Danger of investment linked products

Recently, the STI shot above 3000 mark and I decided that it is time to surrender my Investment Linked Policy (ILP) with Manulife. This was a balanced fund investment using my CPF investment account during 2006. The return was around 4.5% per annum on average which is very amazing.....amazing in the sense that the Singapore government is also paying the same rate for money left in the special account. I figured that I have been screwed as I took on market risk but the end result was that it cannot beat the risk free interest rate. So time to surrender and send the funds back to the CPF board and say bye bye to Manulife.

The problem with surrendering the ILP is that it is only effected 1 working day after you submit your application. 1 day is a very long delay as history has proven that stock market can drop a few hundred points during economic crisis. 

Another unique feature of ILP is that even if the funds made losses, you still need to pay them management fees. This is tantamount to rewarding people for poor performance. 

Last but not least, ILP always come with extra insurance that one does not require. This is a scam to hide the additional charges. Investment and insurance are two vastly different subjects in financial planning. Mixed them into one product and what you get is as clear as mud. 

La Fiesta review (NorthEast District-Sengkang)

Details of this project
Developer: EL Development.
Property Address: 50-76 Sengkang Square Singapore 544830.
Site Area: Approximately 22,497.6 sqm or 242,164 sqft.
Type of Development: Full condominium facilities.
No. of Blocks: 13 blocks of 15 Storeys comprising of a total of 810 units.
No. of Car park lots: 810 (one for one as per agent); 2 level of basement parking.
Tenure: Leasehold 99 years commencing from 3 September 2012.
Expected T.O.P date 30 June 2017.
Expected Legal Completion Date 30 June 2020.

Overview:

The very special name of La Fiesta means "The Festival" in Spanish.The actual launch will be on 15th January 2013. This project location is superb as it is just besides Sengkang MRT and Compass Point shopping mall. The location is even better than neighbouring plot of Luxurie by Keppel. EL Development will also build a shelter linkway to connect to the overhead bridge thus integrating La Feista with Compass Point and Sengkang MRT. As such, the pricing is also out of the world and will set another record high for Sengkang. Tentative launch price will be between 1050psf to 1280psf (depending on facing and floor + unit type). There are also numerous interesting facilities such as Tea Garden and Candlelight Dining Pavilion. The water feature at the drop off point and the mini waterfall along entrance driveway makes this already very impressive development very magnificent.

Private Preview of Showflat-5 Jan 2013

Crazy crowd.....so crowded till it was claustrophobic. Plus one needs queuing within the showflat to enter the units on display....this is going to be a hot selling project! Heard that many cheques offered for 1 bedroom....so balloting required on 15th January 2013 (Tuesday).

People Mountain People Sea.

Squeeze mates!

Notice the guy in orange- He is the unofficial protector of the miniature model.

Queuing to view the showroom of the 3 bedroom compact and dual key 4 bedder.

Home buyers crowding around the miniature La Fiesta model

Main entrance depicted on the miniature model

Drop-off area- Note that the circular fountain in brochure has beautiful water jets shooting upwards

The sheltered linkway from La Fiesta to the overhead bridge to Sengkang MRT and Compass Point

Super large playground for the little ones and tennis court.

  

Big plot of land and even jogging track included in this development!

Parting shot of the main entrance and side gate link to overhead bridge

Clean cutting modern facade

Dinning area for the 3 bedder Compact (893sqft)

Note: For compact 3 bedder, there is one bedroom room which can only fit a single bed.

Master bedroom for the compact 3 bedder on display

Wardrobe for bedroom

King size bed can fit nicely into the master bedroom.

Master bathroom with marble finishing for floor and wall plus mosaic tiles on one side of wall.

Wash basin in Master bathroom.

Location and Amenities

What more can be say? Sengkang MRT and Compass Point shopping mall just a stone's throw away. This is a dream home for many families. In addition:

• Reputable schools such as Nan Chiau Primary school and Nan Chiau High School (accorded SAP status recently).
•  Quick accessibilty to Tampiness Expressway (TPE) and Kallang Paya Lebar Expressway (KPE).
• Seletar Aerospace, Wafer fabrication near Yio Chu Kang/Jalan Kayu and Sengkang Hospital in development which will boost rental demand in the vicinity.
• Walking distance to Kopi Tiam food centre and Seng Kang Community club
• Extremely near distance to the Seng Kang neighbourhood police post- safe neighbourhood
• Access to cineplexes in Sengkang West (Seletar Mall); Serangoon (NEX); Punggol (Watertown Mall).
• Plus many many more.......simply too many too list down here.

Site plan and facilities of La Fiesta 

This plot of land is huge. Being 242,000sqft, there is even a jogging track built within the development. There are also many type of gardens in line with the Spanish Festival theme. The one that caught my eyes is the Sinful Garden! There are 2 main pools for La Fiesta with a whole array of water facilities such as Social Pool, Aqua Gym, Spa Pool, Water Play Zone and 50M lap pool.

 

Showflat and finishing + Unit Layout

The finishing given by EL are decent here. Homogenous tiles for living and dining room. High quality laminated flooring for all bedrooms. Okay, the best part is this: Marble finishing given by developer for the Master bathroom for flooring and walls. In addition, Mosaic tiles given for the wall directly with showerhead which adds to the grandeur feel. For even better finishing, one can consider getting a unit next door at the Luxurie by Keppel.

There is no penthouse units in La Fiesta. All the units are quite small in size actually...which is a strategy by EL to ensure the quantum is affordable (due to high PSF being marketed) to all.

Initially, I was skeptical before I visit the showflat at how liveable a 893sqft apartment can be....turns out that the use of space was extremely well planned and efficient except for the A/C ledge of 6sqm which is the same size as the balcony. At S$1,100psf, this compact unit will be approximately S$982K which is affordable in terms of quantum.

 Summary:

 Despite the small size of the units, the efficient planning by the architects ensure decent livable space. I would recommend for families size household, they should aim for at least the 3 bedder compact unit type. The 4 bedder will be approximately 1098sqft and will be in the region of S$1.2Mil onwards (getting pretty expensive for 4 bedder and above layout). The location for this project is excellent and offer investors room for further capital appreciation once developments for the D19 area completed. Facilities on offer are also impressive.  If EL can lower the price and launch at S$1000psf, this will be a sell out within a day. Anyway, let's wait for 15th January to see how fast EL can move units at it's asking price of S$1100psf onwards.

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: