ASSI is too slow or so they say.

Someone told me that my blog takes forever to load. So, being somewhat concerned that this could be the case for more than just one person, I decided to read up on the topic.

I am not a savvy person when it comes to IT but Google makes it easy for people like me. So, why is a fast loading speed important?

Why do people want to go everywhere in a hurry?
Take it slow. Take in the sights.

Google says "The speed at which your blog loads is critical to attracting more readers to your blog. If your blog takes a long time to load, many readers may leave your blog before they have the chance to read it." This makes sense. We humans are an impatient lot. We want instant gratification!

Next, I used PageSpeed to do a health check for ASSI. Here is the link: PageSpeed.

Click on "Analyse your site online" and enter the blog's URL. Easy.

The analysis will give the blog a score. A higher score indicates little room for improvement. ASSI scored 93 out of 100. Yeah!

However, the PageSpeed Score does not measure the time it takes for a page to load. Oh...

OK, you will love this website I found that will tell you exactly how long it takes for a webpage to load. Here is the link: Stopwatch!

ASSI today took 6.8 seconds to load. That is not too bad, I feel, especially when we take into consideration that I embedded two videos today. Without the videos, the loading speed should be faster.

I think I shall suggest to the complainant to get a faster internet connection. (wink)

Related post:
Bloggy Award
(I dug out this really old blog post dated 9 January 2010. I was so fresh to blogosphere then.)

Volkswagen New Golf 7 2013.

A friend told me about this one. Really amusing:



Already a very successful auto company, I believe Volkswagen is set to make even more money this year. Having cute ads like this one doesn't hurt.

Volkswagen is likely to overtake GM and Toyota in 2014 with sales exceeding 9.4 million vehicles to become the world’s No. 1 automaker!
Source: Bloomberg, 28 December 2012.

Related post:
A new car for S$75,000?

Make money from your hobby.

I have blogged about how we should run our lives like a business. We should try to increase our revenue while keeping costs down. Like what the blogmaster of Bully the Bear says, there is only so much we can do to cut costs. So, we should consider ways to increase our revenue to build up our savings!

Now, most of us have full time jobs. We could possibly be formally employed in the evenings as well and make it two full time jobs, if our employer allows it. I was doing it for a while at one time.

We could also take on another job that requires us to work only on weekends to make it three full time jobs! We would be very productive but I guess we could be quite miserable too.

Why not make money from doing something we enjoy instead? All of us have hobbies, right? Why not make some money from our hobbies?

Here are some resources I found as I was going through the catalog in BetterWorldBooks.

If you enjoy writing, why not try writing a book in your spare time?
How to Publish Your Book and Immediately Make Money

Enjoy music and performing on stage? Could you make money from this?
You Can Make ... Money in Mu$ic

What about people who are good with a needle and thread?
You Can Make Money from Your Hobby: Building a Business Doing What You Love

If you are a homemaker (which covers both housewives and househusbands) and would like to make some money but are unable to leave your home, there are certainly some things you could do.
How to Make Big Money Without Leaving Your Kitchen: A Homemaker's Guide to Moneymaking Opportunities

While cleaning out your home, you found stuff you have not used or even set eyes on in years?
How to Make Cash Money Selling at Swap Meets, Flea Markets, Etc.

If you have an inclination towards doing everything online, you could be amply rewarded for your efforts.
How to Make Money Online with Ebay, Yahoo!, and Google: A Step-By-Step Guide to Using Three Online Services to Make One Successful

Spend some time thinking about what you are good at and what you enjoy doing.

You might be amazed how you could moneytise your talents and hobbies, all the while having fun. Make more money without holding down another full time job? Why not?

Related posts:
1. ASSI is an affiliate of BetterWorldBooks.
2. Do you want to be richer?
3. The very first step to becoming richer.
4. 7 money habits of AK71.
5. Save money with low prices and free shipping.

Something only Singaporean males know.

The uniform looks different. The helmet looks lighter.

SCS is new. It was SAFINCOS during my time. Yes, a mouthful.

ORD is new. It was ROD to me.

However, the scenes are familiar except for the SOC (standard obstable course). Looks like it is more fun. OK, I better not say anything else in case someone issues me a challenge to try it.



