Vending machines in the USA.

On this last trip to the USA, I came across a couple of vending machines that I have never seen before anywhere else.

Guess what this one was selling?

Scratch and win cards! US$3.00 each.

What about this one?

Electronics! Amazing, isn't it?

In a situation where there is a shortage of space and labour, vending machines could be the answer for products which might not really need salespeople.

In Singapore, we see machines selling drinks, snacks and even Gardenia bread. However, we have not even touched the tip of the iceberg. They could be one of the answers to Singapore's problem with high rentals and a shortage of labour.

Related post:
Distinctly Japanese.

Yomeishu: Win Megumi and a beverage mixer!

The everyday person works very hard on a daily basis, taking a toll on their health.

Yomeishu is able to restore and maintain your well-being with natural ingredients.

You can win the goodness of Megumi (a liqueur made with 13 oriental herbs for everyday relaxation), and a Japanese beverage mixer just by answering a simple question!

20 winners will be picked each week for 5 weeks.

This week’s entries close on 28th November 2012.

You could be a winner at:
Yomeishu Guess & Win!

Be cautious even as we accept higher risks.

When I did a Diploma in Business, I had to study Business Law. One thing I remember is that something we buy has to be "fit for the purpose it was built for" and be "of merchantible quality".

So, let's say you bought a contraption which was supposed to keep food fresh but it did not; then, it was not fit for the purpose it was built for. If the contraption really did keep food fresh but it started to fall apart within the first week of use, then, it was not of merchantible quality.

Singapore's Lemon Law which kicked in on 1 September 2012 stipulates a 6 months period in which buyers now have to take action on any defective product. This addresses the issue of "merchantible quality".

In the weekend edition of The Business Times, I read an interesting article on whether conventional wealth management wisdom which says that people nearing retirement should have more of their wealth in conservative bonds is "fit for purpose". This actually raised a question in my mind as to whether wealth managers are providing products which are fit for purpose or are they self serving sales people.

In the few encounters I had with wealth managers, I was advised to be more aggressive with my investments because people in their 30s and early 40s could afford to do so. One asked me why was I so conservative when I told him I was not interested in any of his proposals which sounded rather risky to me. I was then advised that only people nearing retirement should be more conservative.

So far, my personal experience with wealth managers has not been positive, having lost much money through products they sold to me. Unlike physical goods, wealth managers do not have to provide any guarantees as to a financial product's performance. This could be the reason why when the Mini Bonds and other structured products offered a "capital guaranteed" feature, they drew so many investors. Of course, they were not of "merchantible quality" but no buyer could tell until things fell apart. Unlike physical goods, it was too late to do anything.

In an environment of very low interest rates and high inflation, we have to seek higher returns on capital to protect our wealth. However, we have to exercise caution even as we accept higher risks.

Related posts:
1. Low interest rates' a double whammy for some.
2. To protect our wealth, we have to take risk.
3. Fraud: Like taking candy from a baby.

Silver bullion coins.

Sharing photos of some silver bullion coins I own:

I still believe that people who have some extra cash should own some investment grade gold and silver as a hedge against the flaws of fiat currencies. Where silver is concerned, I think the Canadian Maple Leaf is one of the purest around. Relatively cheaper too.

Read my latest piece on the topic in my blog on precious metals:
Gold and silver: Still important assets to own.

Related post:
Buy gold and silver as insurance.

Olam: A time bomb?

The high profile standoff between Muddy Waters and Olam is not about something new. Earlier this year in June, I wondered at Olam's share buy backs as well. I blogged about it and attached a section of research done by Kim Eng on the company then.

What Muddy Waters has said does make sense and Olam has to focus on its business rather than its share price.

Should Olam come to collapse (as we believe it will), its use of much-needed cash to buy back shares at this time should give rise to questions about whether fiduciary responsibilities have been breached – particularly given the possible existence of individual motivations that are not necessarily aligned with those of Olam’s lenders.  - Taken from Muddy Waters' open letter to Olam.

To read the letter in full, go to Muddy Water's website: here.

So, is Olam going kaput in time? I know that Sunny Varghese was at the helm of Cityspring Infrastructure Trust. I was not impressed with that entity and was lucky enough to exit with a small gain. Is he able to do much better with Olam?

