Increased investment in Religare Health Trust (RHT) by more than 150%.

Religare Health Trust's (RHT) latest results missed expectations but yesterday's massive decline in its unit price was surprising and, I thought, excessive.

The sale of a 51% stake in FHTL impacted RHT's income. 

Distributing the proceeds as a special dividend also meant that its NAV per unit declined to 83.8c. 




DPU for the quarter ended 31 Dec 16 was 1.25c, a big year on year decline of almost 31% but most of it should be expected because of a reduced contribution from FHTL. 

Without accounting for this, however, DPU would still have reduced by a few percentage points (i.e. pretending that RHT did not sell a 51% stake in FHTL). 

Trying to figure out how much is a reasonable price to pay for RHT, I referred to my long time healthcare REIT investment, First REIT. 




At $1.27 per unit, First REIT offered a distribution yield of about 6.7%. 

RHT's gearing level is 26.6% while First REIT's gearing level is 31.1% (perpetual bonds lowered gearing ratio from 34.4% to 30.0% last year). 

So, First REIT should offer a higher yield since it is more highly geared.

Nonetheless, if we expect a quarterly DPU of 1.25c from RHT to be the norm from now (however unlikely), with an annual DPU of 5c, to get a 6.7% distribution yield or more, a unit price of 74.5c or lower is required.

Although surprised by the speed and depth of the plunge in unit price, as I already had an idea of what was probably a pretty reasonable price to pay, I simply acted and more than doubled my investment in RHT.

All else being equal, the additional investment I made in RHT will offer a distribution yield of about 6.9% which is probably quite decent for a healthcare REIT now.

One reason why I decided to invest in RHT was discovering how India was not doing enough to provide healthcare for her people. 




I found out from watching an interview with an Indian Nobel prize winner. 

My independent research since then tells me again and again that there is a lot of room for growth in India's health care sector. 

An example of my research:

Source: The Hindu, 13 Sep 16.

I believe that RHT's income would improve in the next couple of years not only because of increasing fees but also because almost 600 beds will be added by development projects to be completed as well as asset enhancement initiatives (AEI) in existing assets.





A child cannot throw a tantrum forever because the child will run out of energy, grow tired and stop. 

Mr. Market is no different.

Source: DBS Research, 7 Feb 17.

Read the companion blog on investor psychology: HERE. 
First REIT's presentation: HERE.
RHT's presentation: HERE.

Hock Lian Seng returns 100% and more!

One of the things that I like to do is to buy into what looks like a fundamentally sound business when insiders are accumulating. One such stock which has amply rewarded me over the years is Hock Lian Seng.

I already had a small position in Hock Lian Seng but decided to buy more in 2011 when I observed insiders buying. Back then, I paid 24c a share. 





Fully confident that the company would be able to continue with a dividend per share (DPS) of 1.5c, I was looking at a dividend yield of 6.25% back then. That was in October 2011. Read blog: here.

A few months later in February 2012, Hock Lian Seng declared a DPS of 2c which translated to a dividend yield of 8.33%! That it represented only 32.8% of earnings was pleasing. 





They were retaining earnings which increased the value of the stock. Read blog: here.

In both 2013 and 2014, Hock Lian Seng declared a DPS of 1.8c. In between, I had an opportunity to add to my investment, paying 26c a share in May 2013, confident that a DPS of 1.5c remained undemanding. Anything more would have been a bonus. I was not disappointed. Read blog: here.





Almost a year later in February 2014, Mr. Market gave me a chance to buy again cheaply. That time, I paid 25.5c a share. I would have liked to accumulate more later on but Hock Lian Seng received positive media coverage by end of 2014 and its share price quickly rose. Read blog: here.

In 2015, Hock Lian Seng declared a DPS of 4c! Mr. Market's exuberance went through the roof!

I cautioned that the 4c DPS was a one off event and unlikely to be recurring as Hock Lian Seng saw its share price rocketing. 





Too many analysts and investors were waving the 4c DPS around as if it was a regular event. 

I won't be surprised if there were many newly minted Hock Lian Seng investors that year. 

