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Reader:
Guocoland declared a 7cts dividend. The share price also up a lot since I followed your call in Mar. Are you keeping your investment for dividend or selling? I am sure you know a famos investment blogger sold all his shares in Guocoland already...
AK:
1. AK does not issue BUY, SELL or HOLD calls. AK is just talking to himself here in ASSI.
2. Whether AK is keeping for dividend or selling his investment should have no bearing on your decision to keep or to sell or, indeed, to buy more. Ask yourself why did you invest in Guocoland in the first instance?
3. Similarly, the fact that another blogger has sold his investment in Guocoland should not mean that you should sell too. He probably had a plan. What is yours?
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I believe that Guocoland will have the ability to pay better dividends as its flagship property in Singapore, Tanjong Pagar Centre, matures.
The fact that Guocoland has declared a DPS of 7c which is higher than the year before shows their willingness to reward shareholders better in tandem with a growing ability to do so.
To an investor for income, the ability and the willingness of a business entity to pay meaningful dividends is a key consideration in the decision making process.
Why did I invest in Guocoland at the price which I did earlier in March this year? Please see related post below.
Related post:
Invested in Guocoland.
Bloggy Award
23 comments:
I believe a lot of instances especially in recent times with the rise of many financial bloggers, many "investors" reason for buying is because a famous investment blogger just bought. Hence should the investment bear fruit or turn sour, they will have no sense or direction to close their position as the initial reason for buying lies solely on the action of another party
Evilbdboi I echo similar sentiments.People have the tendency try to mirror their investment/trades of bloggers or gurus. Perhaps they feel safer following and finding strength in numbers. but when things turn sour they start to play the blame game. I am sure AK knows it way too well. That being said I think it is okay to get investment or trade ideas from bloggers and gurus, but plans(eg: profit taking, stop loss, duration of investment) should come from oneself.
I opened a small long position with Guocoland which i bought in March after reading AK's blog for capital gains because yield wasn;t fantastic and i checked the undervaluation(way below NAV $3.18, we are talking about property play) and possibility of privatization. I second checked and AK's analysis seemed legit:P
The pass 4 years ignoring FY16, DPS was 5cents. With the property sector picking up and the increased DPS of 7cents. That is quite a reasonable to continued collect dividends(3.8% not bad) while we await the price to hit TP.
Hi AK,
Congrats on your capital gain and higher yield. Double Wins! :)
In your first post on your purchase of Guocoland, you mentioned recurring income as being applicable to Guocoland.
This puzzles me because I thought Property Developer companies have lumpy revenue (when properties are sold) and no recurring income. Where does the recurring income come from? Hope to get your reply soon.
Thanks.
Hi jojo,
You will find the answer on recurring income in the related post at the end of the blog (i.e. my initial blog on Guocoland and why I invested in it). ;)
As for capital gain, I am still holding on to my position. So, there isn't any to speak of. ;p
When I look at Capitaland and how it trades at only a 10% discount to NAV after growing its recurring income, I feel that Guocoland should, over time, trade at a smaller discount to its NAV too (which is currently $3.18 a share).
Could Mr. Market one day pay $2.86 a share for Guocoland? Day dreaming? Perhaps.
Oh, this is nice.
Maybank Kim Eng has a TP of $2.75 for Guocoland.
Small free float, low trading liquidity and lack of analyst coverage are reasons for steeper discount valuation when compared to larger peers.
Gradual stabilization of Tanjong Pagar Centre will lift recurring earnings to over $140 million a year from $40 million in FY16!
Wow!
The asking price for a new three-storey Singapore penthouse, complete with a private pool on the 64th floor, has reached a dizzying S$100 million.
Due to be formally unveiled later this year, the Wallich Residence penthouse is in the tallest building in the Republic. The “bungalow in the sky” penthouse in the GuocoLand-developed Tanjong Pagar Centre, is likely to become Singapore’s most expensive apartment.
http://www.todayonline.com/singapore/singapore-penthouse-sale-s99-million-test-luxury-markets-recovery
An article by CNBC on 29 Dec 2016 had this to say about the US Federal Reserve Chairwoman, Janet Yellen:
"The public — through business journalists and investors — hang on her every word, and what she says can move the market."
A day might soon come when this statement aptly refers to AK as well.
Hi AK,
I hope someone buys the S$100 million unit so that GuocoLand can share some earnings from it in the form of special dividends. ;P
Hi Laurence,
I will be in trouble with the authorities if that comes true.
So, I hope that day never comes. -.-"
Hi Kevin,
Crossing fingers. ;)
Hi AK, there are about 750 companies listed on SGX, how do you manage to filter out stocks that will pique your interest?
Are you always constantly reading on different companies everyday?
Hi TFM,
I get ideas from reading the news and observing what is going on in the world around me mostly. I definitely don't have the inclination to go through every single company listed on the stock exchange. I am too lazy to do that. :(
Hi AK and The Financial Monkey,
You can use a stock screener for example google stock screener https://www.google.com/finance/stockscreener. Key in your criteria and narrow down from there. ;)
Hi Kevin,
I know people who do this. Good, hardworking folks. Not like me. ;p
I checked their dividend history and found that they are paying 0.08 in 2005-2011. And then reduced to 0.05 in 2012???
So for me, there is nothing to be too excited about the counter =.=
Hi redponza,
I remind myself that all investments are good investments at the right price. Guocoland's share price went as high as $5.85 in 2007. Look at the share price now and an 8c DPS hardly matters.
As you seem to have a preference for REITs and a more consistent and higher yield, most property developers would not interest you.
40% of the group's FY18 profits to stem from recurrent sources of income.
Office tenants to move into TPC in 2H18.
Sofitel Singapore City Centre to start operations in September.
Damansara City in KL has secured 100% commitment for its office component and 80% commitment for its retail component.
Source:
https://www.theedgesingapore.com/6-growth-drivers-guocoland-fy18-and-beyond
I agree that I am more of a dividend investor :)
I do buy property stock as well but only those with yield reflecting its dividend growth rate.
How big the discount to NAV is not a big consideration for me.
So Guocoland will not be on my list unless it dropped.....a whole lot from current price.
Hi redponza,
It is the nature of their business that earnings are lumpy for property developers. So, I wonder which property developer have you bought into?
With improving fundamentals, everything else remaining equal, it is unlikely that Guocoland's stock price would drop a whole lot from here but if it should happen, it would probably be a great opportunity to accumulate.
Dear AK
I wasn't sure what redponza meant when he thinks perceive "value" with DPS and even at 30-38% below NAV he still doesn't find it attractive. If you are looking for better distribution you can consider REITS?
Guocoland Interestingly it ran up faster than expected. While it has reach a point I will usually sell( Not the price I will buy), I've decided to leave it at least for awhile more considering the current pick up in the property market, I think there is room for more upside.
Property market is cyclical and one has have the will and ability to hold it for years. Hopefully Guocoland can unlock the value of the recently purchase property :D:D:D
JQ
Hi JQ,
I always welcome a good discussion based on sound reasoning.
However, for many people, it is difficult to maintain objectivity 100% of the time.
I try to remember that as long as our decisions are based on sound reasoning, we should do well enough most of the time.
We don't have to agree all the time. :)
Hi AK,
Do you think their 7 cents DPS is sustainable going forward ?
Hi betta man,
I based my investment decision on a more normalised 5c DPS.
Anything higher is a bonus. ;)
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