Friday, March 30, 2012

~Portfolio Ending March 2012~

It has not been an active month for March. I have added a couple of small lots for MapleTree Industrial and Boustead through my SCB account and will probably add more to this in the coming months ahead.

Looking forward to dividends flowing in April and May :)

CountersNo.of LotsAverage PriceTotal Value (SGD)Dividends collected to date (SGD)
CapitalMall Asia101.4314,300.00255.00
ST Engineering82.8222,590.400.00
CapMall Trust11.7051,705.000.00
Fraser Centerpoint Trust101.45014,500.000.00
First Reit60.8004,800.000.00
PLife Reit61.7810,680.000.00
MapleTree Industrial Reit11.111,110.000.00
Unit Trusts--4,800.000.00

Thursday, March 22, 2012

Introducing Global Stock - TELEFONICA S.A (TEF)

I have been monitoring for these two global stocks with high dividend play yield, France Telecom (FTE) and Telefonica (TEF). Today's post will bring us to Telefonica, the number one Spanish private telecommunicator company.

Telefonica, S.A. provides fixed and mobile telephony services primarily in Spain, rest of Europe, and Latin America. Its fixed telecommunication services include PSTN lines; ISDN accesses; public telephone; local, domestic, and international long distance and fixed-to-mobile communications; corporate communications; video telephony; supplementary and business-oriented value-added services; network services; leasing and sale of handset equipment; and telephony information services.

7 reasons TEF is a solid value at current price share:

1.) It has solid operating cash flow (under 4 times market capitalization) and yields a robust >10%.

2.) The company gets more than 2/3's of its revenues from fast growing Latin America so is shielded significantly from the problems in its home country. Increasing smartphone penetration is also increasing its revenue per user. Telefonica Brasil is a particularly strong performer in its portfolio.

3.) The stock is cheap at under 8 times forward earnings and less than one times revenues (.91).

4.) The company has a low beta (.99) despite the problems in Europe. It also sports a "Buy" rating and a $20 price target from S&P reports.

5.) Earnings estimates for FY2011 and FY2012 have gone up over the past two months.

6.) The stock is selling at the very bottom of its five year valuation based on P/E, P/S and P/B.

7.) The stock has strong, long term technical support in the $16 to $18 range (See Chart)

Saturday, March 17, 2012

Determining market direction with VIX

VIX is a traditional symbol for a volatility index. It is a measured of the level of impled volatility, not a historical volatility, based on the S&P 500 market. This particular indicator is seen as a "investor fear gauge". In general, VIX starts to rise during times of financial distress (e.g we have seen VIX of 80 during the 2008 GFC and VIX of 45 during the recent Eurozone trouble) and lessens as investors become complacent.

Historically, this pattern in the relationship between the VIX and the behavior of the stock market, has repeated itself in bull and bear cycles across the years.For beginner investor, you may want to refer to this simple indicator before you decide to buy.

As you can see from the graph above, when the VIX has dropped to relatively low number of 20, a major sell-off will follow shortly after that. This means that should you buy when the VIX is low, your chances of buying the shares are not at its low. You will need to stomach each bad news with uncertainty. In my opinion, this is not absolutely with certain but it is a very good gauge especially for those entering the markets for the very first time.

With VIX at a low of 14+ today, I don't seem comfortable adding to my position, even if some stocks do look undervalued. With oil prices rising and uncertainty in the middle east, one incident can easily change the whole picture.

Sometimes it's not too bad of a thing to keep your money in a bank

I am sure many of us have encountered a time when we see an opportunity and wanting to buy it yet have insufficient funds readily available.

As people becomes more financially educated, the first thing that they learnt is that by putting their money in a savings account in the bank, they are effectively losing its value due to inflation. For the records, inflation in Singapore are currently at 4 to 5% while more realistically core inflation are at 2%. While I do agree that putting your money in the bank erodes its value over the course of time, I think it may be a wise decision as long as you have investment plans and are waiting for the right opportunity to come. Definitely it beats putting your money in a bad investment hands down(e.g buying shares or property at a high price thinking that if you put your money in a bank you are a loser).