I did not add to my investment but, throughout the buzz, I held on to my investment and enjoyed a dividend yield of 15.38% to 16.66% that year. Read blog: here.





In 2016, Hock Lian Seng declared a more normalised DPS of 2.5c. Mr. Market wasn't enthused and its share price reflected the mood. However, its share price did not go below 30c. If it did, I would have bought more. 

Of course, it stands to reason that Hock Lian Seng should not trade at below 30c a share. It is a more valuable company today than it was in 2011 from retaining earnings for so many years.






Yes, on top of the dividends I have received over the years from Hock Lian Seng, my stake in the business has also appreciated in value. The total return has been more than satisfactory.

Hock Lian Seng's sound fundamentals might have caught the attention of Mr. Market and its share price recently went ballistic. 

I don't pretend to understand everything but I understand that selling about half of my investment in Hock Lian Seng would make my remaining investment free of cost. This is without taking into account the dividends received over the years too. 

I talked to myself, I listened and I acted accordingly. Spooky!






Hock Lian Seng could possibly announce a DPS of 2.5c sometime in the near future. Based on 52.5c per share, that would give a dividend yield of 4.76%. 

Based on my cost, however, I would get dividend yields of 9.6% to 10.4%.

Wait a minute, since my remaining stake in Hock Lian Seng is free of cost, what should my dividend yield on cost be? Alamak. How to calculate like that?






I shared in a blog many years ago that my investment in First REIT was for keeps. To be fair, there are a few other investments in my portfolio which I feel the same way about.

My blog is not very cerebral in nature because I am not a very intelligent person. I am not being modest here. I am being honest.

Not being very intelligent, I hope to be rewarded by simply staying prudent, pragmatic and patient. 





I believe we don't have to be smart to be rich. If AK can do it, so can you.

Related posts:
1. First REIT: This one is for keeps.
(In five and a half years, I would have recovered my capital. )
2. Don't have to be smart to be rich.
3. Robust order book at 3 year high.

Croesus Retail Trust 1H FY2017 Hong Bao.

This was from a recent conversation:

Reader:
"Croesus Retail Trust reported good results but an investor I know sold all his shares already."

AK;
"We have our reasons for buying or selling. If our facts are right and if our reasoning is sound, we should do OK. We could consider facts and reasons offered by other investors in reviewing our investment thesis but don't be influenced by their buying or selling."

Mallage Shobu, a CRT mall in Saitama.

That Croesus Retail Trust (CRT) has done well is something I should really celebrate twice because it was with the funds that I got from selling my rather big investment in Sabana REIT years ago that I invested in CRT. 

I should celebrate that I was lucky enough to get out of a terribly managed REIT with fairly decent gains and I should celebrate that I was lucky enough to build a good size position in CRT at fairly good prices.

CRT has announced a distribution per unit (DPU) of 3.6c for 1H FY2017. Based on a unit price of 87c, CRT currently offers an annualised distribution yield of 8.28%. 

Gross revenue went up. Net property income (NPI) went up. Distributable income went up. DPU went up. This is what we want to see. All is well.

Now, I want to share a couple of things. If we see distributable income up and DPU is down, how like that? If we see gross revenue down and NPI up, how like that? 

To me, these are a couple of things which might hold me back from making an investment or adding to an investment. I would have to investigate into the reasons and see if something was wrong and if the wrong was enduring.

If you don't understand what I am saying, never mind. I am just talking rubbish, as usual.

Mallage Saga, a CRT mall in Saga.

Anyway, back to CRT. I will make only a few points because the presentation slides are pretty self explanatory:

1. One of the benefits of having an internal manager is cost savings and the savings we saw in 1H FY2017 should be more pronounced in 2H FY2017. This is because the cost savings only started more than halfway into 1Q FY2017. CRT's DPU should have some support from this.

2. I said before that I like AIMS AMP Capital Industrial REIT because they engage in asset enhancement initiatives (AEIs) and redevelopment of existing assets. Doing something with our existing assets to enhance their income generating ability is always preferred and usually less costly compared to simply buying another asset. CRT is pursuing organic growth too. How to say I don't like?

