Macquire International Infrastructure Fund- Special Meeting

The boxing match will be held on 5 December 2012. The current BOD told shareholders to vote against the appointment of new directors nominated from Lim Asia. As for Lim Asia, the reason they are appointing new directors was mainly they have enough of the current BOD which failed to listen to them on the steps to unlock the intrinsic value.

So how should shareholder vote? To answer this question, look at the track record of Lim Asia. Do a quick google and you will find that they are people who are involved in the liquidation of Tau Capital which is a UK based fund investing in companies in Kazakhstan. Tau Capital was pressurized by their shareholders to wind itself up.

My personal thoughts:

For those that bought the stocks for the dividends and do not mind waiting long term (5 years) for the market price to reach it's true intrinsic value, this group of shareholders should vote against the proposed appointment of new directors. The assets of MIIF such as Taiwan Broadband Communications and Changsha Port are good businesses that generate stable income. It is hard to find such high cash generating business.

As for those who wants to exit this investment as soon as possible, then they should vote to appoint the new directors from Lim Asia. 

For myself, I am voting against the appointment of new directors as this will lead to an increase in management cost. There will be additional directors fees plus traveling expenses to conduct Board meetings. There is already financial advisor appointed on recommending a range of alternatives available to the BOD. I do not want to pursue any divestment strategy. But I do believe MIIF should do a refund of excess cash in the form of capital returns since the BOD is unable to do any M&A.

Macquire Infrastructure Fund- Boardroom showdown

Announcement by MIIF:
"Macquarie International Infrastructure Fund Limited (MIIF or the Company) wishes to inform its shareholders that a valid requisition for a Special General Meeting of the Company (the Requisition) was lodged by Raffles Nominees (Pte) Limited on behalf of its clients, who hold 10.27 per cent of MIIF’s paid-up share capital, (together the Requisitioning Shareholders) at the Company’s registered office in Bermuda on 5 November 2012 (the Operative Date)."

The latest news is the mysterious shareholder wants to nominate 3 directors to the BOD. Looks like an upcoming boxing match.

Religare Health Trust

Fate is kind to me, I was not allocated any shares for the IPO of Religare Health Trust. It tanked on the first day of trading (22 Oct 2012). From IPO price of 90 cents, it dropped to 80 cents and at the lowest point in time, it traded at S$0.785. 

The reason for trying for this IPO was to diversify my portfolio further into Healthcare which is supposed to be defensive in nature. Fortis has injected part of their hospital assets into this trust and waived their entitlement to the dividends for 2 years. At 80 cents, the dividend yield projected would be 10% right now. If including sponsor share, the yield would be probably 8% which is still extremely tempting.

Risk of holding on to this trust are as follows:

(i) Currency risk. But this has been mitigated by 2 year forward contracts entered by managing agent.

(ii) High dividend yield due to sponser Fortis waiving off their share for 2 years.

(iii) Political stability and business environment. There is also a perceived lack of trust in assets based in India.

Interestingly, an Indian friend told me that if I am really so keen to invest in India, why not just put the money in India fixed deposits which is giving an interest of 8%.....hmm....very true indeed.....

River Isles Review (NorthEast District- Punggol)

Details of this project
Developer: Qingjian Realty
Property Address: Punggol Central/ Edgedale Plains
Legal Description: Lot 2497A of MK 21
Site Area: Approximately 20,256.10 sqm or 218,034.64 sqft
Type of Development: Full condominium facilities
No. of Blocks: 9 blocks of 17 Storeys comprising of a total of 610 units
No. of Car park lots: 610 (one for one as per agent)
Tenure: Leasehold 99 years commencing from 6 Feb 2012
Expected T.O.P date 31 March 2016
Expected Legal Completion Date 31 March 2019

Overview:

Qingjian's River Isles development is beautifully landscaped with generous water features throughout the whole estate....lovely from the artist impression....another quality development by Qingjian. The developer has announced that it is planning an IPO. Not surprisingly, you can see tremendous effort by the developer in terms of reasonable pricing, finishing and concept being conceived and catered to all walks of life for residents at all of it's recently launched projects.

Grand Entrance

Show Flat Model

Large swimming pool

Night view of clubhouse

Beautiful landscape and facilities

Exterior facade

Artist Impression of main entrance

Site Layout

Location and Amenities

• In terms of public transport, extremely near to Coral Edge LRT station which  is 3 stops to Punggol MRT.
•  Vehicle owners can take Tampines Expressway (TPE), Central Expressway (CTE) and Kallang Paya Lebar Expressway (KPE) to get to the business hub or shopping district in the city.
• Punggol Plaza is a mere 5 minutes walk away. Super market and shops to cater to resident's daily needs thus close by.
• Megamall Waterpoint is just 2-3 bus stops away. It will be ready by 2016.
• Well located and close to parks and gardens with jogging and cycling tracks by the resevoir. Residents also get to be close to watersports (kayaking and jet skiing) which will benefit the young ones.
• Near to good schools. Schools close to River Isles include Greendale Primary School, Horizon Primary School, Greendale Secondary School, Mee Toh School, Edgefield Primary School and Punggol Secondary School.
• Punggol is up and coming. MND Minister Mr Khaw has just announced the next chapter of development for Punggol. In addition, the number of apartments in Punggol will be increased from the current 26,000 to nearly 100,000. This will mean Punggol becoming twice to size of Ang Mo Kio in future. A truly vibrant satellite town in the making.
• Developer will be providing free shuttle bus service to Watertown/Punggol MRT FOC for the first year.