Short sellers could home in on Olam in time and it would be interesting to see how things turn out.

Related posts:
1. Olam: Share price up on buy backs.
2. Cityspring Infrastructure Trust: Rights issue.

First REIT: 30,900,000 new units.

First REIT is having a private placement, issuing 30,900,000 new units at 95c each. This is to help pay for acquisitions announced earlier in September.

How will this impact existing unitholders?

Other than the advance distribution for the period 01 October to 25 November which is nice to have, existing unitholders' interest in the trust is going to be diluted.

The REIT has approximately 632,645,000 units in issue. The 30,900,000 new units will add 4.88% to the total units in issue.  Based on an estimated pro forma DPU of 6.77c, post acquisitions, the DPU post private placement is estimated to be 6.455c or 1.614c per quarter.

In 3Q 2012, the DPU was 1.68c. Annualised, it gives us 6.72c. So, unit holders seem to be better off pre acquisitions and private placement. We are likely to see a 3.93% reduction in DPU in future.

At a price of $1.02 per unit, I now estimate a distribution yield of 6.32%. If unit price should decline to 95c which is what the private placement's investors would be paying, distribution yield would be 6.65%.

The advantage of the private placement is that it would strengthen the balance sheet of the REIT without incurring hefty costs which would come with a rights issue as the amount raised is not big. However, the expected dilution and a possibly lower DPU in future is unpalatable.

See announcement: here.

Related posts:
1. First REIT: Acquisitions in Manado and Makasar.
2. First REIT: 3Q 2012.

Flew United Airlines SG-Japan-USA (but never again).

Added on 12 April 2017:

OMG! This is what they do on United Airlines these days?



I won't fly United Airlines anymore.
------------------
I am back! It is good to be home.

It has been a while since I went on a trip to the USA. I no longer enjoy very long flights and flying to the USA takes a VERY long time. 

Then, there is the time difference which I find harder to adjust to as I grow older. 

Then, there are all those pre-dawn flights which means being at the airport at 3 or 4am which means waking up in the middle of the night. 

Then, there is the returning to Singapore past midnight. Really tiring.

There is always a need to layover in an Asian city and although some would complain about this, I actually enjoy such layovers. 

I always fly American airlines like United, Northwest or Delta to the USA and the layovers are always in Narita, Japan. 

It is the same this time.

A two to three hours layover is just about right. I would have enough time to have a hot meal and do some window shopping in the airport as well. 

On this trip, I had a bowl of hot udon soup on my outbound journey and a very delicious cheese and ham toast on my inbound journey.

Many hungry for a hot meal!

A bowl of hot udon soup for 750 Yen. Think this is expensive? Try ordering the same in the USA!

DOUTOR has more than 900 outlets in Japan! 

Croque Monsieur is a toast with three types of cheese and ham!
Add a bottle of Genmai Cha for 550 Yen. Heavenly!

Ah, makes me feel like going on a holiday to Japan again. The JPY has weakened quite a bit since my last trip in December 2011. Should I? Hmm...

See photos of my December 2011 trip to Japan: here.

LMIR: 3Q 2012 DPU 0.73c.

A reader sent me an email and asked if I would be writing about LMIR's 3Q 2012 results. I admit that I was wondering if I should just skip it this time.

LMIR announced a DPU of 0.73c which is lower than the 0.79c declared in 2Q 2012. This is despite the fact the distributable income improved 37.9%, year on year.

In my blog post on the REIT's 2Q 2012 results, I was optimistic that the REIT's DPU would improve further as its gearing of 9.3% meant that it had plenty of debt headroom for yield accretive purchases. However, the management has squandered the enviable low gearing level as a slew of recent acquisitions were DPU dilutive in nature. Post rights, I estimated a DPU of 0.815c and it does not look like it is going to happen anytime soon.

Unless unitholders were active in acquiring nil-paid rights as they were sold down to 2.1c, I believe we were better off pre-rights compared to post-rights. Pre-rights, we were enjoying quarterly DPU in excess of 1c and unit price was very much the same level as it is now. Those of us who bought into the nil-paid rights cheaply would have made capital gains of between 20+% to 40+% in less than a year, excluding income distributions received in the same period. Those who did not do so are not any better off.

