Sixth time (un)lucky?

Previously for IPO applications...

CMA - unsuccessful
Ryobi Kiso - unsuccessful
Cache - successful (see Third time lucky)

MIT - unsuccessful
STX OSV - unsuccessful
Sabana - successful (again only allotted one lot as is the norm for applications of less than 10 lots)

Alas...

"Sabana REIT falls on market debut

Sabana Shariah Compliant REIT , which owns industrial properties, fell on its debut in Singapore on Friday, weighed down by jittery market sentiment.

At 2:05 p.m., Sabana REIT was traded at $1.00 with 15.9 million shares traded. The shares traded as low as $0.97 -- 7.6% below the initial public offering price of $1.05.

Sabana REIT, Singapore’s first Islamic REIT and the world’s largest shariah-compliant property trust, sold 508 million units at $1.05 each in its IPO. The IPO was 2.5 times subscribed.

Sabana controls 15 industrial properties in Singapore with an aggregate floor area of about 3.3 million square feet."

Guess only time will tell how this is going to turn out...

Note to self: Low of $0.97 on first day of trading, @$0.96 annualised yield for Sabana will be ~9% in 2011; with a purchase of a further two lots @$0.96, average unit cost for me will be $0.99 and blended yield of Sabana holdings will be 8.72% in 2011

Portfolio Review 4Q10

One transaction completed:

1. Suntec
   
   • Buy
     MBS and Esplanade + Promenade Circle Line MRT stations catalysts
     Retail strength in central CBD area
     Only mixed office and retail REIT -> diversification within a single REIT
   • Sell
     Decreasing dividends from falling office rentals and dilution through issuance of new units (placement and deferred)
     Proposed acquisition of one-third stake in MBFC financed by private placement and term loan will result in lower DPU for unitholders (10.915cents to 9.812cents) -> not at all beneficial to unitholders not entitled to placement units
     

Currently holding on to 7 counters (see Portfolio Review 1Q10 for 1-4 and Portfolio Review 2Q10 for 5):

1. FrasersCT
2. PLife
3. Starhill
4. Saizen warrant
5. Cache
6. First REIT
   
   • Buy
     Proposed acquisition of two Jakarta hospitals (Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals Lippo Cikarang) financed by rights issue and term loan
     Rights units priced attractively (discount of ~47% to closing price ~1 week before announcement) -> beneficial to new unitholders
     Healthcare is a defensive sector -> stable DPU (cf. PLife)
7. Pacific Shipping Trust
   
   • Buy
     Counter is traded in USD but settled in SGD (see Taking advantage of the falling US dollar)
     Acquisition of non-container vessels (two Capesize Bulk Carriers chartered to Jiangsu Shagang Group Co., two Multi-Purpose Vessels chartered to Cosco Xiamen and five Supramax Bulk Carriers chartered to Glovis) -> diversification of fleet and widening of charterer base
8. Sabana
   
   • Buy
     First Syariah-compliant REIT here in Singapore
     Luck with IPO balloting for public (see Sixth time (un)lucky)? entry)

Next portfolio review due after 31 March 2011.


Looking to hold
There were three counters which I held for the the entire 2010: Frasers Centrepoint Trust, Parkway Life and Starhill Global. Definitely, if distributions remain stable, I would continue to sit tight on these three and collect the quarterly dividends.

Looking to add
Of the remaining counters in my existing portfolio, four continue to have relatively high yields at current prices: First REIT, Cache Logistics Trust, Sabana and Pacific Shipping Trust. Cache and Sabana (and also MIT) are the new kids on the block for S-REITs and they remain largely unproven. First REIT has just undergone a rights issue to acquire two hospitals in Indonesia and there are always country risks to consider but otherwise, comments from the online community on the stability of its payouts have been favourable. As for Pacific Shipping Trust, of late it has been on a policy of acquisitions towards diversification of its fleet and I personally view this positively. Also, it has seemed to be the most prudent in its distribution policy and relatively free of counter-party risks compared to the other two shipping trusts (First Ship Lease Trust and Rickmers). However, as it is traded in USD, there are foreign exchange currency risks and one would have to keep an eye out for SGD/USD rates in addition to the share price.

Looking to release
The last counter which I am holding on to is the Saizen warrants. This was more of an opportunistic purchase to take advantage of a possible boost in share price from the resumption of distributions for this trouble-plagued REIT, so as to hopefully make some capital gains. Alas, I missed the window to sell when the price climbed for a bit earlier in the year and I will be looking to release it if there should be another similar window of opportunity to sell.


Finally, here's wishing everyone good fortunes in 2011 and a better year ahead!

~ Happy New Year! ~

Stock Portfolio Update Nov/Dec 2010

Continuing on from Stock Portfolio Update Aug/Sep 2010,

• 7 Aug 2009 - 15 Nov 2010
  Bought Suntec at $0.985 and sold at $1.47
• 29 Nov, 13 Dec 2010
  Collected dividends from FCT, Suntec, Starhill, Cache and PLife
  
  

Taking advantage of the falling US dollar

With SGD hitting an all-time high against the USD, I was very much interested to find out how I could turn this situation to my advantage.

After mulling over this for some time, I came up with the following list:

• Changing some SGD for USD at the moneychanger
  I was at Suntec over the weekend and saw a long queue at the moneychanger opposite Watsons, guess some people like to keep physical cash or they are going to the US for a well-timed holiday.
• Changing some SGD for USD and keeping it in a bank account
  I was looking at some foreign currency accounts and concluded that unless you have use of USD in your daily work or otherwise, there was not much point in opening such an account.
• Buying into USD-denominated shares on the Singapore stock exchange
  STI component stocks denominated in USD include Jardine Matheson Holdings and Jardine Strategic Holdings. However, valuations appear to me to be on the high side right now. Besides, I was also none too familiar with these two counters.
• Buying the upcoming American Depositary Receipts (ADRs) quoted on the Singapore stock exchange
  By chance, I came across this piece of news, saying that SGX will quote ADRs of 19 major Asian companies from 22 October 2010. Coincidentally, that was next week.