Showflat and finishing

Superb finishing for a suburbia development. The developer went all out to sell this project. Marble flooring finishing for living, dining, master and common bathroom for most unit types. Timber flooring in bedrooms. Sanitary and kitchen fittings by renowed brands Kohler and Hansgrophe. Even the toilet bowls comes with anti-slam silent type cover. 

Extract from brochure

Picture taken from Showflat

There are various unit sizes in this development. Will focus on two layout that was at the showflat.

• 3 bedder-109sqm (1,173sqft)

3+1 Bedder

The 3 bedroom with study is strangely V-shaped. Not exactly efficient in terms of layout and Fengshui. Also, the wardrobe for the master bedroom is small. But I like the long balcony that stretches from living to dining area. I also like the balcony in the master bedroom.....can place an outdoor mini coffee table and chair set to read newspaper.

• 4 +1 bedder-137sqm (1,475sqm)

4+1 Bedder

The 4 bedroom + 1 study is my all time favourite layout for this development. It is extremely spacious....superb and generous space provided at the living and dinning area. Walk in wardrobe in the master bedroom also significantly more spacious than the 3 bedder version. Another excellent design feature is the exclusion of an additional attached bathroom to the junior master bedroom. Such extra bathroom is a waste of space. The developer and architect has done a good job in the layout. Interestingly, the 4 bedders starting prices are from 760psf during launch. Where can one get such spacious layout for less than S$1.2Mil nowadays? 

I think that Singapore is going Hong Kong style. Such generous layouts are rare and a premium in the market. Definitely a good buy....comes TOP, my guess is the psf will shoot up to at least 900psf in view of the premium layout and development potential in Punggol.

Just for the fun of it, also included the 4 bedder dual key unit. Great for those who wants rental or getting parents to stay in.

4 bedder Dual Key

Ending Note:

I think that the prices starting from 760psf plus to mid 800psf are very much value for money in terms of the various initiatives launched by the government to develop Punggol. Not forgetting, the developer is throwing in real quality finishing such as marble flooring to buyers. On a personal note, I find it strange that there are many people who only wants to buy projects near MRT or shopping malls and willing to pay large premium of S$1250psf to developers in view of the current economic conditions. River Isles is fairly priced with good potential for future upsides.

October 2012 Investment Portfolio Upate

Got the same feedback from my network of friends, that is, worsening business results in Singapore and poor future outlook in 2013.  Sold off Wilmar and bought more stocks of Singapore Press Holdings (SPH) as a pure defensive play. I like the SPH management diversification strategy into Retail Mall management with their investment into Clementi Mall and Selatar Mall. Printing of money by US (QE3) will not heal the underlying rotting fundamental of the world's biggest economy. 

Also took additional punt on Macquire Infrastructure Fund (MIIF). The board of directors have appointed a financial advisor to look into measures to unlock the value which is firmly undervalued by the market despite various rounds of share buy back. I hope to have a return of excess cash from MIIF as they have not been able to find a M&A target since the last round of fund raising. Hoarding onto huge pile of cash is detrimental to not just the company but also all investors due to high inflation eroding the value. Other possible financial plan may involve selling off of assets to realise the intrinsic value.

Allocation of S$217K:

 

Riversails Review (NorthEast District)

Details of this project
Developer: Allgreen Properties Limited
Property Address: Upper Serangoon Crescent (New side road to be built)
Legal Description: Lot 9557A MK22
Site Area:24,620 sqm/Approx. 265,000 sqft
Type of Development: Full condominium facilities
No. of Blocks / Storey / units 12 blocks / 18-storeys / 920 units
No. of Car park lots 930 carpark lots (Extra 10 lots)
Tenure 99 years commencing from 7 December 2011
Expected T.O.P date 30 September 2017
Expected Legal Completion Date 30 Sep 2020

Overview:

 This is the plot of land that Allgreen got at a steep discount relative to surrounding sites such as Riversound and Boat Quay. The psf ppr approximately S$290 however, Allgreen is launching this project in line with the surrounding market pricing. Reason is that there were many cheques offered in particularly for the 4 bedders and which leads to preview pricing of S$840-S$850psf on average...wow....Allgreen is making supernormal profits out of this project....cool! The 1 bedders were itself 3 times oversubscribed. During my visit today, noted lots of cars and potential buyers swamping the showflat....demand is still hot for private properties despite the economy slow down.

Nice water features outside the showflat

Another shot of the water feature

Carpark lots were fully taken!

Location and Amenities

There will be a mini commercial centre from the BTO opposite Riversails. This will benefit the all residents staying in the area. The park connector will also bring one to the Punggol Promenade...so good for those who likes cycling and jogging. This location is also just next to the KPE exit thus making it extremely convenient for those who drive. The nearest LRT will be Kangkar station which will take one to Seng Kang MRT (10-15mins walk). But no worries, the developer Allgreen will be providing complimentary shuttle bus services to Hougang MRT/Bus Interchange for the first 2 years....extremely generous of them.

I actually like how the neighbouring area are being developed with modern clean cutting BTO, DBSS, Executive Condominiums (Austville and Heron Bay) and Private Condominiums (Riversound and Boat House) which give rise to an exclusive and unqiue district. Riversails is also set to benefit from the up and coming Selatar Aerospace industry.



