First REIT: Acquisitions in Manado and Makasar. (Amended)

First REIT is acquiring two properties from its sponsor, PT Lippo Karawaci Tbk.

The two are Siloam Hospitals Manado & Hotel Aryaduta Manado at S$83.6 million, and Siloam Hospitals Makassar at S$59.3 million. The prices are at a discount of 10.78% and 9.81% to valuations, respectively.

The purchases will be funded through debt and a private placement.

Some pro forma numbers:

Total asset size:
S$782.2m or an increase of 26.4%.

NAV/unit: 84c.

Annual DPU: 7.45c. 6.77c.

Read press release: here.

What really interests me is the DPU here. An annual value of 7.45c 6.77c will approximate 1.86c 1.692c per quarter.

Regular readers will remember that I said a safer way to value First REIT was to use a quarterly DPU of 1.6c as it would remove the special distributions resulting from the sale of the REIT's Adam Road property. This is especially so if the management should be tardy in moving to improve the REIT's income.

Well, the special distributions have run out but the proposed acquisitions will take in S$14.1m in annual net rental income which is equivalent to a quarter of the REIT's annual revenue from its current portfolio. Therefore, the proposed acquisitions will keep the REIT's DPU more or less unchanged which would, in turn, lend support to its much higher unit price today. Now, I wonder if this is enough to lend support to its much higher unit price today.

At last session's closing price of $1.03 a unit, we will be looking at a pro forma distribution yield of 7.233% 6.573%. This is probably still attractive enough for many in the current low interest rate environment.

Related post:
First REIT: 2Q 2012 DPU unchanged.

Tea with AK71: Breakfast and lunch for 96c.

What did I have for breakfast and lunch today?

Breafast: Oatmeal! My favourite!

A 1 kg pack of rolled oats costs less than S$5.00 and is enough for 20 servings or more. So, each serving costs 30c to prepare, perhaps. I would cook enough for 3 servings each time. Keep them in the fridge and bring 1 serving to work daily for the next 3 days.

Lunch: Cup noodles!

I used to eat instant noodles frequently but I have cut down on these a lot in the last few years. I bought some two nights ago when I went grocery shopping at NTUC Fairprice with my mother after taking a walk to the neighbourhood park together. Only $5.95 for 9 cups! That is 66c a cup! Cheap!

*Hot water courtesy of the office pantry.

Total cost of breakfast and lunch today: 96c.

Related post:
Inflation hits fried bee hoon.

Young working Singaporeans, you are OK. Really?

This was just in the news:

Young Singaporeans in the workforce today will have adequate savings in their Central Provident Fund (CPF) accounts by the time they retire, according to an independent study by the Ministry of Manpower.

A recent study using the Income Replacement Rate or IRR indicates that Singaporeans are adequately covered.

Pension economists measure retirement adequacy by using an IRR, which is the ratio of retirement monthly income to pre-retirement monthly earnings.

The study found that a median male earner who enters the workforce today will be able to achieve an IRR of over 70 per cent through his CPF savings.

For the female median earner, the equivalent IRR is 63 per cent.

These figures are similar to those of countries of the Organisation for Economic Co-operation and Development (OECD).

The IRR for the median OECD economies is 66 per cent. The World Bank recommends a range of between 53 and 78 per cent.

The rate is significantly higher in Singapore when it takes into account the fact that Singaporeans have their own homes when they retire.

Cash is freed for other living expenses as they do not have to pay rental fees.

With Workfare, which supplements the wages of low-income workers, the IRR is even higher -- at 93 per cent.

Read the full article: here

I find it impressive that a young Singaporean male who joins the workforce today would be able to have a retirement income equivalent to 70% of his pre-retirement earnings just by drawing on his CPF savings. I suppose this is assuming that he is gainfully employed without significant periods of unemployment till age 65.

I have always thought that it is impossible for us to retire and have a standard of living comparable to pre-retirement if we were to rely on our CPF money alone. Now, if someone is able to have an IRR of 70 to 93% at the official retirement age of 65, it comes rather close.

So, does this mean that people no longer have to make their savings work harder and learn how to invest their money to beat inflation? Ah, inflation!