3. The negative interest rates in Japan are not going away anytime soon. This is good news for domestically leveraged entities in Japan like CRT. USA's interest rate hikes will have no direct impact on CRT which is not the case for many S-REITs as Singapore imports her interest rates from the USA.

4. Although CRT's gearing ratio has gone up from 45.3% to 46.1%, the interest cover ratio has also gone up from 3.7x to 4.2x. Higher level of debt is not alarming if debt service ability has strengthened.

I like what I see and I will stay invested.

See press release: HERE.

See presentation slides: HERE.

An incomplete analysis of SingPost.

SingPost was a company I was looking at just a few months before Alibaba came into the picture. Thinking of adding it as an investment for income, I was waiting for the share price to go a bit lower before buying. 

However, Alibaba came in and bought a 10% stake at $1.42 a share and the share price went ballistic. 

This was in 1H 2014. I told myself I should be patient and wait. 




Then, Alibaba increased their stake late last year to more than 14%, paying $1.74 per share. 

Many people tell me SingPost is doing the right thing to embrace e-commerce and that the partnership with Alibaba is a good thing. 

Instinctively, I know that they are probably right. 

If an IT dinosaur like me buys things online, e-commerce is a success story that will continue to grow. 

Of course, I want to benefit from that story as an investor.

Source: HERE.

If you want to continue reading, please take note that I do not have the expertise to analyse SingPost completely. 

In fact, I do not have the expertise to analyse most businesses, including those I am invested in, completely. 

All I can do is to understand the big picture and use a bit of common sense. 

Hopefully, I get it approximately right most of the time.







BIG PICTURE

With SingPost, we know that its traditional mail business is in decline. 

The weakness is not seasonal nor cyclical. It is a structural issue which means the problem is here to stay and will likely get worse. 

SingPost is part of the old economy and to survive in the new economy, it must re-invent itself to stay relevant. 

Logistics and e-commerce are the drivers in this reinvention and they make for logical choices.





Having said this, transforming a business on such a large scale takes time. It is not going to happen overnight. It also means trying new things, taking on risks and spending, in some cases, a lot of money. 

Evidently, the transformation has not been an easy one for SingPost and it is still ongoing. They will surely get some things wrong. 

However, if they get things right more often than wrong, eventually, they should do well enough.



COMMON SENSE

Mr. Market was willing to pay as much as $2.06 a share for SingPost in January 2015. 

It didn't make any sense to me and I said as much on my Facebook wall. 

SingPost's net profit improved about 6%, year on year, and Alibaba paid $1.42 a share in 1H 2014 which was already more than 10% higher than what I was looking to pay that time. 

Pay 45% more for a 6% improvement in net profit? Unless we were sure that SingPost was going to deliver a 40% improvement in profit in the following year, why do it? 

Now, why did the share price go up as much as it did? 




Incidentally, SingPost delivered only a 7% improvement in net profit in the next year which was pretty decent but, of course, Mr. Market was disappointed.

In 2016, SingPost's capital expenditure (CAPEX) shot up, free cash flow went negative and its profit took a big hit. 

Of course, with a change in dividend policy, their status as a predictable dividend payer is also no more.

In better years, SingPost generated earnings per share (EPS) of more than 7c. Going by what we already know, SingPost's EPS should be much lower now. 

With a new dividend policy to pay 60% to 80% of earnings as dividends, even more realistic investors who are expecting a reduced dividend per share (DPS) of 4.2c to 5.6c a year could be disappointed. 




Those who still think they are going to be paid a DPS of 7c are delusional.




When SingPost registered a massive drop in quarterly EPS to 1.28c, we had to ask why? 

Ask if the reasons for the decline in earnings are enduring?

The reasons given were:
1. Higher expenses in e-commerce business.
2. Costs related to new logistics hub.
3. Loss of rental income at SPC Mall.
4. Decline in domestic mail volume.

To me, only item 4 is enduring in nature. 

Items 1 and 2 are probably CAPEX items which could happen again but are not permanently recurring in nature. 

