Tuesday, January 29, 2013

Ascott: Raises S$150m Private Placement

For Ascott investors who have not heard the news, Ascott has raised a private placement of ~115m new units at an issue price of S$1.305 per new unit raising proceeds of up to S$150m. This may come as a surprise to some as the management has stated in the recent briefing that they will be comfortable with 40% to 45% gearing. But as with Reits, I would have expected it to raise some kind of rights issue or private placement once gearing goes above 40%.
 
 
Following the private placement, Ascott gearing will be reduced to about 35% assuming the proceeds is used to repay the debts, which is at a comfortable level should they need to leverage to purchase yield accretive opportunities or taking some AEI projects on their portfolios sometime in the near future.
 
Because of this move, there will be an advance distribution income to exisiting holders from 1 Jan 2013 to 5 Feb 2013 before the new units are issued. There will be a heavy dilution effect of about 10% as a result of this placement, which is a rather disappointing issue as an Ascott investor. For the short term, I will expect to see price go nearer to S$1.30, especially after the X-date on the 1st Feb 2013. Will I add to the counters? I doubt so for now due to its heavily dilution effect of the placement.

Friday, January 25, 2013

How do you know whether you've reached Financial Independence?

If you are going to a place or a party, you will know that you've reached there when you recognize the place and your friends greeted you at the party. With increasingly more and more people embarking the Financial Independence journey, how do you know whether you've reached there one day. Do you measure it by the amount of capital you have? or perhaps it's your passive income? How exaclty do you know whether you've reached your goal of financial freedom?



For me, I will use these few metrics below to measure the level of my financial freedom:

Age: Up. We can't hide from time. We age each and everyday in life and there's nothing that you can do to stop it. Regardless of whether it rains or shines, your age will only have one direction to go and that is up north.

Active Income: Down. Don't get me wrong. As I move closer to financial freedom, I would like to see my active income coming down gradually. This is due to the fact that I will want to one day take on social work in replace of the corporate world I am in now. After all, we all aim for financial independence so that we can do what we like right!?

Passive Income: Up. Passive income has to go up in order to replace the loss in active income I will be getting. I will be depending mostly on income that works for me, not the other way round.

No. of hours spend at work: Down. As with active income, the goal of financial independence is to have a choice. My choice is to spend lesser time at work and more time at home with my family. I hope to see this gradually come down now.

Health: Up. As I spend lesser time at work and therefore more time for exercise, I will be expecting my health status to get better, even as I age each and everyday.

Hobby: Up. I hope to be able to spend more time on my hobby. I hope to travel around the world. I hope to see Novak Djokovic live in person. And I hope to see Liverpool plays at Anfield. I have plenty of dreams and hobbies and I hope to achieve them when I reach financial freedom.

When all things are going as it is, I will know I have reached my target of Financial Independence. What is your metrics of measuring your Financial Independence?


Wednesday, January 23, 2013

S-Reits - Time to take profits?

The increasing demand for yield hunt, in particular the S-Reits has grown even stronger in recent months, leading to further yield compression. As of current price, we have now seen more and more Reits falling below into the <6% category. I remember just a year ago, most S-Reits are easily in the 6% yield category. Now, we can almost only see a few of them. Are we going to see yield or stock price go south first?



I think the euphoria for S-Reits have become very evident. You have lots of new investors asking which Reit is a good buy now or is this Reit still a good buy now. The answer at most times vary. But one thing is that if you are only thinking of entering Reits now at current price, then it'll be a "watch and pick" from here. To me, the risk reward is very unfavorable but that could be me. And I could be severely wrong.

If I have to choose a Reit at today's current environment, I would prefer to pick a more quality Reits rather than Reits with a high yield, with perhaps Ascendas Reits my preferred choice. But otherwise, small and mid cap stocks would more likely be more risk rewarding at the moment.

Wednesday, January 16, 2013

"Get Busy Living or Get Busy Dying..."

Movies can become an important piece of inspiration to us.
 