So if there is no investing opportunity at this moment, be patient, accumulate and let your money stay in the bank and wait for the big opportunity to come.

I remember a word of advocate from my dad which he says it all the time. In life, all you need is one golden chance and if you take it, you will strike it big.

Friday, March 16, 2012

Are Singapore property still affordable at this price?

A good read news from Channel News Asia :P

Singapore property prices is still low and affordable with good rental yields.

A 2 room BTO HDB flat only cost $100K and after grants only cost $40K. Even someone earning $1K a month can afford to buy one. After he buys, the resale value can easily rise to $200K after MOP. He is in the money by 5 times the initial cost of $40K. This is Singapore, a compassionate country, a dream home for many immigrants from all over the world, esp from the region.

If you look at the resale flats, they are also cheap. Why? Just look at the rentals you can fetch. A 5 room HDB flat can easily fetch rental of about $3K a month or $36K a year. This is a yield of 6.7% and if you take HDB loan of 2.6% per annum fixed for 30 years, you will be enjoying positive net returns. In 15 years, you can collect $540K, which is about the current price of a 5 room HDB flat. So it means, the balance of the lease (84 years) is free for you to live in theoretically. But in reality, your flat will go for enbloc once it reaches 30 years old and you get a new flat.

So based on a $36K a year annual rental, in 99 years you could theoretically collect $3.5mil. And since the current flat is only $540K, it is considered cheap, very cheap.

For condos, go for those in the suburban areas such as Jurong, Woodlands and Punggol. A condo in Jurong costs about $900K and you can rent it out for about $3.5K a month or $42K a year, which means a gross rental yield of 4.7%. With $42K a year rental collection, you can collect $900K in 21 years. You can theoretically collect $4.1 mil over 99 years and since price is only $900K, it is very cheap. And in 21 years, if your condo is next to the MRT station, it may get enbloc and you get big profits. Jurong Lake properties prices will likely to rise significantly over the next decade when the area is fully transformed into the 2nd CBD. With the new development, rentals will also rise. From $3.5K, rentals can rise to $5K a month or $60K a year or $5.9 mil over 99 years. A $1m 3 bedroom condo at the Jurong Lake District is dirt cheap. Just grab!!!

Another property segment you should grab is the $1m plus 3 storey landed properties. These will likely hit 2 mil plus over the next few years as supply is shrinking fast while demand is rising fast. These properties built-in area is about 3000 sq ft and selling at only $500 psf.

So you should just buy. Buy and hold for 30 years.

Dont listen to many people here who are misleading you. They are dying to buy and creating fear because they want to buy cheaper than the current cheap levels. If you are in no hurry to sell, dont sell. If you are selling, make sure you get a replacement property immediately because prices will continue to rise over the next decade and beyond.

Dont forget that Singapore properties is a good hedge against inflation. Inflation is about 5% and fixed deposit earns you less than 1%. The value of your money depreciates every second, every minute, every hour, every day.... The global debasement of paper currencies due to the monetisation of debt by the global central banks of the world, means that real assets prices will need to rise to maintain their real value. Do remember that assets such as stocks and structured products are high risks and their value can go down to zero, whereas Singapore property values may correct but will always rise in the long term as it is a solid brick and mortar asset. Singapore properties will appreciate in the long term. Those who bought a 5 room HDB flat in 1980 at $80K now see the value of their flat appreciate to $500K today, esp after their estate has gone through the main upgrading program. Some properties which were bought at the high of 1996 did drop in value but now have mostly recovered and now the prices are higher than the 1996 high due to limited land, higher family dual incomes, inflation, Singapore's strong economic growth and bright future prospects, better amenities, more MRT stations and lines, good government and strong local and foreign investor confidence that the government will manage a gradual long term price increase but not to purposely crash the property market (cooling measures are to cool the property market but NOT crash the property market). So prices will recover if you hold long enough. Most important is your ability to hold.

