familiar with  Japanese market, but I do not think she know more than me, and I wondered if she know about the lost decade of deflation.

I see 3 folds problem in outsourcing your investment to others.

1) Timing. When you visit that representative, and the market is at the bottom, you are in luck. Or the representative has global or deep knowledge to know where is the sector for growth, you are in luck. Otherwise, no representative is going to say: Hold on to your money first, there might be better opportunity later.

2) How much more does the representative know than you? Plain insurance like H&S or even endowments are straight forward, there is seldom a problem of capital loss if you hold to near maturity or maturity. Go deeper...

3) Companies need to eat, and they need to keep pushing out the products to sell, regardless whether they are over, fairly or under valued.

 If you do not have enough knowledge, how do you ascertain someone is "Peterlynch" or "Peter Pan"? Does he/ she appear in fairy tale and say "buy this and it will go up?"

My sister told me all her investments products which she sell are unsolicited, meaning the clients ask for it, since she is stressed over the performance of these products. I say keep to selling insurance, it is simpler.


Today, my wife told me that our neighbor gave her a hot tip, a counter that goes from 50 cents to $5. I told her I never heard of that China Counter in SGX (can't remembered now, even I heard it just a while ago), anyway, I cannot remember any counter going 1000%, it would be in the headlines definitely, I told her it is some underground money lending instrument packaged as an investment la, don't bother.

She insisted it is listed in Singapore. I told her forget it, even if it goes to $10, I will have no regrets, because the chances of it going to Zero is higher, it might be a ponzai scheme.

Didn't think my wife will fall into the "hot tip" trap. SO it is that easy??


Also, when I went to a mall, I saw an atrium area full of insurance agents selling products to passer-by. Wow, how come it's so packed? Usually it is rather "pia tan" with passerby shuning these agents. That I realised why. There are 2 boxes of free gifts (not sure what it is) and an animal shaped balloon.  

While, they keep saying no obligations. Guess if u want free gifts, you can listen and take them without buying.

But the sale pitch is already a good start.

Maybe I not "gan" enough, I rather not spend time listening for the gifts.

I considered the gifts a "trap" too.



Saturday, February 20, 2016

Random thoughts: No place for novice

When I asked my pupils to write their weekly journals, I ask them to write anything about their learning. What they like, do not like etc. some ask me if they can write what they wish. I said "sure"

A couple of pupils ask me to send them for story telling competition. So when i received an email invitation about National Story Telling Challenge, I jumped on it. I ask the pupils if they are still game, it is a different story telling contest, they give you a topic and you have to span your own story. They look forward to it.

I went for the trainjng workshop today and was shocked. I used to be in the CLDDS part time when I was in college and university. They wanted them to do a story telling cum drama performance. It was interesting and fun, but rather difficult and challenging.

After the workshop, they were given a trial and a topic of "A mother who can't talk". They need to come
Up with a skit and story in 12 minutes and in then add an impromptu condition to the story in the last3 min. I realised they cannot keep to the point and when they do, they cannot develop a twist to the story, so I was quite kanchong. But I thought: it's ok, I will spend more time with them next week to practice.

They then ask for a volunteer. The group that performed blown my mind away!! I would not be surprised if that is rehearsed for a month! But the stage movement, use of props and the interesting dialogue is really power!

Then it dawned on me! These people are trained for ages for this competition. I ask another parent who trained pupils in drama in private. She told me this segment can be trained and she promised to help me. 

I just felt silly. I thought of giving the pupils experince and do not really mind losing but just want the pupils to enjoy the experince. 

Right now, I felt I am silly to register for the competition. I did the same for another competition but did not have the same problem.

So scary. I will do more research next time befor my pupils get gobble up. 