Site Plan: Part 1 of 2 (Ground Level)



Site Plan: Part 2 of 2 (Sky Lounge)



Unit Distribution of Riversails

Showflat and finishing

There are 4 models on display: (i) 1 Bedroom; (ii) 2+1 Study (914sqft); (iii) 3 Bedroom (1108sqft) and 4 bedroom (1367sqft). For all units, built in shoerack outside main door and also built in fridge. The rubbish chutes are built within the units. Toilet bowls given are also of the silent type. Marble floor finishing (timber flooring for bedrooms and study) by Allgreen. Good quality finishing by the developer. But I am not exactly a huge fan of marble floor and marble walls in the Master Bathroom, just think that it is not practical. My personal preference would be non slip tiles over perceived grandness.

My favourite layout and facing are actually those 2+1 Study units that are facing the 50M main pool or the dip pool. Get low floor (2nd to 6th floor) to enjoy the pool view. The 2+1 units are also suprisingly spacious and decent size. Rare these days to get 2+1 over 900sqft. The balcony is also spacious enough for the dining table to be shifted there if the buyer choose to do so. This will free up even more area in the unit.



2+1 Floorplan of Showflat on Display

On the other hand, the 3 bedder on display is quite disappointing. A unique selling point here is the transparent glass installed in the Master bedroom and bathroom. This allows couples to see what each other are doing in the toilet. I was told the developer would not accept any request for customisation. For those who wanted privacy has to settle this issue themselves when it TOP. 3 bedder also a little too small for comfort. Just do not like the feel of the Masterbedroom which was more cramped than I expected. My personal advice would be to stay clear of units facing the busy Upper Serangoon Road as it does get very noisy.

3 Bedroom Floorplan of Showflat on Display

The 4 bedroom also has the same issue as the 3 bedder: It felt cramped. Strange that developer are still building junior master bathroom. For better and more efficient usage of space, one common toilet/washroom is actually more than enough. Why waste precious space? Good thing about 4 bedder is that they come with bathtubs in the Master....awesome!

4 Bedroom Floorplan of Showflat on Display

Ending Note:
I think that for the price on offer, the units at Riversails are still very much value for money. But if Allgreen had not revised upwards the prices for the 4 bedders (the last I heard was going for 800psf or less during the intial planning), it would have even been better for buyers. The cheques gathering exercise has shown a strong and robust underlying demand for private properties despite the huge supply in this area as well as weak global economic condition.

Sep'12- Returns on Investments

Quite good dividends received for past 2 months. Singapore REITS also performing well.

Below is the total returns (unrealised gains and dividends received so far):

Sep'12 Investment Allocation

S$210K allocation:

Investment Philosophy

This is so awesome!

http://www.assetvalueinvestors.com/index2.html

• Buy companies on substantial discounts to net asset value
• investment holding companies on wide discounts
• companies with a strong balance sheet and good quality of underlying assets
• seek anomalies
• under-researched situations
• situations where the underlying assets are not recognized or are misunderstood by the market

Investment Updates

Was extremely busy recently with my new Financial Controller role, hence did not have the time to update the blog frequently. Singapore REITS have performed extremely well over the past 3 months. Based on an average dividend yield of 6.4%, it is offering good values for investors who want to still mop up more Singapore REITS. This average yield is higher than say Hong Kong and Australia of approximately 5%. As for me, I do not think that it is a good time to buy more. Once the herd rushed in, no point joining them for limited upside. 

My portfolio has done well as a result of the strong rally in REITS. Wilmar turned out to be a huge disappointment. But I think the strong management team will pull Wilmar through this difficult time of low market value for it's stock.

Bartley Residences - Hong Leong and CDL

Went to the show flat. Was extremely diasppointed with Hong Leong and CDL gang....a real bunch of blood suckers....no difference from Far East. Heard on radio advertisment that says very well utilisation of space and thus still look spacious. The common bedrooms sizes actually very small....even if you try pushing bed to wall to try squeeze 2 beds, still a tough fit. In addition, ceiling height only 2.8m....at least Far East projects has higher ceiling height. 100sqm for 3 bedders....n 1250psf. Even more disgusting is that Kwek keep telling the media he got a strong balance sheet and will not lower price. Think the general public should seriously give other property developers a second look and stay away from Hong Leong and Far East. Say no to exorbitant pricing and product.

But I must say the finishing given (such as Kitchen Cabinets and wardrobe) are of extremely good quality.

Seletar Mall- First Cineplex in Seng Kang

Extracted from Singapore Business Review (good news for property investors of H2O Residences and Seletar Park Residences):