From the list, we can see some of the big companies in China right now. Personally, I am most interested in Baidu. Firstly, it has the highest 6-month daily turnover in the list, reflecting a high level of liquidity. Secondly, with the exit of Google from China, this opens up an opportunity for other search providers such as Baidu. Thirdly, the China growth story is arguably the current flavour of the times, and Baidu is well-placed to ride on this.

For now, I am content to adopt a wait-and-see attitude first but definitely, I am looking to get in on a slice of the action. Good luck to all!

Portfolio Review 3Q10

Currently holding on to 6 counters (see Portfolio Review 1Q10 for 1-5 and Portfolio Review 2Q10 for 6):

1. FrasersCT
2. Suntec
3. PLife
4. Starhill
5. Saizen warrant
6. Cache

Next portfolio review due after 31 December.

Note to self: NAV includes realised P/L, fees and dividends. Performance vs. STI measures only paper value.

Stock Portfolio Update Aug/Sep 2010

Continuing on from Stock Portfolio Update May/June 2010,

• 27 Aug, 9 Sep 2010
  Collected dividends from FCT, Suntec, Starhill and PLife
  

REITs Performance I

Due to the uncertainty surrounding the strength of the global economic recovery, the general consensus seems to be that the STI is pretty much range bound. In such an environment, stock picking becomes even more crucial in sieving out the likely outperformers.

REITs are no exception to this.

The table shows the month end prices for selected REITs with the STI as the last row for reference. To illustrate the point more clearly, a graphical form in terms of percentages is presented next.

I observed that amongst these, there were three that consistently outperformed the STI:

1. PLife
2. CDLHT
3. MLT
   

In a previous post, I had already highlighted CDLHT's potential.

MLT's strong performance could be attributed to its string of recent yield-accretive acquisitions. PLife is not so clear to me though. On 27th of August, it jumped 9c from 1.44 to 1.53 on volume of 1.262m and on 31st of August, it jumped 7c from 1.51 to 1.58 on volume of 3.48m, both days without any announcements.

Going forward, I would favour a sectorial-cum-sponsor approach in the S-REITs market.

The hospitality sector is clearly benefiting from the IR tourism effect, which could spill over into the retail sector. Industrial rents seem stable enough and office rents appear to be bottoming. As for healthcare, its rental has all along been pegged to CPI and can be seen as a defensive play.

Strong sponsors would include Capitaland, Ascendas, CDL, Keppel Land, Mapletree, F & N, Parkway, in essence all those which I deemed fit to include in the table and graph.

One last thing I would keep my eye on is the Mapletree Industrial Trust IPO planned for later this year. I would definitely subscribe for it if and when it does materialise =)

AUD / NZD Update July August 2010

Status quo on the AUD front, whilst NZD rate continues to rise (see below).

Reserve Bank of Australia (RBA) media release statement on monetary policy decision found below:

At its meeting today, the Board decided to leave the cash rate unchanged at 4.5 per cent.
... (statement continues in a similar vein to previous releases)

Reserve Bank of New Zealand (RBNZ) news release on the Official Cash Rate (OCR) found below:

The Reserve Bank today increased the Official Cash Rate (OCR) by 25 basis points to 3.0 percent.

Reserve Bank Governor Alan Bollard said: “While the outlook for economic growth has softened somewhat, it is still appropriate to continue to reduce the extraordinary level of support implemented during the 2008/09 recession.

“The world economy continues its fragile recovery. Trading partner growth has turned out stronger than we predicted, however, future prospects for growth have deteriorated. While still at high levels, our commodity prices have moderated.

“In New Zealand, domestic demand is subdued. Households are cautious, with retail spending growing only modestly, housing turnover in decline and household credit growth weak. While this caution has been evident for some time, the recent slowing in net immigration will act to further dampen consumer spending. Business investment remains very low, with corporate lending continuing to be subdued.

“The New Zealand dollar has appreciated in recent weeks. This appreciation is inconsistent with the softening in New Zealand’s economic outlook and moderation in our export commodity prices.

“Overall, we continue to predict respectable near-term GDP growth, with manufacturing confidence remaining elevated and forestry exports continuing to expand. An eventual recovery in business investment will assist growth over the medium term.

“Annual CPI inflation has been near 2 percent for the past five quarters. As the economy grows, inflationary pressures are expected to pick up.

“Given this, some further removal of monetary policy stimulus is appropriate at this stage. Even after today’s move, the level of the OCR is still very supportive of economic activity. The pace and extent of further OCR increases is likely to be more moderate than was projected in the June Statement. Our policy assessment will be continually reviewed in light of economic and financial market developments.

“The coming increase in the rate of GST and other government-related price changes are likely to temporarily push annual CPI inflation above 3 percent. The Bank does not expect this price spike to have a lasting impact on inflation. However, the price and wage setting behaviour of firms and households will be monitored for evidence of any increase in inflation expectations.”

Discount to NAV / Analyst TP

In an earlier post on REITs, one screening criterion I mentioned was that of discount to NAV, akin to the notion of paying less than what something is actually worth. Recently, while reading through some analyst reports, another idea struck me, that of discount to analyst target price.

From what I can gather, most if not all of these analyst houses use some sort of discounted cash flow (DCF) method to arrive at their forward target prices (TP). Simply put, NAV is like the current valuation of a house (less the purchase loan), and a DCF TP is like what the house is worth based on the future rental income (forecasted) that it can fetch.

Below is a summary of the target prices gathered from 9 institutions for S-REITs.
Those highlighted in green are those with current discounts of >10% to both NAV and TP.
Those highlighted in red are those with current discount of >10% to NAV.
Those highlighted in yellow are those with current discount of >10% to TP.