Only time will tell us the quality of a REIT's management and LMIR's has disappointed so far.

See 3Q 2012 financial statements: here.

Related posts:
1. LMIR: 2Q 2012 DPU 0.79c.
2. LMIR: More acquisitions and lesser DPU again.
3. LMIR: More benefits from acquiring 4 malls?

Build a bigger retirement fund with CPF-SA (UPDATED).

Young working adults could use their CPF-SAs to grow their retirement funds, risk free, at a faster clip.  

This is a valid and relatively fuss free approach to long term wealth accumulation.

If you think that the additional 1.5% per annum paid on the CPF-SA does not amount to much, I would encourage you to read a blog post of mine written more than two years ago. 

In the last few paragraphs, I explained how transferring funds from CPF-OA to CPF-SA could significantly boost returns.

See: 
Do you want to be richer?





The additional 1% interest paid annually on the combined first $60K in our CPF accounts is another strong incentive for us to use our CPF accounts to grow our retirement funds.

If you are interested to know more, go to the comments section of the blog post:

Want to be wealthier without higher risk?

For risk free, long term savings with significantly higher returns, the best option for average Singaporeans is still the CPF-SA.






Other related posts:
1. SRS, CPF-OA and CPF-SA.
2. SRS: A brief analysis.

Protect your iPad mini.

Thinking of protecting your iPad mini from knocks and don't want to spend too much money at the same time? How does US$3.81 sound to you?

Yes, for only US$3.81, you will get a TPU shell for the iPad mini! Free shipping!

It comes in various colors too!

 

Shop online at:

 and search under New Arrivals.

You can't miss it!

Related post:
Save money with low prices and free shipping globally!

Category A COE hits record $77,201!

The premium in Category A, for cars below 1,600cc, surged $6,200 in the lastest bidding exercise, surpassing the previous high of $73,501 set in early August.

Easy financing is contributing to continuing demand. "Demand is still there, even as the economy slows down, and it is being propped up by cheap loans. So, as long as the monthly repayment is within the buyer's budget, he will get that new car."

(Source: The Business Times, 8 Nov 12.)

My reaction to this bit of news? This is totally mind-boggling!

Boggled at #1:
$77,201 for a certificate to own a car and a small one too.

Boggled at #2:
If monthly repayment is within budget, buy the car!

There are many rich people in Singapore. Bloomberg reported that there are 17 millionaire households out of every 100 households in Singapore in June 2012! Exact figure: 188,000 households.

I guess if buyers are able to afford a car at such astronomical prices using their own savings and if they really need the car, it is ok. If they don't need a car, why buy one?

However, if buyers are only able to afford a car because of the cheap loans available (which suggests that they have insufficient savings), it is not ok. This is especially so if they don't need a car.

Just off the top of my head, buying a $120k 1.5 litre Japanese car today and, to lose as little money per year to depreciation as possible, driving it for 10 years could see the buyer taking back only $7k at the end of the period. That is a loss of $11.3k per year or $942 per month!

In the above scenario, if the buyer draws a monthly salary of $4k, almost 25% of his monthly earned income is gone with the wind! If he really needs a car, it would be more prudent to look for a pre-owned car with a monthly depreciation of $400 or so. This would be a less destructive 10% of his monthly earned income.

People usually look at the running cost of car ownership: petrol, parking, road tax, insurance, ERP, maintenance and repairs. They sometimes forget depreciation which is a bigger than ever consideration in today's environment given the high price of the COE.

Any person thinking of buying a car in Singapore now, please think and think again.

Related posts:
1. Quick, buy a new car cheaper now!
2. A new car for $75,000?
3. Bought a new car!
4. The price of my car now.

President Obama wins! What next?

President Obama has been re-elected! Seems that Mr. Ben Benanke's job is safe. More quantitative easing, a weaker US$ and stronger inflationary pressure? Seems like it.

People are concerned about the "fiscal cliff". Could it turn out to be a non-event? Could the Democrats and Republicans reach a compromise?

