Investment Is Just Like Playing Tennis！

Hi Folks, good day to all! For the past few days while surfing the internet and social media, I kept seeing Ads with Adam Khoo playing tennis popping out. Basically, one cannot anyhow whack the tennis ball back just like investing per Adam Khoo. From motivational speaker to investment guru, wow, Adam Khoo is now everywhere selling investment courses!

I can’t help but wonder whether Adam Khoo is making more money from his personal investment picks or selling courses? Anybody attended his investment course before?

SREITS Crashed Again- REITS Or SG Banks More Attractive?

SREIT tumbled down again over the past 2 weeks. Interestingly, I see a number of folks like Josh Tan buying into Mapletree Industrial Trust (“MIT”) or Master Leong strong preference for Mapletree PanAsia Commercial Trust (“MPACT”) to take advantage of the recent “crash” while others like the famous AK71 preferred the local trio of DBS, OCBC and UOB banking stocks as better buy than REITs. For the latter, the local banks are only paying out 50%-60% of their earnings as dividends to shareholders while ploughing back 40%-50% of their earnings into the business which should theoretically keep building up their Net Assets Value and eventually their market price should gradually increase. So it gets kinda of confusing on whether one should buy more REITs during the current downturn for the REITS sector or accumulate more local SG bank stocks given the different opinions of their preferences. 

1. Time to Chiong/Accumulate more SREITs while prices crash and interest rate being slashed gradually into 2025?

Personally, I have mentioned before my thoughts in September 2024 that most of our SREITs are now priced fairly given that we should not expect future interest rate to be near the previous decade of zero interest rate environment. Distribution yield of 5.5% to 6.0% for blue-chips SREITs should be the norm now. Anything that is lower will not compensate for the additional risk premium one undertakes relative to the local risk-free rate. 

MIT’s distribution yield of 5.96% at unit price of  S$2.27 per unit is decent. But I would not say super attractive given that its market value per unit is at a huge premium over its NTA per unit. Since MIT is my second largest holdings already, I did not add on any further.

As for MPACT, while its distribution yield is now at an attractive 6.9% (@ S$1.23 per unit) and its market value per unit is at a large discount over its NTA per unit, the stock market maybe pricing in substantial worsening in distributions from its Hong Kong, China and Japan exposure. Also, its crown jewel of Mapletree Business City seems to be losing its luster. So I guess the usual high risk high reward adage will apply here. It thus depends on which crystal ball you are gleaning into for whether the foray here will reap handsome return or just a lackluster one.

2. Local Banks With Splendid Results Expected Into 2025.

There is no doubt that DBS, UOB and OCBC trio have been having a good run since last year due to the sudden spike in interest rate on their net interest margin and also wealth management business. But if recession comes, bank stocks will also crash and risk of bad debts increase exponentially. I will be staying away from banks for now unless there is a substantial correction in their prices. 

Parting Thoughts and My Watchlist.

Given the recent developments as aforesaid mentioned, I have been focusing my monthly nibble size investments into Endowus bond funds and Keppel Ltd. I thought that overseas REIT such as Link REIT looks more attractive given its market price is almost 40% off its net book value per unit and giving a distribution yield of 7.6% with 21% leverage ratio.

 

CPF Special Account Shielding Strategy Still Working Meh?

Interestingly, I came across a CPF Special Account ("SA") shielding post by Kilde while browsing on SG Investment Blogger. It was published in June 24, 2024 but updated in August 20, 2024. 

But I thought that Mr Lawrence Wong had already plugged the loophole earlier during budget 2024 and it was published on March 22, 2024 on the CPF Board website that the CPF Special Account for those who attained the age of 55 will be closed with effect from 2025 after the Retirement Account is setup. 

Source : CPF Board- 22 March 2024

Strange that Kilde folks are still promoting the SA shielding strategy wor. Or am I missing things out that there is another new loophole?

Keppel Ltd Heavily Leveraged And Un-investable?

Keppel Ltd’s share price has pulled back from its recent high of S$6.65 in early October 2024 to the recent S$6.40 per share. It’s yearly dividends (excluding special dividends or in specie dividends) is around 33 cents to 34 cents. Hence normalised dividend yield is at around 5.3% based on its current share price of S$6.40 per share. I thought that it is a good time to accumulate more of Keppel Ltd after the recent pull-back.

The Concerns of High Debt to Equity Ratio of 0.9 Times.

Interestingly, there were some skeptics who have condemned Keppel as un-investable and unstable due to its substantial borrowings. The high gearing is due mainly to Keppel’s investment properties and property development segment as well as the infrastructure division. Nevertheless, below are 3 reasons why I would personally still invest into Keppel Ltd. 

1. Shift in Business Model To Focus More on Recurring Income Instead of Capital Intensive Business 

The building up of recurring income is on the right trajectory. As seen below, the recurring operating income now forms a substantial part of Keppel’s income streams-asset management and operating activities (sales of gas, electricity, telecommunication services etc amounted to S$773Mil in 2023. This is a 54% increase relative to 2022 and makes up 88% of net profit for 2023. Keppel’s strategic shift to focus on recurring income and monetisation programme will also release more funds for investments and debt repayment. 