Friday, February 19, 2016





Thursday, February 18, 2016

Parkson Retail Asia - cheaper than cabbage

PRA is a net-net company now (current assets slightly above total liabilities) 

Let's look at its problems.
1) Weakening Ringgit
2) Poor consumers sentiments at even its home turf Malaysia
3) Declining profits (excluding one-off disposal gains)
4) Coporate governance 1 - making a young daughter director with executive powers
5) Coporate governance 2 - 2 independent directors have resigned or quit
6) Coporate governance 3 - Complex owner structure of parents company, just look it's sister company PRG propose transfer/ sale of stake from left hand to right hand. It got voted down, which I cannot understand.
7) Poor execution records. Hanoi expansion is a disaster. PRG, it's sister company, helmed by the same chairman, also incur high ligitation costs for Beijing Metro 
8) Indonesia profits unpredictable, lastest 2Q show a small loss. 
9) FCF is QoQ is worsening 
10) Payables is ballooning.

The valuation:
1) No debts
2) Still profitable at every quarters minus the one-off closure cost of Hanoi mall
3) Giving good dividends since IPO, and a 2 cents dividends (13 mio) would mean a yield of above 10 percent. Give a 1 cent dividend is not too bad. I need another quarter to see if FCF improve, it's short record of 6 years data show it's a FCF generating machine.
4) From PE perspective, it is not demanding, if we believe it can do 2 cents EPS in the longer term.
5) From NAV perspective, I am not interested since it is asset light and inventories, receivables etc might be marked down when "problems" happen.

When I last post about PRA, I say I will
Look at it only when it is near 20 cents, so here am I, what do you think?

( not vested )

Wednesday, February 17, 2016

Sembcorp Industries FY results - Headlines can be misleading

Vested interest with 2 lots 

Given that marine reported results earlier, we already knew Profits will be dragged down.

But the next statement should be Utility net profits up 72% due to divestment gain.

Without divestment gains, utility NP will be lower than last year.

The known fact is Singapore utility  market rate is getting worse and it should not come as a surprise. 

But look at this:

Trumpeting on India's contribution? India is dragging down bottom line. Overseas market taken together is flat.

However, to be fair, divestment gains as part of capital recycling mean it is hardly once-off thing and should be consider as part of the business, but we cannot expect it to be recurring annually either. 

Lastly, I am hardly convinced that the impairment by marine for Sete Brazil is sufficient, given the bulk of payment for still ships are due upon delivery. What about the remaining 4 that have not started construction, is the impairment going to be a yearly thing for the next 2 years?

Marine is making Sembmarine fiances really ugly with cash flow affected and debts increasing. Dividends is cut is hardly surprising, analysts were talking about special dividends from the divestment gains, I was just hoping to get status quo. So, results is below expectations.

A spade is a spade. It's lousy results. 

But will it survive? Is it worthless? 

I did make a bid some time back at $2.1. But didn't get any. Maybe if it goes that low or beyond. I might be adding. 

It will not be due to valuation based on earning or yield then. 

Tuesday, February 16, 2016

A quick stress test on CM pacific

Taken from 2014 AR. The bulk of loans are loans F and G which are in USD and depend on BBA libor rate. CMPH loans are all amortized 

Assume 7.78 HKD to 1 USD and interest rate as what is stated in 2014 AR.

The amount of money to be paid over the next few years including interest cost are: 

2016: 703 mio HKD 
2017: 751 mio HKD 
2018: 890 mio HKD
2019: 879 mio HKD

Capex for 2015 9M is the highest for the last 6 years, at 150 mio. Assume
A higher capex of 200 mio  due to more expressways and the fact that Guixing is not fully completed. And that they need to pay 743 mio HKD. As dividends for the enlarged base

They need to generate OCF of 1.66 billion of HKD, and they need to add 100 mio for Q4. Not tall order.

2018 is the year they need to pay the highest loan. 890 mio. So they need an OCF of about 1.85 billion. 

If we annualise 9 M 2015 results, OCF will be about 2 billion. So there is some buffer. There is excluding the 3 new acquisitions' contributions.

Assume interest rate increase by 1% in 2016( unlikely if u ask me), 2% in 2017 and normalized at 3% in 2018.

Repayments of loans will be:

2016: 731 mio
2017: 798 mio
2018: 941 mio 

Assume HKD weakens by 10%, 8.85HKD to 1 US dollar

2016: 750 mio
2017: 810 mio
2018: 971 mio

Assume double whammy of strengthening USD and hiking of interest:

2016: 778 mio
2017: 857 mio
2018: 1.22 bio

If the company can generated 2 billion of OCF, it can still maintain dividends in the   double whammy situation.