What is the "fiscal cliff" all about and why should we be concerned?

If the current laws slated for 2013 go into effect, the impact on the economy could be dramatic. While the combination of higher taxes and spending cuts would reduce the deficit by an estimated $560 billion... the policies set to go into effect would cut gross domestic product (GDP) by four percentage points in 2013, sending the economy into a recession.

See full write up at: The fiscal cliff explained.

President Barack Obama won re-election in a tight campaign, besting Republican presidential nominee Mitt Romney in enough swing states to secure four more years in office.

The specter of gridlock would undoubtedly loom before Obama as he confronts an immediate task in addressing the series of automatic tax hikes and spending cuts – the so-called “fiscal cliff” – set to spring into place at the end of this year. As Obama won a second term, House Speaker John Boehner, R-Ohio, said Republicans’ retention of their House majority meant “the American people have also made clear that there is NO mandate for raising tax rates.”

Read full story at: NBC News!

The story does not end with President Obama's re-election, for sure. Another chapter is about to begin.

Want to be wealthier without higher risk?

More than a year ago, I wrote about a conversation I had with someone who was worried about the effects of inflation on his personal wealth. By chance, I met him over the weekend and we spoke briefly. He lamented that he did not listen to me as he could not come to terms with the idea that to protect his wealth, he had to take risk.

This reminds me of a saying in Hokkien I heard recently:
Afraid that grasping too loosely might let the bird fly away and that grasping too tightly might kill the bird.

So, fearing the wealth destructive effects of higher inflation, he wants higher returns from investments that have higher risk but the problem is that he cannot accept the higher risk!

If not for the fact that he looked so serious and troubled, I would have made a joke out of it.

This person is very careful with his money. Perhaps, too careful. Well, he has a family to care for and with young kids, I suppose he is right to fear risk. If there should be an investment that would offer him high returns with near zero risk, I am sure he would have jumped on it, but is there such a thing?

Anyway, I did not know what to say to make him feel better and after making some small talk, I bid him farewell. Would you know what to say to make someone feel better in such a situation?

Some people are just ill disposed to risk taking. Live and let live, I guess.

The paradox is that he is actually already taking risk by leaving his money in his bank account in the current low interest rate, high inflation environment and he is definitely not growing any wealthier.

Related post:
To protect our wealth, we have to take risk.

Music and movie!

 

 

I am Your Superstar -

Win a 2NE1 Limited Edition Autographed CD

with Nikon CoolPix S01!

Find out how at: NikonClub!

 

It is movie time!

 

Do you have a pet? Everyone who has a pet would know how heartbreaking it is when your pet leaves you.

For Victor Frankenstein he doesn't want to lose his beloved pet dog Sparky. He brings Sparky back to life only to face unintended and monstrous consequences.

Catch Tim Burton's Frankenweenie for a thrilling ride of comedy, adventure and horror!

 

See the previews at: Frankenweenie!

 

Sound Global: Smart money is buying.

On 17 Oct, I mentioned a downside target of 48c for Sound Global's share price. This might or might not materialise. Personally, I am not averse to buying a few bids higher if the technicals tell me that it could be a good idea.

As Sound Global's share price declined, volume has also declined. This picture of a low volume pull back suggests that the selling is weak. Indeed, looking at the MACD, we see a higher low possibly forming. Looking at Chaikin Money Flow, we see how money flow has turned positive even as its share price weakened lately.

Immediate resistance is at 51c while immediate support is at 49.5c.

This is another stock I am accumulating on weakness.

Water treatment investments are set to double in the 12th Five Year Plan Period (2011-2015) to CNY430b in an effort to improve China’s wastewater treatment rate to 85% by 2015, from 77% currently. Commercialisation and privatisation of the Chinese water treatment market is also a long-term trend. With over 20 years of experience, Sound Global has become one of the leading one-stop integrated wastewater treatment solution providers in China, with a respectable market share.

 

In our view, Sound Global’s revenue will be supported by: 1) continuous order wins thanks to a long-term relationship with the government, and 2) more BOT projects entering their collection period. A hike in water tariffs in China will also have positive effect on revenue.