Item 3 is definitely temporary in nature. 

So, things could look grim for a while more but they should start looking up given enough time. How much time? Years, maybe. I don't know.




Since I don't know, I don't want to be too optimistic. OK, I know I said before I should not be too pessimistic either. 

However, since I don't know, erring on the side of caution is probably a good idea. So, I am going to be more pessimistic this time and you will soon see that there is maybe a method in my madness.

Assuming all the reasons for the massive decline in EPS are enduring and that a quarterly EPS of 1.28c is the norm, we get an annual EPS of 5.12c. Remember that this is just an assumption as you continue reading this blog.






With the new dividend policy, we might get a DPS of between 3c to 4c, therefore, which is a big reduction from the more familiar 7c. 

Investors for income who want at least a 5% dividend yield and who are used to receiving 7c a share would only buy if share price were between 60c to 80c then. 

Did you ask how likely is this? Never say never.

SingPost is no longer an attractive investment for income at least for now although its management is still committed to paying a dividend. 

To invest in SingPost is to want to have a stake in the new economy. To invest in SingPost, we must be willing to accept a lower dividend yield while we wait for better days.

How much lower a dividend yield is acceptable in the meantime? This is pretty subjective but it is probably good to have an idea in order to make a decision on what are sensible entry prices. 




I feel that a 2.5% dividend yield is acceptable. 

I came up with this number by using an example. Mr. Kuok thinks Wilmar was cheap at $3.00 a share and Wilmar had a DPS of 7.5c.  Wilmar paid out about 50% of earnings as dividends.

I know SingPost and Wilmar are in different industries but they are both undergoing transformation, facing their own challenges. Shareholders should expect lower dividends.

You can disagree but don't bite my head off. I know that the comparison is not entirely appropriate but, on an intuitive level, it makes sense to me. I am a simple minded person and rely on stories I know.

Based on the above thinking (and the assumptions made earlier about SingPost's earnings), if we were to match Wilmar's 50% payout ratio to achieve 2.5% dividend yield, then, we should only buy SingPost at about $1.00 a share.

Since SingPost is going to pay at least 60% of earnings as dividend, we would get a 3% yield at $1.00 a share, using the assumption in this blog which gives us a DPS of about 3c.




I don't know if SingPost's share price would go lower and if it should go lower, how much lower might it go? 

I have been waiting for a while. I am used to waiting. So, I am going to wait and see.

SingPost shares hit by risk of impairment for US e-commerce acquisition

"TradeGlobal accounted for S$169 million in goodwill and S$43 million in customer relationships - an intangible asset - in SingPost's 2016 financial statements.

"But TradeGlobal incurred a significant loss instead of a projected profit in the third quarter peak season, and is expected to make a loss for the full year, SingPost said on Friday (Feb 10)."

More income from Ascendas Hospitality Trust expected.

Quite a few readers asked me about investing in hospitality trusts and they usually ask me about FEHT or CDL HT. 

This is not surprising because they have a stronger presence in Singapore.

I don't have a stake in either and with the oversupply of hotel rooms in Singapore, it is probably the case that hospitality trusts with a bigger exposure in Singapore will continue to struggle. 




Beyond this, I don't have anything more specific to say about the trusts.

Having said this, I do have a good size investment in a hospitality trust, namely, Ascendas Hospitality Trust (AHT). 

Newer readers might not know this but I first invested in AHT in 2014. 

I did not invest in AHT during its IPO as I found the financial engineering to boost DPU distasteful. You can read more about this in related post #1 at the end of this blog.

Back in 2014, I thought that Mr. Market offered me a pretty reasonable price to invest in AHT, a price which was about 20% lower than its IPO. 




With the effect of financial engineering expired, it was also clearer what my return on investment realistically was going to be. A distribution yield of 7.64% was attractive enough, I thought.

In August 2015, when AHT's unit price suffered from a severe bout of market pessimism, I was pleased to accept Mr. Market's offer to increase my investment in AHT. 

Purchases in that month grew my nibble of an investment in AHT in 2014 to a much more significant position, large enough to generate enough passive income to replace a month's worth of earned income (when I was still gainfully employed). 

