Saturday, May 18, 2019

Reits Symposium 2019 - A Full Day Reits Event For Investors

Following my previous post on the Reits Symposium, the day has finally arrived for all Reits investors.

The event was held on level 4 at the MBS Expo Convention which has a good full house crowd they have been raving about.

They give pretty good kits goody bag once you have signed in which includes door gifts and a water bottle, sponsored by Share investor, Money 89.3 and First reit respectively. 



The event kicked off with Sgx Ceo, Loh Boon Chye, addressing the full house crowd on how the Reits sector has come a long way since the listing of the very first Reit in 2002. He particularly mentioned the success was due to Singapore being an early mover in this space, and our government putting in place an effective regulatory and tax framework.

In 2013, SGX has entrenched themselves as a true Reits hub with over 35 listed Reits and property trust and from 2014 onwards, there is on growing demand listing from overseas sponsors.

Over the past 10 years, the market cap from the reits sector has grown at a compounded annual growth rate of 22%, that's just crazy numbers.

He ended off by reminding the crowd that whilst Reits is one of the investment tool, Sgx offers a wider range of other investment tools such as stocks, bonds, etfs, warrants and dlcs.




The lunch sessions break was a good opportunities for people to visit the booth in particular talking to the investors relation of the various Reits. 

I didn't manage to stay too long in one booth as I was just browsing around the different booth at different speed to see what the booths have to offer. 

I can see there are more crowds stationed at Reits for Cromwell, First Reits and the Capitaland Group, while the rest were quieter. Perhaps it has to do with the sentiments of the Reits status itself. 

After lunch break, Uob Asset Management presented their slides which promotes their active asset funds in particular the Japan Sumitomo asset funds. This is one particular which I find it rather interesting to find out what UOB Asset funds have to offer.

They are overweight on the Japanese market due to accommodative monetary policy. They are also bullish in the Singapore sectors. 

They are underweight Hongkong and Australia. 

You can also see from the third slide below on the various property outlook they are bullish or bearish on their positioning.

The funds gave an annualized dividend yield of about 5% which they pay out on a monthly basis.





Unfortunately, I didn't stay too long as I left right after the Ascott Reit presentation.

But this was a pretty insightful event for Reits investors in a heavy-weight Reits day.

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Tuesday, May 14, 2019

Dividend Income Updates - Q2 FY19

With all the earnings announcement finally done and underway (Netlink was the last to report yesterday), it's my favorite time of the year where I get to tally the amount of dividends I will be receiving this quarter.

Please do note that this 2nd quarter covered the period of the dividend cashflow from the period 1st April 2019 to 30 June 2019.

For readers who are new to this blog, this is a sequence of exercise that I've been doing for the past few years usually after the earnings season ended. 

This tracking not only allows me to keep abreast of any development in the payout dates and the quantum amount but also more importantly reminds me of how far I’ve come since I embarked on this journey of dividend investing which is coming to almost a decade now. 

Since we are a household of 4, the incoming dividend also comes much handy when dealing with our increased household day to day spending, especially with the current situation now that income will be bare in the next quarter due to unemployment/sabbatical period.


For those who are new to the dividend investing strategy, I'd encourage you to try it out.

Singapore has a plethora of dividend investing companies that has not only good fundamentals but also pays out good dividend yields at a decent valuation. We are also a country where dividends are exempt in the hands of shareholders because of the 1-tiered tax system.

From a shareholder's point of view, this means you get directly whatever the company announces and good companies are usually pretty generous at that.

Dividend investing also possesses an autonomy that will allow us to retire from our job one day because they replaces the cashflow from our job. This is in contrast to growth investing where you need to time your exit in order to "take the profit" eventually and find an alternative.

Without further ado, here's the dividend income I will be receiving this quarter.

The dividend income this quarter in Q2 FY19 amounted to $23,172.


I see this as a good cover for our next 4-5 months worth of expenses, and then we'll be having an income again in the next quarter and this keeps rolling on.

With Q1 being the weakest of all the quarter, this Q2 appears to be the strongest of the quarter as we have companies paying out their final dividends after resolution was approved.


With the Trade War going on and equities look like there will be a bargain once more, it will be a great time to scoop up some good companies once again.

How has your quarter been for you?

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Thursday, May 9, 2019

Genting Singapore Ltd Q1 FY19 Results - Higher Capex & Lower FCF This Quarter

This will be just a quick update on their latest quarterly results since my last article on them which I wrote in March (here) and April (here) recently.

Genting Singapore Ltd reported its Q1 FY2019 results yesterday evening which saw topline revenue and gross profit dropped by 5% and 16% respectively to $640m and $289m.

Net profit as a result dropped year on year by 5% to $205m, which was arguably their weakest quarter.



Whilst the non-gaming business registered its eight consecutive quarter of year on year growth with higher occupancy and higher spend, the gaming business continued to struggle once again as revenue dropped by 8% year on year and 3% quarter on quarter.