Of the highlighted REITs, one in particular has caught my eye: CDLHT. It does not have the highest discount to the average TP at 14%, but shifting our attention to the other column, we see that it does have the highest premium to NAV of not just the highlighted selections, but of all the S-REITs, at 28%.

Evidently, the analysts must be seeing something that the market perhaps does not. Upon closer inspection of the analyst reports on CDLHT, I have picked out two main factors for the apparent optimism.

1. Strong balance sheet, especially after the recent placement exercise, points to probable acquisitions which would act as price catalysts
2. Singapore tourism boom with the improving global economy and further boosted by the opening of the two IRs

In my opinion, these seem sufficiently justified.

Normally, people pick stocks either as growth counters (for capital appreciation) or as defensive counters (for dividends). However, where possible, I would like to have a bit of both. Previously, I would choose a REIT primarily for its dividend yield, and then for its price appreciation as a secondary objective. Barring a double dip recession, which looks increasingly unlikely to me, the STI might just fluctuate within a range. In such a case, buying a REIT such as CDLHT would be first for price appreciation since the yield might not reach interesting enough levels for me when the market goes down. And if I manage to catch the CD period then even better, although that would only be at year end since CDLHT has a semi-annual policy and the first half dividends had been brought forward due to the placement exercise.

In the meantime, my rough guideline for entry into CDLHT would be the placement price of $1.71 plus minus, to be refined further with TA. Cheers!

AUD Update July 2010

Reserve Bank of Australia (RBA) media release statement on monetary policy decision found below:

At its meeting today, the Board decided to leave the cash rate unchanged at 4.5 per cent.

The global economy has continued to expand over recent months, consistent with a trend pace of growth. The expansion remains uneven, with the major advanced countries recording only modest growth overall, but growth in Asia and Latin America, to date, very strong. There are indications that growth in China is now starting to moderate to a more sustainable rate. In Europe, while output in some key countries has been improving recently, prospects for next year are more uncertain given the budgetary constraints governments face and the pressure on euro area banks. US growth has looked stronger in the first half of 2010 but the pace of labour market improvement is slow.

Caution in financial markets has been evident in the past couple of months, driven principally by concerns about European sovereigns and banks but also by some uncertainty about the pace of future global growth. Financial prices have been more volatile and equity prices and government bond yields in major countries have declined. Some tightness in funding markets is evident, though not on the scale seen in late 2008. Commodity prices are off their peaks but those most important for Australia remain at very high levels, and the terms of trade are approaching their peak of two years ago.

With the high level of the terms of trade expected to add to incomes and demand, output growth in Australia over the year ahead is likely to be about trend, even though the effects of earlier expansionary policy measures will be diminishing. Consumption spending is recording a modest increase at present, with households displaying a degree of caution, but most indicators suggest business investment will increase over the coming year. Business credit appears to have stabilised, though credit conditions for some sectors remain difficult. Credit outstanding for housing has continued to expand at a solid pace, but dwelling prices are rising more slowly than earlier in the year.

The labour market has continued to firm gradually, and after the significant decline last year, growth in wages has picked up a little, as had been expected. Underlying inflation appears likely to be in the upper half of the target zone over the next year. The rate of CPI increase is likely to be a little above 3 per cent in the near term, due to the effects of increases in tobacco taxes announced earlier in the year and significant increases in prices for utilities.

The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. Pending further information about international and local conditions for demand and prices, the Board views this setting of monetary policy as appropriate.

Germany lost!!

:(( So Yogi won the bet.. Screw him!

Round of 16: England out (Ber)
Quarter finals: Argentina out (mInG)
Semi Finals: Germany out (KKS)
Finals: Holland out? (Yogi)

Can this pattern hold true? What will the prophet Paul predict next? Find out in the next episode of World cup Paul prediction..

Therefore, Spain is the winner. *rushes to Sgpools to bet..

KKS

Not Everyday is a Sunday..

But.. Today is a Sunday... I guess this is what they mean by 情场失意，赌场得意...

KKS

Portfolio Review 2Q10

One transaction completed:

1. GuocoLeisure
   
   • Buy
     Possible privatization by Quek Leng Chan
     Hospitality strength in London and oil royalties from Australia Bass Strait
     Proxy to hospitality sector
     Possible 2012 London Olympics catalyst
   • Sell
     Rumours proved unfounded and privatization did not materialise
     UK elections overhang -> possibility of hung parliament -> political uncertainty
     PIIGS (Portugal Ireland Italy Greece Spain) debt woes in Eurozone
   • Lessons learnt
     There's no smoke without fire, except when a lot of people smoke together
     

Currently holding on to 6 counters (see Portfolio Review 1Q10 for nos. 1 - 5):

1. FrasersCT
2. Suntec
3. PLife
4. Starhill
5. Saizen warrant
6. Cache
   
   • Buy
     First pure logistics REIT listing in two-and-a-half years
     Luck with IPO balloting for public (see Third Time Lucky entry)
     Logistics strength in ramp-up warehouses located in established logistics clusters, near air and sea transportation ports -> barrier to competition

Next portfolio review due after 30 September.

Note to self: NAV includes realised P/L, fees and dividends. Performance vs. STI measures only paper value.

Can you put a price on love?

Yes you can!

Money in a guy account before you consider accepting him as your life partner?

10K - 20K	[ 22 ]	[6.96%]
20K - 30K	[ 65 ]	[20.57%]
50K - 80K	[ 95 ]	[30.06%]
100K -120K	[ 31 ]	[9.81%]
150K - 200K	[ 41 ]	[12.97%]
Nothing matters	[ 62 ]	[19.62%]

Poll Taken from some local female forum..

Hmmm Interesting! I dun have 50K to 80K leh.. how? :( So moody..

