Saizen REIT: Acquisitions and long term loans.

Although I divested a large part of my investment in Saizen REIT, I still like the idea of owning freehold residential real estate in Japan where two thirds of its population rent the homes they stay in.

The Japanese Yen has strengthened against the S$ quite a bit and this could translate to higher income distribution in 2012 for unitholders. Add YK Shintoku's contribution to income distribution and the recent acquisitions which were funded by debt, we could see DPU a bit higher than my last estimate of 1c. Whether the difference is going to meaningful would also depend on how many remaining warrants would be exercised before the next distribution.

I have said that I like the amortising feature of the loans taken by the REIT before. What I also like are the relatively long terms of the loans taken by the REIT. This logically lowers refinancing risks.

The REIT recently took on a loan of JPY500m which partially funded the acquisition of a property in Kumamoto. This is an amortising loan with a 20 years tenure. The interest rate is 3.35% per annum.

For any investor who bought at 13.8c/unit today, if I were to stick to an estimated DPU of 1c per annum, we are looking at a distribution yield of about 7.25%. Of course, I am hoping for a higher DPU.

REITs, NOL, ARA and Hyflux.

Hope everyone had an enjoyable long weekend and is not missing the holidays too much.

The bullish movement in the stock market should put smiles on the faces of long holders. Has the bear been vanquished? I think it is too early to think so. So, we might want to make use of the bullish sentiment to lighten our long positions.

For me, I am still heavily invested in selected S-REITs as they could continue to deliver predictable passive income even in a zero growth environment. This is quite different, however, from thinking that S-REITs' unit price would not suffer in tandem with the broader market in the event of a crash. Indeed, it would be naive to think so although, with stronger balance sheets, we should not see the same magnitude of decline as in the last global financial crisis.

If we believe that money should go to where it is treated best, any significant decline in the unit prices of the S-REITs in my portfolio would tempt me with higher yields to add to my long positions. For now, I am keeping the status quo with regards to my S-REITs portfolio.

What about lightening my long positions? Share prices of certain companies went up quite a bit yesterday and I tried to sell some.

Today, my sell order for NOL at $1.22 was filled. With this partial divestment, I made some pocket money from Mr. Market. Why $1.22? That was the high of early September. Indeed, a safer resistance to sell at would be $1.18 as it has been tested many times. I took a chance that the buying momentum could push price pass $1.18 and it paid off. Indeed, price touched a high of $1.23.

However, the formation of a shooting star on the back of higher volume today suggests that NOL's share price could be heading lower from here. If $1.18 cannot serve as support, we could see price retreating to $1.10 which is where we find the 50d and 100d MAs merging.

I was not so lucky with another two counters, ARA and Hyflux.

People would say that ARA's trading volume is so thin most of the time that TA is inaccurate here. I didn't really bother using TA this time as I simply remember selling at $1.30 the last time and tried to do it again this time. Its share price did touch $1.30 last evening but my sell order was not filled. Trying to sell again today at $1.30 proved to be futile.

Well, it is back to the waiting game. If $1.30 should be taken out, I wonder if the next target is $1.45? Allow me my little day dreams.

As for Hyflux, the many white candle days on the back of expanding volumes led me to think that we could possibly see gap closing at $1.365 or even see a test of the support turned resistance of $1.39. Deciding not to be too greedy, I entered a sell order at $1.36. Unfortunately, it turns out that I was still too greedy.

Anyway, looking at the chart, immediate supports are at $1.24 and $1.225. The formation of a black candle on the back on lower volume is good news for long holders. However, that the black candle covers more than half of the preceding day's white candle is ominous. The MACD is rising strongly but it is still in negative territory. So, things could go awry.

I partially divested some of my investment, locking in a small gain in the process. I am just simply managing risk here by reducing exposure. If price should continue its upward trek, I would still stand to gain.

Finally, turning our attention away from the stock market, I have put up new blog posts on my recent trip to Japan. See them at Travel Photos and Videos. More to come. :)

Outside Lumine, Shinjuku. Kitty, "Hey! You can do it!" Believe it!

Related post:
Hyflux: Broke resistance.

Happiness in 2012.

The new year is just hours away.

I took this photo in Ueno Park during my recent trip to Japan. The scene has a calming and pleasing effect on me.