 

2. Keppel Is Retaininig More Than 30%-40% of Its Earnings For Growth

Keppel is only paying out about 60%-70% of its earnings per share as dividends to shareholders and retaining the rest for its existing businesses. For 2023, It has a diluted EPS of 49.1 cents and paying out only 34 cents as dividends. 

3. Prize Jewel in Data Centres Development and Management.

Keppel has recently announced that it intends to expand its current DC capacity from 650MW to 1.2GW in the near term with an additional S$10billion funds under management growth. This will take 3-5 years as these DCs will be built from scratch at selected sites.

The DC at Genting Lane is a good illustrative example. After the development of the DC, they will monetize it by selling to Keppel DC REIT. After selling it off, Keppel will still make recurring income from the management of this investment property as Manager and also rental income from its ownership in Keppel DC REIT.

Parting Thoughts

Last but not least, Temasek Holdings holds more than 20% stake in Keppel Ltd. In the event of a full-blown financial crisis, Keppel Ltd will be able to tap on the financial might of its substantial shareholder as its final life line to avoid a fire-sales at the worst possible time. I have recently sold off S$20K of my Keppel DC REIT after its strong recovery from its record low in the past 2 years which resulted in its distribution yield dropping to only a mere 3.9% with 90%+ payout and reinvested the proceeds into Keppel Ltd.      

My Stock Pick- Should One Still Invest in REITs and Other Dividend Stocks in Current Market Climate?

Hi Folks, it has been a crazy past 2 weeks with the weakening of the US Market and also our local SREITs. Back on 19th September 2024, I have discussed in my previous post that despite the jumbo 0.5% rate cut by Powell, the strong rally in SREITs maybe overdone as the distribution yield of blue chips like Mapletree Industrial Trust ("MIT") dropping to close to only 5% yield at its highest point during the REIT rally. Stronger than expected US payroll statistics also led to various market concern that inflationary pressure will be back and it is still too early to step off the accelerator for rate hikes. Even with the slight correction yesterday, I think that most SREITs are still over-valued as we cannot expect interest rates to be at near zero like the past decade. 

1. SREITs That I Will Still Buy

Seriously, I really cannot find any good buys for the top blue-chip REITs from the trio Mapletree, CapitaLand and Keppel families. Look at MIT or Keppel DC REIT, will you still dare to go in to accumulate additional units at the current pricing?

If I have any additional resources and forced to buy something, I will probably add on to United Hampshire US REIT ("UHREIT") as its price has once again tapered off and giving out a 8.8% distribution yield as at 8th October 2024. However, since this is one of my top holdings, I am already overly-concentrated in UHREIT and will have to give this very attractive SREIT a miss.

2. Overseas REITs That Is Still Worth Buying.

I thought that Link REIT ("LREIT") listed on the Hong Kong Stock Exchange ("HKEX") is a very undervalued counter.  LREIT used to be linked to the Hong Kong Government and has interesting properties mainly based in Hong Kong and China. My Hong Kong work colleagues have been mentioning this to me. Same for Master Leong YouTube channel which he has also shared as a value for money buy. Its leverage ratio is at an enviable 20% resulting from a rights issue at HKD 44 per unit in March 2023. 

I accumulated around 6,200 units of LREIT from May 2024 to July 2024 at an average price of HKD 32.2 per unit since I am getting these units at a big discount to what those rights issue holder paid in 2023. For me, any purchase that is below HKD 44 per unit is not a bad deal. It is currently giving out a distribution yield of 6.96% along with potential for capital growth.

3. Other Interesting Dividend Counters

I thought that Ping An is an interesting recommendation on various media such as Master Leong as aforesaid mentioned. Ping An price has dropped from HKD70+ to a pathetic HKD30 range due to the belief that the China Communist Party will force Ping An to do national service and recuse one of the Property Development firm. I have been adding Ping An (5,000 shares) from Jan 2024 to Sep 2024 at an average price of HKD 34 per share. Its distribution yield was previously hovering near 8% which was too attractive for me. However, with the current market pricing which lowers the yield to only 5.25%, I maybe selling it off to accumulate other investments if suitable opportunities such as if our local SREITs underwent further price correction.

Parting thoughts

I do hope that the China and HK markets continue with their revival as they have been in a bear territory for many years and hopefully produce outstanding capital growth on top of dividends distribution. Strangely, picking undervalued good dividend paying companies in China/HK has turned up to be a good decision with a stroke of good luck in recent week- I certainly did not expect the sudden capital appreciation in just one week. 

Investment Portfolios Updates (27 September 2024) - Net Investment of S$732K and Projected Annualised Passive Income of S$42K.

A rising tide lifts all boats indeed! Just 2 months back during my last portfolio review, it was still doom and gloom for our SREIT sector spiralling into a bottomless blackhole. Then suddenly, with the much anticipated rate cut by the US Feds finally materialising, all the SREITs counters started soaring. Considering that my REIT heavy overall portfolios makes up 66% of the entire investment, it contributed to a strong recovery. Coupled with the sudden China stimulus measures announced over the past few days, my China centric investments (Alibaba, Ping An, Link REIT and Capitaland China Trust) shot up by close to 25% which help rallied the overall gross investment value and investable cash balances to above the S$1 Million mark. Net investments after netting off margin loan stands at a record high of S$732K.

