Wednesday, August 30, 2017

32nd Birthday Post - A Year of Milestones

This is the 5th edition of the post since I've started to blog on this site.

For some reason, I missed to write on my birthday last year and couldn't remember what I was doing back then but here's all the past couple of sessions.

30th Birthday Edition

29th Birthday Edition

28th Birthday Edition

27th Birthday Edition

Alright, I am getting older and I can feel it the moment I turned 32 (ok just kidding). I'm feeling it more and more each year that the days and years fly past faster than I thought. I think there's a correlation sign there.

Age is very subjective. There are people that will think I'm old (if you are a student reading this) and another group which will think I'm young (if you are my senior). To me, it's another important phase of life that we just have to go through.

This is a year of different milestones for me and many things happened in the span of across a year.


This is a year where I achieved both my milestones of reaching the $500K and then $600K a few months later due to decisions that goes in my favor, such as the uptrending bull market and Chelsea winning the EPL last season of course.

I also had my second child born earlier this year, so I had to put this as one of my biggest moment in life too.

Expenses have been increasing since my elder boy went to pre nursery school and my younger are born in January this year.

After we had our second child, we started engaging a permanent nanny in the house. So we had one domestic helper who is doing all the cleaning and cooking and another who is helping to take care of the kids. We have plans to terminate the nanny permanently after about 3 years or so but in the meantime, that means double hit to our pockets in the interim. These costs are equivalent to owning a car and this explains why we will never be able to afford one with our current income.

There are good value and reasons in doing it as we are able to free up most of our time in the administrative task and focus on the value-adding part like playing, studying, singing and exploring the world together. In doing so, I also have more time on writing and focusing on my work and personal investment which is bringing greater returns so far. My wife is also able to focus on her online business. So there are blessings for that.


I have figured out pretty much the patterns on the cashflow.

Every March, June, September and December, my cashflow would be in negative position. 

The school fees are recurring every quarter so this would suck up most of my cashflow.

In addition, we usually plan for our traveling during the school holidays, so that would hit us another big time.

In other months, I managed to save up around 20% of my take home income approximately.

The savings are in the range of $20,000 per annum these days. Most would come from the annual wage supplement and discretionary bonus.

Financial Independence Target

When I started this blog and write my target of achieving the financial independence by the age of 35, I think many treat it as a joke.

I have my doubts too in the earlier years. After all, why would someone with only a few years of working experience and such miniscule income can daydream of such lofty ambition.

I never really take it for granted. It was a stretch dream for me to achieve.

Financial Independence is the dream for me.

I think achieving $1m would be a milestone for me to call it a financial independence officially. I'm excluding a lot of parts in this number, such as the CPF, housing, child's fund, wife's portion etc so there's my margin of safety. It's purposefully design this way so I have something to fall back for in case my target is missed.

Financial Independence doesn't mean I'll stop doing any work at all and start doing withdrawal from it. Contrary, I think things could get interesting from there since psychologically the dividend would cover the expenses fully from there.

I'm excited to see where it would take me from there.

In order to achieve that, it would require me to achieve a return of 15% for the next 3 years by reverse engineering. The 15% return would most probably come from a combination of 6% dividend and 9% capital gain.

I must admit that is a stretch target to achieve but not impossible.

Let's just try to give it a shot.

Birthday Celebration

Okay, now that the heavier part is over, it's time to switch the focus to something more important to me.

I took leave today from work to spend my birthday together with my wife, children and dad.

We ate at the spanish restaurant and called for a few tapas and paellas. The price was excellent and service was top notch, so that's another score for me.

Come to think about it, I actually quite like spanish food and learning spanish is something I'd like to accomplish at some point in the future. I went to Spain in 2014 as part of my school exchange trip and really love the country.

My son was eager to sing the birthday song and blew the candle so we had our celebration over there as well.

At this age, I do not need any grand celebration or anything like that. A simple meal and something like that, more than a full score for me.

Coincidentally, I shared the same birthday as one of my favorite investor of all time, Happy Birthday Warren.

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Saturday, August 26, 2017

Review of Value / Growth Investing Workshop

I was invited to attend this 1st value and growth investing workshop between the collaboration of Terence and John which happened this morning.