Bicycles are important transportation vehicles in Japan. I smiled when I saw this bicycle.

Daibutsu in Kamakura. "If one speaks or acts with pure thoughts, happiness and peace of mind will follow."

This helpful sign outside a shop solicited a hearty laughter from me.

Very often, simple things can make me happy.

May all of us find happiness every single day as we celebrate the simple things in life.

Happy 2012.

Hyflux: Broke resistance.

On 15 Dec, I said, "Right now, $1.065 is immediate support provided by the 123.6% Fibo line. A stronger support would be at $1.015, the 138.2% Fibo line and a golden ratio."

Hyflux's share price touched $1.015 on 23 Dec, forming a white spinning top at the end of that session. A positive divergence was also formed in the process. A lower low in price and a higher low in the MACD. A buy signal. Congratulations to anyone who went in on the long side then! (I think I was visiting museums, temples and shrines in Ueno that day.)

Its share price has overcome the resistance provided by the 20dMA. Any further increase in share price will see resistance at $1.22 (the high in early December) and $1.24 (as provided by the declining 50dMA).

There is, however, no sign of a trend reversal in the weekly chart. So, conventional wisdom would suggest selling into strength instead of holding. If $1.24 could be overcome convincingly, there is a chance that the declining 20wMA which would approximate $1.39 next week could be tested. This would coincide with a natural candlestick support. Whether it would happen would depend on the strength of this rebound.

A partial divestment at immediate resistance could be prudent although the very high volume that accompanied the formation of the long white candle in the weekly chart holds promise for long holders. Good luck to fellow shareholders.

Related post:
Hyflux: Continuing downtrend.

A common piece of advice on saving.

I want to say something about a very common piece of advice dished out by many financial advisors and that is to save at least 10% of our take home pay. 

Now, this is an easy enough one liner but is it easy to put into practice?






For me, however, I have always said that saving even 10% is too little. Of course, everyone's circumstances are different. 

So, for some, 10% is all they can manage. For some, even 5% could be a challenge. I have found out, over the years, that many do not save anything at all.

For people who are saving 5% to 10% of their salary every month, they want to work on increasing that percentage. For those who are not saving anything at all, it is worrisome indeed.




These people should sort out their needs and wants and see if they could start saving some money regularly. 

If they have made all possible reductions to their expenses, they might want to find ways of increasing their incomes. This will power up their savings rate assuming that all additional income earned is saved.

It might sound trite but saving is the very first step in an average person's journey towards financial freedom. Remember, it is always hardest in the beginning. Start and don't stop. As we gather momentum, it gets easier with time.

Remember Newton's first law? Yes, it is the law of inertia. Without exerting a force to make a change in our lives, we will remain where we are and inertia is bad company. Once we force ourselves to move and stay the course, inertia becomes a good friend.

Remember also the POSBank mascot, a squirrel. We were always encouraged to save in our school days. There is no reason why we should stop once we leave school. 

Squirreling away even a small amount each day would definitely add up. The result could be amazing when coupled with prudent investments.





Shall we perhaps start with that drink we always buy in the canteen during lunch? Could we instead drink from the water fountain in the office or make a cup of coffee in the office pantry?

Saving $1 each working day would mean $20 a month or $240 a year. A cup of coffee from Starbucks would cost many times more. Quite unhealthy too, in more ways than one. Seeing stars?

Invest the $240 for a 10% yield and we would have 24 cups of "free" coffee in the following year. If we like Starbucks' coffee, it would work too.




Now, assuming Starbucks' coffee costs five times more, if we should be willing to "downgrade", we could be looking at 120 cups of "free" coffee instead of just 24. Downgrade? Another sacrifice? If we can live with it, why not?

Trust me when I say that frugality has a way of growing on us. Saving $240 this year might yield 24 cups of "free" coffee in the following year but once we are used to not paying for coffee as a working adult, we could have "free" coffee for the rest of our lives when we finally retire. Amazing, isn't it?

Sacrifices made today could transform into huge gains over time. Believe it.




Related posts:
1. Wage slaves should be fearful.
2. Do you want to be richer?
3. Seven steps to making passive income from the stock market.
4. Roads to wealth creation in the stock market.