The gaming business took up 2/3 of the overall business so it is imperative that this drop will impact the overall earnings for Genting.

Balance sheet continues to remain strong as the company continues to pare down their borrowings from the excess cashflow they generate and ending cash balance has increased to $4.36m. Net Cash balance has increased by about $130m quarter on quarter to $3.42b.




We know the company generates good amount of cashflow up to $1b a year and but free cash flow are coming in a bit lower this quarter at $130m, out of which $100m goes to repaying the borrowings. It seems like they are starting to put some capex for development of the new IR 2.0.

The management gave quite a bit of qualitative outlook on both the expansion of IR 2.0 as well as the competitive RFQ bid preparation for the Japan integrated resort. This is very much in anticipation of the bid proposal.

In terms of valuation, share price has dropped to 94 cents, while free cash flow has also slowed down in preparation for a higher capex, so there is no easy way to evaluate this. If we are valuing this via the earnings multiple, it will not be attractive either as it stands in the high mid teens.

In this regard, I stand by my earlier call that I think it will be attractive at the 84 cents level when TTM FCF is at 10% level. With trade war on the brink, you might just see this coming.

Thanks for reading.

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Monday, May 6, 2019

The Stock Market Crashed Today!! Admit If You Shit In The Pants Today

It’s been a while since we last hear of something negative in the markets which sent markets across the globe plunging which most investors have to face in their routine battle against the market. 

With the infamous Trump’s Trade Tariffs back with more vengeance this time, this escalation has sent markets across the globe spiralling down and dropped heavily in today’s trading with Dow Futures down as much as -450, SSE down by 5% and STI down by about 3.3%. 



The media will always use scary-sounding headlines in order to catch everyone’s attention. Bombarded by negative headlines, investors may be nervous and tempted to do something in reaction to the news. 

The first and foremost reaction for most investors on the street is to panic because it’s not something they experience often in the market and it’s never a nice feeling to see your portfolio account balance drop massively in one day’s worth of trading in the market. If you are buying part or most of your equities under the margin account, you might get a bit more unsettling than your usual self because this drop could prolong for a longer period of time while you have to bear the interest costs while waiting for your counters to recover. 

On the other side of the spectrum, there are investors who have been waiting for a pullback and they are likely to rejoice because they can finally put their capital to use after waiting for a period of time. Since they were forgoing opportunity costs all these while waiting, the issues these investors might have is when to market time it nicely such that their capital is allocated to the most optimal situation. 

But your best move is probably to keep calm and carry on with your usual activities as these kinds of market panics are usually short-lived and investing is usually a long-term pursuit. 

If you find yourself somewhat panicking a little during market’s bloodbath today, you may want to review the following checklist: 

Risk Appetite 

This is probably going to be the most basic but important exercise everyone has to assess regularly. 

Gauging the degree of risk appetite at any given point in time is highly relevant from a risk awareness perspective because hindsight episodes of decline in markets can spike general interests in assessing risk appetite and tolerance. 

Ask yourself if you are panicking because you have too much of your portfolio allocation invested in the equity market, which can generally be more volatile than the bonds or fixed income sector. If this bothers you too much at night that it disturbs your sleeping routine, then it is likely that you have vested too much interests and it is probably a good time to scale down your vested interests to a lower allocation. 

Company’s Fundamentals

This is probably also a good opportunity to do reviews on the company’s fundamentals to ensure that they are still sound. 

Depending on the event of the macro news that happen during the week, this may potentially impact the future earnings of the company as the company’s valuation may depend on it. 

For instance, the tariffs imposed on Chinese goods means that it will cost more to import Chinese shipment to the US which will impact the profitability margin as well as demand for the goods. 

Stick To Your Game Plan 

The general rule of thumb in investing is always to look at it from a long term view. 

Thus, it is imperative that investors continue to look at downturn as an opportunity to add to their positions and not succumb to fear because good companies will always recover when the market eventually rebounds back. 

For instance, if my goal is to ultimately amass an annual dividend income of $100k/year, then it makes sense for me to focus primarily on the cashflow earnings of the company and ignore the daily gyration of market prices. Even better, if the company gives out the same distributional payout but is now cheaper in price, then it makes more sense to add on to the portfolio in view of the longer term advantage. This becomes a problem and will always be if market timing is a factor to consider. 

Conclusion 

While most investors say they’ll continue to hold on to their investments when there’s a sharp downturn and many even say they’ll add money when their investments go down, data often tells a different story. As the market downturn escalates, you’ll see more people selling in order to “get back in” later at a cheaper price. This behavioural bias has and will continue to be around for as long as there are volatility in the market. 

In any case, I think that it is good that we have a stress test like what we have today in preparation for a bigger meltdown in the future. If this prolongs for longer period of time, then this could become real interesting to assess.

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Wednesday, May 1, 2019

Why I Am Delighted With The Revised DBS Multiplier Changes

Savings have been an integral part of our approach towards financial freedom since we started working 12 years ago. 

