Thursday, December 31, 2015

2015 Review & 2016 New Year Resolution‏

As the clock tick closer to the new year in the next few hours, I will usually take this time to reflect a bit on the journey for 2015 and then come up with some new resolutions that I want to achieve in 2016.
2015 Review
2015 has been a very good year in terms of every aspect in my life.
I was well rewarded in my career, being promoted during the annual review after my ex-boss went overseas to the US to further his career. Promotion, to me is a double edged sword, unlike a progression. A progression is usually remunerated by a larger percentage increase in the increment but responsibilities remain largely the same. For promotion, the remuneration has gone up but the responsibilities have gone up even greater. That is a challenge.
I had also enjoyed my time with my family this year, traveling together with my son for the first time to Bangkok and Hua Hin, after having a rather long wait since our honeymoon in Japan and then waiting for him to grow up bigger first. It’s also nice to have spent sufficient time with the family in 2015, bonding and getting to interact with one another more, as opposed to the year before when I had to complete my MBA and I had less face time to interact more frequently with the family.
For my wife, I’m happy for her that she is able to grow her business so fast this year. At some point, she definitely looks busier than me and I had to play the role of the nanny many times. Perhaps, she can become the house breadwinner one day if it can grow so fast and I will happily take a step down when that comes.
In terms of investment, the portfolio yields a return of +1.3% for the year inclusive of dividends. Even though the results may not look as stellar as some of my previous years’ returns, I still consider them as good performance since the STI yields a negative -13.8% for this year. I took note of some of the following highlights for my own this year performance:
1.) Short term trading plays a big part in the return for this year. During the year, I managed to trade a few counters such as FCT, FCOT, DBS, OCBC, Noel Gifts, China Merchant Pacific to generate double digit returns in this category. I guess I was lucky for the most part of trading but I usually have a rather unique way of doing this and knowing my limits too.
2.) The worst performing award for this year goes to Kingsmen Creative. I had bought the first tranche 15,000 shares at $0.98, then 10,000 shares at $0.95, then another 11,000 shares at $0.85 and finally 1,000 share at $0.73. As a result, my average price based on the weighted average method is $0.92 for 37,000 shares (excluding dividends). Based on the latest share price at $0.68, this means that the counter alone has underperformed by 26% this year.
3.) Most entries are being made during the second half of the year, in particular during the Black Monday event and on some knee jerking news in November. Even though short term winds might persist going into the new year, I trust that my investment in some of the companies I have made will yield fruitful dividends in the long run. In the meantime, I will continue to get busy reviewing the thesis at least once every quarter.
4.) Cash as warchest plays a huge part in the return for this year because first they were not dragged down by the market return and second I was able to utilize them effectively (see number 3).
2016 New Year Resolution
For 2016, I am going to shake things up a little bit and keep the resolutions relatively simple for next year. Personally, I don’t see 2016 as my ground-breaking year in terms of many aspect so it will mostly revolve around the theme of continuing with the good progress from 2015 and stepping up on the weakness.
1.) In terms of investing for 2016, my focus will be on maintaining and increasing my dividends cash flow from $1,800/month in 2015 to $2,000/month in 2016.
Even though the focus is largely on the dividends, I do not subscribe to the idea that I have to buy only companies that yield the highest dividends because that may not be the smartest way to do if those payments are not sustainable. It will be a mixture of proper due diligence on the company itself, their past dividend payout history and management integrity towards the minority shareholders.
The reason why I am focusing on the dividends cashflow for 2016 is because I wanted to test if we can cover our expenses based on dividends cashflow alone. At this moment, the answer is a resounding no but if I were to achieve FI one day, I need to believe it would have to be the case.
2.) Another goal I would like to put across for the new year is to attend at least 3 AGM for the companies I am vested in.
I did not attend much for this year but having attended a few in the past, I found it to be very rewarding because it is an opportunity where we, as retail investors, can get closer to the management by asking relevant questions, talking to fellow investors and getting first-hand information on the outlook that you can draw inference from.
3.) In terms of health and fitness, I’d like to continue the strong progress from the second half of this year where I felt I was fresher and fitter, and I managed to bug off the frequent cold and flu in the past. I think taking plenty of fruits do help to boost my immunity and I will continue to bring that into the new year.
4.) In 2016, I’d also like to increase my spending on things that are beneficial to learning opportunities and improving relationship, while at the same time reducing discretionary wasteful expenses.
Here, I am talking almost about anything like reading, traveling, going to courses, socializing with friends because these are the things that matter in life. I could have categorized all those as “wants” and not “needs” in my life and use the excess money for more savings and investment but I think it will soon lose its meaning.
Let’s see how things would work out because this will bump up my already high expenses to even higher. Hopefully, I’ll manage to balance it out well at the end of the day.
5.) Last but not least, I'd like to do at least one volunteering service which I have not done in a long time. For now, let's keep it at the basic minimum first and then we can grow that thereafter. 
So there I go with my 2016 goals and resolutions. 5 goals to aim for in 12 months and a new year to look forward to.
I hope things will go well for everyone and wishing everyone a Happy New Year and a fruitful start to the new year.