My investment in August 2015 would receive a distribution yield of more than 9.5% based on the numbers I used for my purchase in 2014.




AHT has a portfolio of hotels in Australia, China, Japan and Singapore. However, its exposure to Singapore is limited to one hotel, Park Hotel Clarke Quay which was purchased in 2013. 

So, the effect of oversupply in hotel rooms here will have less negative impact on their results overall.

Most of AHT's assets are in Australia which contribute 56% of Net Property Income (NPI). Japan is the second largest contributor accounting for 24% of NPI. 

The much stronger performance by these assets more than compensate for poorer performance in Singapore.




Year on year, 3Q's DPU improved by 13.1% to 1.64c as a result. 

Gearing is at 33.3%. NAV/share 85c.

In 2014, I said that an appreciation in the A$ would benefit AHT. Together with the stronger JPY, I am hopeful that DPU for 4Q could similarly receive a boost.

The oversupply in hotel rooms in Singapore was already apparent in 2014 and AHT was probably a better choice than FEHT or CDL HT. I was lucky to make the right choice.

Source: SBR, 20 Mar 14.

Despite the oversupply of hotel rooms in Singapore, I expect AHT to be a better passive income generator for me this year.

Unit price declined 16.4% from
$1.645 (15 Sep 14) to $1.375 (10 Feb 17).

Unit price declined 27.6% from
81.5c (15 Sep 14) to 59c (10 Feb 17).

Unit price rose 3.4% from
73c (15 Sep 14) to 75.5c (10 Feb 17).

Download presentation slides: HERE.
Related posts:
1. AHT: A nibble.
2. 9M 2015 income from non-REITs.

$500K in gold and waiting for stock market crash.

Gold is not a productive asset.

Hi boss!

Like to ask you on a topic (precious metals) rarely mentioned on your blog. I love precious metals (gold and silver) and anything in gold I can wear. I liquidated all my shares in 2013 in anticipation of a market crash that didn't happen till date.

If I were to liquidate all my gold today, I will get back 500k. 

I like to ask should I continue to keep the metals waiting for the crash or should I divest (part or all) and return back to the share market. Should I practice patience (since 2013) and continue to wait for precious metals to go up 50-100%? Or return back to the stock market for dividend play?

Hope to hear you speak to yourself. 

Thanks boss!

Hi,

I don't know what is going to happen in the future.

I do know that:

1. Physical gold and silver do not generate income despite what some people might con-veniently claim. However, we can make or lose money trading gold and silver.

http://singaporeanstocksinvestor.blogspot.sg/2012/04/fraud-taking-money-from-some-adults-is.html

2. Physical gold and silver do have value and keeping some as an insurance is not a bad idea. They form a small percentage of my portfolio.
http://singaporeanstocksinvestor.blogspot.sg/2016/07/why-investors-for-income-buy-gold-and.html






If you have decided that you want to invest for income now, I would suggest that you sign up for Dividend Machines and learn the ropes first:
http://singaporeanstocksinvestor.blogspot.sg/2017/02/financial-freedom-through-building.html

It will help shorten your learning curve.
Best wishes,
AK

Sizing my investment in SPH.

When I tell people I am a blogger, some assume that I am IT savvy. 

People who say that are probably not very IT savvy. We only need to know how to use a word processor to blog.

My generation and those who are older would remember that in between typewriters and PCs, we had word processors. Their time on Earth was pretty short, however.

I am really a dinosaur. 

If I were to look for a job today, with my qualifications and skills, I would probably have a hard time getting a job that pays more than $3,000 a month.




From being economically inactive to being unemployed? I shudder at the thought.

I still like hard copies of newspapers, magazines and books. I tried using an e-book reader which someone gave me many years ago. I didn't like it.

I should have sold it when it was still worth $500 but it was a gift. Now, it is just another item collecting dust at home but I can be rather sentimental.

Being sentimental can be a terrible thing for an investor, of course, as we constantly tell ourselves not to fall in love with our investments. Well, I can only try my best as I am only human.