KKS

NZD Update June 2010

Finally, NZD rates up...

WELLINGTON - NEW Zealand's central bank lifted the official interest rate by a quarter percentage point Thursday from a record low of 2.5 per cent, the first change since April last year.

Reserve Bank of New Zealand Governor Alan Bollard said the official cash rate was being raised to 2.75 per cent because the economy was entering its second year of recovery and inflationary pressures were expected to be contained.

'Given this outlook and as previously signalled, we have decided to begin removing some of the monetary policy stimulus that is currently in place,' Mr Bollard said.

'The further removal of stimulus will be reviewed in light of economic and financial market developments.'

New Zealand slumped into recession at the start of 2008, emerging only in the second quarter of last year with economic growth picking up to 0.8 per cent in the three months to December compared with the previous quarter. -- AFP

Stock Portfolio Update May/June 2010

Continuing on from the Personal Financial Journey entry,

• 15 Mar 2010
  Received advanced distribution from FCT due to private share placement
• 21, 27 Jan - 5 Apr 2010
  Bought GuocoLeisure at $0.73, $0.63 (average $0.68) and sold at $0.70
• 27 May, 9 June 2010
  Collected dividends from FCT, Suntec, Starhill and PLife

Reminder to self: second portfolio review due after 30 June.

AUD Update June 2010

Looks like AUD rates will be staying at current levels for the moment...

SYDNEY - AUSTRALIA paused an aggressive series of interest rate rises on Tuesday, citing turmoil on global markets over Europe's debt woes which have raised the spectre of a 'double dip' recession.

The Reserve Bank of Australia opted to leave rates on hold at 4.50 per cent, deciding against a fourth straight quarter-point hike and the seventh since October.

'Interest rates to borrowers are around their average levels of the past decade, which is a significant adjustment from the very expansionary settings reached a year ago,' said Reserve Bank of Australia governor Glenn Stevens.

'Taking all the available information into account, the Board views this setting of monetary policy as appropriate for the near term,' he added. Australia's stock market and national currency have fallen sharply over the past month as investors were rattled by debt problems in Greece, Spain and elsewhere which have prompted emergency action by European leaders.

The economy has also been overshadowed by a row over a new tax on the key resources sector, which has helped drive Australia's strong recovery from the financial crisis.

The rates decision followed mixed data on Tuesday, with April retail sales up a better-than-expected 0.6 per cent from a month earlier but housing building approvals down 14.8 per cent. -- AFP

How much do you need to have to get married?

Supposing you want to get a decent sized ring , 0.5 carat. Nevermind the clarity , colour or setting.. It'll cost you around 4.5k. That's just the diamond ring, you need to get wedding bands too, which will easily cost up to 2k.

So we've got that settled. You're a face-loving Chinese descendant who needs to host a grand wedding. You need to host a wedding dinner/Banquet for all your family members and friends. Suppose the going rate for 1 table is at least 1k, you'll host at least 30 tables depending on how sociable you are. That's 30k for 30 tables + booking fees for dining hall which is another say 10k. You'll need some more money for the misc stuff, wedding gown, suits, photo albums, etc etc. That'll cost about 10k
All in all it'll cos 50k

Then you'll need to go on a holiday. Suppose you two go to the NATAS fair and found a really good deal for 2 to Hokkaido for 10k.

Summing it up, 50k +10k + 6.5k = 66.5k

Supposing your girlfriend is really picky and wants another setting at you ROM, that'll cost 3.5k? to round it up, So in total you'll need at least 70k to get comfortably married.

On the up side, you may recover up to 20k-30k from Angbaos depending on how affluent your friends and immediate family are.

I'm pretty sure every lovebirds would want a private nest they call home, so you'll still have to pay 20% upfront for your HDB if you're buying one. Let's take the average of 250k *20% =50k. Damn you still need to top up 30k and all your Angbaos will go to paying for your new flat.
Plus, 40% max of your earnings will go into your new flat as illustrated in previous post, which will make your life so damn miserable.

Sigh, almost makes you want to have a void deck wedding doesn't it?

~KKS

Affordable HDB

Recently, I've been thinking, does it make sense to get a new HDB flat?

Mr Mah said on 10 Apr 2010 that housing was still affordable. Is it really?

Let's just say for argument's sake that you ballot for new HDB BTO project in Choa Chu Kang and you got it on the first try. Woopee!

For new 4-rm units, pricing ranges from $226K to $278K. Let us take the middle of $252K as representative.

252K, That's not so bad right, so you wanna use your CPF to pay. Let's just say for argument's sake that you and your gf have just nice 52K in your CPF OA + 1st time grant etc. So your CPF is basically wiped out.
To pay for the 200K balance, you have to get a loan, let's say you apply for HDB housing loan..

Let's just say you and your gf have a gross monthly income of $5500, of course, that won't be stagnant as you get more experienced. And you decide to pay the whole thing in 10years because, let's face it, 2.6% loan interest is too high, and the more you decide to delay payment the more money you lose.(Max 30 years)

$5500 * 40% = $2200 repayment per month @ 2.6% interest.
HDB max ceiling for housing repayment is 40% for income. so your CPF OA per month is wiped out for 10 years
So if you do a little calculation, you can repay the HDB in around 9 years.
$2200*9years*12mths=$237600. That's over your loan of 200K , including interest
Let's just say that amount is the amount you pay for 9 years with interest.

So let's sum it up, your
1)OA is wiped out for 9 years
2)You have $3300 left for household expenses, clothing , food,personal insurance, housing insurance, bills.
Let's say you spend $2000 total on all the stuff above.
You have $1000 left in your savings for holiday and extraordinary expenses like eating out on special occasions, personal entertainment.

So what happens when you want to have a baby? You can't possible be waiting for when you're 30+ to have a baby. How are you able to pay for all that?

