Saizen REIT: A retest of resistance at 18c?

On two occasions in the past, I did not partially divest my investment in Saizen REIT as its unit price touched a high of 18c. It was due to a belief that it remained undervalued even at that price. Yesterday, Saizen REIT's unit price broke resistance at 16.8c while it touched a high of 17.7c before closing at 17.4c today. Could we see 18c again soon?

The lower highs on the MACD and the declining OBV are rather ominous. Forming negative divergences with the ever rising unit price, any chart watcher would not be wrong to wonder if a correction could take place soon. In such an instance, immediate support is at the former resistance of 16.8c and if that fails to hold, the next support is at 16.4c.

So, would I sell if a retest of 18c should take place? I could do a partial divestment.

Related post:
Saizen REIT: 2H FY2010.

Sound Global: Accumulate on weakness.

Despite rather positive reports, the share price of Sound Global has been in retreat. Mr Market agrees with my earlier musings in July and August on whether it was a good time to sell, it seems.

Mr. Wen Yibo has been accumulating shares of Sound Global in the last one month and currently holds 56.2% of the shares. He probably knows something that we don't but even if we do not know what he knows, what information is publicly available shows that the fundamentals of Sound Global are sound and that the business is growing.

Technically, Sound Global's share price is experiencing weakness since forming a double top two months ago. The top was at 62c and the neckline at 55c. This suggests a downside target of 48c.

If we draw a trendline connecting the highs since early August, we see a resistance line that approximates the position of the declining 20d MA. Failing to stay above the immediate support at 51c and failing to break out of the down trend could indeed see share price moving to 48c.

What then? I would buy more.

Related post:
Sound Global: Retest of resistance likely.

China Minzhong: Opportunity in slowing momentum.

A big part of my portfolio is invested for income while the remainder is invested for capital gains. In both instances, once I stop adding to my long positions, the main thing to do is to wait. Wait to collect regular income in the first instance and wait to lock in gains in the second.

I will have more income distributions from S-REITs in November and December. Possibly, there will be dividends to be collected from some stocks as well. I am not too sure as I have not noted the precise dates for some time now.

I also invested in a few stocks, believing that they could deliver some nice capital gains. One such stock is China Minzhong and the last time I blogged about it was about a month ago, declaring that its stock price was emerging from a downtrend. Since then, its stock price has moved to touch a high of 85c.

OBV shows continuing accumulation while the RSI shows the formation of higher lows. There is some support. However, the lower high on the MACD which formed as a higher high formed in stock price, together with the reducing volume as price pushed higher, suggest a weaker positive momentum.

A rising wedge also seems to have formed and this suggests that the stock price could see a retreat in the near term. However, wedges are not terribly reliable patterns and the bearish signal we see here could be negated if volume should simply expand with an upward movement in stock price.

In the event that the rising wedge should deliver, we could expect a correction to see the share price retreat to 68.5c thereabouts. Before that, we could see some support at 75c. The immediate support is at 80c.

The weekly chart is somewhat more encouraging as the MACD has just moved into positive territory. Unlike the daily chart, there is no negative divergence observed here. The longer term picture suggests that any pull back in price is an opportunity to accumulate. The 100w MA, approximately at $1.10 now, could put an eventual cap to any upward movement in stock price in case it should happen.

Related post:
China Minzhong: Emerging from a down trend.

Wilmar: A rebound or something more?

Wilmar is up 3.9% at $3.18 as players await further details from the Malaysian government on a CPO export-tax cut. "It's one of the better companies in terms of having feet in both Indonesia and Malaysia and (being) able to trade around any opportunities from that" on the potential tax change, an analyst says.

He adds, the slightly improved soybean supply-side numbers from the U.S. were also positive for the stock as soybean availability is key for Wilmar. He notes the stock is starting from an overly depressed position and a number of players are "relooking" it after its selloff.

Dow Jones & Co, Inc, Friday, 12 October 2012.

I don't like to sell as share prices form new lows. It just doesn't make sense to me. If I want to reduce exposure in downtrends, I would wait for rebounds as prices test resistance. After all, prices go down a river of hope.

I do not know if Wilmar's share price would continue to strengthen or how much it would rise if it should happen, of course. I just have to do what I plan to do if it happens.