There are many competitive savings accounts in the market that are giving out decent interest rates and meeting various needs of the consumers. 

When DBS Multiplier Account was first introduced in 2014, I quickly made the switch to park most of my emergency funds and investment warchest into the account.  

Back then, my criteria was simple. 

I needed a savings account that can reward me with the best return yet was flexible with the criteria such that I could easily meet them. 

In 2017, they changed their criterion with regards to the salary credit with no minimum requirement. This means regardless of how much you are earning, you are eligible to satisfy this criteria for as long as you have a salary credited as an employee. I like this because it caters to those who’ve started working and the bank wants you to stick with them and grow together as you progress in your career later on. 

Their next criterion hinges upon the number of categories that you can hit depending on your stage in life. The bank’s strategy is to have you to grow your life journey with them. The more bundled package you sign up with them, the higher interest return you will be able to get on your savings.

P.S: For more information on the specific terms and conditions, please read on the FAQ on the DBS Multiplier website which explains what works and what does not.

My Own (3Fs) Experience

For myself, this fits perfectly into my plan at this stage of my life as I am able to satisfy the majority of the categories. 

Other than the salary credit which I have it with them, I also own the DBS Altitude card for my miles accumulation project as well as the POSB Everyday Card for our day to day spending which gives decent cashback and rebates. 

For my investments, I also opened a Vickers account to transact some of my bigger trades that require a CDP account. I have to admit that I do have multiple brokerage accounts with Lim&Tan and Standard Chartered Bank as a preventive measure in case I needed to sell some positions urgently.

Last but not least, I have changed my current home loan to DBS home loan which gives me the best rate so far among the many others I’ve investigated. 

With that, I have unlocked the “Salary + 3 Categories” on my savings account which yields me 3.5% on the first $50k savings I have with them. 

While I am happy that I am able to earn 3.5% risk free on my savings, the $50k amount that caps the bonus interests means that I am only able to earn a maximum of $1,750 interests in a year while anything above $50k will be based on base rate. 

I have problem with this because my emergency funds and warchest combined usually exceeds $50k so I have to source for an alternative to park my savings.


The New Changes (effective 1st May 2019)

With the new changes effective 1st May 2019, the Multiplier account will increase the account balance to $100k, which spike interest I am so happy about. 

The new step-up interest comes with a stricter requirement as they want consumers to take on more lateral interests in satisfying 3 or more categories to earn the higher step-up interest. 

I have no issues with that because I have already satisfied that requirement even prior to the changes. 

Obviously, as a bank in their position, they also want consumers to step up the volume transactions so the reward is staggered in such a way that yields the most returns if consumers can transact $30k or more in a month. 

The maximum effective interest rates on the new revised multiplier changes is now 3.65% on the first $100k, which means if you have $100k balance in your account and meet all the criteria, you stand to gain an interest of $3,650 per annum.

Do You Know?

You may think that it’s near impossible task to be transacting more than $30k per month but let me give an idea or two on how you can increase your transactions with the strategy I did.

The first is by strategizing your investment category through crediting of your CDP dividends into the Multiplier account. For someone who’s receiving an annual dividend income of about $30k per annum based on 5% yield on a $600k capital, this can add up to about $2,500 per month.

If you are one of those who regularly allocate capital into the market to purchase equities every month, this would also qualify your purchase into the total transactions assuming you are using DBS Vickers online trading platform.

If you are looking for a life insurance coverage to supplement your other insurance policies on hand, you can also consider purchasing them from DBS/POSB and the premium you pay every month will be counted towards the total transactions.

The Multiplier account is also one of the more rare savings accounts that recognizes joint salary credits. That means if you and your spouse open a joint account and have both your salary credited into the joint account, the total combined would count for the total transactions.

Adding all of the above strategies, your total transactions would likely hit above the $30k requirement. In my case, this is how it usually adds up (range):


Conclusion

The main reason why I am using the DBS Multiplier is because their requirements fit into my plan at this stage of my life. 

That doesn’t mean the other products are worse when compared to the Multiplier but they weren’t a good fit to my lifestyle at this stage. 

For instance, the UOB One Savings Account has less stricter requirements with only credit card spend above $500 and 3 GIRO payment but rewards consumer with lower effective interest rate of 2.44% on their first $75k (staggered every $15k). 

On the other hand, while the BOC Smart Saver (effective 1st April 2019) has high effective interest rate return of 3.55% on the first $60k, their requirement on the salary credit needs to be above $6k and credit card spend to be above $1.5k per month to qualify for the higher bonus interests. This is clearly catered to the middle income class who’s earning above the median and are heavy spenders on their cards. 

It is best to review each of the requirement holistically because they cater to different needs of different people who are in different stages of their lives. 

For me, I’ll stick with it for now because the revised Multiplier plan just makes it more attractive for me to stay on.

This post is written in collaboration with DBS but all opinions are solely mine.

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