The workshop lasted for slightly more than 3 hours and I went with an open mind because I knew both speakers are great investors and they had their methods which they are willing to share.

I met with my good buddies, Richard from Investopenly and Chris from Tree of Prosperity and we went down together.

Unfortunately, I need to go before they reveal their scorecard to the public which is the main highlight of the event.

Terence (

Terence is someone whom I liase quite regularly on private chat.

You can see from his returns over the years that the method works well for him and he has been improvising the scorecard over time into something better each time.

He is also a contrarian by nature so in the session he tried to explain how he values things and how he frames his mind when selecting stocks to invest.

There were times when things during the session are rather dry in nature, but that's the way to go about it. I think if you are really interested to become better, it takes a lot more than just attending these sorts of workshops. You need to go one ahead and find out some of the terms and such yourself.

Terence mentioned he has about 13 to 14 criterias to meet in his scorecard. He only revealed a few during the session. Ratios such as Current Asset less Total Liabilities, Price to Free Cash Flow, Dividend Yield to Price to Book and Price to book to Return on Equity all came out as one of those important ones in his ultimate scorecard.

I overheard conversations behind me saying that how in the world do they have time to find all these ratios and were too lazy to do such screening. This is why such demand for a ready database is there. They are meant to help these people find things in an instant. In return, you got to pay for the service. 

I think that's a fair trade assuming the strategy works well for you.

John (

I knew Simpleinvestor but it's my first time meeting John.

Even though he claimed to be a very technical guy, he is someone who struck to me as confident and knows what he is doing.

John style is somewhat similar to mine in the sense that we have very concentrated portfolio. So when he says that he believes diversification will not reduce systematic risk, it struck a chord with me. When a black swan like world war event happens, I think all stocks will go down. Unless your portfolio is diversified with other hedging assets like gold, it's unlikely that the diversification among stocks will bear fruits.

His track record has been very good too and he has shown that his past companies like Tat Seng, Nordic, 800 Super are all returning crazy returns when he sold them. There were also some discussions over why he sold Dutech and his differed opinions with another popular investor, Thumbthack Investor.

John focuses on growth companies. He simplified the understanding by likening it to a money printing machine that are able to churn out decent and boring profits year after year and dividends get rewarded through dividends and a corresponding higher share price (capital gain).

He also focuses much on the strength of the balance sheet such as gearing and how much cashflow the company is able to churn out.


Both speakers have done well in explaining how their methods are able to provide them superior returns so far.

They were also clear in the disclaimer that this is not a fool proof strategy but something which they found to be useful and hence sharing with the larger crowd. As always, due diligence needs to be considered in all aspects and we need to take care of our own decision in case things does not work out.

If you are interested in their scorecard, they are having a promotion and collaboration with one another. This information should be available in their website. Do ask them questions with follow-up if you have any.

*All opinions are purely mine and I receive no compensation benefit whatsoever other than the invitation to attend the session.

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Thursday, August 24, 2017

Guest Post - Cost of Flour More Than Cost of Bread

We have our regular contributor CK here who writes and provides good insight into the industry he has expertise on.

I am learning a lot just by exchanging emails and chatting with him so it's another pleasure of mine for him to provide his thoughts on the recent development ongoing with our property rush.

One of the most significant development in the local real estate market in recent memory is the fully sold out of EC at Hougang, Hundred Palms in seven hours in 22 July 2017. See first blog post here on the quick sales cycle and high return on equity the developer is likely to enjoy till the project obtain TOP. 

The local property market has not seen a fully sold out (or almost fully sold out EC) since Lake Life EC in Jurong back in October 2014. The high demand (yes there are many disappointment buyers who never get a unit) was attributed to it being the first EC in Hougang, near a good school (1km from Rosyth School). Interestingly, a Straits Times article mentioned most of the buyers are concentrated in the nearby housing estate of Hougang, Serangoon, Sengkang and Punggol. The “supply” of potential upgraders is likely to be very high given the large number of flats that will reach the five year minimum occupancy period in Punggol/Seng Kang. This could bode well to private properties and more so for EC for it is the most natural route of upgrade for most Singaporeans.