I like to potter around a bit with charts and using the Fibo fan, the chart shows that price broke resistance in the last session but mostly retreated to close just slightly above resistance. A continuing rise in share price next week looks rather iffy. If it should happen, next target is $3.28

Of course, we can also say the the confluence of the 20d and 50d MAs at $3.20 is a formidable barrier. This could be the case but in a situation where price is no longer trending, MAs are weaker tools. I would turn to momentum oscillators in such instances for clues.

For anyone who thinks that Wilmar's share price is experiencing a blip in positive movement and that it is on its way lower, I won't be too sure. Look at the MACD which is a price momentum oscillator. It just formed another higher low. It shows that negative momentum is continuing to weaken.

The ADX shows that there is no trend per se and if there is any, it is a weak one.

What I can say for sure is that Wilmar's share price is going through a long drawn basing process. When is it ending? It will end when it ends.

Related post:
Wilmar: Is the tide turning as buying pressure returns?

Tea with AK71: Maison Ikkoku.

Recently, a friend whom I have known for more than 20 years asked me out to have tea. We met at Maison Ikkoku which is owned by a friend of his.

I am not much of a food blogger but here are photos of what I had for tea that day:



Yummylicious ice lemon tea!

Melts instantly in your mouth tiramisu!



This was a total surprise. Kong Bah Pao!



It was so good! You simply have to try this.


I didn't bring my IXUS out with me and these photos were taken with my trusty Samsung mobile phone. Can do lah.

In case you would like to visit Maison Ikkoku (and you really should),

Address:
20 Kandahar Street, Singapore 198885.

Tel:
6294 0078

I am doing this blog post without any monetary reward. I do this because I want to share with you a wonderful discovery I made: a beautiful cafe with good food and drinks. I think you will enjoy the place as much as I did.

Oh, did I mention the interior decoration? I promise you that it would be an eye opener. I am not putting up any photo of the cafe's interior here (really because I didn't take any). You will have to visit Maison Ikkoku to take it all in. ;)

Bon appetit!

LMIR: More benefits from acquiring 4 malls?

Since its rights issue last year in December, expectation was for LMIR to acquire more shopping malls to improve its DPU which has been rather disappointing, being much lower, post rights issue, than initially expected. With my investment in LMIR some 200% bigger than it was, pre rights issue, I am naturally concerned with its underperformance.

Finally, an announcement to acquire 4 malls at a discount to their respective valuations. The 4 malls are:

1. Palembang Square for S$ 74.8m
(19.9% discount to valuation)

2. Palembang Square Extension for S$ 29.8m
(4.5% discount to valuation)

3. Tamini Square for S$ 30.1m
(23.4% discount to valuation)

4. Kramat Jadi Indah Plaza for S$70.8m
(2.2% discount to valuation)

The acquisitions will be funded fully by debt. Weighted average interest rate: 5.079% per annum. See note at the end of this blog post.

One question now on unit holders' minds is probably how much more are we going to get in DPU, post acquisitions. After all, we are investing for income.

1Q 2012, we received a DPU of 0.69c.
2Q 2012, we received a DPU of 0.79c.

Both distributions were lower than the estimation of 0.815c per quarter, post rights. They were definitely lower than the DPU of approximately 1c per quarter, pre rights.

So, will DPU improve after these latest acquisitions?

Net Property Income (NPI) yields for the 4 properties are: 4.41%, 1.00%, 8.637% and 7.2%. Collectively, the NPI yield of these 4 acquisitions is less than 6.00%.

If I remember correctly, LMIR's portfolio's NPI yield is about 7.5%.  So, these acquisitions are not NPI yield accretive. They are, in fact, regressive.

However, the management of LMIR is going to get a performance fee because in terms of absolute NPI, there will be additional NPI after the acquisitions. Fee? Some 613,158 new units in LMIR will be issued for this purpose. This fee is payable even though the pro forma numbers show that the distributable income will suffer a decline, post acquisitions.

Of the 4 malls being acquired, 2 malls have occupancy rates of under 90%. If the management is able to boost occupancy to above 90% over time, it could make a marginal improvement to the pro forma numbers. It wouldn't be anything to shout about.

It should, therefore, come as no surprise that in the five benefits of the acquisitions listed by the management, none refers to any improvement in income distribution which, probably, matters most to ordinary unit holders like me investing for income.