And of course, all that is dependent on you , having a reasonable girlfriend who doesn't demand that you pay for all the expenses.

Yes, HDB is affordable, but the cost of living here is not. We do live a sad, debted life. No wonder we always complain "Money not enough"



KKS out.

REITs Screening Criteria I

It is no secret that I am a fan of REITs. For me, the great thing about this class of assets is that I get to enjoy regular and predictable distributions in most cases, barring any extraordinary circumstances. However, what the recent credit crisis has done is it has exposed the weaker REITs for their ability to secure financing and ultimately, the fallabilities behind the management of their debt profiles.

As a retail investor, I have thus learned that I have to screen my buys stringently to protect my own interests. Below is my newbie attempt to establish a set of criteria to determine which REITs to buy for stability and for value-for-money:

Stability

1. Low gearing, i.e. < 35% (also the limit for REITs without a credit rating)
2. Presence of a sponsor, preferably a strong one, eg. Capitaland, F&N, etc
   
3. Portfolio mainly in Singapore, as I will have a local knowledge of the industry in that case

Value-for-money

1. Discount to NAV, i.e. paying less for more
2. High yield, preferably > 8% p.a.
3. Quarterly distributions (as opposed to semi-annually), this is just a personal preference to improve my own cash flow

After Saizen had set the precedent of suspending its distributions to conserve cash for paying off debts, I typically ascribe the most importance to the gearing criterion. Having a sponsor can be argued both ways, it can bail the REIT out in times of trouble, but it can also dump its own rubbish into the REIT. Reading about the efforts of F&N with regards to FCOT which it took over, I choose to believe the former rather than the latter. Despite the general penchant that Singaporeans have of complaining about their own country, I actually think Singapore is a stable country to do business in and hence have no issues with REITs having the majority of their portfolios here. Discount and yield are somewhat related since they are based on the share price, here TA is extremely helpful in determining good entry levels.

When I decide to enter into a counter, I settle for nothing less than 5 ticks. Of my holdings, 4 out of 5, with the exception of FCT, still pass my screening at current levels. Additionally, AIMSAMP after their recapitalisation exercise and the two Indo-based REITs, First and LMIR, fulfill the majority of my criteria and are on my watchlist.

As always, I am constantly seeking to refine and add on to my screening criteria and appreciate any inputs from friends and well-wishers, cheers!

Yield

As stock markets head towards a correction this May, for me this represents an opportunity to accumulate. Principally for me, I am vested in shares mainly for the dividends as an additional stream of 'passive' income for me. Once in a while though, my fingers get itchy and I attempt to do a spot of trading, but so far, have not been very successful at it =P

It has always been a dream of mine to be a 包租公. For the more ang moh pai people, it means to own properties and collect rental. Since I have just started working, this is of course not possible. So, when you have peanuts, then you play with peanuts. REITs represent a chance for me to own perhaps a single tile of huge properties like malls and hospitals and warehouses and enjoy the rental income from them.

With regards to my current portfolio, I was fortunate enough to begin my buying at a reasonable level and hence, have built up a certain margin before I begin worrying about losing my capital.

At the moment, my collection of REITs are yielding 8.2% per annum. Actually, my aim is for 8% and anything above that is a bonus. To put things into perspective, suppose you wish to generate an annual cashflow of $50k from stock dividends, you would need to invest $625k at 8% yield. This has taught me one thing: always try to buy at reasonable or even better, underpriced, levels so as to benefit from better yields (capital growth) and limited downside (capital protection).

Thus, my strategy for this correction is to keep my eye open for sustainable 8% yield stocks and continue to add to my portfolio. Wish me luck!

Hijack!!

So Micheal Ballack msged me the other day, he said Germany is going to win the world cup. That was way before FA cup when he got injured by Boateng. Now the German Captain is out of the world cup. Sadness. I'm sure Podolski or Klose will score some goals on his behalf..

The yongkiat is being ridiculous. Everytime I mention about Micheal ballack msging me he shuts me out. He's ignoring the fact that Germany will win the world cup. It's in the maths. 1954 -> 1974, 1990->2010.
20 years apart. It's all fated. Nothing can stop them. The world is coming together for their victory!

Check out the groups..

1	Australia	0	0	0	0	0	0	0	0
2	Germany	0	0	0	0	0	0	0	0
3	Ghana	0	0	0	0	0	0	0	0
4	Serbia	0	0	0	0	0	0	0

oh come on.. Ghana ? Australia? Serbia? pffftttt cya in world cup 2010...

and yes, I got an iPhone, finally succumb to the temptation.. now BKMY left Kiat without an iPhone.. When are you gonna get one?

KKS out.

Aviva SAF Insurance I

Recently, Aviva sent me a letter offering me an "exclusive offer to automatically upgrade your (my) group term life insurance cover to $200,000". The key points of the letter were:

1. Revision of maximum coverage to $600,000 in October 2009
2. Automatic upgrade of insurance coverage to $200,000 costing $0.85 daily (monthly premium $25.60) unless the insured person opts out

Upon reading the letter, I had an issue with (2) straightaway. It reminded me of the "innocent unless proven guilty" versus "guilty unless proven innocent" conundrum. In this case, Aviva was adopting the "Yes you want it unless you say otherwise" approach. I do not think this should be the way. For me, where insurance is concerned, there are two conflicting stands:

1. The level of coverage I would like to have
2. The level of coverage I can afford

Who doesn't want to be covered for a million bucks? But would you be able to pay the premium every month?

Subsequently though, Aviva realised its customer relations folly and sent me another letter. This time, it was "Yes you want it if you say so, otherwise status quo", which is of course much more palatable to the customer. In fact, Aviva was fairly quick to act upon its initial boo-boo. The first letter was dated 30 March and the second one 12 April.

