Keppel Pacific Oak US REIT Reported Valuation Decline of 6.8%- Still Good But Strange Twist To Delay Results Release on 31st Jan 2024.

Today, the market reacted with shock at the sudden U-Turn in results announcement date of 31 Jan 2024 by Keppel Pacific Oak US REIT ("KPO REIT") and it crashed over <20%> as at 11.00am of 31 Jan 2024. Valuation report is out with a decline of 6.8% in property valuation, which I thought, is rather good news given that its aggregate leverage ratio is at 43.2% and Interest Coverage Ratio at 3.1 times as at 31 December 2023 year end. 

I am not exactly sure why KPO REIT management decided not to release the financial results as pre-planned in their notice on 5th January 2024. But this U-Turn move may signal some hidden can of worms such as adjustment of financial results or massive reduction in dividends to pay off debts. 

Extract of announcement on decline in valuation by KPO REIT

Overall, I think that the situation seems not too bad given that KPO REIT has thus far avoided the tragic fate that has befallen Manulife US REIT. Hope that there will be at least some dividends being payout to unit-holders. What are your thoughts folks?

Ping An Insurance Group Becoming High Yield 8% Dividend Stock- PE Ratio @Amazing 6.3 Times Earnings.

I try to make this a short post to reflect my current thoughts and my latest stock purchase addition into my investment portfolio. For the past 2 months, I have been seriously contemplating on whether I should increase my investment stakes in China equities that has been badly beaten down. 2 of these on my target list are (i) Alibaba (which I already held 1,500 shares) and (ii) Ping An Insurance Group. But the uncontrollable downward spiralling of China stock prices and the deflationary local environment there makes me extremely nervous and puts me off whenever I try to muster enough courage to click on the "Buy" button on my trading App.

1. Rainbow Amidst the Current Thunderstorms.

China has been in a bear market for the past 3 years and every week it keeps getting lower. Many fellow retail investors who are holding onto China listed companies have been burnt by the worsening economic conditions. I have been holding on to my remaining 1,500 shares of Alibaba stocks for 1-2 years. The good news is that recently, there were encouraging signs (as well as various rumors) that the China Government will come up with a more substantial rescue package to boost its equities market. 

2. Buy Now Or Wait For Further Official News Announcement?

I thought that the sensible thing would be to wait for official news confirmation before buying into China equities to prevent a wild goose chase and confirm that we are nearing the end of the market capitulation stage. However the usual adage of high risk high return applies, so I decided to start deploying some investment funds into either Alibaba or Ping An Insurance Group.

3. Makes More Sense to Diversify into Ping An Insurance Group Instead of Alibaba.

Many renowned China listed companies are now trading at fire-sales pricing. Hence I decided to diversify my China holdings and buy into Ping An Insurance Group. The latter has been badly beaten down recently when rumours surfaced that Ping An will need to do "National Service" to rescue Country Garden. Its management team has since came out to vehemently deny that the CCP has instructed it to inject funds into the troubled developer which is facing imminent bankruptcy if things do not improve.

At a dividend yield of 7.8%-8% and PE of 6.3 times, the established Ping An Insurance Group looks like an ideal candidate for both capital growth and high dividend yield return investment.

[P.S: Saying that, note that its Revenue and Net income for the past few years (2020-2023), seems to be declining and showing indicative red-flags about its ability to withstand the current local economic downturn albeit the decline in share price is substantially more than the financial results]. 

Ping An's 9mths 2023 Results against 2022

Parting thoughts

I am currently vested in a small stake of 500 shares of Ping An at around HKD34 a share. Will add on more shares if there are better news being released in the coming months ahead. 

Singapore Property Market Will Always Rise Fallacy And What Many Property Gurus Never Warn You.

It has been a very busy 2 weeks meeting up with clients and visiting project site. With age catching up on me, so does my energy level it seems and one gets tired very easily....haha. Today I am going to touch on the gravity defying crazy Singapore property market as I find it shocking that there are still many young couples rushing into the market and snapping up mass market condo Outside Core Region (“OCR”) for S$2Mil plus 3 bedder at 947sqft. Worst still, some are playing the buy 1 condo for (i) own stay and another 1 for (ii) investment game and heavily leveraged up. Do skip reading further if one is upset by this topic which is just me venting my personal thoughts.

1. Fallacy belief that in Singapore, prices of property will always shoot up and never drop due to “scarcity” of land.

Many people also believed that for Hong Kong with limited land space, its property price will keep going up. However, HK property price has already slumped to its lowest in 7 years with more than 20% decline since its peak of September 2021. Property market is cyclical in nature and all countries undergo boom and bust in terms of its economy-this is the natural rule of the universe. Nothing flourish perpetually- take a look at China which escaped the 2008 Global Financial Crisis relatively unscathed but currently facing a bear market for its 3rd year with rapidly worsening unemployment among its fresh university graduates.