Saturday, December 26, 2015

How Much Am I Making From Online Income (2) ?‏

Early in the year, I wrote a post (link here) on some of the things that bloggers need to take note if they are interested in earning some online income on their site, since there were a few people who asked me about it.

They were not the most comprehensive you can find, but they were everything that I know at present, so I am just sharing with everyone that wishes to learn about it. I will try to be as transparent as I could although I do appreciate your understanding that there are some sensitive information that required to be hidden.

My main source of income from the blog is through Google Adsense because they are the easiest to implement and they do not create a disruptive way when opening via a mobile app. I’ve seen some other blogs which use different advertising platform and it can be very annoying when there are too many pop ups along the way.

Google Adsense platform has 3 main avenue to which bloggers can earn money from:

1.) Cost-Per-Click (CTC)

2.) Click-Through Rate (CTR)

3.) Cost-Per-Impression (CPI)

In the first couple of years, my main source of revenue was coming in from the first two, CTC and CTR, from which revenue is earned for as long as someone clicked on the banners displayed. This doesn’t yield much because you cannot obviously influenced when people would click on the banners or if anyone is genuinely interested. All bloggers can do is to increase the amount of traffic for as much as they could and hope by the law of large numbers, more people would click on it.

For some statistic, I was having about 500,000 views based on the first 4 years (and written over 350 articles) and I can tell that the revenue was barely negligible at best (barely less than SGD 50/month). It was a very poor yielding revenue/hour so you definitely need to be doing this more than just the dollar amount alone.

Over the recent year, traffic seems to gain more traction and mounting higher (thanks readers for that) so the Cost-Per-Impression (CPI) has generally inched higher. For the benefit of those who was not aware of the term, CPI is computed based on per 1,000 impression into your traffic. So if let’s say your CPI rate for the day is $5 and you have 2,000 views during the day, then you would get $10 as your revenue. CPI changes everyday based on the advertising tender and the viewership quality of your blog, so it will deviate accordingly.

Other than Google Adsense, the other platform I am using is Nuffnang, which basically has the same avenue of income for bloggers to reach to.

On top of these two main advertising platform, I have also earned via sponsored post, banners, affiliate marketing and freelance writing. I am not able to provide a detailed breakdown on the individual as they are information sensitive so apologize for that. If you are particularly interested in anyone of them, you can email me and we can discuss about it in private.

In 2015, I made a total of about SGD 1,623.17 from these online income revenue. I didn't have to pay for any expenses for the site, so these goes directly into the bottomline.
I really don't pay much attention in trying to increase this as much as possible. I still view writing as a form of passion and providing as much beneficial information to the public as much as I can. It is also not a one way traffic, so I get to learn as much from the others as well. That's where I think the real value is.
The revenue/hour earned from writing is pale in comparison to what I probably earned from my job so I am pretty sure that this is not something I would rely on but something nice to have at the end of the year.

I hope this gives some indication to those who are passionate enough to write because they love to not because they have to. Otherwise, this will become just another task for you.


Tuesday, December 22, 2015

Summary of 2015 Journey In Review

As we approach towards the end of the year, I try to look back across the things that have surfaced throughout the year and also some of the past articles I have written to do some reflection. 