 

Although we are positive on Sound Global’s revenue outlook, its high net margin of the past few years would be very hard to maintain, in our view. Recent high-cost borrowing will weigh on the company’s net margin for the next few years, assuming it does not redeem the senior notes before maturity.

 

Sound Global is trading at a large discount to its peers (6.7x FY12PE based on consensus vs average of 12.8x for HK-listed peers and Hyflux’s 16.7x). We currently do not have a rating and target price on Sound Global. However, we think the deep discount may not be justified given Sound Global’s comparable net margin and higher-than-peers ROE. Sound Global is worth considering if investors are looking for cheaper alternatives.
 

(Maybank Kim Eng, 8 Oct 12)

Related post:
Sound Global: Accumulate on weakness.

CapitaMalls Asia: Any correction is a buying opportunity.

CapitaMalls Asia's share price is enjoying a strong follow through after breaking resistance. Further increase in share price is likely to meet stronger resistance at $1.93, the 138.2% Fibo line. Overcoming this resistance level would see the next two golden ratios at $2.00 and $2.07 providing resistance.

It remains to be seen if $1.84 is resistance turned support. Stronger support is at $1.705 as that was a many times tested resistance that finally gave way after a period of seven months. Bears would have to be out in full force and more in order to push the share price below $1.705 as the bulls who missed the boat earlier would likely try to get on the boat at this very price, give or take a couple of bids.

All the daily MAs are rising and the picture has turned nicely bullish. Any correction to test supports would be a buying opportunity.

We reckon there may be opportunities for CMA to monetize some assets in 2013, such as Queensbay Mall and its 50% stake in ION Orchard. With continued strong underlying performance from the malls, we maintain our BUY recommendation. Target price is raised to SGD2.25. (Maybank Kim Eng, 29 Oct 12)

Related post:
CapitaMalls Asia: Broke resistance.

China Minzhong: Accumulate on weakness.

There are a few stocks which I would like to accumulate on weakness in the near term. China Minzhong is one such stock.

Many like Jim Rogers have put forth a convincing case of an impending food crisis. In the event of global food shortages, it is logical to expect food prices to rise. So, investing in food producers seems to make good sense.

Improving numbers, insider buying, an experienced management and the right industry, I believe China Minzhong is a good company to invest in. Also, there could be more positive catalysts and these could push its share price higher.

After hitting a low of 53c in early June, its share price rose to hit a high of 87.5c on 19 Oct. That is a meteoric 65% increase in a short span of 4 months.

The daily chart is showing some fatigue. Some consolidation is to be expected. The immediate support is at 78c. If that should go, next supports are at 74c and 70c. The MACD which is a pure price oscillator suggests that supports could continue to be tested. However, the Chaikin Money Flow does not show any significant outflow of funds which suggests that long holders are not in any hurry to sell. We could see share price doing what Daryl Guppy calls a correction using time which means people waiting on the side hoping to get back in when there is a price correction could be disappointed.

The weekly chart shows quite clearly that the downtrend has reversed. Breaking immediate support could see share price declining to test the 20w MA in the longer term. This currently approximates 71c. As the 20w MA is rising, the longer term support would be a higher value over time. The declining 100w MA, currently at $1.10, could cap any further price increase in the near future.

Buying when there is a test of supports with longer term MAs rising seems like a good idea. However, remember, TA shows where the supports and resistance are but it does not mean that they will be tested.

Related post:
China Minzhong: Opportunity in slowing momentum.

“If food inflation in China remains high, there is a high chance that the management’s revenue target (of 15% growth) could be surpassed.” Maybank-KE keeps a Buy call with $1.16 target. Read full article in The EDGE.

AirBook at US$464.96 only!

Looking for an inexpensive and sleek notebook? This looks cool and the price is amazing!