When you're buying remember to buy within your means. Do not overleverage. Use 40% cash downpayment and only loan 60% and make sure you can finance your monthly mortgage comfortably. If you have a HDB flat now, sell it away and use the big profits as the 40% cash downpayment. Buying using 40% cash downpayment ensures that you are firmly in a strong position to hold the property for a long time. Buy the cheap suburban condos in Jurong, Woodlands and Punggol. Dont buy expensive luxury condos if you cannot afford. With a 40% cash downpayment, mortgage rate of 1.5%, and a small loan, you dont have to worry even though mortgage rate rise from 1.5% to 1.8% next year.

You can consider selling away your fully paid $900K 5 room HDB flat in Queenstown and buy a $900K Jurong Lake District condo, fully paid. Condos in the Jurong Lake District have a much greater price appreciation potential over the next decade when the area is transformed into the new CBD.

Saturday, March 3, 2012

"I was cheap before frugal" - Classic

I was reading a post recently debating about the differences of being cheap and frugal and it does strikes a resembility between the two. (Let's skip "spendthrift" for a moment because it is a huge gap that we all can easily identify).

Assuming you are buying over a pair of shoes which cost one at $100 and another at $40. Being "cheap" means that you will definitely choose the one with the lower cost. But what about being frugal? To me, the differences of being cheap and frugal are multiples, but are pretty simple at times. Just think about it like this. Frugal people are willing to spend money on quality products at a reasonable price. They are smart people because they know that the products they are buying will last them for at least some time, which minimizes the cost over the long run. Cheap people, on the other hand, are people who will go and find the cheapest item on the price tag. They have a mindset to buy products cheap and usually these people are the ones that buys the same product over and over again...simply because the products are "cheap".

I used to be a "spendthrift" when I first started working 4 years ago to being a "cheap" over the last few years to being "frugal" now. I used to own a branded watch, a pair of branded shoes and a couple of branded clothes when I started working. Whenever my salary was paid at the end of each month, I would go and spend it on items which I do not really need. Luckily for me, it lasted for just a year and from then since, I began to realize and transform dramatically to being "cheap". Being "cheap", emotions easily run through the veins everytime you had to make a decision about purchasing something. It is measured by the amount of pain threshold you experience when taking your money out of your own pockets. Again luckily for me, it lasted for only a few months before I finally realise the importance of being "frugal".

I am striking hard to work the difference between being cheap and frugal. I have a target to save a certain amount of money every month but I also know the importance to live my life in a healthy and happy manner.

Thursday, March 1, 2012

"My Portfolio ending February 2012"

There has been a couple of transactions that I made in the month February as I tried to switch a couple of the shares I own and re-balance my portfolio. I sold 2/3 of my Yangzijiang and half of my CapmallAsia stocks and reinvest some of the money into Reits as I look to balance my portfolio with more cashflow.

Linking my portfolio to soccer, the 4-5-1 formation is what I am seeking for in investing stocks in the long run and one that I will definitely keep in mind when making purchase. As with soccer, my team is currently in a rebuilding mode and I hope to make it better as time progresses. I will also be in the lookout for some bargain to add to my team to make it even stronger as time passes.

(GK) - Still looking for a pair of confident shotstopper and safe hands.

(DL) - Parkway Life REIT ("PLife REIT") - is one of Asia's largest listed healthcare REITs. It invests in income-producing real estate and real estate-related assets used primarily for healthcare and healthcare-related purposes. As at current, PLife REIT's total portfolio size stands at 36 properties (3 in Singapore and 33 in Japan) totalling approximately S$1.3 billion.

(DC) - ST Engineering (Captain) - is a global, integrated, engineering group with capabilities spanning the aerospace (ST Aerospace), electronics (ST Electronics), marine (ST Marine), and land systems sectors (ST Kinetics).