SPH's Seletar Mall to be completed by end-2014 284,000-sqft mall to open in Sengkang West Avenue and Fernvale Road junction. "The design intent is to create a friendly, comfortable and pleasant environment to encourage shoppers to spend longer quality time in the mall. This is achieved through the clarity of retail circulation and space planning both horizontally and vertically, creating interesting architectural spaces, the introduction of natural lighting and thoughtful material selection," said SPH in a release. "The mall is positioned to cater to the convenience, lifestyle and dining needs of existing residents as well as those in the upcoming new residential developments in the vicinity, consisting of HDB Built-To-Order flats, private condominiums and landed properties at the Seletar estate. The new mall will enjoy a catchment (within 5 km) of 730,000 residents and a working population of 47,000, including the Aerospace Park, slated for completion in 2013," it said. "The mall will have a gross floor area of 284,000 sq ft and net let table area of 188,000 sq ft, spread over four levels above ground, and two basement levels. The four- storey retail podium above the ground creates a less imposing building facade, and allows a friendlier suburban shopping experience. A variety of key anchor tenants are strategically planned to attract shoppers to various locations within the mall. These include a Cineplex on the 4th storey, a food court on the 3rd level, anchor retail shops at the 1st, 2nd and 3rd storey, and a good-sized supermarket at Basement 2," it added. Providing more details, SPH said the unique triangular-shaped site with three corner nodal points allows entry from Fernvale LRT station, corner junction of Fernvale Road and Sengkang West Avenue, as well as Fernvale Road. All entrances direct pedestrians to a four-storey high atrium, serving as the central feature of the whole mall. Within this atrium is the main event space flanked at two ends by the escalators that connect to basement levels and upper floors. "The retail planning is based on a wide single loaded retail corridor organised around the voluminous atrium space. This provides a simple and friendly shopping experience and also allows visual connectivity between floors. A large clerestory skylight perched above the atrium allows natural light to enter the mall, thereby ensuring a cheerful atmosphere throughout the day. The shopping floors recede from the 2nd storey to the 4th storey in a terracing manner, allowing a clear view of activities at the lower levels, and particularly, the main event space. Roof gardens outside the food court and the Cineplex offer an outdoor experience with views of lush greenery," it said. About 390 car park lots are provided at Basements 3, 4 and 5. To ensure user friendliness, the driveway, ramp and car park lots are designed with widths wider than the norm. Environmentally-sustainable design features and energy efficient mechanical and electrical systems are carefully selected such as high efficiency water cooled chiller plants, installation of LED lights within the mall, lift cars and escalators with sleep mode function, and carbon monoxide sensors in the carpark to regulate demand for mechanical ventilation. Non-potable water including rain water harvesting will be used for landscape irrigation and washing of some areas in the mall.   "The Seletar Mall is easily accessible to all shoppers - it is connected to the Fernvale Light Rail Transit (LRT) which is seamlessly linked to the Sengkang North East Line (NEL) MRT/LRT station and the Sengkang bus interchange. It is also located near expressways, including the Tampines Expressway and Central Expressway," SPH said.

Greek Election and the future of Eurozone

Ballots are now opened nationwide in Greece for the crucial general re-election which will determine whether the debt-laden nation will undertake painful austerity reform or see its eurozone future jeopardised by rejecting the original package.

The past few weeks have seen the Singapore stock market stock turnover hovering around the daily billion dollar mark with most investors choosing to stay on the side line till the dust settles (me included). Dividend yield stocks such as telecom and REITs continue to hold well amidst the financial turbulent.

Bought additional Wilmar when it slided below S$4. At the same time, sold off OCBC and reinvest the proceeds into Macquire Infrastructure Fund where prices has dropped approximately 15% due to China authority revising the toll rates at Hua Nan Expressway.  

Raised cash position to S$15K and wait for clearer signal whether market is almost bottom or STI will crash and drop below 2000. Taking into account market crashes on the STI....generally the highest point reached divided by 2.....STI may hit a bottom of 1600 if things do not turn out well in Europe. 

Economic Outlook- Greek sparks off Economic Woes again

In view of the recurring economic turmoil from Europe, risk of holding on to non-dividend yield stocks increases drastically. (Note: Non-dividend yield stocks tend to rise and fall drastically relative to dividend yield stock which are more defensive in nature) It leads to a re-assessment of whether I should hold or sell off (i) OCBC; (ii) OUE and (iii) Wilmar. Wilmar as per the last entry gave a significant upside potential due to it's current low price hence to keep and wait for price rebound. OCBC just announced it's quarterly and numbers still going strong while OUE seems to be in a perpetual limbo state. Conclusion is to keep OCBC and Wilmar and sell off OUE to mitigate market risk.

Wilmar disappointing first quarter result1Q12.

Extract of Wilmar's announcement on SGX: 

"Singapore, May 10, 2012 – Wilmar International Limited (“Wilmar” or “the Group”),
Asia’s leading agribusiness group, posted a 34% decrease in net profit to US$255.9
million for the quarter ended March 31, 2012 (“1Q2012”). The decline in net profit was
largely due to lower Oilseeds & Grains margins. However, the Group enjoyed robust
earnings growth from Palm & Laurics, Consumer Products and Plantations & Palm Oil
Mills."

Interestingly, many analysts and investors claimed that they were extremely disappointed with the results which falls below their expectation. Hence the share prices plummet from S$4.80 to S$4.060 within 2 days.....a billion dollar written off market capitalization....oouch!

Once I saw the price at S$4.070, it became a no brainer and I immediately bought 1 more lot of Wilmar on 11 May 2012 (Friday). Market overreacted over the Oilsees and Grains decline as well as loss from sugar processing. True enough, the price rebounded upwards to close off at S$4.140. Should price drop below S$4.00, it may be time to accumulate more Wilmar stocks.

Analysts revised beta due to lower margin to increase risk profile. Targeted price range from S$4.60 to S$4.85 according to these experts. My own analysis points towards S$5.20. Anyway, think that the probability of upside seems greater at this one year all time low price of as low as S$4.060.

Genting Perpetual Securities-5.125% interest

Invested into the Genting Perpetual Securities offering 5.125% interest per annum. Strong financial performance from RWS Sentosa makes this issuance a good deal instead of keeping too much cash in the bank account. Trading price as of 20 April 2012 was already approximating 2% higher than the original coupon price. Go Genting GO!

Sky Habitat shatter suburban price ceiling in Bishan

Wow....1450psf to 1800psf! Incredible pricing by CapitaLand. The robust sales of 125units during one weekend speaks volume of the extraordinary marketing campaign by CapitaLand which all developers should suck thumb and learn. Far East Organisation, CapitaLand and Hong Leong/CDL group are the big boys with lots of fats stored on their balance sheet. Hopefully, the next economic downturn will trim off some of their excess fats and make them more down to earth with their sky high pricing. Property development seems to be very much a game of hit and run for these developers. The ones who suffered are the average men in the street.