Hence, I think we should seriously worry more about the operating business than what many people are harping on, currency and interest hike. 

I wanted to post this before their annual results so that readers can see for themselves what OCF they can generate for themselves with a quarter of contribution of 3 expressways.

If full year 2015 OCF hits 1.8 - 2 billion, I will sleep well. 

If the tolls start falling due to economic slowdown (less goods transport around the country), I will study how big the fall is and decide if I will reduce or cut loss.

Saturday, February 13, 2016

Random thoughts: New Year, New approach to work

Last year was a rough patch in my work.I am not kidding when I said I contemplated quitting my job.
Now, I am feeling much better and would rate job satisfaction back to the long term average of 7 out of 10.So what have changed?

Nothing, the demands of the job are the same, maybe perhaps even more. What really changed is my mindset. With the change of my mindset, I did the following:

  1. Create more time by working at nights after my family go to bed and also on weekends when I visited my parents.
  2. Became more forgiving of myself. I told myself it's ok to be the weakest manager in school, just keep improving and stick to my core values.
  3. Always asking how can I add value to the system 
  4. Delegate more tasks to my able colleagues 
  5. Happy that I can live by my own values at my department level (since I am the boss LOL) 
I no longer fear decision making or that my colleagues are better than me Perhaps my skin got thicker. Many times last year, when I would groan about doing certain work, I would now see it as an opportunity to add value in the system. I am also more hands on and start to manage and indeed feel like I am part of the team running the school.

I not longer have inner demons screaming at me at whatever I do. I said things as it is, never considering how the opposite party would have an opinion at me. I am very mindful to be kind in my speech but I no longer doubt myself and bothered about how others would think little of me. In short, the self-inferior complex is gone. I am well aware that I might not be as good as others, but "its OK" I have also done several "wrong things" this year, things I would definitely do differently if I have the chance. However, I forgive myself and moved on. 

"What if I still do not produced results" this year? I still have this doubt and inner demon. But at least it is not screaming at me.

I just did a bo liao lesson with my P4 class. I felt "young" again, spending hours preparing and uploading pupils' work and showcasing their work. I used to do that, I shall share with you 1-2 work    


Friday, February 12, 2016

Why am I adding CM pacific?

As announced in my previous post, I added CM pacific.

I got a gentle poke from Kyith, and decided to write a post to crystallize my thoughts.

So here go:

1) Expect 7 cents dividends to be maintained and sustained
Simple and only reason.

Why I expect CMPH to continue paying:

  1. Enlarged shares base would be about 1.8 billion shares
  2. They need to pay about 743 mio HKD if they want to keep this dividend payout. (1SGD : 5.9 HKD)
  3. 9 Months FCF is already is already in excess of 1 billion
  4. Full contribution of Yanping and part of Guixing and GuiYang would be captured in this quarter
  5. Negative goodwill of the 3 acquisitions will provide good headline numbers and perhaps fool Mr Market? LOL
  6. Operating numbers wise, Yanping managed to edge out a small profits. It is loss-making when the acquisition is announced. Jiurui revenue while falling, share the same story. It means one thing to me only, execution track records.
  7. Yongtaiwen, its biggest contributor, is still reporting strong operating numbers. Although the rest of the JVs and Beilun are all weakening.
  8. Since the 3 acquisitions are largely financed by equity and not loans, there is no risk of balloon interest cost

What are the risks:

1) China economic slowdown affecting revenues and cause all expressways to go down further.
That could happen. When it happens, I will suck thumb.

2) The dilution effect offset the benefits of contribution

If you look at the 3 acquisitions as one, it is a deal that really is nothing to shout about. If you look at the Net profits and the amount paid, it is very obvious the 3 deals is one package. You will be scratching your head why GuiXing is more expensive than GuiYang (beside the fact that they have 5 more concession years)

So taken together, the NP yield would be about 5%. and 15% based on acquisition costs and 2014 Net profits respectively, while the dilution is 33%.

However, I believed I should be more concerned about cash flow, which should be higher than 5%, since they pay dividends through cash flow.

