Quek Leng Chan ups stake in Guocoland. Is AK buying? (How much exposure to property developers does AK have?)

Someone asked me if I would be increasing my investment in Guocoland recently as it is still trading at a big discount to NAV.

In fact, he also asked if I would be increasing my exposure to the property sector since interest rates look like they will stay low for some years to come.

Although I like undervalued investments, there is always the possibility of such investments staying undervalued for an extended period of time.

Some readers might have noticed that this is usually the case with property developers.






My preference is, therefore, to invest in property developers that are able and have shown a willingness to reward shareholders with meaningful dividends.

The wait can be a long one and being paid while we wait makes it more affordable for most people.

Guocoland is a pretty good fit.

Since becoming a shareholder of Guocoland, I have received three rounds of 7c DPS.

Dividend yield is about 3.8%.

That is pretty decent for a property developer.








I became a shareholder of Guocoland in 2017.

That was when I noticed persistent insider buying and decided to do an incomplete analysis.

Then, I decided to invest in Guocoland which was trading at a hefty discount to valuation. 

Well, there is more insider buying now.

Following recent purchases, Mr. Quek Leng Chan's stake in Guocoland increased to almost 72%.

Although paying a price of $2.05 a share is more than 10% higher compared to what we paid back in 2017, the price is still a big discount to the NAV of $3.47 a share.






I am quite happy to hold on to my investment in Guocoland but I won't be adding now.

Reason?

Although individually my investments in property developers are not big enough to be in my list of largest investments, collectively, they are.

So, which property developers am I invested in?

They are:

1. Guocoland
2. Ho Bee Land
3. Hock Lian Seng
4. OUE
5. Perennial Holdings
6. Tuan Sing
7. Wing Tai

(If you want to read my past blogs about these entities, click on their names above as they are hyperlinked.)






Based on market value, together, they probably account for a sizable chunk of my investment portfolio.

For a retiree like me, I feel that is enough exposure to property developers.

For sure, I do not know when value would be unlocked and this unknown makes limiting the total investment exposure to 10% of my portfolio or lower sensible.

What if value is not unlocked in my lifetime?

Hmmm...






Although I am not interested in increasing my exposure to property developers, I have increased my investment in the property sector by putting more money into the following business entities not too long ago:

1. IREIT
2. Centurion
3. Accordia Golf Trust

(If you want to read my past blogs about these entities, click on their names above as they are hyperlinked.)






It should be obvious that the ability to generate a meaningful recurring income stream has always been an important consideration for me.

It has become more so as I grow more settled into my early retirement.

Of course, I am only doing what makes sense to me.

Others have to do what makes sense to them.

Oh, totally unrelated, I watched the following video by CPFB and had a good laugh:





Related post:
Largest investments updated (4Q 2019).

Voluntary contribution to CPF MA in 2020.

This blog is more of a personal reminder to do a voluntary contribution to my CPF MA in early January 2020.

Remember that interest earned this year in our MA will go to our SA if our MA is at maximum (i.e. 2019's Basic Healthcare Sum or BHS which is $57,200).

If our SA is at maximum or is in excess of the FRS, the interest earned this year in our MA will go to our OA.

So, at the start of 2020, we can do a voluntary contribution to our MA to hit 2020's BHS which is $60,000.





How much to contribute exactly?

2020's BHS $60,000 

minus 

2019's BHS $57,200 

= $2,800 

For those who are gainfully employed and paying income tax, remember that voluntary contributions to our MA will enjoy tax relief as well.

For me, being retired, I will not get any tax relief but I will enjoy more interest income like anyone else from my MA with this move.

How much interest will $2,800 earn in a year?

At 4%, that is $112 a year.

I like this.

Be inspired by Mr. Clarence Heng's life experience and his CPF story.






Of course, for most of us, money is a limited resource.

We can choose to save more or spend more.

I choose to save more and, in this case, to have free H&S insurance too.

Watch the video and learn more about Medishield Life which provides us with basic healthcare insurance for life.






Underestimating the power of compound interest is one of the biggest mistakes anyone can make.

Of course, if you are very rich and not like the most of us, please ignore this blog.

So, how does the power of compound interest grow our savings?

AK is lazy to explain lah.

Watch the video.






Make full use of our CPF membership and we are taking a big step towards a financially secure retirement.

Believe it!

If AK can do it, so can you!

Believe in yourself!

Believe that you can do it too!

Related posts:
1. Voluntary contribution to CPF MA in 2019.
2. How to do online contribution to CPF?
3. How to get free medical insurance in SG?






Is there a maximum amount I can save in my Medisave Account?


"You can save up to the prevailing Basic Healthcare Sum (BHS) in your MediSave Account if you have not turned age 65.

"The BHS from 1 January 2020 is $60,000 for all CPF members aged 65 years old and below in 2020.

"The BHS applicable to you will be adjusted yearly to account for increasing life expectancy and healthcare costs until the year you turn age 65.

"For instance, if you are aged 65 in 2020, the BHS that is applicable to you will be $60,000 for the rest of your life."

Source:
CPF Board.