CPU: Intel Atom D525 Dual Core, 1.8GHz.)
Chips: Intel NA NM10.
OS: Windows XP.
Hard disk: 64GB SSD.
System memory: DDR3 4.0GB.
Aluminum Shell Slim Notebook Computer.
Screen: 13.3 inch TFT color LCD display, resolution: 1366 x 768.
Keyboard: 84 key keyboard.
Touchpad: With touchpad.
WIFI: 802.11b/g/n.
LAN: 100Mbps Ethernet Access.
Storage device: Reader modules (SD/MS/MMC),MAX. 32GB.
Camera: 1.3 mega pixels camera.
I/O Port: 3.5mm audio jack, 2 USB 2.0 ports, Card Reader (SD/MS/MMC), DC IN, Mini HDMI. Adapter power supply: 100-240V Input; 19V/2.2A DC Output.
Battery: 7.4V/4200mAh.
Dimension: 334.5 x 223.5 x 21.8mm.
Weight: 1.45kg.
Language: English   

US$ 464.96! Free shipping!

Check it out:
13.3 inch Aluminum Shell Slim AirBook Notebook Computer with WIFI

Related post:
Save money with low prices and free shipping globally!

Black, white or grey?

I enjoy reading but the kind of stuff I read is mostly related to money and investments these days. Gone are the days when I would read a book of fiction every week.

A friend told me I have no life because I don't read the "Life" section of The Straits Times. Droll.

Anyway, just now, I read a story in Yahoo which evoked within me a mixed feeling of condemnation and sadness for the guilty party. Many times, things are not black or white although I would prefer for them to be so as it would make life easier.

This story has nothing to do with money and investments:

A 32-year-old female Singaporean teacher was sentenced to a year in jail on Monday for having sex with a 15-year-old boy in her school, local media reported.

The teacher, who was married with two children, started a relationship with the student last year after she started counselling him, the Straits Times daily reported on its website.

The teacher-student-monument in Rostock, Germany.

I think it is more common to read about male teachers in such cases or am I being sexist here?

After reading the story, my initial reaction was that the female teacher deserves the punishment. Pure and simple. Then, although I still think she should be punished, I feel a bit sad for her.

Under Singapore law, an adult found guilty of engaging sexual intercourse with anyone under the age of 16 -- even if it's consensual -- faces up to 10 years' imprisonment, a fine or both.

The boy is one year away from being legal. Could they not have been really in love?

Of course, there are other issues involved here such as how the teacher abused a position of power and trust. So, if the boy had been a JC student, the teacher could still have been dismissed by MOE but she would have been spared a jail sentence?

Once people are married, they are no longer fully their own person. They are only half a person. Whatever they do, they should think of the other half. If they have children, the responsibility becomes heavier as the children could be psychologically scarred for life through parents' thoughtless behaviour. So, I feel sad for her family too.

Then, I thought perhaps the boy's family could have thought about the teacher's situation and how they could have dealt with the issue differently. People do wrong sometimes. Perhaps, a private meeting with the teacher and a warning that she should stay away from their son would suffice?

Psychiatrists found "no predatory paedophilic tendencies" in the teacher. So, she is not a threat to the young in society at large. Of course, this fact only came to light because the case went to Court.

In a different time and age, could this have had a different outcome?

Read full story: here.

A blast from the past: Singapore blue chips or S-REITs?

I have been blogging for close to three years and looking back, I was a rather prolific blogger. Over the weekend, I read some of my older blog posts and found one which I have almost totally forgotten about.

Those were the days when S-REITs were largely unloved and shunned. Written in the first year of my blog's creation, to anyone who would listen, it was an effort to show that S-REITs could be great investments too.

Readers from my blog's early days might or might not remember this blog post but, I believe, all readers could benefit from the blog post as a reminder for us not to be bigots. It is a reminder to myself as well as I find that I have an increasing propensity to become mired in mental mud as I grow older. Feel the same way?

Then, you might want to read an ASSI forgotten classic:
Building and preserving our wealth: Singapore blue chips or S-REITs?

Three point turn!

This weekend, I am going to leave you with a very short blog post. Nothing original but sometimes, we need a few reminders, don't we?

Man is created in the image and likeness of God but there is nothing Godly about Man.

So, here are the three points which could turn our lives (for the better):

1.  We only need so much money in life. The rest is for showing off.

2.  Keep our needs simple and our wants few. We will have less money problems that way.

3.  Know what and who matter to us. Don't waste time and money on others.

True or not?





I hope we are all truly happier individuals over time. Have a good weekend, everybody.