I assume that upon retirement, our monthly withdrawal of our CPF money is a constant number. This is what CPF Life will do for us, if I understand it correctly. This means that our monthly "allowance" from our CPF would stay the same nominally till the day we bid farewell to this world or am I wrong? So, even though someone could have an IRR of 70%, that someone's standard of living could worsen with time due to inflation, could it not?

I would still encourage all Singaporeans to be more pro-active in managing their money and growing their wealth. It is risky to think that our CPF money will be enough, financially, to provide for our old age.

Of course, there are those who would like to retire before hitting 65 but that is another story.

Related posts:
1. SRS, CPF-OA, CPF-SA.
2. Do you want to be richer?
3. Wage slaves should be fearful.

Tea with AK71: Inflation hits fried bee hoon.

Today, I went to the "economic fried bee hoon" store near my office to buy breakfast. I like fried bee hoon a lot. It is inexpensive and tasty. However, I would try to restrict it to once a week or fortnight. It is still less expensive to bring my own food to work (e.g. oatmeal).

I would usually order fried bee hoon with a piece of tofu to make it a more nutritious meal. Price? $1.50. If I am not feeling very hungry, I would have half of it for breakfast and keep the rest for lunch. Two meals for $1.50! I like this too.

We all know that inflation has come fast and furious to Singapore. For a while, I thought my favourite fried bee hoon would be spared as the price has remained the same since last year. I am mistaken. Today, I paid $1.70. So? It is only 20c more, right? It is actually an 11.76% increase in price!

Imagine how this would affect someone who does not have the habit of bringing food from home to work. If his eating out food bill is $300.00 a month, it would mean paying $35.37 more every month! That is enough for a nice dinner for me at Soup Restaurant and still have money left over for some grocery shopping.

With QE3 launched by the Mr. Ben Bernanke, inflation could get worse. Time to get cooking.

Related posts:
1. A simple meal.
2. Another budget meal.
3. A healthy, low cost meal.
4. Korean noodles for lunch.
5. A loaf of bread.

Fraud: Credit cards.

When I was in Los Angeles with my dad once many years ago, he tried to buy some chocolates at the airport but his card was declined. The cashier told him that a message appeared on the machine that he was to call the card centre. My dad was puzzled since he promptly paid his credit card bills each month.

Anyway, he called the card centre using his ICC at a public phone booth. In case you are wondering what on earth is an ICC, it was an International Calling Card issued by Singtel for people who were travelling overseas in the past. I don't think ICC exists now.

The card centre lady asked him where he was and told him his credit card was used in a petrol station in Johor just two hours ago! Wow! My dad must have had taken something faster than the Concord to travel from the USA to Johor and then back in two hours.

There are risky places to use credit cards and we have to be very careful:

Flea MarketsFlea market merchants are often transient and can be difficult to locate if there is a problem with charges. It's especially true for vendors who don't have online credit card terminals and instead make carbon copies of your credit card.

That doesn't mean those vendors are necessarily fraudulent, but it makes the transaction less secure. The credit card company might have trouble doing a charge back. If you're going to the flea market, take cash. It's also easier to negotiate that way.

Small Shops/Cafes in Foreign Countries
These smaller merchants have a significantly higher percentage of credit card fraud as reported by large banks and credit card companies. Many of these transactions end up being written off by the banks because the merchants simply can't be located. There's just a higher chance of fraud when you get outside of the mainstream, so when in doubt, use cash.

For the full article, read:
The Riskiest Places to Use Your Credit Card

China Minzhong: Emerging from a down trend.

The last time I blogged about China Minzhong, I said that the longer term downtrend was still intact. Has this changed? Yes, it broke out of this downtrend middle of August and briefly went under the trend line in early September.

Both MACD and MFI have formed higher lows. Breaking the down trend with stronger positive momentum is good news for the bulls. Now, all eyes would be on 78.5c, the recent high of 23 August as well as the declining 200d MA at 80c. If price action is able to break these resistance levels and move higher, we could see a move to test a band of resistance between 88c to 94c.

In case of further weakness, I see support at 66c, provided by the 50d MA. Stronger support is at 63c, the top of a 5 months base formation (March to August 2012). I would be accumulating on weakness.

------------------------

We expect higher operating cash flow and less Capex in FY13, thus the first positive free cash flow in three years. We cannot rule out the possibility that Minzhong will pay dividends or buy back shares in FY13. Although we have not put in any dividends payments or share buyback forecast as our base case, we believe such actions will boost the valuation if they eventuate. (Kim Eng, 28 August 2012)

Related post:
China Minzhong: Pushing higher.