Maybe, I should go catch the movie.

Related post:
AK71 gets recognition from the government!

Can Singapore really house 6.9m people?

I have been careful not to blog about politics but I just need to get this off my chest.

Let me say first that I am neither pro PAP nor WP nor any political party. I will vote for anyone who will do the job right. Although the PAP has a good pedigree, in the last few years, its performance has been wanting and the people spoke with their votes in the last GE.

I feel that 6.9m people would make Singapore really crowded and I don't like crowds for many reasons.

I find driving in Singapore really stressful in the last few years. It used to be a breeze driving here just ten years ago or even just five years ago. I used to tell people that staying in the west and working in the east was better because the jams on the roads were always in the other direction as most people were staying in the east and working in the west. Not anymore. Now, it is jammed in both directions!

So, on some days, I would try to take the MRT instead. Oh, the nightmare! Even our newest Circle Line has problems. I was personally affected by breakdowns twice in the last 6 months and for a person who rarely takes the MRT, I am either very unlucky or the system has some serious issues.

Well, they are doing road and expressway widening on top of buildng new roads and a new expressway. All these should help to make traffic conditions better at least in the near future.

Also, they seem to be spending a lot of time and money on improving the reliability of the MRT system but it is going to take a year or two apparently to complete the upgrades and repairs! Till then, expect more breakdowns.

Overcrowding aside, what I am really concerned about is the cost of living in Singapore.

A friend's dad who is in the real estate development business told him the day Singapore has 6.9m people, everything will become very expensive just like in Tokyo. I shudder at the thought.

The PAP government should not squander away the chance that it has been given to set things right or it could see its majority shrinking again in the next GE. Could we then see a situation in Singapore like what we see in Malaysia now?

Till the next GE, let us see if the PAP government does better. In the meantime, we should do what we can to safeguard our own financial health.

DJIA's above 14,000! What to do?

The Dow Jones ended above 14,000 points for the first time in more than 5 years! Could it go higher? Are retail investors coming back in a big way?

"I would say in the 30 years I've been watching it, this is the least amount of retail interest waiting for a pullback, or waiting to jump in that I've ever seen," said Scott Wren, senior equity strategist at Wells Fargo Advisors, which focuses on retail investors. "Probably and unfortunately for a lot, it's going to be a lot higher before they get in."

Wren said the move to 14,000 is at most psychological and won't be that important to disenfranchised investors. "When you run into people at parties, unless they're in the business ... the stock market isn't even a point of discussion. There's very little conversation. There's very little excitement about the market," he said. "It feels to me like there's a little bit of chasing going on, but not very much at all. I don't expect it any time soon."

Source: Yahoo! Finance.



We are but frogs in wells. We see what we believe to be real.

As long as there are still investors out there who are sceptical of the stock market, who are heavy in bonds and cash for their perceived safety, there is room for stocks to go even higher. When everyone is bullish on stocks, when there is no one left who would stay away from the stock market, then, the fuel is spent.

So, pick out a few good stocks which are still undervalued and hold on to them. However, this does not mean that we should avoid trading for some short term gains in the meantime. After all, share prices climb a wall of worries in an uptrend and do not go up in a straight line.

Related post:
1. Noises, voices and choices.
2. Be comfortable with being invested.
3. Tea with AK71: A frog in a well.

Marco Polo Marine: Negative divergences.

Although the fundamentals of Marco Polo Marine are sound and its future looks bright, Mr. Market is not known to respect fundamentals. Mr. Market is a creature of sentiments.

Technical analysis provides a window into the collective psyche of market participants and when there are negative divergences aplenty, we should exercise caution when thinking of initiating a long position or adding to a long position.

The presence of negative divergences does not mean that the share price will definitely weaken. It does not mean that the share price will not go higher. It just means that the risk of a retracement is now higher.

So, how do we respond to something like this?

Personally, I have not divested any of my shares of Marco Polo Marine. I am that confident of the company's prospects. In fact, if there should be a pullback to supports, I am likely to add to my long position.

So, is buying on pullbacks at supports a sure win strategy? Not at all. Supports could break and price could go lower! If that disturbs you, you might want to hold on to your money. However, if price should rebound and go higher, would you kick yourself if you had held on to your money?