1. Portfolio 1- Stocks held in SGX Central Depository 
(Note: This portfolio is designed to provide immediate dividends for use as it is under my own CDP account and the dividends credited goes directly to my bank account.)

2. Portfolio 2- Margin purchased securities

(Note: My margin purchased securities has grown to a sufficient scale to sustain itself and can pay off annual financing charges as well as to gradually pay down the margin loan through dividends generated.) 

I think that the financing charges would have dropped to 4.75% or 5%- anyway, have not had the luxury of time to find out from my broker. So will just leave the financing rate at 5.25%. Interestingly, my wife offered to lend me funds at a lower by 1% rate to Maybank Securities but I rejected it as I told her that she can put her liquid funds to better use and a higher return.

For Keppel Pacific Oak REIT, I think that if interest rate continue to trend downwards, there will be a higher probability that the REIT Manager may resume distribution payout as soon as the 2nd half of 2025 instead of 2026. 

3. Portfolio 3 (with Tiger Brokers and MooMoo) 

(Venture into higher risk as well as capital growth stocks here)

I have added on to Ping An Insurance just before the huge rally in HKSE. Keppel Corp as well as a small tiny stake in Oceanus were added since the last update 2 months ago.

4. Portfolio 4 (Endowus Unit Trusts & Other Investments)

The Income Insurance and Allianz takeover deal continued to be in limbo. The Monetary Authority of Singapore has not officially given the deal a go ahead. In addition, new capital were injected into the different Endowus units trusts (picked those that are bonds focused with the exception of Fidelity Global Dividend Fund).

Summary

While the investment value of my underlying portfolios have went up significantly, the sad fact is that my projected annual passive income still remain the same as 2 months back which is a tad disappointment. I do look forward to exiting my stakes in Alibaba once it hits over HKD160 per share and then convert them into higher yielding income producing assets.

Why Dividends Are Irrelevant And Don't Matter!

The topic of "Why Dividends Are Irrelevant And Don't Matter" was posted recently by a famous local YouTuber which has once against stirred up lots of emotion online judging by the comments left on his video...haha.  He has over 100K of subscribers. What he says is true in theory but is just bullsh*** in reality as there is simply no stock market with perfect information in terms of valuation of stocks being traded by buyer and seller. This was also covered in my Accounting Theory module decades ago. According to one school of thought, dividends are irrelevant so that the amount of dividend paid has no effect on the valuation of a firm. Also share price will drop by the same amount after the dividends are being declared. 

1. MODIGLIANI AND MILLER ("MM") HYPOTHESIS:

The crux of the MM position on the irrelevance of dividend is the arbitrage argument. Arbitrage refers to entering simultaneously into two transactions which exactly balance or completely offset each other.

The two transactions here are the acts of paying out dividends and raising external funds. When dividends are paid to the shareholders, the market price of the share will decrease. What is gained by the investors as a result of increased dividends will be neutralised completely by the reduction in the market value of shares.

2. Why Dividend Strategy Adopters Are Always Presumed to be Stupid or Adopting an Inferior Approach?

First and foremost, I do not understand why people keep on posting such topics to whack dividend investing. Of course, all dividend investors know that fundamental of a company are important and that one cannot just invest in a company with the highest yield in dividends to determine good or bad companies. 

3. Thoughts on Dividend Investing

I will just write a short paragraph here as there are already many posts and online materials available on what are some of the good side of dividend investing. For example, the past 2 years of SREITs Bear market that hammered their prices to crazy low means that if you sell away your REITs to buy into other form of assets due to a change in your diversification & concentration review, you will not be able to enjoy the recent strong rally in their prices after the rate cut. The dividends being declared will help investors to use them for investment into other asset classes while retaining ownership of one's REIT holding to wait for a recovery from the bear market.   

Parting Thoughts

If you believe that growth investing approach such as investing in companies like Tesla that pays little or zero dividends, then go ahead. It's a free world...do what one likes lor. But don't discount another person strategy due to one's own blind spot.

This is not the first time I seen this kind of post by the above mentioned You-Tuber. He also has another group channel with other finance influencers (think it is called the "Bagholders Pod") which has also launched similar anti-dividend investing content this year to generate views. 

SREITs Maybe Overvalued Despite Jumbo Size Interest Rate Cut of 0.5% By Powell.

Wow, what a BIG surprise! The conservative Uncle Powell has finally announced not just a cut in US Federal Reserve rate but a giant size 0.5%. Current US rates now hovers at 4.75% to 5.0%. This is higher than what I was expecting. But still, the recent SREIT price rally maybe overdone. US interest rates will not fall back to the close to 0% in the past unless the US economy crash due to a severe recession. 

Assuming an eventual near term US Fed rate of 3.5% at equilibrium to fight against inflation and also to ensure adequate economy growth stimulation, returns from REITs required for most folks should be at least another 2.5% to compensate for equity risk of holding onto financially strong ones like Mapletree Industrial Trust ("MIT") and Capitaland Ascendas that are linked to Temasek. This will translate to an expected yield of 6.0%. MIT is now trading at 5.3% distribution yield as at 18 September 2024.

While I am still holding on to the SREITs in my current cash and margin portfolios, I have began selling off part of my CPF OA investments in MIT to lock in the recovery and the resultant capital gains at the S$2.50+ range.