Wilmar: Is the tide turning as buying pressure returns?

I bought more shares of Wilmar as its price went to a new low yesterday. Some might question why I did this. Was I not afraid of losing even more money? Well, it was a calculated risk based on certain technical signs.

As Wilmar's share price went lower, I noticed that the CMF was forming higher lows. So, share price was forming a positive divergence with the CMF. What is CMF?

CMF stands for Chaikin Money Flow. This is a money flow oscillator that measures buying and selling pressure. When the CMF is in positive territory, the bulls have the upper hand. When it is in negative territory, the bears are stronger.

So, if we look at Wilmar's chart, selling pressure was reducing even as its share price drifted lower.  We can see the selling pressure letting up with the CMF forming higher lows. It is a process.

When the CMF forms a bullish divergence while still in negative territory, it is saying that selling pressure is reducing. When the CMF crosses over to positive territory, it is saying that smart money has moved back in and selling pressure has given in to buying pressure. So, the smart money are buying as weaker long holders or late short sellers continue to sell at lower prices. Yes, price could continue to move lower even as buying pressure returned and it did.

Those who short sold as share price retested and broke the low of $3.04 just a few sessions ago probably contributed to the heavy buying today as they scurried to close their short positions.

If we double check with the MACD which is a pure price oscillator, we notice that it did not form new lows even as share price moved lower. If we check the MFI, a favourite of mine as it takes in price and volume and more effectively measures demand, we see it forming a higher low as price formed a lower low. Another positive divergence.

With central banks around the world easing monetary supply, expectations are for commodities and other cyclicals to do much better in future. Wilmar seems like a logical beneficiary.

I would pay attention to the declining 50dMA. At $3.32, it is just 8c away from today's closing price of $3.24. If it should be overcome on high volume, it would attract more buyers and force more shortists to close their positions. Then, we could see price going higher to test the support turned resistance at $3.52.

--------------------------

Wilmar said on Thursday it had repurchased 7.4 million shares from the open market, representing 0.115% of outstanding shares, at $3.00 each.

“The buyback is because Wilmar is good value at these prices. It also reflects the confidence that the Wilmar board has in the long term fundamentals and growth prospects of the group,” Wilmar’s spokeswoman said in an email.

REUTERS

Religare Health Trust: 8.5 to 9% yield.

A new business trust to be listed soon in Singapore, it seems.

Religare Health Trust, which will own assets managed by Indian hospital group Fortis, is offering an indicative yield of 8.5% to 9% for its initial public offering that could raise as much as $500 million. The units offered will comprise about 70% of the total, the source added.

The listing is planned in the third week of October, sources said.

Religare Health Trust has a mandate to invest in medical and healthcare assets and services in Asia, Australasia and emerging markets, Fortis Healthcare has said previously.

Source: REUTERS

Fortis Healthcare is controlled by billionaire brothers
Malvinder and Shivinder Mohan Singh.

The distribution yield is tempting, for sure. However, I wonder what is the debt level going to be like. After all, it was reported in August that Fortis Healthcare, the sponsor of the trust, has a very heavy debt burden.

Religare Health Trust is set to launch an up to US$400 million ($498 million) initial public offering in Singapore, a source said, in a move that will allow the backer of the trust, Indian hospitals group Fortis Healthcare, to cut its substantial debt level.

Fortis is India’s No. 2 hospitals operator after Apollo Hospitals Enterprise. It had consolidated net debt of 62.37 billion Indian rupees ($1.39 billion) as of end-June.

Source: REUTERS

Details are lacking at the moment. What is the gearing level going to be like, pro forma? What is the NAV/unit? Apart from hospitals in India, where and what are the other assets to be held by the trust? Are the assets of good quality?

Apart from watching some documentaries and news coverage on the country, India is a country I barely know. This is also only the second listing in Singapore by an Indian company. Some of us might remember that in 2009, there was Indiabulls Properties Investment Trust.

To trust or not to trust? I will need more information.

Tea with AK71: Tonkatsu, Saizen REIT, Mazda cars.