If the fundamentals are sound, lower prices would present greater value. Why wouldn't we buy? The trick is in buying at supports and pacing ourselves as we do so. Don't throw in everything including the kitchen sink at the first support on retracement.

Some would say to wait for clearer signs of an upturn before adding to long positions. That, I feel, would work better in a downtrend. In an uptrend, buying at supports on pullbacks is what I would do. Go back one blog post and you would know what I mean.

Finally, just to add the confusion, technical analysis shows where the supports and resistance are but there is no guarantee that these would be tested at all. This is where hedging comes in. Something to think about over the weekend, perhaps?

Related post:
Marco Polo Marine: Looking into the future.

CapitaMalls Asia: New 12 month high in the making.

The share price of CapitaMalls Asia has been rising and with strong momentum too. Amidst bullish calls by research houses, I would not be surprised if its share price were to go even higher.

Citigroup adds CapitaMalls Asia (JS8.SG) to its Focus List.

"In the next few years, we expect China to be the key driver of CMA's earnings growth, as the company harvests gains from multi-year investments that have expanded its footprint to 36 cities in the country. The majority of the China portfolio is still in the growth stage, or in the process of stabilisation. India, from a low base, also offers significant upside potential," it says, expecting its Singapore exposure offers a visible stream of recurring income.

CMA's competitive advantages in China can't be easily replicated, including a strong brand equity and solid track record as a first-mover, ability to tie up with other local developers and access to a varied, cheaper pool of financing, Citi says.

"Moreover, CMA has an efficient capital recycling model (via three listed REITs and six private real-estate funds) that enables capital to be freed up for future growth opportunities, which offers upside to our earnings estimates." It tips CMA as its preferred pick among China's retail landlords and within Singapore's developers. It raises its target to $2.58 from $2.08 after increasing RNAV on changed China cap-rate assumptions; it keeps a Buy call.

Dow Jones & Co, Inc

Friday, 01 February 2013

Today's long white candle day formed on the back of heavy volume is a good sign. Overcoming immediate resistance at $2.24 could see price hitting $2.41 next.

Related posts:
1. CapitaMalls Asia: To buy on possible weakness.
2. CapitaMalls Asia: Any correction is a buying oppotunity.
3. CapitaMalls Asia: Buy more at $1.93.

Yongnam: Partial divestment at 27.5c.

Further weakening could see 25c tested as support. It is also where we find the 50% Fibo retracement line.

I decided to lock in some gains yesterday at 27.5c as price spiked very much higher on the back of heavy volume. I did this as, although Yongnam is a fundamentally sound company, my portfolio is too heavily loaded in the stock.

Related post:
Yongnam: Looking forward to further weakness.

Sound Global and China Minzhong: Retracing.

Sound Global is going through a low volume pull back now but with the CMF negative and forming a lower low, I was probably too hasty in adding to my long position today at 66c.

Let us see if 64.5c is tested next. I have an inkling that a very strong support is at 61.5c, the many times tested resistance in the middle of 2012. 

59.5c would be an even stronger support as that is also where we find the 100w MA. In the short term, there could be further weakness but in the longer term, I see strength.

China Minzhong is taking a breather too. Immediate support is at 96.5c. If that should go, the next support is at 87.5c.

Related posts:
1. Sound Global: Another resistance level broken.
2. China Minzhong: Partial divestment at $1.01.

AIMS AMP Capital Industrial REIT: 3Q FY2013 DPU 2.58c.

The management declared a DPU of 2.58c for 3Q FY2013 as it pays out 100% of taxable income for the quarter. Note that this includes 0.05c from a tax adjustment.

So, removing this, a more accurate DPU from its business is 2.53c for the quarter.

NAV/unit: $1.469
Gearing: 33.6%
Interest cover ratio: 4.6x
No major refinancing needs till FY2016.

Total Assets: $1.048 billion

Occupancy: 98.5%
Average security deposit per property: 6.8 months
Average land lease expiry: 40.4 years

The management impresses with securing lease renewals from its tenants way ahead of expiries and with positive rental reversions to the tune of 23.5% on average to boot.