(DC) - Still looking for a reliable defence partner. Preferably someone with experience and high defensive skills. SPH and/or Telcos are in my shortlists.

(DR) - First REIT - is Singapore's first healthcare real estate investment trust (REIT) that aims to invest in a diversified portfolio of income-producing real estate and/or real estate-related assets in Asia that are primarily used for healthcare and/or healthcare-related purposes. Its current portfolio consists of ten properties strategically located in prime locations in Indonesia, Singapore and South Korea.

(DMF) - SATS - is the leading provider of gateway services and food solutions in the region. From airfreight, baggage, and ramp handling to passenger services, aviation security, cargo, warehousing to perishables handling. Being the leading ground and in-flight catering service provider at the Changi International Airport, one of the best airports in the world, we now have ground handling and in-flight catering presence in more than 30 airports in Asia.

(CMF) - FraserCenterPoint Trust - is a leading developer-sponsored retail REIT with five quality suburban malls in Singapore. FCT's current portfolio comprises Causeway Point, Northpoint, Bedok Point, YewTee Point and Anchorpoint. With combined appraised value of $1.7 billion, FCT's malls enjoy wide captive markets, good connectivity and high occupancy.

(CMF) - CapitalMall Trust - is the largest REIT by market capitalisation and asset size in Singapore, with a market capitalisation and asset size of approximately S$5.7 billion and S$9.2 billion respectively. CMT’s portfolio comprised a diverse list of more than 2,500 leases with local and international retailers and achieved an average committed occupancy of 94.8%. CMT’s portfolio comprises 16 quality retail properties which are strategically located in the suburban areas and downtown core of Singapore - Tampines Mall, Junction 8, Funan DigitaLife Mall, IMM Building, Plaza Singapura, Bugis Junction, Sembawang Shopping Centre, JCube, Hougang Plaza, Raffles City Singapore (40.0% interest), Lot One Shoppers’ Mall, Bukit Panjang Plaza, Rivervale Mall, The Atrium@Orchard, Clarke Quay and Iluma. In May 2011, CMT took a 30.0% stake in a joint venture to develop a prime land parcel at Jurong Gateway, marking its first foray into greenfield developments.

(LMF) - Still looking for someone with the ability to dribble and go past players yet at the same time able to defend when things go rough. ComfortDelGro is one I am looking out in my main shortlist.

(RMF) - YangZiJiang - is a large shipbuilding enterprise in China with Jiangsu Yangzijiang Shipbuilding Ltd. and Jiangsu New Yangzi Shipbuilding Ltd. as a core. Equipped with one large dry dock and five large and medium-sized slipways, the Company boasts the shipbuilding capacity over 1 million DWT annually in terms of ship tonnage. The main stream products of the Company range from large and medium-sized containerships, large bulk carriers to, medium multi-purpose ships. Rich in shipbuilding experience, the Company has building container ships, oceanographic engineering ships, chemical tankers, multi-purpose ships and bulk carriers for numerous domestic and overseas customers over the last fifty years. Apart from shipbuilding, the Company has also undertaken fabrication of large steel structures of land use, with the main steel frame for the well-known Jiang Yin Yangtze Bridge as a good example.

(CF) - CapMall Asia - is one of the largest listed shopping mall developers and has an integrated shopping mall business model comprising of 97 shopping malls across Singapore, China, Malaysia, Japan and India with a total property value of over S$29.4 billion. Ion Orchard is one of their main malls in Singapore.

CountersNo.of LotsAverage PriceTotal Value (SGD)Dividends collected to date (SGD)
CapitalMall Asia101.4314,300.00255.00
ST Engineering82.8222,590.400.00
CapMall Trust11.7051,705.000.00
Fraser Centerpoint Trust101.45014,500.000.00
First Reit60.8004,800.000.00
PLife Reit61.7810,680.000.00
Unit Trusts--4,500.000.00