Many things happened in my life lately. Some good and some bad. Well, mostly bad, I feel. Anyway, all I can do is to soldier on and roll with the punches. Take the good with the bad.

Today, after going out in the morning for an extended family gathering, I detoured to Orchard Road to take in the sights and have lunch at a tonkatsu place in the basement of Ion Orchard which my sister brought me to once before. It is called Ginza Bairin. Very good and cheaper than Tonkichi. The generous portion really filled me up too.

Fillet Katsu Set. $16.90. 3 pieces of fillet katsu which I prefer to loin katsu as it has less fats.
Served with rice, miso soup, pickle, salad, a really generous slice of fresh lemon (not the dried up type) and two sauces for the salad and tonkatsu.

Then, I bought the latest issue of The EDGE and went to Scotts Square's UOB to rest my feet. Only my second time there after I discovered that they serve a very fragrant Osmanthus green tea a couple of months ago. I asked for the same tea again today.

The least expensive apartment at Scotts Square is 600+ sq ft in size and has a price tag of $2.2m. As much as I like the place, it is unlikely that I would ever be able to buy a unit there. So, I can only enjoy the view from UOB on the third floor. Hahaha...

The EDGE has a few interesting articles in this issue. For anyone interested in Saizen REIT, luxury condominiums or shoebox apartments in Singapore, go pick up a copy.

Saizen REIT's unit price has shown strength lately and it is revealed that the REIT is attracting buying interest from wealthy investors in Singapore. Mr. Raymond Wong, executive director and major shareholder of the REIT's manager, declines to identify them but says that they are "entrepreneurs the locals would have heard of".

Intriguing. I wonder who they are...

According to NRA Research, units in the REIT are trading at a much steeper discount to its book value than its peers listed in Japan, which are trading at 0.75x book value.

Saizen REIT's NAV/unit is about 30c. So, 0.75x book value would translate to 22.5c. Saizen REIT is currently trading at about 16c per unit. I wonder...

I also flipped through the many magazines at UOB and one of them was an auto magazine. The back of the magazine has the latest prices of all the major makes sold in Singapore. I took a photo of the price list for Mazda cars in Singapore.

Wow! Would you pay S$128,988 for a Mazda 2?

I have to go out in a while. Family dinner. Hope the weekend is a good one for everyone. :)

Related posts:
1. Saizen REIT: 2H FY2012.
2. Quick, buy a new car cheaper now!
3. Hainanese pork chop rice.

60 years leasehold condominium in Singapore.

When I was told many years ago that residential properties in Hong Kong generally come with a 50 years lease, I was amazed. 

So, if someone in his 30s were to buy a condo in Hong Kong and if he should live to be 90 years old, he could be kicked out of the property as there is no guarantee that the lease would be extended?

To someone from Hong Kong, a 99 years leasehold property in Singapore is probably a steal! The lease is twice as long as back home and the prices are probably lower too, like for like. However, what I have read in the papers today could change things in Singapore for the next generation.

A 1.02 ha residential site in Jurong Kechil comes with an unusual 60 years leasehold term.  This is believed to be the first time a private housing site is being sold on such short tenure under the GLS.

Developers have options for a 30, 45 or 60 year lease period for the plot, URA said. The development conditions for the site cap the maximum number of units at 203 units and can be built up to part 5 storeys and part 8 storeys. The tender will be launched in about two weeks.

Industry experts are expecting a top bid of between $200 to $250 psf ppr and a sale price of $550 to $600 psf. This compares with freehold developments in the area going for about $1,000 psf.

(Source: The Business Times, 6 September 2012)

The government did mention some time ago that it would explore offering residential sites with shorter leases to bring down the cost of home ownership in Singapore.

Possibly, I am out of touch with the reality on the ground. Foreigners, new citizens and younger Singaporeans are probably less concerned with shorter land leases. 

They might just want a home in their living years or to reap as much rental returns as possible in the same years. A project that is freehold or 999 years leasehold and selling at a premium might only be attractive to older Singaporeans over time.

Now, in my 40s, maybe, I would consider buying a new private residential property with a 60 years lease if I could save 40 to 50% compared to buying a similar property which is freehold or has a longer lease. This is for self stay only as the property could be hard to resell as its lease gets progressively shorter. 

Just pray I do not live to be a hundred.