Currently, only 6.3% of leases are expiring in FY2013 and only 8.3% of leases are expiring in FY2014. Managing to renew these leases and with a corresponding increase in rental could bump up subsequent DPU.

Of course, the completion of phase 2 in the redevelopment of 20 Gul Way by end of this year and the completion of redevelopment of 103 Defu Lane 10 in the middle of next year will bump up DPU more significantly, everything else remaining constant.

In the near term, expect DPU to improve in the next quarter as income from phase 1 of the redevelopment of 20 Gul Way will be recognised then. I would not be surprised if the unit price of the REIT goes higher as the market takes this into consideration.

The REIT has many more properties with under-utilised plot ratio like 103 Defu Lane 10. Selectively re-developing these plots will lead to higher NAV and NPI over time.

Like I said before, this could be another A-REIT in the making and spells good news for loyal unit holders.

The REIT will go XD on 7 February 2013 and the income distribution will take place on 19 March 2013.

At $1.58 a unit, annualising the adjusted DPU of 2.53c, the distribution yield is 6.4%. 

Doing a projection into 2014, however, I expect that this is set to increase, assuming that the unit price remains where it is today.

See presentation slides: here.

Related post:
AIMS AMP Capital Industrial REIT: 103 Defu Lane 10.

Marco Polo Marine: Looking into the future.

I think readers have heard enough from me on how I am positive on Marco Polo Marine ever since I started blogging about it after discovering persistent insider buying last year.

See:
Marco Polo Marine: Persistent insider buying.

Let us hear from some other people:

On the financial performance for Q1 FY2013, Mr Sean Lee Yun Feng, CEO:

“We are heartened by the set of results attained for Q1FY2013 amidst subdued market environment. The performance was consistent with our corporate strategies premised on four growth platforms which will continue to underpin our performance moving forward.

“On the shipyard front, our focus in securing projects with increasing sophistication is expected to continue to distinguish ourselves from competition.

“With regard to ship chartering, our deliberate shift in focus towards offshore oil and gas sector is expected to enhance contribution to both our chartering profits and margins. To this end, we have added a new OSV built by our Batam shipyard to our offshore fleet since mid-October 2012 and have had it chartered on a time charter basis.

“The recent successful listing of BBR on Indonesia Stock Exchange augments the Group’s focus to further penetrate into the Indonesian oil and gas sector. Apart from enabling BBR to reach out to a wider base of customers, the listing also makes avail more funding avenues to enhance the growth of BBR. With BBR now being our subsidiary, we will further align the offshore operations more closely as a group for better synergies.

“Last but not the least, our focus to generate profits through strategic alliances is beginning to bear fruits as well. Notably, our recently forged jointly controlled entity which engages in the bunkering logistics business has contributed to the bulk of the 57.1% increase in the share of results from jointly controlled entities”.

See: Media release.

OCBC Invesment Research, 28 Jan 13, on the results:

Marco Polo Marine (MPM) reported a 38% YoY drop in revenue to S$15.2m but saw a 3% rise in net profit to S$4.5m in 1QFY13, such that the latter formed about 20% of our full year net profit estimate, within our expectations. The fall in revenue was mainly due to slower progress in newbuild orders, resulting in lower shipbuilding revenue. This was offset by higher ship repair turnover, which grew 75.5% to S$8.6m in 1QFY13.

Ship chartering revenue fell by 5.2% to $5.5m with the mandatory docking of an offshore vessel. Overall gross profit margin, however, increased from 25% in 1QFY12 to 39% in 1QFY13 with a higher proportion of ship repair revenue (generally commands higher margins compared to ship building). Fair value estimate of S$0.56 under review.

OSK Research, 28 Jan 13, on the results:

Topline fell 38% but profits up 3%. Gross margin jumps from 25.2% to 38.6%. Most of the $9.4m fall in revenue to $15.2m was due to shipbuilding revenues falling 92% to $1.1m, while ship repairs grew 75.5% to $8.6m. The fall in shipbuilding revenue is mostly due to accounting procedures – last year, MPM could recognise 49% of shipbuilding revenues for BBR, but that vessel has been delivered and going forward due to consolidation it no longer can. Nevertheless, with a much greater share of revenue coming from high-margin businesses like ship repair and OSV-chartering, the gross margin jumped from 25.2% to 38.6%, flowing through to the bottom line for a 3% increase in net profit to $4.5m, in line with expectations as 1Q and 4Q are seasonally the weakest quarters.