See announcement: here.

Note: The Manager proposes to finance the Acquisitions from the proceeds raised from the issuance of the S$200,000,000 4.88% Notes due 2015 and S$50,000,000 5.875% Notes due 2017.

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Tea with AK71: Vandals and selfish cyclists.

A few days ago, I was taking an evening walk after dinner and took these photos at an underpass:

Cyclists, get off your bicycles.

Vandals trying to be smart.

Shortly after, a motorised bicyle and three regular bicyles went by me. None of the cyclists got off their bikes as they went through the underpass. These people were being selfish and irresponsible.

The relevant authorities should do more than just put up signs (which are vandalised anyway).

Taken in one of the many public parks in Singapore on a pedestrian walkway. How many cyclists heed the advice?

This world would be a much better place if people all behave more responsibly and show more consideration for others. Is it too much to ask for? I wonder.

Related posts:
1. A moving bathtub and fridge.
2. McDonald's shows us how.

Win Eu Yan Sang goodie packs!

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Seven of my money habits.

This blog post is mainly inspired by a conversation with my mother on some of my habits. 

Recalling a popular book titled "Seven habits of highly effective people", I came up with "Seven money habits of AK's". ;p





Habit No. 1:
I never order canned or bottled drinks when dining out. 

Fresh food needs on site preparation but I can walk to a nearby supermarket to buy the same canned or bottled drink for a much lower price. 

Some might say it is convenient that we buy drinks from the eateries but the premium paid for this convenience is way too high. 

A can of Jia Jia herbal tea costs $0.60 in NTUC Fairprice but could cost $1.50 at a kopitiam! 

A can of Coke could cost $0.55 in NTUC Fairprice but could cost $4.00 (before taxes) in a restaurant!






Habit No. 2:
I always check my bills.

Huh? Can we really save money this way? 

You bet. 

I have lost count of the number of times I have been overcharged by pharmacies, supermarkets and restaurants. 

Very often, the larger bills are the ones we have to be more careful with as overcharging even a few dollars could be hard to spot. 

It is because of this habit that I have avoided being overcharged for many years now. 

Oh, check the receipt just outside the shop, not after getting home!






Habit No. 3
I always compare products on offer between shops.

For the same product, two shops which are side by side could have very different prices. 

Guardian and Watsons are very often found in close proximity to one another. 

Many times, I saved quite a bit of money comparing their prices before deciding who to buy from.






Habit No. 4
I never take for granted that buying more is definitely buying cheaper.

Many times, I stopped friends and family from buying bulk packed products as they actually cost more than buying loose! Huh? 

Of course, they cost more since we are buying more, you might say. 

No, no, that is not what I mean. 

I mean we should check to see how much is the per unit price in bulk packed offers. 

Don't assume that bulk packed products are always cheaper.






Habit No. 5
I always try to get discounts off my bills.

I always get a discount off my bills at Kopitiam and Food Junction. 

Yes, go get the discount cards if you have not done so. 

If I should be in an unfamiliar establishment, I would ask the service staff if they had discount agreements with credit card companies.

Habit No. 6
I never pay in cash.

Well, unless that is the only mode of payment acceptable. 

Often, I see people before me in a queue choosing to pay in cash. 

Some transactions were rather high in value too. 

Imagine the number of reward points they could have accumulated if they had used a credit card, if they had one, or the amount of cash they could have received in rebates!





Habit No. 7
I bring my own food to work.

I always bring some food prepared at home to work and I save quite a bit of money this way. 

Anyway, I enjoy oatmeal regularly and I don't think they sell oatmeal in the coffee shops or food courts.

If we work to increase our income and reduce our expenses, our financial health will improve over time. 






As the saying goes, it is easier to spend money than to make money.

So, if we just put in a little effort, we could be saving some money as we spend money. 

Sounds good, doesn't it?

When I was in primary school, the POSB bank squirrel came to us and taught us how by saving just a little every time, we could have a meaningful sum of money stashed away over time. :)

Related posts:
1. Save money with low prices and free shipping globally.
2. Money management: Needs and wants.
3. Queue for $1 parking fee redemption.
4. A common piece of advice on saving.
5. Inflation hits fried bee hoon.