I started off the year with a post reminding everyone on the importance of adopting an adrenaline rush of having something to look forward to in life. This is important because while it may seem obvious to many, equally as many people are simply taking it for granted and they don't really have any objective to aim for in life, which could be disheartening.

I then discussed about potentially having a concentrated portfolio between 15 to 20 stocks in a portfolio and imagining that you only have 20 punch-hole tickets in your investment journey. The idea behind this concept is the lesser the chances you have, the more importance probably you are willing to put in to ensure that all the decisions are made correctly. In terms of investing, this means doing in-depth research and prospecting of companies to ensure that you invest in the right companies for the long run.

I provided some general feel of the overall market valuations at different period of time in different quarters (Q1Q2 and Q4). Although the data shows that market is somewhat overvalued based on the Buffett indicators, it is still up to the investors to decide what he is going to do with his asset allocations. Keeping cash could be a good option but psychologically it is as hard to deploy capital when the market is down. Just take a look at the Black Monday example for instance. Some people managed to get in while some did not. The important thing as investors is to try to plan ahead knowing what is your plan during a market downturn.

Speaking of liquidity, I like this post which was written as a summary from Howard Mark's memo. According to him, no investment vehicle should promise greater liquidity than what is afforded by its underlying assets. Because if there are no sources to that liquidity, the incremental liquidity is usually influenced by a number of other factors - illusory, fleeting and unreliable. I'd encourage everyone to read his memo as it provided some really smart insight to it.

Fear of failure is something which everyone has gone through at some point in their lives. It is not a nice feeling to be on the trough of something especially when you are at the bottom of your class, peers or life. Some people use that as a learning experience and bounce back faster while others simply succumb to the devil and never came back up. On the opposite end of the spectrum, I spoke about redefining some conventional definition of success. What the society perceives as being successful, certified by luxury cars and condominium, may not be what successful is all about. There is an obvious need to define success by measures that are away from these but it can be difficult to do so.

I did a fun exercise of looking at some of the changes for my pre and post financial independence weekly schedule. While it may look entirely what I wish to be different, it's probably not going to be a whole lot different from now, with exception probably to flexibility and working at a role that I am much happier doing. Different people would have different opinions about this and some people enjoy working all their lives. That is great. A pity I don't have the luxury to feel the same way in my working career.

In terms of investing, I did a simulation of what is it for a portfolio to withstand a stress test for small-cap stocks. While their valuations may look more attractive than big cap companies, they may be more susceptible to withstand prolonged market downturn which may affect earnings more seriously. Anyone who had their portfolio full of small cap stocks my want to do a similar simulation to test the investing thesis when market is experiencing a slowdown. I have a couple few myself which has not done well this year.

Onto more personal, I turned 30 this year and it's a big leap in terms of personal and family growth. My son has also turned older (1.5 years old) that we can finally take a vacation without worrying much. Alright, the last part was not true there, we were still worried as ever. I'm just glad that we are finally at a stage where he is comfortable enough to travel and he is able to learn to see live animals and fly in the aeroplane for the first time. First time experience always rock, especially when the destination is as fantastic as Thailand. I blogged my experience in my other leisure blog as below:

Hua-hin Thailand - Rest Detail Resort

Hua-hin Thailand - Cicada / Chatsila Night Market

Hua-hin Thailand - Venezia

Hua-hin Thailand - Hills Vineyard

Last but not least, I recently wrote a subject about whether we should conceal our early retirement. The topic itself is definitely sensitive and opionated on its own, so we could have a group of people under the same radar and another sitting on the opposite end of the fence. That is all not important. What is important is it gives you hope and something to aim for in your life.

I hope everyone had a great run to the end of 2015 and wishing everyone a Merry Xmas in advance :D

Sunday, December 20, 2015

"Dec 15" - SG Transactions & Portfolio Update"

No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
China Merchant Pacific
ST Engineering
Fraser Centerpoint Trust
IReit Global
Dairy Farm*
City Development
Stamford Land
Ho Bee Land
Nam Lee Metals
CapitaCommercial Trust
Keppel DC Reit
Silverlake Axis
First Reit
Total SGD

It's been quite a while since I last updated my portfolio towards the earlier part of last month. In the month of Nov and Dec, I've travelled quite a few bit to Bangkok and Jakarta as well as Malaysia for some business trips. As a result, I haven't been updating my buys and sells quite as regularly as I would have like to. I'll have to try to make it up in this section.