Elite UK REIT Entering Into Student Accommodation and Data Centres?

Usually, I tend to stay away from writing any post on Elite UK REIT (“EUREIT”) as it can lead to personal attacks and persistent online hustling by disgruntled loyal investor who only wants to hear good points on this investment. Having a high concentration risk in mostly one government agency for over 90% of the entire REIT's revenue generation is extremely risky. What is there to stop the government from closing down or downsizing some of its agencies should it meet with financial constraint? EUREIT price has tumbled <-58.8%> from £0.68 per unit from its IPO days to £0.28 per unit (as at 9 Sep 2024) and has done 1 round of equity fund raising to par down leverage during the not too long ago debt crisis (current gearing is at a healthier 41.4%).  

Well, I came across an interesting video and post from Mystocksinvesting.com on an interview with the new CEO of Elite UK REIT, Joshua Liaw. In this interview, the new management team led by Joshua has mentioned that EUREIT is looking at entering into the student accommodation or Data Centre business. While there are question on whether EUREIT has the expertise and financial resources to enter into these segment, I personally think that this is the right step in a new direction taken by the new management team. Joshua has further mentioned that they intend to form a joint venture with those companies that has the right expertise to spearhead their foray into this new frontier. The vision to go into other business sector and diversification from a single major tenant is definitely a plus point. 

Saying that, execution risk of new joint ventures into student accommodation and data centres as well as UK forex losses are other key considerations going forward.

(Note: Another interesting point is that both Joshua and the new CFO, Micheal Tong, are formerly from Lendlease Group).

United Hampshire US REIT Amazing 17.7% Return to Unit-holders Since 30 June 2024.

United Hampshire US REIT ("UHREIT") has delivered an amazing return to unit-holders of 17.7% since 30 June 2024. I was initially extremely disappointed with the plummeting unit price and the ever decreasing DPU over the last 2 years especially during the high interest rate environment imposed by the US Fed. With the softening of hardcore stance by the US Fed Reserve as well as weak US economic data indicating that the US economy is running out of steam, an upcoming rate cut by 17th-18th September 2024 FOMC meeting seems imminent. UHREIT has benefitted from this latest news with a strong rally in its market price over the last 2 months. Please see my video for why I will continue to hold on to UHREIT for now. 

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Oceanus Group Limited and Red-Flag on Strange Loan to External 3rd Party at Incredulous Interest Free Rate.

Oceanus Group Limited just released a very disappointing set of half year 2024 results on 14th August 2024 which revealed a loss of <S$1.17Mil >. This is a hefty 92% worsening of results relative to 1H2023 of <S$610K>. Having years of losses and a mere 5% growth in revenue is one of the red flag indicator that something maybe wrong with its management team. The list of queries from SGX on 22nd August 2024 further add to the uneasiness over its financial health.

Personally, I am a bit spooked by another weird transaction by Oceanus management team. From the SGX query 3, it appears that the management of Oceanus Group has given a S$1.268Mil loan to a 3rd party that is interest free which is honestly absurd. If this 3rd party is so weak financially, why did Oceanus choose to work with it? I am sure there are other vendors out there who can fulfil what they are doing. 

In addition, it is ridiculous to give an interest free loan to a 3rd party and to take up credit risk of default by the external non-related party. This does not make commercial sense at all. Also why not do equity buy-over instead if the platform technology is so unique that the survival of Oceanus Group depends on it?  I am not sure whether it is just me here but do anyone else smell a rat somewhere.... 

Parting thoughts

I am currently vested in Oceanus Group via a small stake of around S$1K as previously I like the growth story sold by its CEO. But seems that there are some "more than meets the eye" stuff going on here. Oceanus Group audit committee should come out to clarify on why their management team entered into something that makes terrible commercial sense. 

Why Tan Kin Lian Keep Talking About Buying Apartments in Malaysia Forest City? Is He Out of His Mind?

 

Not sure why my Facebook will frequently show me Tan Kin Lian’s post. He has been talking about Forest City I recalled from 2017 till now. So what if Forest City is freehold condo and cost just S$300K relative to S$1.5Mil+ Singapore condo right now? Beside the issues of foreign exchange depreciation risk as well as ghost town issue, the MM2H (Malaysia My Second Home) scheme is also fraught with the ever changing political climate risk. One moment Malaysia politicians welcome foreigners like Singaporeans and Chinese and then the next moment they may just decide to ban foreigners or raise up the anti-foreigners sentiment to score political points. 

Hence I am shocked that he even mentioned that it maybe a good idea for retirees to sell one’s property in Singapore and then use part of the proceeds to buy an apartment in Forest City. One will always be a second class citizen in other countries and that is the cold hard truth. 

The Silence of the Lambs Part 2- Venturing Into the Tiger's Den.

This is actually an update on my personal career since a restructuring exercise at my workplace approximately 2 years ago. To recap, those were poignant moments then when some of my colleagues were let go by our Headquarter (based overseas). My local Singaporean director heading the local business unit also left after disagreeing with the new remuneration package on offer by the HQ Big Boss. This was strange despite the business still being profitable.  There was no replacement and I was asked to be the lead General Manager for the local business and do double-hatting for both commercial and financial functions to save cost. Fast forward 2 years and the cat is finally out of the bag: The reason for what had transpired was due to an upcoming Merger and Acquisition ("M&A"). The Big Boss at our Headquarters had decided to sell away his business to a giant Global MNC. No wonder there were so many lambs being slaughtered over this period as he was so busy trimming cost throughout the entire Group. Apparently, he was striving to get as high a selling price as possible with magnificent profit numbers by roasting the lambs. 