Financially stable. Net gearing is low at 28.5%, and although net working capital looks negative at -$16.5m, most of it is due to the cheap short-term debt which at $35.7m forms 56% of current liabilities. MPM has no problems refinancing this due to its low gearing and the interest coverage this quarter of 13.5x.

15-20% charter rate premium in Indonesia. Our industry sources inform us that charter rates for OSVs and tugs & barges in Indonesia enjoy a large premium compared to regional rates, due to the massive shortage created by the cabotage law. With only four modern AHTS vessels of >8000bhp in the whole of Indonesia, and MPM effectively owning two, this is MPM’s most promising source of high-margin growth.

Maintain Buy with TP $0.61, MPM valuations look ready for catch-up. We continue to value MPM at 9x FY13F EPS for a TP of $0.61. For the last year, MPM has been trading below book value while it delivered a 23% jump in profits over the year. We expect MPM’s valuation to break out and catch up to the other oil & gas plays. The recent +51% performance of XMH – which similarly draws most of its revenues from Indonesia – gives us confidence that the market is beginning to revalue companies with strong earnings that ride on the growth of Indonesia.

My take?

When Marco Polo Marine's OSV chartering business in Indonesia takes off in a big way, the higher margins enjoyed now will translate into really impressive earnings. Patience will be rewarded.

Although I bought more recently at 40c and 40.5c, if Mr. Market should send share price lower again, I hope I would be brave enough to buy more.

Related post:
Marco Polo Marine: Still cheap.

AIMS AMP Capital Industrial REIT: 103 Defu Lane 10.

Readers might want to do a recapt before continuing:

1. AIMS AMP Capital Industrial REIT: Insights
(dated 30 March 2011)
2. AIMS AMP Capital Industrial REIT: Making money
(dated 3 July 2012)

With phase 1 of 20 Gul Way's re-development completed, the management of AIMS AMP Capital Industrial REIT is going ahead with another re-development. This time it is at 103 Defu Lane 10, a site with a land lease till 2043.

It has been disclosed that the re-development will be fully funded by debt. So, upon completion in mid 2014, we can expect DPU accretion. Not only is this the case, the new property will be some $30m higher in value compared to the current property on site.

I shan't say too much as readers could look at the presentation slides which are self explanatory: here.

The management of the REIT continues to impress under George Wang's leadership, no doubt. This could be another Ascendas REIT in the making and loyal unit holders would be amply rewarded.

"How to tell if you are rich" by Alexander Green.

I would like to share an article titled "How to tell if you are rich" which was published 4 days after my blog post titled "If we are not rich, don't act rich!"

Although the writer used the USA as a backdrop, providing some numbers to show what households in the top 20%, 10%, 5% and 1% in the USA make and have, the ideas on wealth building are universal.

If we own a car like this, we are rich, aren't we?

Alexander Green is the name of the writer and I like his style!

If our households are amongst the top earners in the country, do we run the risk of being "demonized by those who view hard work and risk-taking as a matter of good genes and good fortune"?

If our households are amongst those with high net worth, do we run the risk of being "frowned upon by redistributionists who resent folks that live beneath their means, save regularly and handle their financial affairs prudently"?

Instead of complaining about how we are not rich when others are, try to be rich!





See if what Alexander wrote sounds familiar:

How do you get rich if you aren’t currently?

The basic formula is pretty simple: 

1. Maximize your income (by upgrading your education or job skills). 

2. Minimize your outgo (by living beneath your means). 

3. Religiously save the difference. 

4. And follow proven investment principles.





Most millionaires – folks with liquid assets of one million dollars or more – are not big spenders. Quite the opposite, in fact.

...the most productive accumulators of wealth spend far less than they can afford...

The wanna-be’s, on the other hand, are merely “aspirational.” ..... Their problem, in essence, is that they’re trying to look rich. This prevents them from ever becoming rich.





I like how Alexander ended his article: "If you want to be rich, you have to stop acting rich… and start living like a real millionaire."