However, for someone in his 20s or 30s, would he buy a new private residential property that comes with a 60 years lease? By the time the project gets its TOP, the property would only have 55 years left to the lease...

AK's simple strategy.

What is my simple strategy?

按兵不动

- Hold our troops; bide our time.

Collect regular dividends and wait for opportunities.

We want to be in a position which would allow us to benefit from market weakness as well as strength. The way to do this is to stay invested in the market and also have a war chest ready.

Opportunities to accumulate will always show themselves but without a war chest, it would be difficult to take advantage of them.

Sometimes, doing nothing is also doing something.

So, as I wait and do nothing, I might have mostly nothing to blog about. ;p

Related post:
To be richer, be comfortable with being invested.


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Singapore REITs yield world’s best returns: Southeast Asia
Wednesday, 05 September 2012

© 2012 - The Edge Singapore

Tea with AK71: Funny!

I was sent this and found it amusing:

I hope this has coaxed a chuckle or even a hearty laughter from you, no matter what your personal beliefs might be.

Life is short. Don't take it too seriously. ;)

This is funny! I really laughed very hard!

I don't know who are responsible for these works but kudos to them for bringing fun and laughter to our lives. :)

I know I need some cheering up as I will be sending my car to the workshop for major repairs early tomorrow and will be carless for a week or more. :(

See: Traffic accident with a Malaysian vehicle.

Wilmar: Should we be buying?

A reader asked me if I am buying more shares of Wilmar as I said before that the time to buy is when the selling has dried up. Has the selling dried up?

Well, the trend is still obviously down and my investment is in the red. My long position in Wilmar is my biggest money losing investment on paper this year.

However, I have bought more shares of Wilmar as the MACD is rising while share price declined. Momentum is still negative but with a rising MACD, the negative momentum is weakening.

There is no obvious sign of accumulation or distribution with the OBV flat as the share price languished more or less at the 61.8% Fibo line.

Volume has been relatively low as the Bollinger bands begin to squeeze, confirming the picture of low volatility. A big move in Wilmar's share price could be on the horizon. Which direction? That is anybody's guess.

If the move is to the upside, overcoming the 20d MA on high volume would signal a breakout. If the move is to the downside, the low of $3.04 touched on 15 Aug is the support to watch.

A sign that things might have bottomed is when there is massive pessimism and no one is interested in buying anymore. In fact, there would be more who would sell even at a big loss because they believe the share price could move much lower over time. Then, there are the increasing number of "sell" calls by the research houses all offering much lower 12 months target prices.

The relatively low volumes, the gently rising MACD and the flat OBV tell me that there is currently a stalemate between the bulls and the bears, pending a possible big move in price with the constriction seen in the Bollinger bands. The trend is, however, still in the bears' favour.

Now, no one should tell you what you should do. You have to decide for yourself.

Related post:
Wilmar: Touched a new low.

Tea with AK71: Quick, buy a new car cheaper now!

It is reported that last weekend saw 5 to 20% more new cars sold in the showrooms here as COE premiums declined for the first time in months.

We probably have friends and family members who are looking to buy a car for a host of reasons. Although some might think that cars are not necessary in Singapore, many would beg to differ.

Finance manager Lionel Ng, 58, and his wife, 53, a homemaker, own a MPV vehicle which will be 10 years old in October. Yesterday, they took advantage of the lower COEs to purchase a Toyota Altis which will replace their current car.

Mr. Ng said: "The COE is still very expensive but we cannot wait anymore - I feel a car is a necessity in Singapore but right now, it's priced like a luxury item."

Ms. Evelyn Tan, 36, self-employed, upgraded her vehicle from a 3 year old Toyota Vios to a Mercedes Benz C-Class. She said: "With the trade-in and lower COE, I'm getting a very good deal on my new car." (The Straits Times, August 27, 2012).

I bought my current car about two years ago and I have not really been looking at cars or tracking their prices. A quick check online revealed the following:

1. New Toyota Altis 1.6 Classic (A) @ S$ 123,988
2. New Mercedes Benz C180 (A) @ S$ 214,888

Wow! WOW! WOW!!!!!!

I am used to driving around and would find it hard to adapt to a carless lifestyle. However, to pay so much even for a new Toyota Altis is simply mind-boggling.

If I were to buy a car now, I would look at pre-owned cars.