1. Most dramatic turn of event.

My local Singaporean director who left previously is now in the acquirer Company HQ. Interestingly, it was revealed that he was recommended his current role at the new acquirer company by my current overseas Big Boss who connected him to the new business owner/acquirer. So, it turns out that eventually, I will still be working with my ex-local director albeit each of us in a different role capacity under the new owner. 

2. Venturing into the unknown- M&A Integration.

Many fellow managers and staff were extremely worried about the upcoming integration albeit much assurance from the HQ Big Boss (who is selling away his business) and also the new business owner that there will be no retrenchment within the next 2 years due to the upcoming integration exercise. It is like a Ripley's Believe It or Not moment. :)

In addition, I have no doubts that the usual higher level fight over control by the senior management will soon start. The new organisation is so humongous that a Manager is just a small fry inside. There seems to be plenty of Director level staff. The higher up "food chain" even have different Vice-Presidents and Presidents in different clusters.  

3. Going back to global MNC.

With such a big structured organisation filled with so many headcounts and departments, navigating through the complex human spider-web will be fraught with challenges. Not to mention the clamouring for credit during project work and pushing away of blame to other department or other personnel when there are screw-ups. So not exactly looking forward to it. Worked before in some of these big organisations but find things too structured at times. So went to a smaller organisation. Now I am back to square one it seems....hmmm. 

4. Importance of passive income during such moment.

Although I have not achieved financial independence, but the interest and dividend income from my half baked tiny investment portfolios do come into handy. At least I will be able to pay off basic housing mortgage and the kid's living and educational expenses if unfortunate events were to strike later on.

Parting thoughts

I am not sure one gets wiser as one gets older, But one does learn to dodge a certain amount of hell. :p

Haw Par Corporation Delivered Another 1st Half 2024 of Excellent Results-17.1% Growth in Net Profits!

Haw Par Corporation is on its way to another year of extraordinary good results coming off FY2023-an impressive S$122Mil 1st half profits being generated!  Its 1st half 2024 Earning Per Shares (EPS) is at 55.1 cents and I think it should eventually hit more than S1.00 for the entire FY2024. This is amazing given that its historical EPS are 82 cents (FY2019); 54 cents (FY2020); 50 cents (FY2021); 67 cents (FY2022) and 98 cents (FY2023) respectively. The huge earnings for 2023 and 2024 is mainly attributable to its investment income from its strategic stake in UOB and also interest income from government debt securities.

Tiger Balm Still Doing Well.

Revenue top line from its main business of Tiger Balm healthcare have also been doing well recently and gradually recovering to pre-COVID level. It grew an impressive 6.3% year on year basis for the 1st half. Furthermore, the Management of Haw Par Corp has been looking out to deploy excess capital on hand via the acquisition of a new business. However, from management last update, they still have not found a suitable business for Haw Par Corp to acquire. 

For those interested to know more about Har Paw Corporation, I will recommend you guys to read up on an interesting deep dive of Haw Par Corporation by our Incipient Investor friend from Passive Loss's blog in 2023.

Parting Thoughts

Shareholders who are hoping for a "special dividend" payout will be extremely disappointed. The interim dividends is at 20 cents which is a miserable pay-out ratio of approximately 36% only based on the current earning of 55.1 cents. Management has previously indicated that they will continue to look out for suitable business investment opportunity. 

It is also strange that despite the better results of Haw Par for 2023 and 2024, its share price never recover to its former glorious price of S$13.60 per share in July 2021 and has continued to languish at the S$10 per share price range. 

Divestment of Properties at Premium of 8.8% Over Book Value- United Hampshire US REIT.

Great news! United Hampshire US REIT ("UHREIT") has announced that it is disposing its Freestanding Lowe's and Freestanding Sam's club property within Hudson Valley Plaza for US$36.5Mil. The Divestment Consideration of US$36.5 million represents a premium of US$2.9 million, or 8.8%, above the book value of the Properties, and US$1.5 million, or 4.3%, above the Independent Valuation. Furthermore, the Divestment Consideration is US$5.4 million, or 17.5%, higher than the purchase price of US$31.1 million of the Properties. The estimated gain on divestment based on  the book value of the Properties is approximately US$2.0 million, after taking into account the transaction-related expenses of approximately US$1.0 million.

1. Use of Divestment Proceeds

It is stated that the proceeds from the Divestment may be used to repay existing debts, finance capital expenditure, fund potential higher yielding acquisition opportunities and/or for other general corporate requirements. 

Taking into account the super low market pricing (US$0.43 per unit) relative to its Net Assets Value per unit (US$0.74 per unit), the realised value of the capital appreciation is actually benefical for retail investors of UHREIT. It will also reduce the leverage ratio from 41.7% to 39% and improved its interest coverage ratio from 2.9 times to 3.2 times. 