Read complete article by Alexander here:
How to tell if you are rich.

Related posts:
1. If we are not rich, don't act rich!
2. The very first step to becoming richer.
3. Retiring a millionaire is not a dream!

First REIT: DPU of 0.7c.

First REIT issued 30,900,000 new units last November at 95c each to help pay for a couple of acquisitions in Indonesia. An advance distribution of 1.02c was paid for the period 1 Oct to 25 Nov.

The DPU of 0.7c announced is for the period 26 Nov to 31 Dec.

The management expressed confidence that contributions from the two new properties would boost the REIT's net property income in 2013. The full impact would be felt from 1Q 2013 which means that we would be able to tell in the next quarterly report if DPU would see a substantial increase.

When I blogged about the private placement in November, I was concerned that we would see a reduction in DPU, post placement, using the pro forma numbers provided by the management then.

Now, it seems that, apart from the maiden contributions from its two recent acquisitions in Indonesia, the REIT enjoyed higher rental income from its existing properties in Indonesia, Singapore and South Korea as well.

If I were to do a quick back of the envelope calculation using the latest DPU of 0.7c as a guide, I would say we could actually see a quarterly DPU of as much as 1.75c in 2013. This would mean an annual DPU of 7c.

Therefore, my fear of a reduction in DPU due to the dilutive effects of the earlier mentioned private placement has been allayed or so it would seem.

Interest cover ratio: 12x

Gearing level: 27.1%

With the management steadfast in its vision for a S$1 billion portfolio over time, although the REIT's balance sheet is strong, we could see more fund raising in future.

With unit price well above NAV/unit, it has become cheaper for the REIT to raise funds by issuing new units now. So, future private placements or rights issues cannot be ruled out.

See presentation slides: here.

Related post:
First REIT: 30,900,000 new units.

If we want peace, be prepared for war!

Next crash to be worse than 2008.

I had an email exchange with a reader who, amongst other things, asked me to elaborate on an often used phrase in my writings. I feel that his questions are pertinent and as there could be other readers who might have similar questions, publishing our exchange is probably a good idea.




Reader:

Hello Mr AK71, .... I am an avid reader of your ASSI blog.

First I want to say a big thank you for the many posts you have written, they have been extremely insightful to so many of us who are still learning about investing. Your guidance and advice is very much appreciated.

I have a question regarding a piece of investing advice you gave us some time ago, I hope you can enlighten us!

In several of your posts earlier this year and last year, you mentioned that we should always have a "war chest" ready should good opportunities come and we can use it generate good returns. ie buying low.

My first question is, what would you say will be a good percentage ( of one's total assets used for investing, ie both cash and stock ) for a person to put aside for such an opportunity ?

My 2nd question is, surely the opportunities you mentioned come once in a blue moon ( ie during times of recession, etc, ), and for small time investors such as myself, putting aside a considerable amount of cash while waiting for such opportunities seems "wasted" when it can be put into actual investments to generate passive income in the meantime.

To paraphrase, I fully understand your idea of a warchest, but I am in a dilemma as I would like to utilize all my available funds I have set aside for investing to maximize my passive income, and setting aside a considerable amount of cash while waiting for such opportunities doesn't seem like the best use of my money.

What is your take on this ?

I have one final question - Would you recommend investing using the extra cash one have in cpf ? ( the money after all, is just sitting there. )

I was thinking of investing it in relatively safe assets like SREITS.
Thank you so much for your time.

Lake Ashi, Hakone, Japan.

My reply:

I am glad you have enjoyed my blog and found the posts insightful. :)

I also have questions for you.

Do you believe in insurance?

When we buy insurance, we are protecting ourselves against bad things which could happen. If we know that bad things would definitely happen, would we buy insurance? More so, we would buy insurance, wouldn't we?

A war chest is like having insurance. Do you think there would be another bear market? If you think there would be, why won't you need to have a war chest?

If you think this through, you would realise the importance of having a war chest (or a few).

How large should your war chest be? This is up to you. It should be large enough to make a difference during bad times but not so large as to make you feel uncomfortable. It is a very personal decision.

I won't recommend you do or not do anything with your CPF-OA. 