A 2006 registered Mercedes Benz C180 would, for example, set us back by S$60,000. This means saving S$154,888 for losing 6 years of use. This is rather simplistic, of course, as we would be buying an older car with older technology which would probably cost more to maintain with the wear and tear accumulated over 6 years. However, we would be saving ourselves some hefty depreciation.

Although I would always argue it is not a matter of affordability but a matter of value for money, consumption is always more of an emotive activity for most. So, happy, buy lor! ;)

Related posts:
1. Tea with AK71: A new car for $75,000?
2. Tea with AK71: The price of my car now.

Saizen REIT: 2H FY2012.

Thanks to its recent acquisitive activities, paying down of its loans and a strong JPY, Saizen REIT is able to declare a higher DPU of 0.63c for 2H FY2012. This is payable on 18 Sep.

Therefore, the expected reduction in DPU of 10+% with the conversion of its warrants did not materialise and Mr. Market has shown his approval in the usual way as unit price of the REIT climbed higher today.

Net gearing: 24%
Interest cover ratio: 6x
NAV/unit: 30c

Annualising the DPU of 0.63c would give us 1.26c or a distribution yield of 7.875% at a unit price of 16c. Everything remaining constant, the DPU is likely to increase as the REIT's management continues to look out for apartment buildings to acquire and pay down its loans which are amortising in nature.

I have mentioned before that if the REIT's loans were not amortising in nature, its DPU could be some 50% higher than it is now.

The management has also indicated it could buy back units from the open market if unit price should be depressed. This would also improve DPU if it should happen.

All in all, I am very pleased with Saizen REIT's results.

With numbers very healthy and operations stable, Saizen REIT is very much undervalued. I believe a 30% discount to NAV/unit is closer to fair value. That would be 21c per unit.

Assuming that there is no new acquisitions from here on and everything else remains constant, at 21c a unit, we would be looking at a distribution yield of 6%. Bearing in mind that this would likely improve in time due to the amortising nature of the REIT's loans, everything else remaining constant, makes Saizen REIT a strong value proposition for anyone investing for income.

Results presentation slides: here.

Related posts:
1. Saizen REIT: Why did I buy and would I buy more?
2. Saizen REIT: Beefing up distributable income.

Have a plan, your own plan.

"As always, invest based on your risk comfort level. 

"Remember that media headlines should not be what is driving your overall strategy and, instead, thoughtful analysis of your goals (and willingness to absorb pain in market down periods) is what is necessary for a successful investment strategy.





"Decide which type of investor you are before you invest and make sure the overall strategy reflects your view of the world as well as the degree to which you can afford to be completely wrong. 

"And always remember that no matter what you read, opinions change and strategists are fallible.





"It's a mistake to believe that anyone has all the answers; if they did they probably would not be sharing their secret with the world."

Michael Yoshikami





Related posts:
1. Sleep well at night with a plan.
2. Roads to wealth creation in the stock market.

The very first step to becoming richer.

Singaporeans have a reputation for being very good at complaining. This is not a bad thing per se. 

After all, if some things are really bad and in urgent need of correction, we should complain. 

How else would the relevant authorities know about the problems and to take action? 

I draw the line at taking videos and photos of minor incidents and posting it on Stomp!





However, what I really find unacceptable is perfectly healthy and whole people complaining about how they do not make enough money. 

I have blogged about this before and I must say this again: If we feel that we are not making enough money, ask ourselves if we are being shortchanged.

Are we being paid fairly? 

If others in similar position are being paid more, hey, we got a raw deal! Negotiate with our employer. 

If we are really good workers, our employers would want to keep us and give us a much deserved raise. 

If we are sub-par workers, we should keep quiet if we want to keep our job (and, hey, stop complaining). 




We have a choice if we want to do better or to remain sub-par, of course.

Would you believe me if I were to tell you that it is always harder to keep really good workers in any company? 

Sometimes, even with above market rate compensation, it could be difficult to retain really good workers. Why? 

They keep improving themselves and would try to look for better paying positions which could even be in a totally different industry. Jobs could even come looking for them! 

These people are dynamic and driven. It is not surprising that they are usually able to earn higher incomes. One day, they could even strike out on their own and run their own businesses.




Very few things in life are free. 

To earn money, we must give something in exchange. 