"Every man is rich or poor according to the proportion between his desires and his enjoyments." (Samuel Johnson)

AIMS AMP Capital Industrial REIT: 2Q 2013.

A DPU of 2.5c has been announced. The REIT goes XD on 2 Nov 2012 and the income distribution is payable on 20 Dec 2012.

Gearing is comfortable at 31.5%. This leaves ample debt headroom for further yield accretive initiatives.

The REIT now has a new source of funding via a $500m Medium Term Note Program. It issued a $100m 4 years 4.9% fixed rate notes due in August 2016. Being an unsecured facility, the cost of debt is dearer but if we should continue to see positive rental reversions, this is still acceptable.

Indeed, the REIT manager has not disappointed as they have been successful in renewing leases with higher weighted average rental with positive rental reversion of some 17.3%. They have also reduced concentration risk as the proportion of leases expiring by 2013 have reduced from 35.7% one year ago to 9.9%. Of course, it remains to be seen if they could secure positive rental reversions by renewing the 9.9% now remaining. Negotiations are in progress.

The management should also continue to work towards 100% occupancy although, at 99.2%, it is already above average for industrial properties in Singapore.

Average security deposit of 7.2 months per property provides a peace of mind.

In the papers, it is reported that distributable income reduced some 5.4% but on a quarter to quarter basis, the reduction is much lesser at 0.6%. So, I wouldn't be too worried.

Although gross property income improved some 3% quarter on quarter, NPI reduced 1.4% due to an increase of 13.9% in property operating expenses. This includes repair and maintenance of some properties which should be a one off expense. Having said this, the management should continue to be prudent in managing expenses.

See presentation slides: here.
See financial statement: here.

Related post:
AIMS AMP Capital Industrial REIT: 1Q FY2013.

First REIT: 3Q 2012.

As the contribution from the divestment of its Adam Road property has run out, First REIT's DPU sees a reduction of 12.5%, quarter on quarter, from 1.92 to 1.68c.

Year on year, however, DPU has improved from 1.58c to 1.68c.

I would say that First REIT has produced sterling results yet again.

Income distribution is payable on 29 November 2012.

See financial statement: here.

Related post:
First REIT: 2Q 2012.

LMIR: More acquisitions and lesser DPU again.

The latest acquisitions of Pejaten Village and Binjai Supermall will further reduce DPU.

Of so many REITs I am vested in, LMIR is one which has constantly disappointed in more ways than one.

The management has listed the advantages of acquiring these malls and they sound like a rehash from their equally distasteful purchase of 4 malls recently:

1. Acquisitions are at a discount to NAV.
2. Enhance earnings of the Trust.
3. Properties are of good quality.
4. Increase economies of scale in operation and marketing.
5. Minimise concentration risk.

The price tag for the purchase of the two malls: $126.5m
NPI of the two malls: $7.0m
NPI yield: 5.53%

Just like its recent purchase of 4 malls, these acquisitions are not NPI yield accretive. NPI yield of the REIT's portfolio is being gradually diluted with these overpriced purchases.

It does not matter that purchases are at a discount to valuation. They are still too expensive if ordinary unit holders are getting less income even as the REIT's asset base grows! If there is nothing worth buying, don't buy anything. Doesn't sound too difficult or does it?

The primary beneficiary here is the REIT's manager as they will be paid an Acquisition Fee equal to 1% of the purchase price which works out to be about $1.3m!

I think Ms. Viven Sitiabudi should consider retiring as CEO.

Read announcement: here.

Related post:
LMIR: More benefits from acquiring 4 malls?

Dynasty REIT: At what price would I bite?

Recently, I received quite a few emails regarding Dynasty REIT.

With full page ads taken out in the newspapers, few could have missed the promise of an approximate 7% distribution yield. It seems that the REIT is generating quite a bit of interest in the current low interest rate environment.

I have not subscribed to any IPOs in many years, believing that they are on terms which are more in favour of the issuers. Of course, there are cases in which IPOs have done quite well because Mr. Market's sentiment towards them was favourable.

So, for people interested in IPOs, they should develop the ability to read Mr. Market's mind! Personally, I already have great difficulty reading Mr. Market's mind with the help of charts. Without any trading history (i.e. no charts), it is a tall order indeed for me to read Mr. Market's mind towards IPOs.