It's a rather long post so just a heads up.
There's been a flurry of activities I've made towards my portfolio in the late month of November and earlier December. I didn't really exactly remember the average price I've made as some of the counters were transacted over a period of time but for all the details, you may want to refer to the "Recent Transactions" page.

City Development (CDL)
First, I've added 2,000 shares of City Development at a price of $7.50 in the late month of November.
This is a counter which I have been eyeing for a while now and the recent fall especially this year has alerted my attention to go long on what I think is a rather compelling buy. CDL is one of the largest property in terms of market cap and for them to trade at a 45% discount to its rnav is rather unjustified, even if we are hitting the trough of the property cycle.
I could have gone on and on about this company but the gist diamond about this is they have kept their investment properties held at cost in their books instead of revaluing them to the fair value. They have also in recent times set up an investment platform in the form of PPS (Profit Participating Securities) which would enable outside third party capital to tap onto their investment securities and properties which makes it a viable option for CDL to recycle its capital on top of what they already had in their reits arm.
The recent Fed hike means that property sector is not one in favor but I think that's where you could find value in the midst of an unpopular sentiments. CDL has about 52% recurring income coming from the investment properties and while their residential sales remain muted, they have been trying to diversify their sales and purchase of land banks beyond Singapore alone.
Recently, the share price has dropped to slightly below $7 before bouncing back due to the positive sale announcement. My plan was to add onto this counter each time it falls by about 10% for at least 4 rounds so I think over the long run, this would be one of my more confident bets. It doesn't yield very decent as is almost all developers so investors interested in this might want to take into account that factor.

ST Engineering

I have also accumulated more ST Engineering by purchasing an additional 5,000 shares at a price of $2.89 in late November as well.

The company has been facing plenty of headwinds from all their sectors, in particular marine and aerospace. The management has guided that their bottomline will be somewhat lower as compared to the previous year, so we shouldn't see any short term upside to this. Having said that, the electronics sector is one where it could shine with projects such as the Smart Nation yet to come and they could be in favor to win the bids.

The stock is currently trading at a TTM PER of 16.94x and it is trading at -1 SD below their average 5 year mean. While earnings might come under pressure in the near term, I believe their core business remain solid fundamentally and they should get a re-rating up towards nearer to the 20x PER once business has stabilised. Meanwhile, just sit tight while I believe dividends of 16 cents should be maintained which translates into a 5.4% yield.

Dairy Farm

I have also recently added Dairy Farm by accumulating them at a price of $5.83 and $5.79 for 1,200 shares.
In case you are interested in the more detailed analysis, you can refer to my earlier post here.
I will not be going over the distance to explain this as I have already done so in my earlier post but this is a sector that is currently out of favor to investors as many similar consumers related companies such as Osim, Super and Kingsmen are also similarly facing slowdown.
However, given the strong track record in the management execution as well as some compelling valuations they are currently traded in, I believe this could be one to watch out for should they manage to improve margins and macro factors managed to restore confidence.
The company is also yielding a very delicious 4% given their strong free cash flow generating ability so I think I am very comfortable on this.



Next, I have also accumulated Ireit global by purchasing an additional 16,000 shares at a price of $0.67.
This is a pretty straightforward play since they are structured as a reit and my weigh towards both the risk versus reward when I accumulate this tend to favour towards the reward.
Given their high yield of 9.3%, strong WALE and extremely low costs of interest, I think this is a rather strong yield play compared to all the other foreign reits there we have right now. With Europe currently initiating a longer form of quantitative easing, I think this stock should outperform while the central bank is still injecting funds to boost the economy.
The company hedge towards Eur will also ends in FY2015 and management has guided that they will look into this as the current exchange is already too low for consideration and the company might benefit from now hedging the currency, though earnings will be volatile. Borrowings are done in Eur, so we have a natural hedge there against the properties they owned.
The only problem I might have here is the high gearing which means any acquisitions would most probably have to be funded by raising rights which can be annoying. But having just made an acquisition recently, I don't think they would make any acquisition within the next year or two at least.