I will only say that my CPF-OA money stands ready only to be used when there are compelling investment opportunities. In the meantime, it earns 2.5% per annum risk free.






Reader's reply:

Hello Mr AK, thank you so much for your reply.

I have never thought about my "war chest" as a form of insurance, but more as a liquid asset that I can use for investment. Your advice has indeed given me something to think about. :]

As to investing with my CPF, I will give it more careful thought, and also do some more research and homework first.

Please feel free to publish our exchange if you think it might help fellow readers out there. As you mentioned, I'll feel more comfortable staying anonymous. :]

Once again, thank you so much for time and advice. Your blog continues to be a source of great inspiration and knowledge.




AK's final word on the matter:
We would do well to remember that if we want peace, we must be prepared for war. If we want to be richer, we need a war chest.

Related posts:
1. Be cautious as we accept higher risks.
2. Never lose money in S-REITs?
3. SRS, CPF-OA, CPF-SA. (Note publishing date.)
4. AK71's simple strategy.

China Minzhong: Going higher to $1.22 - $1.46!

I received an email and a very interesting chart on China Minzhong from a reader, RayNg, this evening.

See what he had to say:

Historically, Mr. Market paid ~10X PER during the first 2 years of IPO. It went down south due to EU crisis and bearish outlook of China economy. I think the main concern is its high account receivable (double from fy11).

However, the fy13, its account receivable and cashflow is back to norm and this might ease investors’ concern.

CMZ’s current PE is ~ 4X (base on EPS of 0.244). If Mr. Market is willing to pay 5X or 6X, then its potential share price will be $1.22 and $1.46, respectively. I think this is possible because China has bottomed out and is in recovery phase. In fact, looking at past 3Q/fy13 result, I believe its EPS will be > 0.244.

I bought some shares during the consolidation period (Jun-Aug 2012) when the price was ranging around 55-65c. That was the time when the PE was ~3X. The reason I bought this counter is because it has good fundamentals, low PE with high ROE, strong balance sheet (retain earning) and low gearing ratio. Still holding.

Yes, I do have some concern on S-chips as most people are very scared of S-chips.

So, let us see if Mr. market is willing to pay 5-6X PER for China Minzhong's shares.

RayNg

Related post:
China Minzhong: Breakout or fake out?

Slaving to stay in a condominium. (Sanity check in the comments section. Please read.)

"House poor is no fun."
UPDATE (JUNE 2018):

A reader sent this to me:

Reader says...
Monthly income of $3500 can own a condo 😱

AK says...
Slave for life lor... House poor. Cham like that.

Salesman only wants to sell... 

We buy already is our problem liao. 😛

When we buy anything with borrowed money from banks, we don't actually own it until the loan is fully paid up. 

We might have control but we don't have ownership. 

This is why most people don't receive the original title deed to their homes until their golden years. 😉





UPDATE (DECEMBER 2016):

Why are you borrowing?

Borrowing money for important things like buying a home may be unavoidable. But getting into debt is also a major responsibility. Too much debt can easily get us in trouble.

Avoid the debt trap by controlling how much you borrow. Even if you qualify for a bigger loan, ask yourself whether you really need the item you are buying and whether you can really afford the debt repayments (on top of all your existing debts and expenses). Consider buying it another day, perhaps after saving up for some or all of it first. Interest charges and the extra you pay in instalment plans over time can add up to a lot more than you think.

Source: http://www.moneysense.gov.sg/Understanding-Financial-Products/Credit-and-Loans/Is-Debt-Right-for-You.aspx

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In my memory, there were two people I knew whose families squeezed out all the money they could just to buy and stay in condominiums. 

One person was a schoolmate in junior college and another was a colleague during my stint in National Service.

I remember both as being extremely frugal and I always wondered why being people who stayed in condominiums were they so poor. 





Of course, those were days when I was a financial ignoramus.

Now, although I think that frugality is a virtue, it is a virtue when we are so without being forced to be so. 

If we had a choice and we chose to be frugal, good. 

However, if we are frugal because we don't have a choice, that is misery on earth!






I remember when I talked to both of them, they gave me almost identical answers. 

Yes, I was a nosey kid. 

Their families had to make hefty monthly repayments to the banks. 