To make more money, we must give more in exchange or give what few could give as it would be more highly valued. 

If we have a relatively low income and would like to have a higher income, complaining is unlikely to help make us more money.




Now, I always say that we are all made differently and some of us are just comfortable enough doing what we are doing, feeling that there is no reason to change. 

Is there anything wrong with this? 

Well, if by keeping the status quo, we become wage slaves, yes, it is wrong, very wrong.

The last thing we want to be is to be a burden to people we love or, indeed, to society as a whole. 

Well, I could be generalising too much but common decency would require that we think this way. 

Taking affirmative action to plan for self-sufficiency, avoiding dependency, is not only financially prudent, it is the responsible thing to do.




Think of our lives like how we would think of a business. 

Healthy personal finances would require us to, firstly, increase our revenue and, secondly, to keep our expenses prudent. 

OK, not necessarily in this order.

If we feel that we do not make enough money, look at our revenue and expenses. Something must be wrong with one or both. 

Unless we are severely disadvantaged in some way, there is no reason why we cannot do something about one or both.




With such people who are always complaining they do not have enough money, naturally, I would not even talk to them about investing in the stock market. 

They have to seek freedom from their mental shackles first. Otherwise, they are just wasting everyone's time.

Do you know of anyone like that? 

If you do, try reaching out to them. 

You would be doing them a big favour.

Related posts:
1. Do you want to be richer?
2. Wage slaves should be fearful.
3. Money management: Needs and wants.
4. A common piece of advice on saving.

AIMS AMP Capital Industrial REIT: Scrip dividend II.

I have been asked online and offline if I would be taking part in the Distribution Reinvestment Plan (DRP) offered by AIMS AMP Capital Industrial REIT.

The price is $1.2421 per unit. This is at a slight discount compared to the closing price of the REIT in the last session which was $1.27 per unit.

The last DRP offered unitholders a price of $1.1622. Shortly after, the unit price plunged to hit a low of $1.085. Could we see a repeat of history? Could unit price plunge lower this time as well?

I did not take part in the last DRP and was waiting to accumulate closer to S$1.00 a unit. Unfortunately, Mr. Market was hungry for AIMS AMP Capital Industrial REIT and buyers overwhelmed sellers after unit price touched a low of $1.085.

So, if we put these pictures together, we could see the REIT's unit price plunge below the DRP's offered price again. How low would the unit price go? This, no one can say for sure but if the opportunity should present itself, for anyone who would like to increase exposure to the REIT, buying then would make sense.

So, am I taking part in the DRP?

Related post:
AIMS AMP Capital Industrial REIT: Scrip Dividend.

Tea with AK71: Kwan Im Thong Hood Cho Temple.

As a boy, I used to visit the temple dedicated to the Goddess of Mercy on Waterloo Street regularly with my parents. During the very difficult years of the 1980s recession, we were even more regular. Till today, my dad would still visit regularly.

Personally, I have not been to the temple in years. Today, I made use of the public holiday to visit the temple. I went through the usual routine of prayers and making a donation to the needy when I got there.

A visit to the temple always sets my mind at ease, not because I think the Goddess of Mercy would make things right but because I would reflect on my life and realise that things are not too bad. Sometimes, life gets a bit choppy but we have to count our blessings. Remember to be humble and remember to help the less fortunate.

As I was leaving the temple, on impulse, I took a photo with my Samsung Galaxy Ace. It was hastily taken and as it was very sunny, I could not see the photo taken clearly then. I looked at the photo when I got home just now and I was really amazed by it.

佛光普照

May the benevolent radiance of the Lord Buddha shine on all of us.

Good debt is always good?

I look at debt as a necessary evil. Sometimes, I need that extra help in order to buy something.

Then, do I take as long as I can to repay the debt? Well, in this environment of very low interest rates, the concept of good debt has gained traction. Why not?

The idea of good debt is appealing because it gives us more funds which could possibly generate higher returns than the interest paid on the borrowed funds. What is the catch here? Yes, only if we can use the funds to generate higher returns.

The late Dennis Ng said that the rich always take on debt while the average man tries to be debt free. This is not always true. I know of rich towkays who have so much money in their bank accounts that they would pay for a luxury car in cash instead of taking a car loan! No matter how low the interest rate is on a car loan, it is still some 10x more than what a savings account pays in interest. I also know of average people who are leveraged to the max to capitalise on good debt.