3) The concession years are short:

Road toll concessions are 29/30 years long. Yongtaiwen Have only about 14 years left. If you are those who shun industrial reits because you think 30-60 years of lease is too short, then CM pacific is....

4) Regulation risk

Lower tolls to be mandated or more toll-free periods

Thursday, February 11, 2016

Recent Market action - sold GLD USD and bought CM pacific

Just another update for readers.

Trying to be transparent, not asking anyone to follow, in fact my track records is horrible.

It is again when high can get higher and low gets lower.

I sold Gold for about 10% profit because I wanted to get CM pacific which is getting lower and lower. 

Given The US tumble and there is flight to safety to gold, perhaps today or a few days later would be a better timing if luck has its way. 

I have blogged about CM Pacific and Venture as companies whose fundenmental I think would not changed in the short term in today's volality.

I could be proven wrong with the announcement of their results. 

With this sale, my ammo increase further. It is now 5K and I could still nimble as I wait for my PB in March.

Market could possibilitly still have some
Way to go down, but I buy when market going down and sell when it's going up, with the dividends providing me with sound sleep if the going down takes a while. 

Not losing sleep yet and hope to stay that way. Have a Prosperous Market year. Mr market is monkeying around, don't take him too seriously. Don't throw in your sink 

Accordia Trust - A bountiful 2H?

Accordia Trust results is good enough for me. It show that 2Q weak numbers could well be due to weather and not excuses. 

It went up more than 5% at one point today. Because with the better than expected results, come another good news, they will distribute 100% of distributable income and also return the 10% they hold on 2Q.

So what are we looking at?

the 10% more from 2Q will add about 0.2. Cents to distribution. (Taking 90yen/1sgd)

Q3 distribution is 2.16 cents, so it would work up to be 2.36 cents

Now, some projections are just projections, because mathematically, it doesn't reconcile.

2H distribution would be higher due to higher cash flow. How
Much higher is projected?

Let's just use 5% more from

Then 2H will be 2.415 cents. But Q3 is already 2.36 cents. 

So, Q4 need only be 0.06 cents. 

0.06 cents is hardly what that projected of 25% of distribution.

As research earlier, while the golf courses business is stagnating and it is the Golf drives that provide
The growth for its parent company. Its revenue and OP has been relatively stable despite the ups and downs of external factors 

I am still eagerly awaiting its first  acquistion from its parent. I hope it's a driving golf. It would mean that the trust is not just a pure dumping ground. 

Operating numbers show a big jump in this quarter. January no. Is positive. 

So what does all this mean?

If we take 2.4 cents at 2H as a conservative longer term distribution, allowing a quarter of poor results due to weather. The distribution of about 4.7 cents still yield 8.5 % at current price. 

So, I expect to get a 8.5%-10% yield this year. 

In the longer term, yen would be weaker since USD would be stronger. But JPY to SGD is not so clear cut. Compare this 2 charts

It is not so obvious that the strengthening of US mean JPY will weaken against SGD. from July to September both are strengthening against SGD

It's loans are in Japanese Yen, and Japanese interest rate is going down with Abenomics. Strange Yen can strengthen against USD with their negative interest move.

However, the Tibor rate is constant in January althought it is going down since 2014.

Anyway, any negative movements could be offset by acquisition.


The odds are high that AGT is no 3 grade  trust that have volatile distribution. Yes, there is interest and currency risk. But as explained, in the near term, things are not looking bad.

I am glad I did not capulate and shut off the noise when they have a poor Q2.

I had my doubts but since it's only less than 10% of my portfolio, I hold my ground, without adding either.

I am lucky, and I was right. If operating numbers is poor for another quarter, it would be more doubtful.

Saturday, February 6, 2016






Friday, February 5, 2016

Singpost's Alibaba Magic gone?

The Singpost caught my attention a few  weeks ago when it's price went below "Alibaba effect" price.

It was around 1.36 when Alibaba bought a stake in singpost 

So what have changed?

1) price went on a INVERTED V shape journey 

2) top line keep going up BUT

3) core profits are still stagnant or growing unimpressively

4) 2 quarters of 1.5 cents dividends instead of the usual 1.25 cents 

5) still aggressively buying logistic and distribution capabilities and/  assets 

6) logistic operating margin improved in the lastest quarter.  