Singapore property market has already been in a boom status for more than 14 years in particularly the recent run up in price created the impression that buying property is a sure way to generate lots of wealth in Singapore. Once the economy tanks and one gets retrenched or paycut, it can lead to the ultimate financial disaster of a life-time. 

2. Look at the Standard Terms and Conditions ("STC") of Borrowings instead of just the T&C inside the letter of offer from the banks for property financing.

Unless one is super rich, most middle-income folks are actually taking up banking bank loans of up to 75% of the property’s market value. For S$2Mil OCR private property, there are many folks taking up loans of S$1.5Mil which seems to be the current norm.

The interesting part here is that if the Singapore property market were to correct by 10% to 20% downwards in valuation, this will mean S$150K to S$300K diminution in property value. Theoretically speaking, this in itself will trigger the Security Margin breach clause and the bank can actually choose to request for immediate top up of the “deficit” or exercise its right to force sell one’s property at the worst possible market doldrum time. Many folks seemed to have missed this critical T&C which is stipulated in the "Standard Terms and Conditions Applicable to Banking Facilities" accompanying any letter of offer by the bankers.

Extract from DBS STC

So far, I have not seen any banks exercised this clause during crisis, but having it is like the Sword of Damocles hanging over one's head. Note that this is actually worse than buying stocks using margin financing as most folks are super over-leveraged when it comes to property which is perceived to be safer or carry the same risk as holding stocks but as you can see above, this is strictly just a fallacy- property purchase using 75% leverage is highly risky,  

Parting Thoughts

Housing to me is just for a roof over one's head. Buying into a property at the wrong time can lead to life-long financial ruin. Personally, I will diversify my investments into other asset classes rather than wholly going into holding on to multiple properties. Also not a fan of UK properties and those companies such as I Quadrant. For now, I hope that the musical chair continues and don't stop. Take care and good luck!

(P.S: Updated 29 Jan 2024- During the 1990s dark period of Asian Financial Crisis, apparently, Singapore banks did ask their client to top up cash or face foreclosure due to significant decline in property valuation- please see below comment for sharing by Bro Henry. I thought that this is a rather good reminder for folks to consider whether they have covered all areas in their own property financial purchase decision.) 

The End of DBS Meal Subsidy for Customers- Last Day!

Hi Folks,

Please see my latest uploaded short video for sharing. Last chance for DBS loyal customers to enjoy meal subsidy this week. 

Do subscribe to my YouTube Channel for exclusive contents there.

Anyone Knows Why Ya Kun Kopi-C Being Priced More Than Normal Kopi?

Hmmm….Ya Kun Kaya Toast food and drinks prices have been raging recently. My favourite set A Kaya Butter Toast has gone up from S$5.60 per set to S$6.30 per set. This is a painful 12.5% increase in pricing.  While I can understand the high inflationary environment leads to adjustments in pricing to keep up with rental, labour and supplies costing, there is this mystery that has been confounding me for some time.

Not sure whether it is my poor memory. I noticed that these days, when I request for Kopi-C instead of the normal Kopi, Ya Kun cashier will add another S$0.20 to my meal. It used to be only additional charge if I opted for Milo while coffee and tea are always at same pricing regardless of whether they are in the “C” form. The C is a less sweet version of the added milk for Kopi and Teh (which I heard from an older colleague) represents the “Carnation” evaporated milk brand that is commonly used in coffee-shops.

Mystery of why the healthier Kopi-C/Teh-C cost more than normal coffee/tea?

This is really an enigmatic puzzle. Generally speaking, it appears that the evaporated milk (less sweet) that makes up Kopi-C or Teh-C is cheaper in terms of cost to the normal Kopi or Teh. So why is it that it Ya Kun need to charge higher selling price for the healthier Kopi-C/Teh-C? 

Moreover, our Ministry of Health has been trying to fight off the long term ill effects caused by excessive consumption of sugar (example: diabetics and obesity), so Ya Kun is encouraging Singaporeans to take more sugar by ordering the “normal sweetness” coffee and tea through imposition of extra S$0.20 penalty on request for healthier “C” version.

Any kind soul can shed light on why the weird charging mechanism by Ya Kun? Maybe my research on condensed milk pricing and evaporated milk pricing not accurate and condensed milk is extremely cheap relative to evaporated milk?

The Disastrous Downfall of EC World REIT- Sponsor Fraud Detected And Implications.

Sponsor fraud has been detected by the management of EC World REIT. This irregularity brings us to other questions such as : How did the EC World REIT management get to know this? When did they know this? Was it before the SGX suspension on 31 August 2023 that they requested or after the trading suspension then this was released gradually? The occurrence of fraud has added further complexity to the current financial crisis facing EC World REIT. 7 points to note:

1. Let's call a spade a spade and not mince our words. This is not just a case of the Sponsor being negligent. This was done knowingly in order to secure a loan from the provincial government. In my mind, this is clearly a case of fraud being committed.  