 
One of the movie which I've watched over the past weekend is "Shawshank Redemption", a great movie with lots of messages and inspirations. If you have not watched it previously, stop whatever you are doing right now, start downloading them, grab a popcorn and watch them. It simply is one of those movies which you don't want to miss.
 
It is a story about a man who is wrongly accused of murder and sent to prison. He tried repeatedly to outdo the people who tried to stop him but again and again he did not give up. In one part of the movie, he said: "Get Busy Living or Get Busy Dying...".  To me, this story is like a metaphor in everybody's life situation, including myself. Just like how the main actor feels he is wrongly accused of murder and being sent to prison, we too feel like everyday we are being forced to go to work against our will. His prison is like the office we are in and the wardens are similar to our bosses.
 
 
When the main actor somehow manages to find someone to testify for his innocence, the wardens once again ask him to drop the silly idea. It sounds like hope and goal in your life which you have been dreaming to pursue but yet the people around you tells you to stop dreaming and face the reality. It is most times hurting and demoralizing.
 
 
The main actor tried repeatedly of ways to get out again and again and despite against all odds, he did not give up. It is important in your life to get started in whatever you are planning on doing. Set a goal and resolution in your life and follow it thoroughly. You don't get success by lying down on your couch doing nothing all day long. If you fell down because you had failed, stand up and try again.
 
 
He met with a few obstacles along the way to reach his dug out freedom. In life, the road to success is never a straight line. There will be noises and difficulties throughout the journey and it is important to contain them. Keep moving on and you will see light at the end of the tunnel.
 
 
At the end of the day, it is the basic rules that gets you success in life. Plan, determination, hard work and a little luck along your way is your formula to success. As the above quote says:
 
 
"Get Busy Living or Get Busy Dying..." - Get busy living your life fruitfully or just simply wait to die. It's a choice you can make and you have the upperhand.

Tuesday, January 15, 2013

"Jan 13" - US Transactions & Portfolio Update


Counters
No. of Shares
Average Price (USD)
Total Value (USD) based on average price
Market Price (USD)
Total Value (USD) based on market price
Total Dividends collected (USD) since purchase
Verizon (VZ)
20
43.22
864.40
43.59
871.80
0.00
AT&T (T)
20
34.43
688.60
34.37
687.40
0.00
Coca-Cola (KO)
5
37.07
185.35
36.96
184.80
0.00
Total USD
 
 
1,738.35
 
1,744.00
0.00

With effect from Jan 2013, I will also be including my US Portfolio as I begin my quest to search for more value in the overseas market. For the month of Jan 13, I have initiated a small position in Verizon (VZ), AT&T (T) and Coca-Cola (KO).

Verizon (V) - I decided to purchase Verizon immediately after it went Ex-dividend on 8 Jan 2013, paying out $0.515 as dividends. Though the stock currently trades at a premium to its peers and the rest of the S&P index, I find its low beta and dividend attractiveness as a major support which will provide protection downside support. The stock is currently trading at a P/E of about 17.6 and dividend yield of 4.7%.

AT&T (T) - AT&T is a widely brand name across the county and has strong balance sheet. It usually has a wide operating margin and very good dividend yield as well. If I were to pick one weakness from this, it would be that it has run up quite a lot these recent months. Having said that, I am initiating a small position and will monitor further. The stock is currently trading at a P/E of about 14 and dividend yield of 5.25%.

Coca-Cola (KO) - This stock needs no further introduction. It has been a darling stocks for investors all these years. I find that current price of Coca-Cola is rather unwarranted. It has good balance sheet, good exposure to emerging markets and good profit margins. The stock currently trades more expensively than its closest peers, PEPSI but I believe the attractiveness of the company makes it a premium than its peers. It currently yields at about 2.76% and will keep on growing based on past records.