I first signed up for this policy back when I was a blur-like-sotong NSF. It was only when I graduated and entered working life that I started to review all my existing insurance policies and recalled that I have been paying for this all this while. Initially, my monthly premium was $16 for a coverage of $100,000. Then, in a letter dated 28 April 2008, Aviva offered existing customers an automatic upgrade (similar to the one now):


This brings me to my current policy. Upon receiving the recent letter from Aviva, I did a brief comparison:


The third column is the premium per month per '000 coverage and shall serve as the basis of my comparison. To my surprise, the insurance component of my Manulife ILP turned out to be the cheapest in this respect, followed by the CPF DPS, and finally by the Aviva SAF insurance.

However, I will be the first to concede that this is not an entirely fair comparison study.

Firstly, insurers have to make money from somewhere, and for an ILP, the insurer's profits do not come from the insurance component but from the investment portion in the form of fees and the penalties incurred during the first few years.

Secondly, to compare amongst these various insurance policies that I have, is a bit like comparing apples to oranges. For instance, the Aviva SAF insurance has amongst other benefits, accident coverage and hospital cash whereas the CPF DPS is solely for death and total and permanent disability (TPD), which the Aviva SAF insurance also covers. A fairer comparison would entail comparing between policies which have the exact same terms and benefits, such as between term policies. The trouble is, I find that policies nowadays tend to combine benefits across various categories such that it is harder to classify them solely as just one certain type of insurance.

Nevertheless, despite the seemingly unfavourable results of the comparison, I have decided to go for the upgrade due to a few reasons:

1. To increase my overall coverage
2. Aviva SAF insurance allows spouse and children to enjoy the same coverage under one policy
   
3. Every year, I receive a partial cash rebate which helps to lessen the actual cost of the insurance
4. This offer includes free first one month premium

For more details on Aviva SAF Insurance and CPF DPS:
http://www.aviva-singapore.com.sg/life-and-health/for-individuals/saf-insurance-for-nsmen.html
http://ask-us.cpf.gov.sg/explorefaq.asp?category=23023


Disclaimer: The writer is covered under GE DPS, Aviva SAF Insurance and Manulink Flexi ILP mentioned in the post. This is not a solicitation to purchase insurance. Premiums quoted are for males who are non-smokers, aged 35 and under.

Private MediShield Plans

CPF

In Singapore, we have 3 accounts under CPF:

1. Ordinary Account (OA)
   
2. Special Account (SA)
3. Medisave Account (MA)
   

From CPF website:

For (1) Private Sector Employees (2) Government Non-Pensionable Employees (3) Non-Pensionable Employees in Statutory Bodies & Aided Schools (4) Singapore Permanent Resident (SPR) employees from their 3rd year onwards

Employee Age (years) Contribution By Employer (% of wage) Contribution By Employee (% of wage) Total Contribution (% of wage) Credited Into Ordinary Account (Ratio of Con) Special Account (Ratio of Con) Medisave Account (Ratio of Con) 35 & below 14.5* 20 34.5* 0.6667* 0.1449* 0.1884* Above 35 - 45 14.5* 20 34.5* 0.6088* 0.1739* 0.2173* Above 45 - 50 14.5* 20 34.5* 0.5509* 0.2028* 0.2463* Above 50 - 55 10.5* 18 28.5* 0.4562* 0.2456* 0.2982* Above 55 - 60 7.5* 12.5 20* 0.575* 0 0.425* Above 60 - 65 5* 7.5 12.5* 0.28* 0 0.72* Above 65 5* 5 10* 0.1* 0 0.9*

In addition, at the May Day Rally 2010, Prime Minister Lee Hsien Loong announced that the Government will raise the employers’ CPF contribution rate by 1 percentage point. The increase will be done gradually in two steps to moderate the impact on employers. The first 0.5 percentage point increase will be implemented on 1 September 2010, and be made into the Medisave Account (MA). The remaining 0.5 percentage point increase will be effected 6 months later on 1 March 2011, and will be made to the Special Account (SA).

For illustration purposes, this means that for the 35 and below age group in the above table, the contribution by employer will be 15% wef from 1 Sep 2010 (extra 0.5% going towards MA) and 15.5% wef from 1 Mar 2011 (extra 0.5% going towards SA). Hence, the percentages under the green heading will change accordingly to reflect this.

For more details:
http://mycpf.cpf.gov.sg/Members/Gen-Info/Con-Rates/ContriRa.htm
http://mycpf.cpf.gov.sg/Members/Gen-Info/CPFChanges/Changes_ConRates.htm


MediShield

MediShield is the basic medical insurance scheme introduced in 1990 by the Singapore government for CPF members. It is designed to help meet medical expenses from major illnesses, which could not be sufficiently covered by the balance in Medisave, and will cover up to 80% of medical bills at the Class B2/C level. MediShield operates on a co-payment and deductible system to avoid problems associated with first-dollar, comprehensive insurance. Premiums for MediShield can be paid by Medisave.

From MOH website:

Age Next Birthday

MediShield Yearly Premiums

1 to 30

33

31 to 40

54

41 to 50

114

51 to 60

225

61 to 65

332

66 to 70

372

71 to 73

390

74 to 75

462

76 to 78

524

79 to 80

615

81 to 83

1087

84 to 85

1123

MediShield covers medical expenses incurred during hospitalisation, including:

• Normal ward charges
• Intensive care unit charges
• Medications
• Investigations
• Surgical implants
• Surgical procedure fees

MediShield also caters for certain approved outpatient treatments such as:

• Kidney dialysis
• Chemotherapy and radiotherapy for cancer treatment
• Cyclosporin and Tacrolimus drugs for organ transplant patients
• Erythropoietin drug for dialysis patients

For more details:
http://ask-us.cpf.gov.sg/explorefaq.asp?category=23069
http://www.moh.gov.sg/mohcorp/hcfinancing.aspx?id=306


Medisave-approved Integrated Shield Plans

Apart from MediShield, Singaporeans can also choose from several other Medisave-approved Integrated Shield Plans offered by private insurers:

1. NTUC Income
2. AIA
3. Great Eastern Life
4. Aviva
5. Prudential Assurance

Since 1 July 2005, each of these Medisave-approved plans have been integrated with MediShield to form a single integrated plan. These Integrated Shield Plans provide you with additional benefits and coverage when you opt for Class A and B1 wards in the restructured hospitals, or private hospitalisation.