Extraction from the Association of Certified Fraud Examiners

2. This entire fiasco also brings us to the point on why the management of EC World REIT has only now then demanded that Yuntong Property Management Co., Ltd, the property manager of EC World REIT’s properties and a wholly-owned subsidiary of the Sponsor, handover all the title deeds of EC World REIT’s properties to EC World REIT’s Onshore Facility Agent. It is either they are too slow to react or they are incompetent. This is absolutely horrendous. It is akin to waking up one morning and then finding out suddenly that your fully-paid property owned by yourself has been mortgaged by your relative whom you passed the title deed to for safe-keeping. In the first place, why would you pass your title-deed to your relative when it should have been all -along kept within one's control?

3. Also, how much more hidden can of worms is being concealed by EC World REIT?

4. EC World REIT is strangely giving me a Deja Vu vibes and reminded me of Eagle Hospitality Trust. My gut feel is that more bad news is going to be released by EC World REIT.  In Eagle case, once fraud is uncovered, this means that the entire management at the top is dubious.  

5. Personally to me, one can no longer trust the financials once there are integrity issue from the sponsor as these unfortunately also cast aspersions also over the current management team. 

6. The fact that the Sponsor is so desperate to make false representation to get the loan also means that they are in great financial distress. The Sponsor can't even save its own skin. So how will they be able to save EC World REIT? Already, the Sponsor commitment to buy-over 2 warehouses belonging to EC World REIT has fallen apart. 

7. The sad thing is that for existing investors, nothing much can be done as the REIT has already been suspended from trading. One can no longer exit their investment by selling them to other investors who are more willing to take up the risk. As per the case of Eagle Hospitality Trust, there is now a high likelihood that existing investors may end up with zero value due to fire sales of properties at the worst possible time. 

Parting thoughts

The EC World REIT financial crisis saga will most probably drag on painfully for another 2-3 years. My personal thoughts are that for overseas REITs investing, it is critical to only buy REITS from reputable sponsor back up by Temasek Holdings or established reputable sponsor that are listed on well-regulated stock exchanges. Personally, I thought that it is preposterous that the management of EC World REIT lost control of its own title-deeds.  

(P.S: Hi folks, do also subscribe to my Youtube Channel for exclusive updates there.)

Thai Beverage Share Price Rallied From 52 Weeks Low and Further Potential Catalyst For Its Share Price.

Good news! The Thailand government has announced tax cut on alcoholic and entertainment venues to boost tourism for a year. This is expected to benefit Thai Beverage, in particularly, its spirits business segment. Please refer to my latest YouTube Video on ThaiBev. Do stay till the end of the video for some sharing on a key potential price catalyst. Do subscribe to my Youtube Channel for exclusive updates there.

Central Provident Fund Personal Updates- Moving Towards Enhanced Retirement Sum Using Special Account.

As at 31 December 2023, the much anticipated interest of S$13.6k was credited by the CPF Board. My special account is now at S$247.6k which is S$15k higher than last year. The S$10k of recurring interest income from the special account should be enough to catch up to the yearly increase in ceiling for enhanced retirement sum. For my CPF special balances, I do not intend to risk investing any of it albeit tempted at various times to try to beat the 4.08% interest income rate using unit-trusts. This is my final line of defense in the event of a black-swan event that may wipe out my cash investment portfolios.

As for my CPF ordinary account, I have set aside S$76K in my CPF Ordinary investment into the following assets as at 31 December 2023:

1. S$36K invested into SGX- Mapletree Industrial Trust;

2. S$30K invested into MSCI Equity Index (50%) and MSCI Bond Index (50%) via Endowus &

3. S$10K invested into Endowus Core Flagship (80%/20% Equity/Bond mix).

I have also taken profit of S$5.6K realized from Endowus MSCI indexes during the recent rally in global equities and bond prices and returned these balances to my CPF account. I will redeploy another S$5k to S$10K if the stock market corrected in early 2024.

As for my Medisave account, these will be eventually depleted as my parents do not have critical illness insurances. For H&S, managed to get some for my Dad with certain exemptions. I am thankful that our Singapore government has rolled out the Pioneer and Merdeka Generation medical packages for the elderly Singaporeans. These initiatives have thus far saved me and my sibling from incurring huge medical expenses.

How to 10X One's Investment Portfolio For Quick Financial Freedom Myth.

Don't just go for the potential 1000% investment return as advocated by some folks on YouTube. There is no need to take on excessive risks in one's investment. Personally, I thought that it is not mission impossible to achieve a 8%-9% per annum yield and grow one's portfolio gradually. Please refer to my latest YouTube Video on my channel.