I have also added OCBC recently by purchasing a total of 3,000 shares at a price of $8.80 (1,000 share) and $8.64 (2,000 shares).

One thing I like about valuations of banks right now is they are trading at -1 SD of 10 year mean based on P/BV. With the type of asset quality Singapore banks hold on their books, they will be strong enough to face any major deterioration as impairments.
OCBC, in particular, has also a stronger NIM earnings growth as key driver on the back of Fed decision to increase interest rate.
The risk with banks right now is probably on the guiding provisions taken to a slump in oil and outflow of junk bonds which could lead to a much lower credit quality and any possibility of liquidity crunch if things get worsen. With banks, you always have to consider these factors as they are the face of the economy.

FraserCenterpoint Trust (FCT)
I also managed to pick up an additional 7,000 FCT shares at $1.81 after the recent price weakness.  With the earlier 6,000 shares, I now have a total of 13,000 shares on my portfolio.
FCT is one of the reit which I am most familiar with after having vested with them for the past 5 years and having attended 3 AGMs in the past. Readers interested can search a couple of my posts on FCT written in the past.
There are so many things about FCT that I like which I have mentioned in the past so I will not be touching on the thesis again. The one thing which I am taking a close look though is on their refinancing which is coming up soon and interest costs are most likely going to trend higher given the current environment. Having said that, sensitivity analysis shows that 25 basis points increase would have negligible impact to the earnings distribution. So the pace to which interest rates are going to rise will be key in this instance.
Keppel DC Reit
Another Reit which I am initiating a new position in my portfolio.
I purchased 10,000 shares of Keppel DC Reit at a price of $1 after a very impressed recent results which I thought was very good.
The company is aggressively leveraging to make an acquisition in areas where it has a high barriers of entry such as Germany. The company also has some triple-net lease rental reversion upwards with their tenants which would ensure growing earnings for as long as they are tenanted. Moreover, the WALE for their exisiting tenant is as long as 9 years with almost full occupancy rate.

Accordia Golf Trust

I also made a total divestment of 38,000 shares of Accordia during the same month at a price of $0.55. It is a loss made on the purchase earlier, so I have to make that clear.

There are a couple of bloggers who had already touched on their recent results which I think was deeply disappointing, especially towards how the working capital was so negatively impacted that it affected its distribution. My take regarding the retained earnings they keep is to keep a buffer on the working capital for the 2nd half of the results, which I think is equally as disappointing as the first half.
The only saving grace for them at this point is probably the low LTV which means they can and will surely have to gear up to make some acquisitions in the near future which will help their earnings.
This is a good lesson I learnt that the type of business Accordia is operating on is highly cyclical and even short term it is very difficult to forecast. You put this together in the same category with hotel reits and you know why they are trading at higher yield than the other reits. Hotel reits have a rather similar quick turnover and they can be difficult to forecast, hence you need to pay a higher risk premium to account for that factor. Contrast this against some of the reits with long master leases with upwards rental reversion and you can barely find a 6% yielder at best.

The portfolio performance for the month of Dec has gone down slightly from the previous month but due to the capital injection from the year end bonus, dividends and some side income, I manage to bump it up using some of the capital injected into the portfolio.
As a result, the portfolio has inched up slightly to $360,600 this month (+1.2% month on month; +28.8% year on year). I am holding a total of 17 stocks now which remains part of my overall goal of maintaining around 15-20 concentrated portfolio.
The warchest portion has gone down quite a lot to around 14% of the overall portfolio as I continue to look for opportunities in the market and they will be deployed as and when it is necessary to do so. Overall, I'm still quite bullish on the market and I don't think the market would see a significant fall due to a few central banks quantitative easing, particularly in Asia and Europe which I think would support the economy. The market isn't totally overheated as well so it's unlikely we'll see a magnitude of gfc. The outflow of junk bonds and liquidity crunch could have serious circumstances if that happens but we'll have to progress along with the macros. In any case, I will still stick to the plan should the market continues to head downwards and I will welcome that anytime.
I'll try to update the annual portfolio return as part of the annual exercise to benchmark against the STI index in the next post so we'll just have to wait a couple more days for the year to wind off.

What about you? How did you do in the month of Dec?