The above event signal the key factor in driving real estate prices such as demand/supply, demographics and government policies. To add twist to the development on the seven hour sale were sale of 2 land plots within the vicinity the very next week.

The sale of flour is more expensive than the sale of bread. Interesting times indeed.

Quickly, you can see that developers like Guocoland is holding on to their prized assets in launching the next phase of their Martin Modern now that the property seems to be picking up. This is way in stark contrast to last year when developers are throwing everything at a discount. Seems like we have a market back on its way up again.

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Saturday, August 19, 2017

The Real Incentive Behind Achieving Financial Independence

I've written two themes about financial independence this year and they are both about passive income. You can refer to the link here and here.

The allure of being able to have no worries about money is the main attraction of financial independence and you can quickly see so many people taking advantage of this when they tried to sell courses or investment opportunities like unit trust and other investment units.

When I get invited to speak at InvestFair this year, they are still related to money. I don't see Love and Children Fair inviting me to speak about how financial independence can relate to that.

Don't get me wrong. 

I am not saying that passive income is a factor that isn't true. 

In fact, when I started my investment journey when I was still single and carefree, passive income is the only thing that attracted me because of the huge allure of money concept that is working hard for you. I can tell you it has benefited me in a lot of ways, both financially and mentally in many other spectrum of life.

We are the new rebels and bandits of the new generation.

We are the new batch of generation who probably doesn't owe much to our jobs than our grandfather generation. While some of us do struggle individually in getting a good paying dream job, or some to settle down, we do not appreciate it hard enough.

As I move up the ladder in my stages of life, I had experienced different flows and benefits of the real incentive behind the aspect of financial independence, especially after I become a father.

I think a lot of people have talked about this concept Ikigai in detail.

I am not going through the concept in detail but rather literate them with my own experience.

Since I became a father of two children, I had always prioritized family on top of anything else. This is not a default by choice but something which I put on top of my priority list in front of the other things I love.

I like to play around with my two children, mess around with them, bring knowledge to them, travel around, messing around again, spending more time with them and then messing around with them again.

You can't translate this feeling into someone who has not had a children yet. You just have to experience that to understand.

Growing my passive income has become part of that bigger plan because it can help me in many ways that would allow me to achieve that.

To illustrate the case for example, I love to read financial statement and analyze a company prospect when I am investing but they are fun when they are vocational and are under no pressure. Let's assume one day I am recruited by a company to perform the same task with deadlines and KPIs, I might like it a lot more less. In essence, it feels different once you have an obligation to perform in exchange for a return.

The same goes with the profession.

I think there are many people who goes to work, and stayed for the same company for 10 or 20 years and then get comfortable with it. I've heard of many cases where you get so comfortable with your 9 to 6 jobs over the years that you don't know what else to do once you freed up your time. If you fall under that category, I think there's an emptiness or void that you have not managed to find. Find that and you'd feel a lot differently.

Ultimately, everything revolves around the bigger part of the goal.

The best part of it is it doesn't have to be family that is part of your mission. You just need to search what you are living for in this world and find your own unique ikigai.

There would be a time when my kids would eventually grow up and be spending lesser time with us. That would be a day when we would find another mission in life to cover the void in our ikigai.

But for now, financial independence means a lot to us and that means a lot more than just the allure of money itself.

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Wednesday, August 16, 2017

Why Is My Stock's Share Price Declining Despite Announcing Favorable Earnings Results?

Share price of a company moves up and down everyday for many different reasons.

During earnings announcement, they are especially more volatile because investors are pricing in adjustment to the share price based on what was announced in the earnings. Earnings are a significant underlying determinant factor that can move the share price of a company very quickly, either for the good or for the worse.

In general, whenever a company announces earnings which was not favorable, and I defined not favorable at this point by lower year on year comparison, the share price would usually dived southwards. On the similar end, when a company announces favorable earnings results, the share price would usually get boosted the next trading day, signaling positive sentiments and outlook from investors.

This is not always the case though however.

The Singapore market recently is behaving like one which baffled many new investors.