So, they had to be very careful with their money.

Although I have suggested that investing in properties could give us a leg up in our wealth building efforts, I believe that buying properties without any margin of safety is foolhardy.





Basically, if we had to take the maximum of 80% LTV allowed in order to buy a property and if the monthly repayment was an amount that would lead to a very frugal lifestyle which was not by choice as a result, we should not buy the property. 

It could be within our means by conventional definition but this is one example of how we should not succumb to conventions.





Buying properties in Singapore has been seen as the way to riches. 

To many ordinary Singaporeans, buying a condominium for self-stay seems to be a natural first step.

I will share these thoughts:

1. Like I said, if we have no choice but to be frugal in life, that is utter misery! If to stay in a condominium, we are forced to live like paupers, the price is too high.





2. We have to remember that our homes do not generate cashflow. So, a home is not really an investment. It is consumption. 

So, just like anything we consume in life, make sure we do not spend beyond our means. 

In fact, we should not just spend within our means. We should spend well within our means.


Of course, our homes might have the unique property (pun unintended) of being able to appreciate in price over time which makes them unique in the world of consumption but it does not detract from the fact that our homes are not investments but consumption.





3. Borrowing to the max with no reserves means there is no margin of safety.

Probably, a $3,000+ monthly repayment on a 30 years loan of $800,000 is manageable for a couple who is making some $8,000 in combined gross monthly income. 

Now, we have lots of cheap money sloshing around, after all.


What happens when the party stops? 

What if interest rates go up just 1% which means almost a doubling from current levels? 

What if the economy goes into recession and home values decline? 

What if the couple were to be retrenched?





I won't talk about whether it is a good time or bad time to buy a condominium in this blog post. 

I will, however, say that we must be very careful or we could end up slaving just to stay in a condominium. 

Surely, this is more so for new condominium buyers who intend to be owner-occupiers today.





Related posts:
1. Good debt is always good?
2. Affordability of housing in Singapore.
3. More cooling measures on the way?

China Minzhong: Breakout or fake out?

There was a bit of excitement in the price action of China Minzhong towards the end of the day. It broke the long term resistance provided by the declining 100w MA to touch a high of $1.05.

Daily chart.

However, volume was lower than the day before and without higher volume, share price closed at $1.025 or just one bid under the long term resistance. A long legged white spinning top was formed in the process, suggesting that bulls and bears are evenly matched.

Weekly chart.

With three more sessions to go this week, we could see a new high in China Minzhong's share price if volume expands while it continues to push higher.

That volume was lower suggests that many are waiting on the sides to see who would win the tug of war.

A convincing break above resistance would invite a mad rush from the bulls. An obvious decline would invite a mad rush from the bears.

Which camp do you think I am in?

Related post:
China Minzhong: Partial divestment at $1.01.

Cache Logistics Trust: 4Q DPU 2.154c.

Full year distributable income improved 9.5% while full year net property income improved 11.7%.

However, full year DPU improved by a very much smaller 1.6%.

Why do investors like Cache Logistics Trust? Some reasons could be:

1. 100% occupancy rate.

2. Only 2% of lettable space is up for lease renewal this year.

3. Weighted average lease to expiry: 3.9 years.

At $1.27 per unit, annualised, distribution yield is 6.78%. This is much lower than Sabana REIT's but Cache Logistics Trust offers greater certainty and that alone would command a premium.

A more interesting question is whether the size of the premium is justifiable. That is another exercise in subjectivity.

Gearing is higher now at 31.7% which, however, is still comfortable.

Related post:
Cache Logistics Trust: DPU down 5%.

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K-Green Trust: DPU of 4.69c.

K-Green Trust announced a DPU of 4.69c for 2H 2012.

For a long time now, I have been waiting for K-Green Trust to gear up, acquire assets and increase DPU. Well, it seems that my wish is going to come true.

"In 2013, we will focus on acquisitions in areas of waste management, water treatment, renewable energy and energy efficiency, including assets that were identified under the Rights of First Refusal," Thomas Pang, CEO of the manager of the trust.

Perhaps, it is time to look into buying in the next bout of selling by Mr. Market.

Related post:
K-Green Trust: DPU of 3.13c.