Anyway, buyers of Sky Habitat must be mainly from among the top 10% earners in terms of average household income. Such group will not be that adversely hit by the recession for any firesales of their units. I would say wait long long to those hoping for major property price crashes to land their hand on a heavily discounted Sky Habitat from either the developer or the current buyers. The ones who will be hit are those group of people who bought the other suburbia condo that the government released from government land sales.

Property is very much sentiment driven. That explains why coupled with an extremely low interest rate environment, the numerous cooling measures kept failing to "cool" the property market which is behaving like a raging bull. During Mr Mah Bow Tan time, the government has underestimated the demand for private and public housing by a huge margin of error which the new Minister Mr Khaw Boon Wah is trying to rectify. However, I do not think it is a good idea to keep throwing so many Executive Condominium sites and private condo site into the market. Once the marco-economic wind changes and condition soured, the market will drop drastically (depending on the extent of the recession and duration). Even if all cooling measures were subsequently removed, it may take many years to re-build the property market during the year of capital excesses being invested into highly priced property. This is evident from the deflated property market in the United State which will take many years to sort out.

We seems to be embarking on a perfect recipe for imminent disaster.

Dividend Yield Stock- Valuetronics

Recently came across what I believed to be an undervalued stock call Valuetronics on SGX. It is an OEM maker. Dividend yield for last year is around 10%. Since earnings for this year is also fantastic, would expect another 10% to be declared. Price earnings ratio also looks good. However, history of dividend trend reflected cyclical nature of business being in tandem with the broader macro-economics. Risk of losing all invested capital. Hence staying away for now and not sure whether to invest.

What investment strategies to use?

Now, this is a very tough topic to discuss. Despite being an advocate of dividend yield investing, this does not mean that one should be narrow minded and fixated on employing only this particular strategy. Instead one should always embrace value investing techniques as well as the buy low and sell high approach. Let me elaborate further below.

I have utmost respect for financial gurus such as Mr Dennis Ng, who is the King of Retail Investment in Singapore. By combining technical analysis and financial analysis as well as other background information on a particular stock, this increased the probability of staying one big step ahead of the market in terms of the appropriate time to buy or sell. At the same time, I am also a huge fan of Mr Warren Buffet who believes in value investing and largely ignore the irrationality of Mr Market. If a company has a solid business which is easy to understand and also led by good management as well as offer a good price relative to it's intrinsic value, Mr Buffet will invest and hold for long term. In his letters to the key managements of all the business units, Buffet always reiterate that Berkshire will be there for the long term hence business should always look at the long term growth rather than employing short term tactic to boost profits in the short run. Buffet does not engage in frequent buy and sell of the different companies acquired.

Next, cash is indeed king. Do keep truckloads of it in the bank accounts. I do not believe in staying fully invested. In the event of a stock market crash (read 50%-60% decline in prices), this will be the time to pick up stocks which offer good value. At this juncture, one should fill one's portfolio with lots of capital growth stocks such as banking counters which generally falls the fastest but jump back up rapidly once confidence is reinstated in the gloomy economy. The global financial crisis that happened back in 2008 will no doubt return. Such periods are the best time to double or even quadruple your capital. These opportunities unfortunately only appear a few times in one's lifetime and to take advantage of it when all the stars are aligned made it all the more tougher. But safe to say, any one such crisis will most likely propel one close to achieving financial independence. 

The sad fact is that recession or even depression is the only way to drastically increase your wealth. Retail investor invests only to stay ahead of inflation while accumulating enough capital for that big day. But the question that comes on that fateful day will be whether one dare to plough the market and pump the capital on such gloomy market sentiment and move in the totally opposite direction of the herd and skeptics?

Starhub - Capital Reduction or Increase in Dividends

The latest news going around in the market is that Starhub is sitting on lots of excess cash. It seems that Starhub management will be favouring more of an increase in dividend paid out rather than pursuing a capital return exercise. Either way, it spells good news for long term investor of Starhub in terms of unlocking further values from the company and re-investing the cash in other yield stocks.

This is also a good testament to the Dividend Yield Strategy rather than other investment philosophies such as re-allocation/balancing or sell high strategy. The strength of the management of a company is a very important attribute of a well run company. If we have just took a look at the current market price as well as the PE ratio  of 17.1, many experts would have recommended selling at the current high price to lock in unrealised profits or selling to rebalance one's portfolio. 

Economic Outlook-2012 and 2013

It seems that many financial gurus and analysts are predicting gloom and doom for 2012 and 2013. There are also talks of the next upcoming global financial crisis leading to the outbreak of World War 3. Renowned Financial Guru, Dennis Ng, even predicted the demise of the Eurozone in 2012. The self made multi millionaire also quoted another analyst on the running of the "biggest Ponzi scam" through the printing of US dollars to finance the largest economy in the world. So, if Mr Dennis Ng is raising his cash position, should everyone of us also start selling our assets to raise cash and prepare to re-enter the market once crisis struck and then snap up cheap and good assets?

My view is that no one can accurately analyse and predict the market. Economic outlook is all about market sentiment. It would be foolish to have everything in cash and missed out on market rally as evident from the past few months. Based on my past experience, I found that it is virtually impossible to time the market and determine exactly when to buy and sell albeit lots of experts claiming they can do it.

An investor must always be prepared to suffer a 50% to 60% plunge in the market value of his investments. Mr Market is forever irrational. What matters most is to have the holding power and the guts to snap up good value assets like stocks or properties in times of financial crisis in order to exploit Mr Market when he is in one of his irrational mood swing.