Take UMS for example, a semi-conductor company which is enjoying its upcycle period in these few years. The earnings result was very favorable and more than doubled the previous year earnings. The company even managed to reward shareholders by issuing a 1 for 4 bonus on top of the usual interim 1 cent dividend. Upon the announcement, the share price dived from a high of $1.17 to the current period of around $1.02, almost a 15% decline in share price.

The same goes for another semi-con company, AEM.

Another example recently in the market is Elec & Eltek. The company issued a profit guidance announcing that the company would make exceptional earnings this year. The share price went up for a few months and upon the earnings result, the company announces a 500% increase in earnings per share. Despite the favorable result, the share price dipped the following day by about 4-5%, signaling the market's disappointment perhaps by the lack of the interim dividend, which have mostly been priced in the expectations.

I think this is what makes investing an interesting and challenging experience.

The fact that market reacts mostly dependant upon priced in expectations signals that it is very difficult to predict movement in the short term. In the longer term, they would retrace back to the fundamentals of the company and share price and valuations would follow eventually.

This is probably the reason why value investing for longer term is such difficult to follow because you really need to have patience and by that it means having to stomach the up and down of market sentiments almost on a daily basis.

On one hand, you need to ascertain the outlook fundamental of the business and on the other hand you need to evaluate the current valuation of the company that you paid for. It needs to go both hand in hand to capture the most reward and they are often difficult to find which makes an exceptional investor having to go a step ahead of the others before others find the gem.

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Monday, August 14, 2017

Dividend Income Updates - Q3 FY2017

With most of my companies already reporting earnings for this round of quarterly earnings, it is once again time to update my favorite part of the dividend income.

If you recall in the past two quarterly updates (here and here), I am on a good decent track to hit a record high dividend received for the year, so it'll remain to be seen with one more quarter how things can go from here.

These days, with market doing rather well this year, it becomes a lot harder to stay invested in dividend companies when valuation gets higher and it becomes a question on whether you should sell off the golden goose for the meat.

I think there should be a good strategy allocation down there.

With that a due, here is the dividend income received in the 3rd quarter of 2017.

CountersAmounts ($)Payable Date
FLT2,944.00 29-Sep-17
Comfortdelgro2,392.00 29-Aug-17
M12,340.00 8-Aug-17
CDLHT984.00 29-Aug-17
FCOT (Scrip)966.00 29-Aug-17
First Reit174.00 28-Aug-17
OCBC6.00 18-Aug-17

It's a pretty solid dividend income received in the 3rd quarter. This usually tends to be my strongest quarter as most companies are reporting their interim so it's a good way to build up cashflow during this period.

That makes up $24,948 received so far year to date up till the 3rd quarter. This is profits that are returned back to the shareholders in terms of income received.

With another quarter still left to go, I'm keeping my hopes on a few more thousand to come in terms of dividend.

This should really be the base moving forward and I am keeping most of the companies intact for the foreseeable future.

Thanks for reading.

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Friday, August 11, 2017

Comfortdelgro - Q2 FY17 Results & Thoughts

I was quite anticipating the results from Comfortdelgro and even more so after reading the results in the previous week by Vicom and SBS where both increased their payout to issue higher dividends to shareholders.

I mentioned previously that I thought there was a good decent chance that Comfortdelgro might maintain their dividend as last year despite the poorer taxi division due to the better cashflow that they have. This remains something which I am taking a close look still.

In terms of earnings for the Q2, revenue was down 3% while nopat was down 9% year on year.

Revenue for the taxi division was down by more than 10% due to the lower leasing fleet and higher competition. You can see that in the overhead driver's benefits also quickly went down so margins are steady but it was still a very strong decline.

The public transport did much to mitigate the situation otherwise it could have been worse.

In terms of geographical, the UK segment was the part intriguing to me. Not sure if their bus division there are facing some pressures.

Despite the lower earnings, operating cash flow was higher due to the lower grant, as well as higher free cash flow due to the lower capex. The free cash flow yield I computed is at 17 cents or 7.3% based on current share price. They would be well able to pay the current payout they are paying to shareholders in term of dividend.

Other than that, there are not much new development that we will know about the taxi business and how the management would tackle the current situation.