Tea with AK71: Parting with an old friend.

Would you consider 15 years a relatively long time to be in a relationship? Personally, I think it is. It is longer than the duration of many marriages I know of.

After 15 years, I am finally parting ways with an old friend which has been showing visible signs of ageing. Beginning to fall apart, it still stayed by me, faithfully serving me while I reluctantly looked for a replacement in the past couple of months.

I must admit that it is really hard to find a fitting replacement as the candidates were either too big, too small, too complicated, too sexy, too fake, too simple or just didn't feel right. Finally, I found one that is just about right.

What am I talking about? My wallet, of course.

My old wallet was from Heritage, a company in West Germany. Yes, it was bought during a time when Germany was divided into East and West. I think it cost me a bit more than S$100.00 back then. I bought it when I got my very first pay cheque.



Visible signs of wear and tear as the stitching in the fold unravels.

The replacement wallet is apparently quite branded or so I was told by friends. Braun Buffel is a company in Germany (not West Germany) and this wallet costs me $109.00, after a discount. 

15 years on, it is still roughly the same price to get a good quality German leather wallet. No inflation! A miracle!

Even though it is very similar to my old wallet in design, I feel that my old wallet is still better. I guess I just need time to get used to the new one.

Related post:
Some of my stuff (Part 2)

Millionaire or not, plan for retirement.

Being a millionaire today is different from being a millionaire 30 or even 20 years ago. This is simply because a million dollars is worth less now due to inflation in the cost of goods and services. These days, even a HDB flat could cost a million dollars!




I cannot remember the person's name but in the latest issue of The Sunday Times an interviewee (a millionaire) says that he does not want to think of retiring when asked for his retirement plan. Why? People who have plans for retirement, he says, will not be as driven or gung-ho.

Conventional wisdom says that we start planning for retirement as soon as possible. Even a very good fisherman should plan for the day when he can no longer do any fishing.

Today, I received a newsletter with a few interesting facts:

1. Singaporean males live an average of 79 years and women live an average of 84 years. Living longer means we need more money.

2. Due primarily to inflation, current savings will be worth less in future. 30 years later, something that costs $3 today could cost as much as $13.70 with inflation at 5.2% per year.

3. Although 91% of Singaporeans find CPF a reliable tool for retirement planning, according to a retirement study in 2011, each year, fewer members meet CPF's Minimum Sum requirement.

4. Escalating medical costs are a big concern.

The newsletter is a sales tool for an insurance company but these four points which I have extracted are pertinent to us all. If we have not started planning for our old age, we should if we could.

Apart from working to make money and being financially prudent, we invest and grow our wealth, creating streams of passive income along the way. Our investment returns, year after year, should be higher than the inflation rate. This is only part of the equation, however.

I am a strong believer in having adequate insurance coverage for medical costs which are bound to be incurred as we age. Our financial health could take a severe hit if we do not have medical insurance as money meant for living expenses could be depleted by medical bills.

Many might have heard the sardonic remark that being sick is worse than being dead. This could indeed be the case especially if one did not have sufficient insurance coverage of the right kind.

Planning for retirement is definitely more than just having enough passive income to replace our earned income. 

Being able to retire is much more than working because we want to and not because we have to.

Knowing how to make money and building wealth is the first step. Knowing how to protect our wealth is the necessary second. 

Protecting our wealth will cost us some money but not protecting our wealth could cost us even more.

In case you are wondering, I am not an insurance agent and this is not an advertorial. If this blog post has alerted some who have yet to plan for retirement to put on their thinking caps, it would have achieved its purpose.

Related posts:
1. Young working Singaporeans, you are OK.
2. To protect our wealth, we have to take risk.
3. Roads to wealth creation in the stock market.
4. Wage slaves should be fearful.
5. CPF is a cornestone in retirement.

Save money with low prices!

I started buying stuff like books and health supplements online only recently. The convenience and savings, especially with a strong Singapore Dollar, help to make online shopping a growing phenomenon here.










You know those mega sales at the Singapore Expo by John Little or Harvey Norman? This reminds me of a mega sale except that we don't have to be in a crowded and noisy location, rummaging through baskets of bargains with everyone else and, then, joining a super long queue to make payment!

Happy shopping in the comfort of your own home!

