Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...
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I made quite a few new investments in the last six months to a year but, of these, the largest investment was in Centurion Corporation. I was attracted not just by their ability and willingness to pay meaningful dividends but also their clear and viable strategy for growth.
With insiders eating their own pudding too, it was a vote of confidence which regular readers know I have always liked. 2Q 2017 was another stellar quarter. 72% rise in earnings is definitely nothing to scoff at. However, what I am more impressed with is the gross profit margin which improved some 7% to 73% while gross profit improved 36%.
Much has been said about the increasingly difficult business environment with many more competitors sharing the Singapore foreign workers accommodation pie.
The stellar results tell me that Centurion's management are not only competent, they are also fast to move into a new growth area and they are masters in branding.
An interim dividend per share (DPS) of 1c has been declared and that makes me happy. Although I had no idea that Centurion Corporation had plans to list in Hong Kong when I became an investor in February, if that should come to pass, we could see its share price going higher.
Of course, although less important to me than the investing for income angle, a higher share price would make me happy too.
As my blog grows in readership, there are many more questions which are repeated. There is some level of predictability when it comes to questions from readers, I see. This is why I find it useful to share some older blogs regularly on my Facebook wall. It is mainly for the benefit of my new readers and also readers who are more forgetful.
A question which I get asked before and which has picked up in frequency in recent months is why am I the way I am? This is a question I have addressed on a piece meal basis and to make it easier for me in future, I am blogging a reply in the comments section so that I have something which I can find easily to point to readers.
Read only if you are interested in my psyche: I have some deep seated insecurities which I can never be rid of. I have provided glimpses of these in my blog before. They are, of course, very piecemeal in nature and scattered.
I cannot remember where they are in my blog exactly. I do remember that I shared in the comments section but I have never really blogged about these insecurities in their entirety. I try not to relive those years.
So, I will be brief.
My family almost went bankrupt when I was entering my teens and our financial hardship lasted many years. Those years left a mark on me.
I hinted about the financial hardship my family went through in a few blog posts before and one which I can remember is:
My family learned first hand that banks are fair weather friends and I developed a strong aversion to debt. I try to avoid borrowing money for anything.
Sleeping in the living room of a HDB flat for some years as a teenager was a humbling experience. It was awkward too.
I learned early on in life how finances could go wrong so badly and so quickly and how not having enough money was a terrible thing, how being indebted was much worse.
Living with the constant threat of losing whatever we had left was very stressful but my parents tried to give us as normal a life as they could.
Those years of financial hardship left me with scars and I believe that anyone who had similar experience will always have shadows haunting them.
"Do I have enough money? Maybe, it is not enough. What about my parents? Do I have enough to take care of them? What about my younger siblings?" So, I tend to overcompensate.
I tend to save as much money as possible. I put away much more in my emergency fund than what some people think is necessary. I do this although, financially, we became more comfortable as I graduated from university and started working.
I craved greater financial security.
The CPF-SA was a natural candidate and I blogged about how I transferred funds from my OA to my SA in the first few years of my working life and that was almost 20 years ago.
There are many clues littered throughout the blog about the way I think and why.
Of course, I don't expect anyone to piece all the clues together to understand AK the giam siap fellow.
Pulled pork as Rivalea calls off IPO
The Australian, November 7, 2017
(See Comments section at the end of this blog.)
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7 October 2017 Reader: Hi AK, thanks for the session (i.e. Evening with AK and friends). QAF has received shareholders approval to list it's primary production on the ASX. Since management has not indicated that the proceeds from listing will likely not translate to special dividend for shareholders, hopefully they can put the money to good use to expand their operations in the Philippines. Wonder when the share price will be appreciated by investors and truly appreciate upwards.
AK: I dunno if the share price will move up or not. One off gains are one off. So, don't place too much emphasis on that. Although QAF has a good track record, we could see lower share price if the pork oversupply situation in Australia is prolonged and lasts for several quarters. Earnings will continue to suffer then. Off the top of my head, in such a situation, we could see $1.00 - $1.10 a share then. As QAF should be able to maintain its dividend, I am staying invested and getting paid while waiting.
------------------------- Reader #1:
I wonder if any of your readers have written to you recently about the longer term aspects of QAF- both in dividend yield and share price? Reader #2:
Hi AK, I know you are an investor in QAF Limited. Any reason why the share price is plunging? I know a long time director just stepped down last year. Do you think that has an effect?
Singapore's Longest Sandwich AK: Don't ask me about share price. Ask Mr. Market. There is no way I can tell how prices might move now or in the future (with certainty). Past prices, I can tell you easily. Dividend yield? That partly depends on share prices. Refer to what I said above. ;) There will always be challenges in business. I will say that QAF's track record is a good one and I can only hope that they continue to bring home the bacon (and bread). ;p
Of course, QAF is not just about Gardenia bread although that is what most of us know them for. QAF is also in the business of pork production in Australia (i.e. Rivalea) which is doing very well. It was only a few years ago that Rivalea's viability was still a big question mark and some readers might remember that I blogged about it too. Now, Rivalea stands shoulder to shoulder with Gardenia in importance to QAF. Of course, with the strategic review to improve value for shareholders still underway, it is difficult to say what will happen in future but it is reasonable to assume that any action taken will probably result in value being created.
The "worst" thing that could happen from the review is for QAF to maintain the status quo. To an investor for income, this is probably not really a bad thing but to a speculator, it could be. Know our motivations as investors and know our investments. Then, we will know if the investments are appropriate for us.
If they are appropriate investments for me, I will stay invested. The day they are no longer able to do what I think they should do for me is when I would probably let them go. Time will tell.
Que sera sera.
Reader says: Time flies and I'm glad to have taken your advise previously to do well in studies. I am currently reaping what I've sow for my study & career. Good news is that i have gotten a job that pay me well compared to my first job 3 years ago; i got close to 50% pay increment! However, my life had been quite a drama due to conflicts at home.
So, i end up moving out, renting a room to keep myself in peace.
With that, expenses increased and i am having difficulty sustaining it. As i am single (28 years old) and I have to wait to reach 35years old to be eligible for a hdb bto 2 room flat (considering the waiting time for BTO or higher price of resale flat). I am currently thinking of getting private property (studio) which if possible, i would like to save enough downpayment before committing to own one. i calcluated at least 3-4 years of saving to reach that goal. Do share with me your opinions too to handle my current situation
Reader says: That is a interesting rule to use as a guide, but does other factors affect the outcome if we factor in the inflation, demand & supply of housing and uncertainty of the house value in future?
AK says: It is about cash flow. How can we tell what the demand and supply situation is going to be like in future? The Japanese didn't know they were going to suffer 2 decades of decline in housing prices. The Americans didn't know they were going to suffer a huge crash in housing prices that wiped out 10 years worth of wealth. If cash flow is going to be an issue, forcing ourselves into buying a private property because we fear prices are going up higher in future is silly. Too many people have too much of their wealth stuck in their homes. This is why so many people in a wealthy nation like Singapore must work till the day they die.
Reader says: I see, thats is a very good insight for me to learn. i trust your experience in this. AK says: Alamak. Don't trust me. I don't have a crystal ball. I cannot see what the future is going to be like. I am just saying that we should stay prudent especially if cash flow is tight. If you have plenty of money lying around and cash flow is not an issue, then, if you want to take a bet on property, go ahead. Having healthy cash flow is always important.
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