I think overall there would probably a point where the drop in taxi would reach saturated point, and the disruptors would face more pressures in terms of less incentives so that would be a time where competition is really head to head. I mean think about this, if there are a disruptor in airline and they keep giving huge incentives for you to take their flights you probably do that too. The question remains when will that last. Their technology and light asset model are obviously a huge advantage too.

I'm still skeptical as well about the margins on the new downtownline later this year as well as the public fare reduction. Sentiments should continue to remain poor.

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Sunday, August 6, 2017

"Aug 17" - SG Transactions & Portfolio Update"

No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
Fraser Logistic Trust
Fraser Comm Trust
CDL Hospitality Trust
First Reit
Total SGD

I'm updating the Aug transactions a bit early as I don't foresee much activities going on as I will be focusing on the earnings instead, in particular my top few position, Comfortdelgro and Guocoland.

I divested my positions in Singtel and Capitamall Trust as part of the plan right before they went ex-dividend at $3.91 and $2.03 respectively. As you can see, I divested them a bit early and missed out on the dividend but they were all along part of the plan to move in and out to lock in the gains first.

From the buy side, I managed to initiate a new position in Guocoland which I blogged over here. I think given the strong run up in leading developers like Capitaland, CDL and UOL and having reported good results, we'll probably see more upside for developers. I am hoping Guocoland will follow suit over time being a lagger.

I also increased my position further in M1 at $1.785 after seeing their price stabilize after going ex-dividend. I think the outlook is still rather grim but I think we'll still see some sort of value there from valuations point of view and that's where I am putting my bet on it. In terms of results, I think it's not totally unexpected with a fall in ARPU but I thought volume and customer base remained good overall.

On CDLHT, I managed to ballot for excess shares and I received 2,000 excess shares at a price of $1.28 which I thought its decent. I think hospitality will see it bottoming this year but valuation wise it's no longer as attractive as previously I had last year so I am reducing this portion. Still with a base of 24,000 shares, I am going to hold it out for any further upside.

Net Worth Portfolio

The portfolio has gone back on track into the right direction from the previous month of $608,501 to $612,564 (+0.6% month on month; + 39.2% year on year). This portion includes capital injection.

As much I'm happy that the equities portfolio has gone in the right direction again, it is the cashflow that matters much to me. I think it'll be a lot less given I'm not putting my money more into companies which gives a lower payout.

In terms of warchest, not much is left but a decent amount to add on to any opportunities for now.

Child Portfolio 1 (Age: 3 years and 4 months)

I also divested my child's portfolio and Singtel and added a bit of the amount there in Comfortdelgro at $2.30 as I see some value out there over the longer term. The portfolio has now crossed over the $15k mark, which is a new record high so far.

No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %

Child Portfolio 2 (Age: 6 months)

I did the same too for this account with the intention to grow this over time.

No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
Total SGD

Invest Fair 2017

On some other news, I was kindly invited to be one of the panelist in the Sunday Invest Fair 2017 together with fellow bloggers Jes (, Alison ( and Kenny ( 

Mark (Moderator), Alison, Jes, Me, Kenny

The topics were on "Investing in our 20s, 30s and 40s". I thought crowd attendance was excellent considering it was the earliest event in the morning and we thought it wouldn't have so much crowd. Still, it was too bad time was short so much cannot explain in detail and I hope the crowd goes home getting something out there.

I also had the chance to drop by Investing Note and had a little chat in the morning with the owner, Shanison. It's great to know their plans and how their platform can help reach out more to the community.

Thanks for reading.

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Thursday, August 3, 2017

Guest Post by CK - Accounting For Development Properties Using Bukit Sembawang As Case Study

One of the many favoured investment options is to buy properties for capital gains and rent it to receive passive rental income. Such properties are classified as developed or development properties in the balance sheet of the Company. Put it simply, these properties are built to be resold to end users.

In this post, I hope to let readers have a better understanding on how these development properties are being accounted for and also to shed some lights on a developer illustrated and how we can appreciate the value within using Bukit Sembawang as case study.

The Financial information below is extracted from the annual report of Bukit Sembawang for the financial year ended 31 March 2016.

Development property
Cash and cash equivalent
Total assets
Trade and other payables
Total liabilities
Net asset

Cost of sales
Gross profit
Total profit
GP margin

How are development properties being accounted?