Monday, January 14, 2013

"Jan 13" - SG Transactions & Portfolio Update


Counters
No. of Lots
Average Price (SGD)
Total Value (SGD) based on average price
Market Price (SGD)
Total Value (SGD) based on market price
Total Dividends collected (SGD) since purchase
ST Engineering
1
2.82
2,820.00
3.84
3,840.00
1,240.00
SIA Engineering
3
4.12
12,360.00
4.57
13,710.00
210.00
Noble
2
1.12
2,240.00
1.24
2,480.00
0.00
FraserCenter Point Trust
15
1.66
24,850.00
1.995
29,925.00
825.00
Ascott Reit
8
1.29
10,320.00
1.40
11,200.00
825.00
First Reit
11
0.89
9,840.00
1.055
11,605.00
442.00
PLife Reit
3
1.85
5,550.00
2.36
7,080.00
476.00
SPH
2
4.11
8,220.00
4.11
8,220.00
476.00
Boustead
6
0.92
5,500.00
1.115
6,690.00
140.00
Singtel
1
3.09
3,090.00
3.44
3,440.00
316.00
Neratel
30
0.46
13,970.00
0.535
16,050.00
400.00
Ascendas Hosp. Trust
7
0.89
6,250.00
0.965
6,755.00
63.00
QAF
3
0.71
2,135.00
0.795
2,385.00
20.00
Second Chance
17
0.43
7,210.00
0.405
6,885.00
456.00
Unit Trusts
-
-
7,800.00
-
7,800.00
-
Elec & Eltek
2
2.17 (denominated in USD)
4,340.00 (denominated in USD)
2.09 (denominated in USD)
4,180.00 (denominated in USD)
-
Total SGD
 
 
122,155.00
 
138,065.00
4,588.00
Total USD
 
 
  4,340.00
 
    4,180.00
       0.00

For the month of Jan 13, I made further profit taking, mainly from ParkwayLife Reit (one of my favorite Reits btw) and did some rotational yield plays in Second Chance, FCT and SPH.
 
My main reason of selling PLife Reit is due to its compressed yield because of its rising price in recent weeks. At current price, it yields about 4.2%, way below the average REITS yield and have limited potential upside imo given no further DPU increase. Having said that, PLife is a very good defensive play reits and one which I will definitely be looking to add on back once the price returns attractively.
 
Singtel is another stock which I have sold off and this is an easy decision. Firstly, its risk reward earnings from overseas isn't attractive enough to warrant such high price currently. Secondly, its dividend will only be paid out in the 2nd half of the year (Singtel pays out dividend in Aug and Dec), so there is a lot of time to relook back at this stock nearer to the dividend date in Aug.
 
I've added Second Chance, FCT and SPH in the rotational play due to its higher yield and better risk reward play. Though they aren't as attractively valued as before, I believe their high yield will make them a darling stocks among investors at this low interest rate environment.


Friday, January 11, 2013

New Cooling Measures for Singapore property

Not for the first time you are hearing, the government has once again imposed a new cooling measures on Singapore property in the bid to control speculation for property in Singapore.

The following measures will take effect on 12 January 2013:

a) Additional Buyer’s Stamp Duty (ABSD) rates will be:

i) Raised between five and seven percentage points across the board.
ii) Imposed on Permanent Residents (PRs) purchasing their first residential property and on Singaporeans purchasing their second residential property.

b) Loan-to-Value limits on housing loans granted by financial institutions1 will be tightened for individuals who already have at least one outstanding loan, as well as to non-individuals such as companies.

c) Besides tighter Loan-to-Value limits, the minimum cash down payment for individuals applying for a second or subsequent housing loan will also be raised from 10% to 25%.

The measures listed above will not impact most Singaporeans buying their first home.

I think this news will come as a surprise to many especially with the pace coming in from the last cooling measures we had just recently. This news in my opinion will be very bad for property developers - Capitaland, Keppeland, CDL and Wing Tai as not only sales have been dropping in recent months, with this additional news they are going to once again feel the pinch even more.

And of course, for myself who are still awaiting for the PR application results this month, this news do come as a disappointment to me as the new ABSD will affect me on purchasing a property here :(

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