7) No more updates in the latest quarter on the various Alibaba JVs and strategic cooperation 

8) went from net cash to net debt posotion to fund expansion 

I am doing more of a qualitative analysis here. 

The business plan is simple enough to understand. Ride the e-commerce boom and vertically integrate this into their logistics and distribution business. This would offset the growth or lack of of their mail business. 

What I cannot understand/ don't like is they are going net debt yet increasing dividends. 

They are going property heavy, with the building or a e-commerce Hub. 

The long wait on Alibaba JV which is supposed to be firm up in February (already extended from December)

If you believe the Alibaba magic is still around, and as the word suggest, will appear when you are off guard, current price is worth monitoring. 

If you believe the magic is gone.... Plenty of choices out there now. 

I know nothing about business except using the Internet to do case study. I believed Alibaba bought Singpost for the booming SEA e-commerce market which is relatively less crowded by Giants like Amazon, eBay.

I wonder why singpost go jostle with the Giants through tradeglobal, which IIRC is loss making looking at the pro forma info. 

Was waiting for updates from their quarter reports, but only get "wait huh"

In short, it is no longer the singpost of 3 years ago. 

Staying clear, since there are others more compelling on my watchlist

Wednesday, February 3, 2016

Random thoughts: This picture makes my day!

My pupil during her weekly journal,
Complained that I seldom call
On her to answer question. This is because I know she always get the right answer.

But she drew a picture, and I think I look very handsome !! LOL 

The joy of being a teacher LoL

MIT- Small is beautiful

MIT is the second industrial REIT I owned. It is not small per se, it is a REIT with strong parentage and 84 buildings.

But compared it with A-REIT, it is easier to have visible growth drivers that will add to NPI.

There is a new one after HP BTS. An AEI at kallang

Taken with HP phase 1 and 2, which is fully committed. You have staggered increase till 2018.

Each project will add about 400k sft of space. When HP takes up all the space in 1H2017, it will add about 2.2 mio per quarter. I use an conservative $2 per month per sq ft rent for high tech building in my calculation 

There is no pre-committment for Kallang AEI.

But, I would think these 2 growth drivers will provide some buffer in interest rate hike.

2.2 mio per quarter is 30% of its interest cost, it's interest cost will
Have to go above 3% to wipe it off. It might go above 3%, but I do not see the odds as very high. It's current all-in interest cost is 2.4 percent.

However, DRP will cease. MIT will no longer have this source of "funding" to save on cash for acquisition or AEI.

Beautiful, isn't it?

And the supply surge in industrial space is behind them. If they can survive that phase, they should continue to do well unless Singapore economy stagnant or go into negative territory.

7.5% yield is better than A-REIT. 

Valuation in terms of prenium above NAV,
Will show MIT is more expensive.

But I think the distribution and yield should be more relevant valuation. 

As for capital management etc, I like both A-REIT and MIT spread of refinancing needs. 

Random thoughts: My imaginary tuition center

Today, I was waiting for my wife at a mall. I was staring at an empty shop, wondering how would my shop look like if I start my own tuition center!

For fun sake!

The slogans at the glass wall:

From a E to an A in 1 year.

Expert language teacher with experinces in various schools handling variety of pupils.

No matter what is your problem, we have a solution. 

English speaking at home? Not a problem, expert has produced a class of As pupils, all from English speaking background.

Choose your weakest component. 

You will graduate with the right skills and never need tuition! 

Cheaper and more effective !! 
I will then split my class into 

1) Vocab class
2) Writing class
3) Comprehension class
4) Oral class 

Lol... Schedule will be packed if they take all as all kiasu parents would mostly likely do.

Ok. Enjoyed my dreaming. I going to do my marking Liao. Bye!! 

Tuesday, February 2, 2016

Recent action update- Sold Cogent and bought ST engineering

Just to alert readers, who might be interested. 

Why? One already giving me nice profits and another had a price I think is low enough.

The high can go higher, the low can go lower. It's ok for me.

With the sale, there is some spare ammo too.