Accounting for development property is set out in page 56 of the annual report: “Development properties are measured at the lower of cost and net realisable value.” In another words such properties will be held at cost and will only take into account any downside movement but not the appreciation that has taken place.
Trading at around $4.50 per share during March 2016, would give the Company a market capitalisation of about 1.16 billion (number of shares of 258,511,000 multiply by $4.5). Relative to the net asset of $1.29 billion, the share was traded at a discount of about 10%.
But given the manner of accounting at lower of cost and net realisable value,  is there more value to the Company than the net asset reflected on the balance sheet? Some history on Bukit Sembawang will shed some light to it.
Bukit Sembawang started off as a leading rubber company in 1911. Arising from the legacy, the Company “inherited” a substantial potion of freehold land which they have successfully developed into landed housing over the years which the most recent ones being Luxus Hills off Ang Mo Kio.
Lack of detailed information, one shortcut method to compute the estimated market value of the development properties is to regross the development properties using the gross profit margin using the gross margin of 40%.
Taking development property of $941,883 yielding a gross margin of 40% would result in an implied development property value of about $1.57 billion. ($941,883/60%) which is an uplift of 0.63 billion of its net asset of 1.29 billion to about 1.9 billion.
The discount of market capitalisation to revised net asset? A cool $0.74 billion or about 40%.
Another plus point to highlight is that the Company is debt free and is probably biding its time to launch its projects at a suitable time.

Investment considerations for such companies
Unlike REITs whereby there is a requirement to distribute 90% of its distributable income, the issue with investing in developers is the timing of return. Hence the track record on dividend payout (i.e. how willing is the Company is willing to reward its shareholders while waiting for the eventual upturn is important.

Bukit Sembawang is not too shabby in that respect. Below is a table on their dividend distribution history.

Dividend (S$)
Yield based on $4.50

Another consideration to take note is the sustainability of the Company’s dividend payout and more importantly how long can they capitalised on their low cost land bank before it runs out.

One metrics to look at is taking development properties balance divided by cost of sales which will yield a result of 5.54 years. This is a conservative metrics as it assumes the Company will not make new land acquisition which the Company will be able to do so given its net cash position and this metrics also have to be benchmark against the industry especially in land scarce country like Singapore.

The other more traditional metrics will be looking at dividend payout ratio which is a respectable 1.08 times for Bukit Sembawang. This means the Company is not dipping into its reserves to give back to its shareholders.

There are obvious value to it and personally, I have invested in Bukit Sembawang at around $4.50 in September 2016. Fast forward to today, lets recap the key concepts introduced and summarise the various value indicators based on the latest financial results and market capitalisation.

Value indicators
2017 (S$billion)
2016 (S$billion)
Estimated value of development properties #
Revised net asset value
Gross profit margin
Market capitalisation
1.76 billion based on share price of $6.80
1.16 billion based on share price of $4.50
Discount to RNAV
Development properties/Cost of sales
Dividend payout ratio
Dividend yield
Net cash
Net cash

# Estimated value of development properties for 2017 is uplifted on the basis of 40% gross margin as a conservative estimate although gross profit improved in 2017. 

Take note that the revenue recognised for 2017 is $143,395,000 compared to $281,997,000 recognised in 2016. This explains the increase in development properties to cost of sales ratio due to the lower denominator with a fixed numerator.

If adjusted by the revenue recognised, the ratio would be more comparable by taking 18.5/281,997*143,395 which would yield a result of about 9.4. Based on the above analysis, it suggest that the Company has been selling more of its units with a lower cost by observing a higher gross profit margin and also highlight the adequacy of land bank to sustain the Company’s operation with a higher development properties to cost of sales ratio after adjusting for revenue.

From a value investing standpoint, the discount to revised net asset value has narrowed considerably and dividend yield has compressed significantly. Realisation of the eventual market value of the land would entail the Company’s successful execution in development its land bank and more importantly overall market sentiments on the Singapore residential market.

For the record, I have disposed my shareholdings in Bukit Sembawang at around $6.10 or at around 20% of the discount to the revised net asset value of the Company.

Thanks for reading.

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