The dividend yield investment strategy thus offers investors the chance to gradually realise the gains made annually through the payment of dividends instead of seeing all the capital gains made disappear during times of stock market downturn.

Returns as of 23 March 2012-Year to Date

Cache Logistics, Sabana REITs and K Green continue to pay good dividends. In addition, looking forward to the dividends from Macquire Infrastructure, Starhub and CapitaRChina.

Global economy continues to be gloomy with investors worries over the health of the China economy.

Returns as per below:

Portfolio-23 March 2012

Allocation of S$187K of assets as of 23 March 2012. The market rally this month resulted in a significant improvement in market valuation and returns on investments. Starhub went past the $3 mark.

CapitaRetail China Trust-Additional Investments

Have decided to give Mapletree REITs a miss and invest into CapitaRetail China Trust. Just been back from China recently and I have been awed by the rapid development there. There is no doubt that China is getting more powerful and many of its people are moving up in terms of earning power.

CapitaRetail China Trust (CRCT) is the first and only People's Republic of China shopping mall real estate investment trust (REIT) in Singapore with a portfolio of nine income-producing shopping malls. It is established with the objective of investing on a long term basis in a diversified portfolio of income-producing real estate used primarily for retail purposes and located primarily in China, Hong Kong and Macau.

In particularly, I like the fact that CRCT focuses on retail business which offers resilience in earnings from the tenancy agreements signed. This will enable the business to do well even during times of economic crisis. A significant portion of the properties' tenancies consists of major international and domestic retailers such as Wal-Mart, Carrefour and the Beijing Hualian Group (BHG) under master leases or long-term leases.

Growing with the Chinese Consumer is indeed a good theme for CRCT annual report.

H2O Residences Review (North East District)

Review of H2O Residences

H2O Residences is an upcoming new condo launch by City Developments Ltd (CDL) located at Sengkang West Avenue / Fernvale Link and directly next to Layar LRT Station connecting to Sengkang MRT station and bus interchange.

Awarded the Active, Beautiful & Clean Waters (ABC Waters) certification by PUB.

Details of this CDL project:

Project Name : H2O Residences

 Developer : Impac Holdings Pte Ltd (Subsidary of City Development Limited (CDL))
Address : Sengkang West Avenue / Fernvale Link
Tenure : 99 years leasehold w.e.f 10 May 2010
Site Area : Approx 16,998.8 sq m / 182,795 sq ft
District : 28 (Seletar, Yio Chu Kang)
Type of Development : Proposed erection of condominium comprising of 5 blocks residential flats (total 521) with 2 basement carparks, swimming pool and communal facilities on lots 4340A MK 20 at Sengkang West Avene
No of Units : 521 + 1 retail unit
Car Park Lots : 540
Facilities : Full Condo Facilities
Expected TOP : Dec 2015
Legal TOP : Dec 2018

Good Points:
(1) Just next to Layar LRT Station. As compared to Riversound Residences, one has to walk5-10mins to reach the LRT. Also, a sheltered linkway will connect from Layar LRT to H20 Residences. This means residents will not get wet even when it rains cats and dogs.

(2) Not sure why but people keep complaining about the location being remote. This is not true especially for those very familiar with the North East District. Access to the SLE, CTE, TPE and KPE are good. HDB has actually planned for new roads in the precinct.

(3) Amenities such as NTUC Fairprice and Foodcourt are within walking distance-the temporary commercial hub known as Fernvale Point. I estimated less than 500m. (No point to actually travel another LRT station down). Also near to Jalan Kayu! Besides Roti Prata, there are various nice eateries and even a shop famed for selling durian and choclate cakes there. Selegie beacurd too.....

(4) Singapore Press Holdings just won the land tender to the plot besides Fernvale Point for development of a shopping mall. It is just a 5mins walk from H20 Residences. Once the new mall is completed, it will increase the value of all properties in the vicinity.

(5) There is definitely rental potential-AMK Industrial Parks and the Seletar Aerospace Park.

(6) Quite like the floor storage patented by CDL in one of the room. This was the only part that impressed my wife who went along to view the showflat. Not sure why some people think this is a silly idea. Extra storage space is practical and efficient.

(7) 540 underground parking lots relative to 521 units. Adequate parking which reduces potential conflicts.Out of the 540 lots, 2 will be catered for electric cars.

(8) Superb landscaping and facilities on offer by CDL! The whistling pavilions and nature terrace concepts are awesome. Another interesting point is that all the facilities and stacks actually started on the "2nd level". Also, from the end of the secondary club house and lap pool, one is able to overlook the park connector and Punggol reservoir.....very well though out by the development team.

Not so good points
(i)It is not next to the main MRT. Residents have to take the LRT to Sengkang MRT. A bit troublesome as you have to dismount and then move on to another platform for the LRT. But the price already factored it in relative to say the Luxurie near Compass Point which is going above S$1000psf.

(ii) The bedrooms (including Master bedroom) are small....seems typical these days but still bigger relative to say Luxurie or Barley Residences. In the showflat, there are lots of mirrors, missing walls and even enlarged doorframe to make the unit seems bigger. The 3 bedroom at 1130sqft is decent size relative to 1055-76sqft type which newer projects are marketing. 

(iii) The interior finishing given smacks of squeezing as much margins out of home buyers as possible by CDL. Tiles pretending to be marble/stone lookalike given by CDL. Built in Wardrobe for the 2 common rooms are not sliding nature albeit the tiny room size (however, the Masterbedroom Wardrobe given are sliding and cleverly design).