Policyholders on the Medisave-approved Integrated Shield plans retain the benefits of MediShield membership, while their private insurer will service all their needs. In other words, policyholders pay their premium, and submit claims directly to their private insurer. Their private insurer will then sort out all arrangements with MediShield.

Medisave can also be used to pay for premiums of these private Medisave-approved Integrated Shield plans, subject to a withdrawal limit of $800 per policy, per year. For policyholders aged 81 and above, the withdrawal limit is $1,150 per policy, per year.

Since MediShield premiums are paid on a yearly basis, the transition between MediShield and this is effected by crediting back on a pro-rated basis the unused remainder of the MediShield yearly premium which has already been paid, and then deducting the premium of the Integrated Shield plan, whereupon the new coverage starts.

From MOH website:
The following claims return rate table shows how long it takes each insurer to process claims with positive payouts.

The phrase, cumulative claims return rate, refers to the percentage of claims processed by the insurer within one week, two weeks and one month. Note that the fifth column shows the median number of days it takes each insurer to process claims.

	Cumulative Claims Return Rate			Median claims return rate (days)
	<= 1 week	<= 2 weeks	<= 4 weeks
AIA	69%	76%	83%	4
AVIVA	77%	79%	85%	2
Great Eastern	90%	92%	94%	1
NTUC Income	93%	94%	96%	1
Prudential	81%	87%	93%	1

(1 January 2010 – 31 March 2010)

I did a bit of research into the various Integrated Shield plans. Premium-wise, NTUC appears to be the cheapest, this could be due to its mass market customer base and reputation as the "people's insurer" (according to my cousin who is with GE). Coverage-wise, they all appear to be similar, other than for specific diseases and/or certain benefits.

One other thing to take note of about these plans is that they normally have a few levels
of coverage, from Class B1 to Class A and finally to private hospitals. Also, there is usually some sort of rider available which takes care of the deductible and co-insurance portions of the bill, but this of course comes with its own separate premium. So depending on one's needs and finances, one may opt for the plan (with or without rider) which gives greatest ease of mind. After all, this is what insurance is for.

For more details:
http://www.moh.gov.sg/mohcorp/hcfinancing.aspx?id=342


Disclaimer: The writer is covered under GE since Jan/Feb 2010. This is not a solicitation to purchase insurance.

AUD Update May 2010

Reserve Bank of Australia (RBA) media release statement on monetary policy decision found below:

At its meeting today, the Board decided to raise the cash rate by 25 basis points to 4.5 per cent, effective 5 May 2010.

Recently, forecasts for world GDP growth have been revised up again, and growth is expected to be at trend pace or a little above in 2010. Conditions in Europe remain quite weak, though recent data suggest growth is becoming more established in North America. In Asia, where financial sectors are not impaired, growth has continued to be strong, contributing to pressure on prices for raw materials. The authorities in several countries outside the major industrial economies have now started to reduce the degree of stimulus to their economies.

Global financial markets are functioning much better than they were a year ago, but sovereign risk concerns have escalated significantly in Europe over recent weeks. This has prompted additional efforts by policymakers to put fiscal policies onto a sounder footing and to provide support for Greece in the near term. To date, there has been very little contagion outside Europe.

Australia’s terms of trade are rising by more than earlier expected, and this year will probably regain the peak seen in 2008. This will add to incomes and foster a build-up in investment in the resources sector. Under these conditions, output growth over the year ahead is likely to exceed that seen last year, even though the effects of earlier expansionary policy measures will be diminishing. The process of business sector deleveraging is moderating, with business credit stabilising and indications that lenders are starting to become more willing to lend to some borrowers, though credit conditions for some sectors remain difficult. Credit outstanding for housing has been expanding at a solid pace. New loan approvals for housing have moderated over recent months as interest rates have risen and the impact of large grants to first-home buyers has tailed off. Nonetheless, at this point the market for established dwellings is still characterised by considerable buoyancy, with prices continuing to increase over recent months.

Recent data on inflation confirm that it has declined from its peak in 2008, helped by a noticeable slowing in private-sector labour costs during 2009, the rise in the exchange rate and the earlier period of slower growth in demand. In both underlying and CPI terms, inflation over the most recent 12 months was around 3 per cent. Nonetheless, the extent of decline from here may not be quite as much as earlier forecast and inflation now appears likely to be in the upper half of the target zone over the coming year.

With the risk of serious economic contraction in Australia having passed some time ago, the Board has been adjusting the cash rate towards levels that would be consistent with interest rates to borrowers being close to the average experience over the past decade or more. The Board expects that, as a result of today’s decision, rates for most borrowers will be around average levels. This represents a significant adjustment from the very expansionary settings reached a year ago.

The Board will continue to assess prospects for demand and inflation, and set monetary policy as needed to achieve an average inflation rate of 2–3 per cent over time.

Third time lucky

Previously, CMA - unsuccessful
Ryobi Kiso - unsuccessful
Finally this time, Cache - successful (albeit only allotted 1 lot) =D

Yeah! Hope it has a solid debut on 12 April, Monday!

Cache IPO 7.8 times subscribed

CACHE Logistics Trust’s initial public offering (IPO) of 474.1 million units was about 7.8 times subscribed, drawing support from major institutional investors from Asia, Europe, the Middle East and Australia.

Other institutional investors who were allocated units under the placement tranche include DBS Asset Management Ltd and Fullerton Fund Management Company Ltd.