2. Pro forma Financial Effects of Divestments.

2.1 DPU effect if assume UHREIT had completed the Divestment on 1 January 2023:

2.2 DPU Impact:

2.3 Aggregate Leverage Ratio and Interest Coverage Ratio effect:

Parting Thoughts

Above is good news as many investors of UHREIT have been lobbying for a reduction in its leverage ratio which have been hovering over 40%. Good job by the management team of UHREIT. Today (14th August 2024) also happens to be the results released date (before trading commence) for UHREIT. Keeping my fingers crossed that the distribution per unit will not be reduced drastically due to the high interest rate environment.

Opportunity To Acquire This Quality Non-Banking Blue-Chip That Has Dropped 20% from its Peak.

I thought that now is a good opportunity to accumulate more shares of this blue-chip on SGX which has dropped 20% from its peak this year albeit the not too bad operating results.  Accumulated 2 tranches at S$6.20 per share (700 shares) and S$5.93 per share  (1,000 shares) on 2 Aug 2024 and 8 Aug 2024 respectively. 

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NTUC Income Already GG 20 Years Ago- So Not Sure Why So Many Old Men Coming Out to Bash The Allianz Offer.

I hope I don't get roasted too badly writing this post. I get the nostalgia that many old old men such as Tommy Koh, Tan Kin Lian and Tan Suee Chieh have about NTUC Income and its goal to help the lower income secure insurance coverage. This was indeed the grand vision of one of the founding fathers of Singapore, Dr Goh Keng Swee. Nevertheless, my personal thoughts and experiences are that NTUC Income Insurance has already lost track of this goal 20 years back when it was run by Mr Tan Kin Lian. 

The sucky parts about NTUC Income Insurance:

At that time (20 yrs ago), NTUC Income kept selling those traditional whole-life policy that one has to pay premium until one's death bed or for 99 years. I wrote to Mr Tan Kin Lian before telling him that other insurers already started offering limited premium paying plans for only 10-20 years (and then become fully paid up) but NTUC Income was still selling its policy holders pay till 99 years old type of stupid traditional insurance plan. His immediate response was a disappointing whether I am another insurance agent from another competitor insurance company. NTUC Income products were already losing innovativeness and relevance to the real market. On a social level, it is actually harming consumers with an inferior product relative to other insurance companies.

NTUC Income was also selling to heartlander customers its investment linked polices- the NTUC Ideal Plan. One would have lost almost 15% of one's invested capital as sales charges before the remaining capital gets invested into unit-trusts. I will leave the link to a post here from 2 March 2012 on my experience with a NTUC Income Insurance agent. 

I also encountered a lot of extreme questioning by NTUC Income assessor trying to get Hospitalisation and Surgical coverage for my aged parents about 15 years ago. They are the pioneer generation that worked hard for Singapore during the early days. I only succeed in getting coverage for my father (with various exclusions) but none for my mother. So what social goal is Tommy Koh, Tan Kin Lian and Tan Suee Chieh talking about that NTUC Income is helping the lower income get insurance coverage? This is Bull-SH*T by these old men. It is clear that NTUC Income is trying to reduce coverage for low income workers while aiming to preserve as much profits as possible.  

Bear in mind that it is Mr Lee Hsien Loong and his government that came up with the Pioneer Generation and Merdeka Generation medical packages to help aged Singaporeans like my Father and Mum generation who most needed the medical coverages but NTUC Income is not keen to cover at all...period. Without the Pioneer generation and Merdeka generation subsidies, my sibling and I would have been saddled with hefty hospitalisation & surgical bills for my aged parents. 

Is NTUC Income Insurance still relevant?

Personally, I thought that it was definitely relevant during the days of Dr Goh Keng Swee when many workers are struggling to get adequate insurance coverage. However, it has since lost its social goal decades later and at current time where for decades, they are very profit driven. Worst still is that Income Insurance is struggling with relevancy for its products and pricing relative to other insurance competitors. I have moved away from NTUC Income many years back due to its inferior products. So I do not understand why so many old men are coming out to stop the Allianz deal which actually has more pros than cons for the future of Income Insurance Ltd. 

Investment Portfolios Updates (26 July 2024) - Net S$620K and Projected Annualised Passive Income of S$42K.

The recent SREIT rally has finally put a brake on the non-stop downward spiralling in market prices. There is a much anticipated worldwide expectation of a US rate cut in September 2024. Based on US inflation reports and moderate job growth data, it seems chances of a rate cut is indeed high. Keeping my fingers crossed that the recent rally in price is permanent with more to come. However, Geopolitics such as the upcoming US Presidential Election (Trump appears to be the favourite to win now after his assassination) and also escalating Middle East conflicts between Israel and Iran back military groups are causing much uncertainty in global economies. There is also the very controversial Allianz offer that affects my current share-holdings in Income Insurance Ltd- please see further remarks under Portfolio 4 section below.

1. Portfolio 1- Stocks held in SGX Central Depository 
(Note: This portfolio is designed to provide immediate dividends for use as it is under my own CDP account and the dividends credited goes directly to my bank account.)

I have given up on Capitaland Investment Limited and sold off all my holdings in it. The proceeds were used to purchase additional units of Keppel Ltd stocks at S$6.62 per unit.