Overall, I think it is quite good value these days (with other developments going above 1000psf). Rare to have a development so close to Sengkang Riverside Park but at the same time, close to amenities like shopping mall and just next to a LRT station.  

K-Green- Valuation

There are different methodologies out there for valuation. A simple one is probably using the standard dividend model. For K Green, there is another even easier way to do the estimation: Using a simple net asset on hand divided by total units. Allow me to explain further.

The business in K Green is actually very straight forward...it is a business trust that at the moment, focuses on "green infrastructure assets" in Singapore, namely, the (i) Senoko waste to energy plant, (ii) Ulu Pandan NEWater Plant and (iii) Tuas waste to energy plant. K Green also has the right of first refusal from Keppel and the management is also actively looking for opportunities aboard albeit no announcement of M&A of any sort yet. It is also no secret that Keppel probably spin it off into a Trust those projects that are of lower yield....but we should not discuss it further in this post....focus will be on the 3 main projects it is running for government.

Oh ya, talking about government makes things very interesting indeed, it's major and only customer is actually the Singapore government. The default risk is minimal unless somehow, Singapore collapses or K Green team unable to deliver proper maintenance or operation support which leads to a fundamental breach of contract. Unless that happens, it is safe to assume that the money made from government will keep recurring. Do note that based on the current business, the trust is actually self liquidating. The higher paid out in the form of dividends which is significantly more than the earnings thus cause the net asset to decline gradually over time.

 Next, with regards to the balance sheet of K Green, the net assets is really a good proxy to it's fair value. For example, cash, trade receivables, trade payables, provisions will approximate their fair value for obvious reasons. Only tricky part will be the service concession receivables and plant and equipment (we can ignore the Plant and equipment as it is immaterial). Based on IFRIC 12 accounting for service concessionary agreement, the total receivables from the 3 projects would have been factored and discounted to the present value during 2010. Hence I put it across boldly that what you see is what you will get from the published K Green financial.

Attached below an illustration how I worked out (that was last year hence I only have the half year June 2011). Yields based on it's earnings effectively around 2.71%. But if base on the net assets acquired at that point, it is a 17% discount to my perceived intrinsic value of K Green hence I went ahead to buy at 0.935 and was confident that I have found a very good deal. 

 










Did I also forget to mention that K Green currently does not has any loans outstanding and if it were to take on new projects and leverage up on the low interest rate environment, the yield to shareholders will actually increase.


Have found that the market price can be extremely volatile. It's first day listing price in June 2010 was S$1.05. From there, it had been a downward spiral until the recent market rally in Jan 2012.  I would say just ignore the background noise and let the market go on it's daily up and down see saw. If you have put $10K with K Green instead of leaving it in the bank in savings or fixed deposits (@1.87% interest), you would be rewarded and definitely better off with the total returns accumulated throughout the remaining income generating lifespan of the 3 projects.. Along the way, we can also wait for potential growth in acquisition of new infrastructure assets from leveraging on bank loans. Hence, holding on to K Green definitely has lots of good upside at the moment. May not be as exciting as holding on to blue chip stocks but the returns are decent.

P.S: The largest shareholder in K Green is still Temasek Holding at 49% of the issued units.

K-Green

The recent Sunday Times investment section list down K Green as a dividend stock producing yield of over 9% which is extremely impressive. However, the journalist failed to point out that there is a big difference between a trust and a REIT. Under the Singapore Companies Act, all companies can only pay out dividends from earnings (accounting profits). This is not true for business registered as a Trust. For such business, they are able to pay out dividends based on free cashflow. The fair value of K Green will thus decline overtime based on it's current business model.

Many investors seems confused by the accounting for concessionary service agreements and how to compute a fair value to K Green. Will try to analyse how we should work out the fair value in future posts.

Riversound Residences Review (Suburban-North East)

 Went down with wife to take a look again. It was definitely crowded. Just that not sure whether many are buying or just shopping around. But seems more people compare to the preview time. Market recovering fast from the latest round of cooling measures.

Details of this project
Developer: Qingjian Realty (Sengkang) Pte Ltd
Property Address: Buangkok Drive / Sengkang East Drive
Legal Description: Lot 2453K MK21 at Sengkang East Avenue
Site Area:19,549.20 sqm / Approx. 210,427.59 sqft
Type of Development: Full condominium facilities
No. of Blocks / Storey / units 6 blocks / 18-storeys / 590 units
No. of Car park lots 592 carpark lots + 6 handicap lots
Lifts 2 per block (Ratio – 1:3)
Tenure 99 years commencing from 26 August 2011
Expected T.O.P date 31 December 2015
Expected Legal Completion Date 31 Dec 2018

Good Points: 

• Sky Terraces unique and first for Sengkang and Hougang precinct.   
• Very impressive water features all around the estate. Also got SPA pools and Cocoon pavilion
• Marble finishing for masterbathroom flooring and wall (with option to choose homogeneous tile)
• Efficient layout. Spacious bedrooms size even for the compact 3 bedroom. at 1066sqft. 
• 4 bedder also do away with the typical junior master bathroom.....kinda of like this concept as personally think this leads to wastage of space, 2 bathrooms and 1 water closet should be more than enough for a family. 
• Got rain shower for Masterbath.
• Kitchen Electrolux fittings. 

Not so good Points:

• This development is not near to LRT or MRT. The nearest LRT is at Kangkar which one needs to cross a road and then walk...think 5mins-8mins....just not convenient at all without a car. 

•  Not much amenities nearby. Eating places coming up with the new HDB BTO coming up...but one still have to walk. 