So, who is right and who is wrong?

Recently, UOB came up with a 50 year home loan offer. Khaw Boon Wan has called this a gimmick, advising people not to fall for that and that it doesn't make sense. Now, does it make sense? For someone who is financially savvy and who is able to make his money work much harder, it could possibly make sense.

Personally, I am rather apathetic about the whole matter. There will always be people who are more comfortable with debt. Hey, ask the Americans. Then, there are those who are less comfortable with debt. I have heard of mainland Chinese buying condominium units with cold, hard cash.

Again, who is right and who is wrong? It is really subjective, isn't it?

For people who are proponents of good debt, the pertinent question to ask is whether our money can always make higher returns than the interest paid on the loans? For now, it looks that way. What happens the day the party ends? Are they getting drunk on debt?

For people who are more conservative, the pertinent question to ask is whether they could be short changing themselves by being debt free in this environment of very low interest rates. Of course, if the most sophisticated wealth building tool they know is fixed deposits, staying debt free is the way to go.

Like a friend told me, I have a choice. His intended message was that I have a choice whether or not to embrace good debt. Personally, I understand the concept but I am more comfortable being debt free.

I feigned ignorance and replied: "People who do not have a choice should not be investing in property." With this, I deviated from his line of reasoning that good debt is always good. Instead, I insinuated that people who do not have a choice but to borrow to invest in properties just because of the very low interest rate environment and the perceived future returns should think twice.

Of course, the choice is theirs. ;)

Tea with AK71: Climate change.

Let us take a break from all the hustle and bustle of our lives. Let us think about the world and if we are helping to make a difference.

Beijing was hit by the worst rainfall in 60 years last month.

The relentless, weather gone crazy type of heat that has blistered the USA and other parts of the world in recent years is so rare that it can't be anything but man-made global warming...

The research says that the likelihood of such temperatures occurring from the 1950s through the 1980s was rarer than one in 300, Now, the odds are closer to one in 10...

The increase in the chance of extreme heat, drought and heavy downpours in certain regions is so huge that scientists should stop hemming and hawing... AP



Mother Nature will find a way to right the imbalances. In Beijing, the official pollution index, which had showed an unhealthy rating before the storm hit, registered “excellent” after the storm, with the air noticeably free of its normal acrid smell. Full story: here.

If we do not make changes, Mother Nature will change things her way.

Related post:
Tea with AK71: Just storms?

Wilmar: Touched a new low.

In the last session, Wilmar's share price touched a new low of $3.18. Many market participants are wondering if they should go long here. Of course, conventional wisdom would say wait for the sellers to be done selling.

So, are the sellers done selling? The OBV shows that distribution activity has not ceased. However, both MFI and MACD have not formed lower lows as compared to May 2012 when share price was higher but declining. Together, the technicals tell me that there are still sellers around but demand has picked up if only barely so.

Technically very weak, we could see lower prices for Wilmar's shares if the current floor fails to hold. Immediate support is at $3.18 while immediate resistance is at $3.54.

Although we could hope for a gap fill at $4.65 which is also where we find the declining 200dMA, that is a long shot and unlikely to happen in the near future.

After such a massive selling down, market participants are likely to take whatever gains they can and run for the hills if there should be any run up in share price. So, adopting a trading mentality could be fruitful for anyone interested in going long here.

Related post:
Wilmar: Not a time to sell.

China Minzhong: Pushing higher.

To any chart watchers, it is obvious that China Minzhong's share price has broken out of resistance.  From here the immediate resistance is provided by the declining 100dMA which is currently at 73c. It could approximate 72c in the next few sessions.

Overcoming the 100dMA could see a test of resistance provided by the 200dMA which is also declining but more gently so. The 200dMA is at 83c. The last time the 200dMA was tested was earlier this year in February.

With all the momentum oscillators up sharply, the worst is over for China Minzhong's share price, it would seem. MACD suggests a return of positive momentum. MFI suggests demand is stronger. OBV suggests robust and continuing accumulation.

It has to be said that a longer term downtrend that started in early 2011 is still intact. So, traders ought to be careful and watch the longer term resistance.

Related post:
China Minzhong: Crossroads.