Made and still making money from S-REITs.

In an environment of very low interest rates, S-REITs are logical beneficiaries and in more ways than one. Regular readers would have heard this many times already. Readers who are new to my blog might want to read some of my older blog posts on S-REITs and why they are expected to continue performing well.

When we invest in S-REITs, it is with a primary aim of receiving regular and meaningful income. I have also said that any capital gains would be a bonus.

The outperformance of S-REITs' unit prices has led some holders to wonder if they should divest. Well, as market wisdom goes, taking profit is never wrong. However, I would ask that these holders consider if they have better places to park their money. Remember, money will go to where it is treated best.

In economics, we learn about supply and demand and how prices are affected by the relationship between the two. S-REITs are seeing their unit prices rising strongly because more investors are now putting their money in S-REITs.

In the last two years, I have had readers from Malaysia, Hong Kong, Europe and the USA writing to me. The early movers into S-REITs are sitting on some very nice capital gains and receiving regular distributions with yields as high as 10+% in some cases. What's more? Their investments have seen forex gains as the Singapore Dollar continues to strengthen against their home currencies!

I kid you not when I tell you that these readers are all very much richer than I am and have made much more money by being in S-REITs although they came in somewhat later. I am happy with how well things have turned out for their investments in S-REITs.

When Pat (a cboxer in Bully the Bear) told me that I have a pool of funds, I told him I know well that what I have is merely a puddle. Having self-knowledge and knowing what I have achieved is humble, I am not fixated by how much I have versus how much others have. Of course, I am only human and it used to bother me when I was younger.

Instead, just like starting a business, we should have a model for wealth creation. Being fixated with how much wealth we have versus how much others have does nothing to grow our wealth.

For someone who is investing in the stock market for income, first, have a clear goal and that, to me, should be to create meaningful passive income streams which will fully replace our earned income. Pick out likely candidates and do the due diligence to decide on the ones which are likely to help us achieve our goals.

Next, have discipline. Stay the course. Yes, stick to the plan. If circumstances have not changed, why deviate from a good plan? However, what if they did change? Then, ask why was our plan a good plan. If the reasons for the plan being good no longer exist, it is time for a change, isn't it?

Maybank Kim Eng, 28 Sep 12: Year-to-date, we have seen many pension, insurance and income funds switching into REITs to pursue higher returns for the sheer fact that the yield-curve is almost flat.  This is further aggravated by the almost "zero-bound yields" which meant that yields have no more room to fall, erasing any prospects of fixed income capital gains for investors. In the quest for returns, many such funds had to turn to slightly riskier asset classes such as REITs for stable recurring distributions.  We believe that with the latest round of QE3 Infinity, ECB’s unlimited bond-purchase program and BoJ’s yen-asset-purchase program, coupled with the low interest rate environment and a yield-spread of 440 bps over the 10-year government bond with low earnings risk, would warrant further yield compression of 56-73bps, translating to 11%-14% upside for the S-REITs sector. Link: here.

Now, is investing in S-REITs still a good plan?

Related posts:
1. Investing in REITs: A flawed strategy?
2. Staying positive on S-REITs.
3. Mr. Market is always right.

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Tea with AK71: Ipoh Hor Fun (Holland Village).

Some time ago, I blogged about a higher purpose in having passive income in our lives which, to me, is to be able to spend more quality time with family as we spend less time at work. Of course, being able to spend money more freely is a nice feeling too.

Since moving back to stay with my family, I have been spending more time with my family, especially my mother. We would go and exercise in the gym and attend yoga classes together. We talk a lot more too, which can be good and bad (and this is the honest truth).

Today, we were supposed to go to the gym but I asked if she would like to skip gym and go for Ipoh Hor Fun in Holland Village instead. Since both of us are naturally lazy, I didn't have to do any persuading for her to agree to it.

Ipoh Hor Fun with vegetable, fried wanton and char siew. $4.50.

Ipoh Hor Fun with vegetable, fried wanton and char siew in curry. $4.50.

Dumpling soup. $5.00.

Inexpensive. :)

Burp.

Related post:
Passive income: A higher purpose.

Marco Polo Marine: Accumulation mode.