• This is just next to Austville EC. I would put across boldly that both Riversound and Austville EC caters to the same customer segment (mostly Singaporeans and PR in the vicinity). It maybe hard to resell this with the EC as competitor in terms of pricing albeit facilities and landscaping better for Riversound, would any future resales buyers consider Riversound over Austville by paying over S$100k to S$200K higher in premiums? 

•  Also, just across the road, a new project is launching....by Allgreen properties. Allgreen managed to get that plot at a low S$290ppr....maybe worthwhile to wait a while before committing.
• Another bad point which was never brought up at all was that not all cars can fit into the 2 basement carparks. There will be cars parked on the surface. In addition, only 6 additional carpark lots given. 596 lots for 590 units. 

Overall, prices after discounts seems higher than the average 850psf quoted on many websites. Compared to Boathouse and H2O residences, this is relatively cheaper. Further discount can be further bargained for serious buyer. Also can try work out a deal for those who have already purchased and share the referral fee which hovers around 1%. Split it means 0.5% share for prospective buyer and existing owner.

Properties- To wait or to buy now?

For those poor souls who are unable to buy HDB or Executive Condominiums, and being forced to buy private apartments in D19, I would say Riversound, Parc Vera and Minton offers good value for money (in view of the current market environment) as one can get a unit for S$800+ psf.

Being near MRT or major amenities is not everything.  If a project is not near MRT, then the developer must work to set a lower pricing for their projects relative to one that is near MRT and many amenities in order to move units. Also, why pay $1000psf for say Luxurie at Seng Kang town centre when you can get a unit at S$850psf. For a 1000sqft unit which work out to be S$150K of differences. The savings become even more incredible for bigger units such as a 4 bedder.

Property prices have actually come down in terms of furniture vouchers and stamp duties reimbursement by developers to customers for certain projects. Only question is whether it is a good time to buy now or to wait for property prices come down?

Despite the competitive landscape, many developers seems to setting out of the world prices (psf) by reducing sizes of new launched units to make the absolute quantum affordable for consumers. The greed of men knows no bounds. This is akin to making a bet on the future economic condition.

Mapletree Logistics Trust and Mapletree Industrial

Currently thinking of investing into the Mapletree Reits. Both Reits have seen their annual distribution returns increased since their IPO and has been doing extremely well. Current yields are 7.388% and 7.546% (see SGX REIT Data website) respectively. However, their leverage are equally high at 41.40% and 39.10% respectively. Good thing about Mapletree is the public view them as strong sponsor hence their tenants are usually of more renowned and of better quality. This is evident in their market pricing which far outpaced their net asset value unlike say AIMSAMPI Reit or Sabana Reit.

My struggle with insurance policies

My first insurance policy was actually an accident policy purchased during National Service with an agent (known as Mr A-see my previous post) from NTUC Income. Interesting thing about this accident policy was that it has a savings element to it which if you think hard, does not make any sense at all. Insurance is protection. Savings is just pure savings. The two does not mix together. 8 years later, I terminated this policy which requires monthly premium of S$32.50 as it just make me look extremely silly.

Another insurance policy that Mr A advocated was to buy life coverage for death and permanent disabilities. He made lots of commission from me selling me coverage for S$100K. Even more ridiculous was pushing me to sign up another S$50K a year later. For death and permanent coverage, one does not need it forever. You only need it while accumulating wealth and to cover for any unforeseen events to ensure your loved ones can survive financially. As such at most 25-30 years term policy should suffice. Beware of insurance agents or financial advisors who try to sell a life coverage. The commission from life insurance sales is a lot more than term insurance and there goes their independence. If possible, try to get insurance planning from financial advisory firms that charges fixed fees. (Note: When I realised I was being misled by Mr A, I terminated the life coverages and incurred S$1.5K of losses...just no point to continue when the money saved from buying term policy can generate a far better return to the savings components of life plans.)

The only life policy that I ever purchased was for critical illness. Currently, I am holding  on to 3 critical illness policy from (i) NTUC Income; (ii) Aviva and (iii) TM Asialife. I like the NTUC Income Living Policy series as it does generate good cash value with the double bonus given out on every 5th anniversary of the Cooperative. However, this is a traditional whole life policy that one is required to pay until age 85 years old. In year 2006,I wrote in to the then CEO, Tan Kin Lian on my suggestion for a limited payment plan which other insurance companies are offering but was told "there were reasons" why they only have traditional wholelife payment plans but will look into it.

 I loved Aviva and TM Asialife as these companies offer limited payment critical illness coverage. I just can't envision myself paying for insurance when I am already retired. Since then, NTUC Income has came out with it's own version of limited wholelife plans to remain competitive. TM Asialife is the only insurance company in Singapore that has this awesome record of never ever cutting their yearly bonus.

Disability income is another crucial piece of protection that everyone should have in his or her arsenal. This type of unique insurance offers you protection against short and long-term disability caused either by accidents or illnesses by providing you with a replacement income that continues to support you and your loved ones during disability. The flexible coverage is guaranteed renewable and continues until your chosen age of retirement (55, 60, or 65 years). In the Singapore market, seems that only 2 insurance companies dare to offer this coverage, namely, Aviva (IdealIncome) and Great Eastern (Pay Secure). Manualife also offers something similar in lump sum payout in the event one is not being able to work but there is a distinct tightening in definition of the events that triggers the different tranches of payout....so be careful when shopping around for such coverage.

Last but not least, hospitalisation and surgical plans for healthcare. If possible, everyone should opt for the best graded plan that covers private hospitalization. In the event that one is sick, one should be looking for the best medical treatment available and not worry about whether such treatment covered under the current plans.