2. Portfolio 2- Margin purchased securities

(Note: My margin purchased securities has grown to a sufficient scale to sustain itself and can pay off annual financing charges as well as to gradually pay down the margin loan through dividends generated.) 

I have took profit and sold off all my Ping An Insurance shares. Have used the proceeds to purchase Link REIT as well as to pare down on expensive margin loan. Margin loan thus went down from S$291K to S$281K. 

Also took a small speculative 5000 units trade in Mapletree Industrial Trust when its price plummeted to S$2.10 per unit and took profit 2 weeks later @S$2.29 per unit after the SREIT rally. 

3. Portfolio 3 (with Tiger Brokers and MooMoo) 

(Venture into higher risk as well as capital growth stocks here)

I have took profit and sold off all my Ping An Insurance shares. The proceeds were used to purchase additional Link REIT units when its price plunged to below HK$30 range (HK$29.80) per unit. Also opened up a small position in a penny stock, Oceanus, which had seen continued strong growth in its food distribution business in China. 

4. Portfolio 4 (Endowus Unit Trusts & Other Investments)

I have continued to build up my bond funds investment via Endowus platform. 

Guess the only news-worthy update here is that my NTUC Income shares market value will go up from S$1,060 to S$4,300 if the controversial Allianz offer gets approved by local regulator and shareholders. The 2 formers CEOs of NTUC Income Co-operative have come out to speak out against the deal as they do not want the insurance group to lose track of its social goal to provide cheap insurance to the lower income of Singapore society. 

Yummy Toast Box is Back!

It has been a while since Toast Box moved out of this neighbourhood shopping mall near my home. I was delighted with the management of Toast Box for re-opening their outlet recently. So lonely Ya Kun Kaya Toast now finally has some companionship at the mall…..haha. 

After my morning jog, I thought that I should support Toast Box and so went there for my breakfast. Originally have a craving for fried bee hoon and wanted to order the set. But I was flabbergasted when I saw the S$9.70 price tag for bee hoon with egg and chicken wing plus a drink. I thought that the last time the set was valued at S$6 plus. So inflation must have hit Toast Box extremely hard perhaps over the past few years?   

Disappointing Q1 June 2024 Results for Mapletree Logistics Trust But Not All Is Doom and Gloom!

What a disappointing set of Q1 2024 results released from Mapletree Logistics Trust ("MLT") with its DPU dropping by a substantial <-8.9%>. However, not all is doom and gloom for MLT. With worldwide interest rate cuts as well as the near completion of its 51 Benoi Road warehouse facility at Western part of Singapore near Joo Koon MRT (approximately 850,000 sqft  lettable space after Asset Enhancement & Improvement) that will TOP by May 2025, I think that MLT unit price will eventually recover. 

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SGX Stock Which Increased Dividends by 33% and EPS Increases But Market Price Nose Dived Over the Years.

This is one of the weirdest local stock I seen on SGX. While its Earnings Per Share improve over the past 3 years and increased dividends by 33%, its market price kept nose diving and never regain its former glorious form. I have added on to my minor stake into this stock for diversification into my current REIT centric portfolio.

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Loyal Shareholders of Income Insurance Ltd See Jaw Dropping 400% Returns From Potential Bidder’s Market Valuation.

Congrats to all Income Insurance Ltd shareholders! The former NTUC Income Co-operative- which has just recently completed its corporatisation in September 2022- announced that German financial services giant Allianz plans to acquire 51% of its share at S$40.58 per share. Considering the fact that many shareholders got their share at S$10 par value (plus the 5%+ dividends over 20 yrs) and considering recent transaction on an exchange setup by Phillips Securities is at around S$20 per share, the S$40.58 offer is a whopping +400% and +100% to cost price and recent transacted price respectively. 

What happens next?

First and foremost, the above offer must be approved by our local regulator. Next, the offer needs to be approved by shareholders of Income Insurance and an EGM thus needs to be convened. The major shareholder of Income Insurance, NTUC Enterprise Co-operative has undertaken to sell part of its shares should the sales of shares by minority retail shareholders falls below the 51% required by Allianz. So, we can tell that the management of Income Insurance has given priority to minority shareholders who would want to exit. More details should be announced soon.

Do note that since the announcement of this deal, ex-CEOs of NTUC Income Co-operative have came out expressing their opposition to the sales of shares by controlling shareholder NTUC Enterprise. Even the influential Prof Tommy Koh (ambassador-at-large at the Ministry of Foreign Affairs, a position he has held since 1990, and a professor of law at the National University of Singapore) is now challenging NTUC Enterprise Chairman Lim Boon Heng’s justification for selling away their majority stake in Income.

Parting thoughts

During late May’24 portfolio review and update, I have stated that I will be keeping my small holding of 106 shares of Income Insurance as a souvenir as the amount is extremely small and then live with its 5%-6% yearly dividend yield. However, with a S$40.58 offer, this paltry investment has suddenly grown from a mere S$1,060 to S$4,300. I guess I will definitely sell if off and then reinvest the proceeds into the Endowus bond funds.

Keppel DC REIT Back On Its Growth Path!

Good news from the management team of Keppel DC REIT!  

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SREITS and Banks Strong Rally Today (11 July 2024) After Powell Show Power!