Trading in the counter on the Singapore Exchange is expected to begin at 2pm today.

At the offer price of 88 cents per unit, gross proceeds of $417.2 million have been raised.

The trust will be managed by ARA-CWT Trust Management (Cache) Limited, a 60:40 JV between ARA Asset Management and CWT Limited. CWT is also the Reit’s sponsor.

The offering comprised an international placement of about 433.1 million units, as well as 41 million units to the public in Singapore of which 14 million units were reserved for subscription by the directors, management, employees and business associates of CWT, ARA and their subsidiaries.

The real estate investment trust (Reit) will hold an initial portfolio of six properties in Singapore with a total gross floor area (GFA) of 3.9 million square feet.

The Reit will focus on expanding locally in the near term before looking at acquisitions in foreign markets such as Greater China and Malaysia.

Some of the principal unitholders of Cache include CWT (12.2 per cent), ARA, C&P Holdings, and cornerstone investors JF Asset Management Ltd and Morgan Stanley Investment Management Company.

Cache’s manager has forecast for the current year ending Dec 31, 2010 a distribution per unit of about 7.65 cents, which reflects a distribution yield of 8.7 per cent.


Cache Logistics Trust rose 8.5% on trading debut
By Jo-Ann Huang | Posted: 12 April 2010 2301 hrs

SINGAPORE: Cache Logistics Trust (CLT), the first pure logistics real estate investment trust (Reit) to be launched in 2.5 years, had a bright debut in the Singapore Exchange (SGX) on Monday.

The counter ended its first trading day at 95.5 cents up 8.5 per cent from its offer price of 88 cents.

The stock also hit as high as 99.5 cents during intra-day trading before some profit taking activity pared off part of its gains.

It was also the most actively traded counter in SGX with 149.4 million units changing hands valued at S$144.8 million.

The Reit is jointly managed by CWT-ARA Asset Management and currently has six properties with a total gross floor area of 3.9 million square feet in its portfolio.

Brokerage firms CIMB and DMG have issued upbeat reports on the Reit as well.

CIMB has an "outperform" rating with a target price of S$1.23 supported by potential acquisitions worth S$220 million.

Meanwhile, DMG has a "buy" rating with a target price of between 96 cents and S$1.09.

Citing the properties proximity to established logistics clusters such as Changi Airport, PSA Terminal and Jurong Port, the DMG analysts reiterated that the assets currently enjoy a higher than average occupancy rate of 94.1 per cent compared to the industrial average of 90 per cent. - CNA/vm

AUD / NZD Update April 2010

AUD and NZD are traditionally high-yielding currencies. Historically, foreign currencies also tend to trade within a band. Therefore, when it was reported in the news that the AUD was at a historical low, my brother and I felt it was a safe bet to park our non-emergency money there and just let it grow. Even if the exchange rate doesn't appreciate in our favour, we would still have the high interest to fall back on, not forgetting the power of compounding. However, our plan turned out to be not as foolproof as we thought and we were hit by the interest rate cuts, although Australia has started to restore them back to historical levels (see below).

SYDNEY - AUSTRALIA announced its fifth rate hike since October on Tuesday and said borrowing costs would continue to rise as growth and inflation return to normal after the global crisis.

The Reserve Bank of Australia (RBA) lifted the official cash rate 25 basis points to 4.25 per cent, underlining confidence that the country has seen off the downturn unscathed and must now work to moderate prices.

'The board judges that with growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average,' RBA governor Glenn Stevens said in a statement.

Australia was the first developed economy to lift rates after the world's biggest financial shock since the Great Depression, raising them 25 basis points to 3.25 per cent in October and a further four times since.

The Reserve Bank is now unwinding its emergency cuts of late 2008 and 2009, when interest rates were slashed by 425 basis points to a five-decade low of 3.00 per cent as the world economy tanked.

'Australia's terms of trade are rising, adding to incomes and fostering a build-up in investment in the resources sector,' Mr Stevens said. 'The rate of unemployment appears to have peaked at a much lower level than earlier expected. 'The process of business sector de-leveraging is moderating, with ... indications that lenders are starting to become more willing to lend to some borrowers.' -- AFP

Disclaimer: Rates plotted are for 3-mth fixed deposits with OCBC, and not RBA nor RBNZ rates

Portfolio Review 1Q10

This is to track the performance of my stock portfolio over the course of the year.

Currently, I am holding onto 6 counters:

1. FrasersCT
   
   • Buy
     Upcoming acquisitions of NP2 and Yew Tee Point (achieved) -> increase in DPU
     Suburban malls near MRT stations mean non-discretionary spending by catchment populations -> stable DPU
2. Suntec
   
   • Buy
     
   • Upcoming Marina Bay Sands and Esplanade + Promenade Circle Line MRT stations catalysts
     Retail strength in central CBD area
     Only mixed office and retail REIT -> diversification within a single REIT
     
3. PLife
   
   • Buy
     Low gearing -> possible debt-funded acquisitions (achieved) w/o share dilution
     Resilient healthcare sector -> stable DPU
     
4. Starhill
   
   • Buy
     Announced acquisitions of David Jones building in Perth, and Starhill Gallery and Lot 10 in KL
     Retail strength in prime Orchard area
     Share price near placement price -> downside probably limited
     
5. GuocoLeisure (2012 portfolio)
   
   • Buy
     Possible privatization by Quek Leng Chan
     Hospitality strength in London and oil royalties from Australia Bass Strait
     Proxy to hospitality sector
     Possible 2012 London Olympics catalyst
     
6. Saizen warrant (2012 portfolio)
   
   • Buy
     Probable DPU resumption in 2010 -> possible share price re-rating by market

Next portfolio review due after 30 June.

Note to self: NAV includes realised P/L, fees and dividends. Performance vs. STI measures only paper value.