On 19 June, I blogged about Marco Polo Marine's persistent insider buying activity. I initiated a long position and I have been updating that blog post in the comments section. The latest update happened yesterday.

Today, I added to my long position as its share price retraced to 34c a share.

Technically, we see the Bollinger Bands narrowing on the weekly chart. Expecting a big move in share price in the coming weeks. With the MACD forming higher lows on the weekly chart, momentum is improving as sentiments towards the company turned positive. The OBV bears this out as it shows accumulation taking place over the longer term.

Immediate support is at 33.5c while immediate resistance is at 35.5c a share.

Some might wonder why I look at the weekly chart here instead of the daily chart. I do this because I am interested in holding on to my investment in Marco Polo Marine for a longer period of time and the weekly chart shows me the longer term probabilities.

I would buy more on further weakness in its share price, everything remaining constant.

Related post:
Marco Polo Marine: Persistent insider buying.

Tea with AK71: Home made sandwich!

My last blog post on what I had for lunch was a cause of concern for some readers. I have to say that I don't eat instant noodles all the time and I apologise if I have given anyone the wrong impression. I am happy to note, however, that so many readers of ASSI are into healthy eating.

So, what am I having today for lunch? A home made sandwich.

Ingredients:
1. Wholemeal bread
2. Tuna flakes
3. Lettuce
4. Cheese

Yummy!

This is probably the least expensive and yummiest wholemeal bread I have come across. Available at all Cold Storage and Shop N Save supermarkets. It is their house brand.

NTUC Fairprice's house brand wholemeal bread is cheaper, if I remember correctly, but it is a bit dry and not as tasty. Of course, taste is a very personal thing.

Related post:
Breakfast and lunch for 96c.

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Ever thought of being an entrepreneur?

More and more, people are starting online businesses. In Singapore, where a small shop space in a popular mall could cost more than $20,000 a month to rent, having a virtual shop makes sense.

Follow a few successful online shop owners and see their entrepreneurial journey. See how they carve out a niche in a market where fickle minded consumers are an everyday staple.

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Sabana REIT: Convertible Sukuk.

Some time back, I wrote about how perpetual bonds could be a good thing for REITs if they could use the funds raised to acquire yield accretive properties. Imagine borrowing at a lower interest rate to invest in a property with a NPI yield higher than the cost of debt. This is good news for existing unitholders.

Sabana REIT has announced a Convertible Sukuk which will raise S$80m. What is Sukuk? The easiest way to understand it is to think of it as an Islamic Bond. So, a Convertible Sukuk is a Convertible Bond.

The Sukuk will carry a profit rate of 4.5% and are due in September 2012. If the conversion to new units takes place, there will be 67,040,979 new units issued (about 10.5% of all units currently in issue).

Read announcement: here.

Sukuk holders could exercise the option to convert to new units after 9 November 2012. The initial conversion price is $1.1933 per unit. This is some 5.6% higher than the closing price of $1.13 in the last session.

If my understanding is correct, Sukuk differ from conventional bonds in that they do not take interest payment but, instead, they will take partial ownership of the business or assets. This is why the coupon of 4.5% is referred to as profit rate. Interesting.

Read announcement: here.

Property to be purchased:
23 Serangoon North Avenue 5.

Remaining land lease: 44.2 years

Purchase price: S$61.0m

Read about the property to be acquired: here.

I feel that the cost of debt at 4.5% per annum is somewhat pricey but Sabana REIT is a smallish outfit and the higher profit rate is to compensate for perceived higher risk, I suppose. It is similar to what Saizen REIT pays for some of its bank loans, for example. So, no big issue here.

I am not able to find information on the NPI which 23 Serangoon North Avenue 5 will generate for the REIT but I am assuming that it is yield accretive as announced by the manager. So, the NPI yield should be much higher than the cost of debt of 4.5% as the REIT's current portfolio has an average NPI yield of 7.3%. The purchase should be DPU accretive as well.

If the Convertible Sukuk are all converted to new units in the REIT, there will be a dilutive effect as they represent some 10.5% of the total units in issue now. However, the benefit is that they become equity in the REIT and not debt. This will, then, have a benign effect on gearing.

Do we stay invested and take the good with the bad or do we take our money elsewhere?

Related post:
Sabana REIT: 2Q 2012 DPU 2.27c.

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.

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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.