For example, some people were saying that the unit price of Religare Health Trust would probably do very well because the public tranche was 13.5x over subscribed. On the first day of trading, it tanked 10%. It is still trading below its IPO price today.

What about Dynasty REIT? Could its unit price tank 10% on the first day of trading too? Who knows? I have said before that as an investor for income, I am more concerned with the distribution yield and that any capital gain is a bonus. Of course, we want to avoid any loss of capital at the same time. How do we do this? Buy when things are inexpensive. So, is Dynasty REIT's IPO price inexpensive?

Shanghai International Capital Plaza:
29 floors office and retail building plus a basement.
Committed occupancy rate: 86.8%

The promised distribution yield of about 7% per annum is largely achieved through a waiver of entitlement to income distributions by sponsor units. Now, the sponsor is not being altruistic or generous. It has to do this in order to make the IPO attractive. Without the sponsor waiver, the distribution yield would approximate 4% only. A big difference.

Of course, there are many assumptions that could be made for a possibly higher income distribution over time which could make up for the loss of the sponsor waiver by December 2017. However, we would be counting the chickens before they are hatched and in this case, we are not even sure we have the eggs for counting.

This IPO is heavily engineered and, in my opinion, at 85c to 91c a unit, it is not a good value proposition. I could be interested in initiating a long position if its unit price were to be closer to 55c a unit.

You might also be interested in these blog posts:
1. Religare Health Trust: 8.5 to 9% yield.
2. Perennial China Retail Trust: A weak debut?

Sabana REIT: 3Q 2012 DPU 2.34c.

Sabana REIT reported a robust set of numbers, declaring a DPU of 2.34c. The counter will go XD on 24 Oct and income distribution is payable on 28 Nov.

Total assets under management: $1.1 bn

Occupancy rate: 99.9%

Average all-in financing cost: 4.3%

Weighted average tenor of debt: 3.5 years.

Interest cover ratio: 5.5x

NAV/unit: $1.03

Sabana REIT's higher income from a slew of acquisitions comes with financing cost increasing significantly as well. Gearing is now higher at 38.3%. However, this does not disturb me much as the net result is still positive for unit holders.

In my opinion, the weakness of Sabana REIT remains a high concentration of leases expiring in 2013.  At 47.4%, it has not changed from 3 months ago. My hope is for positive rental reversions which should lead to a higher DPU. I look forward to any growth in income without any significant increase in costs to the REIT.

At the closing price of $1.13 in the last session, the annualised distribution yield is 8.28%. In an environment of very low interest rates, this is still very attractive and a further compression of yield to 7.5% does not seem improbable. That would see unit price at about $1.25.

See presentation slides: here.

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

CapitaMalls Asia: Broke resistance.

I got into CapitaMalls Asia way too early. However, taking a cue from the weekly chart, continual buying means my current long position is in the black. Of course, I have collected some dividends in the meantime as well.

Of course, what I have done is by no means brilliant. Far from it. The brilliant thing to do is to buy only when share price has troughed and looks to be turning up. Another lesson for me.

Technically, CapitaMalls Asia's share price broke resistance at $1.70 and it remains to be seen if this could be resistance turned support. With all the MAs rising, it could indeed be the case although a dip to test the rising 50d MA for support would not be too far fetched. The 50d MA is currently at $1.66.

The rising OBV suggests continual accumulation by smart money in the last 12 months. If this reading is correct, we could see share price climbing a wall of worries in the next few months.

Related post:
CapitaMalls Asia: To buy on possible weakness.

Value for money holiday in Hong Kong.

The year end holidays are just round the corner. Wondering where to bring the family for a vacation this year? Why not Hong Kong? The flight does not take too long and Hong Kong has good food and attractions aplenty.

You might want to bring the kids to Hong Kong Disneyland as well to see Snowy Christmas Town.

 

Find out more at: Christmas Town.

Get a special 4D 3N Hong Kong package to make it a value for money holiday at the same time.

Check out the special offer by following the banner here:



Wanna see photos of my trip to Hong Kong last year? See them: here.