I thought my eyes were playing tricks on me when I checked on  the SREITs market today. Not just SREITs but local bank stocks also went up. Looks like the market like Jerome Powell's message on potential interest rate cut which may happen earlier rather than sinking into recession: “You don't want to wait until inflation gets all the way down to 2%, because inflation has a certain momentum,” Powell said. “If you waited that long, you’ve probably waited too long, because inflation will be moving downward and will go well below 2%, which we don't want.” 

I am surprised but delighted to see the surge of 2.86% to 4.76% today for Mapletree Industrial Trust and Mapletree Logistics Trust respectively. I am heavily vested in the Mapletree family of REITs. Let's hope that there will be a sustained rally in price after the long drought.

Why I Am Not Taking Part In the Guaranteed Interest Rate Product Offered by Chocolate Finance?

Wow, the recent talk of the town seems to be Chocolate Finance. Recently, I kept receiving Wat's App messages from friends or seeing online posts with regard to the super attractive S$20K guaranteed 4.2% interest income product by Chocolate Finance. To be honest, the old adage of if something sounds too good to be true, then it probably is. Personally, I am staying far far away from Chocolate Finance due to the following reasons:

Guarantee by Chocolate Finance Mgt Team

1. Product doomed for failure in event of sudden global interest rate drop to fight recession

I think that it is very irresponsible for financial product designer these days to use "guaranteed high interest rate" for a certain duration to attract investments. No matter what, there is still a lead time between actual collection of funds from investment subscription to deployment into the various auv-component funds constituting Chocolate Finance latest product offering. If interest rates were to suddenly plunge, Chocolate Finance will be dipping into its shareholder fund to compensate investors. Where got business take on excessive risk like that? 

2. It is a fallacy that many folks believe that as long as the legal title of their investments is being held by 3rd party custodian, this means that one's money is safe even if Chocolate Finance goes bankrupt.

The thing is that if Chocolate Finance business model collapses, investors will no longer be able to withdraw their funds immediately. During the chaos transition while regulator take-over, there maybe loss of electronic records from system, or even fraudulent collusion by senior management and their IT team in sending of electronic records to the custodian that is holding on to all assets separately as required by the Monetary Authority of Singapore ("MAS"). I can easily think of a few more scenarios that may happen to cause months of delay in ascertaining ownership of respective individual's investments as well as the completeness of records. 

Point number 2 actually also applies for other robo advisory platforms such as Endowus. But difference here is the strength of the shareholders of Endowus relative to Chocolate Finance. Endowus shareholders include UBS, MUFG, Singtel, Samsung, Prosus (largest shareholder of Tencent) and Softbank etc.

3. The guarantee is only for up to S$20K and until 31 December 2024.

It is a waste of time and efforts to move funds whenever another Fund Management Company come out with same pattern as Chocolate Finance to call itself having the best deal in town. I will rather spend the time concentrating on my career or spending time with my family. There are already many good products out there on Endowus (Cash Smart) ,MooMoo or Tiger Brokers that have good decent money market funds offering 3.5% to 4.6% return per annum and being able to withdraw on demand. It does not make sense for one to keep going after a newer product that professes to be the "best" in the market for a 4.2% return that is not much of a difference to other similar products in the market. 

Parting thoughts

Anyway, above are just my personal thoughts and views. This is a free world. For those who likes the thrill of constantly shifting their cash around for a better deal, do go for it! :)

Can Keppel DC REIT Extricate Itself Out of Its Guangdong Data Centres Misery?

Will Keppel DC REIT be able to extricate itself out of its Master Tenant default saga at Guangdong Data Centres?

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Invest SREITs at all-time low or better to go into Bond Investment Instead?

I am having a headache recently with regard to my upcoming regular month end of additional capital injection into the investment portfolios. On one hand, SREITs have tanked again to near their 52 weeks low and now seems the best time to invest. Saying that, in particularly for the past few months, whenever I thought that the SREITs prices have bottomed and accumulated more units, their price just dropped further. On the other hand, my investment forage into bond unit trusts over the past 1 year has been stable thus far especially with global inflation under control- interest income which I had received is around 6% return per annum and capital price of the bond fund held their ground well. Moreover, there is also potential further capital appreciation once interest rate cuts by the US Federal Reserve is announced.

1. Invest SREITs at all-time low or better to go into Bond Investment Instead? 

I think that I will probably add on to the bond unit trusts for June 2024 month end as I have previously in May 2024 already invested approximately S$10K into both United Hampshire US REIT and Frasers Logistics & Commercial Trust  (unfortunately, both SREIT's unit price declined further after my respective purchases).

2. A close friend asked me whether Equities or Money Market Funds is the best investment in view of current market?

I thought that my friend asked me a very interesting question. My personal thoughts are that for risk averse folks who find equities and bonds extremely risky, then maybe buying into the Money Market Funds is well worth it. Singapore Saving Bonds or T-bills are also good options. 

The thing is that over the years, I have decided to just keep my real thoughts to myself whenever risk averse close friends asked me such question. I will at most just share my thoughts on the above financial instruments since their risk profile is extreme prudence and they generally ask for the sake of affirming their own beliefs (if you say something else, then it gets into a heated debate). However, the fact remains that returns from such investments will barely keep up with inflation. I think that some risks need to be undertaken in order to exit the rat race earlier.

Ok, that's all for today's post, have a great week ahead folks!