I am lucky that I am also pragmatic. I like to think that being pragmatic helps to temper any sentimentality in me. 




When I spoke with somebody who bought SPH shares recently, I said that I wouldn't buy SPH shares today. It happened so quickly that I surprised myself a little bit.

I have always suspected that there is more than one AK inside me. Spooky!

I have been an SPH shareholder for many years and doing a back of the envelope calculation tells me that, taking in the dividends collected over the years, my earlier investment in SPH is almost free of cost.

However, dividends collected for my later investment in SPH probably managed to do only a bit more than cover the decline in its share price over the same number of years.

Like it or not, media remains the core business of SPH and that business is very much disrupted. 





On hindsight, SPH should have ventured more aggressively into real estate but they didn't. 

I remember Dr. Tony Tan mentioned that selling their land in River Valley was a mistake many years ago. He was right.

Now, we see disruption technology everywhere and our investments could get disrupted one way or another. 

Being rather old fashion could be a problem for an investor like me as I am not always in touch with the changes in technology nor fully aware of the implications of such changes on the ground.




Having said this, until I could find replacement investments for income, I was quite willing to hold on to my investment in SPH. It is still an entity which has a relatively strong balance sheet and is still generating an income for me.

Recently, as things turned out, I added several income producing stocks to my portfolio and I decided to let go of my later investment in SPH.

This effectively reduced one of my larger non-REIT investments by half, boosting my cash level which would allow me to take bigger positions in other income generating investments.




I am retaining my earlier investment in SPH as it is almost free of cost and I still hope to benefit from possibly the sale of Seletar Mall to SPH REIT at a later date.
-----
Added 18 July 2017:

A journey through time with SPH.



Related post:
Fate of my investment in SPH.

My ARA Asset Management fixed deposit adventure.

When I shared my full year results end of last year, I mentioned ARA Asset Management's offer of $1.78 a share and how it translates to 35% to 78% capital gains for me if the offer is to be accepted.

At the time, I had a fixed deposit maturing and ARA Asset Management's share price was at $1.71. So, I decided to plonk the money from the fixed deposit into their stock. 

It looked like it would be a sure win, an arbitrage opportunity, and I would get a 4% "interest rate" so to speak within half a year or so.

At the time, I knew some shareholders thought $1.78 was too low a price and I knew there was a possibility that the offer would not be accepted. No issues, I thought. I could keep the investment and receive 5c dividend year after year which would give me a yield of around 3%. 

However, at the back of my mind, there was a very small voice which asked if I really want a much larger position in ARA Asset Management and with a yield of only 3% to boot in case the offer is rejected by shareholders?

That voice did not go away

Today, I decided to accept a yield of about 2.6% from Mr. Market. After costs, it would be a bit lesser. I closed my "ARA fixed deposit" and received what is very good "interest income" for a 2 months fixed deposit.

I thought of this position as a "fixed deposit". So, like a fixed deposit it should behave.

I still retain my original investment in ARA Asset Management. What I divested was my more recent "investment".

Related post:
2016 FY passive income non-REITs (Part 2).

AIMS AMP Capital Industrial REIT and free money for AK (3Q FY2017).

Many years ago when I decided to reduce my investment in industrial S-REITs, I was faced with the choice of reducing my stake in either Sabana REIT or AIMS AMP Capital Industrial REIT as both were the largest investments in my S-REITs portfolio. 

Yes, they were both about the same size.  

I decided that AIMS AMP Capital Industrial REIT was better run. 

So, Sabana REIT was given the boot.





Today, AIMS AMP Capital Industrial REIT is my largest investment in the S-REITs universe and a rough back of the envelope calculation tells me that with all the distributions collected over the years, my investment in the REIT is going to be free of cost very soon. 

Free? 

Yes, free!

This is massive for me not only because I like free things but because it is such a massive investment in my portfolio.





If an investment is 2% of our portfolio and it has become free of cost (like Sabana REIT is for me), ho hum. 

If an investment is 20% of our portfolio and it is going to become free of cost soon, it isn't ho hum x 10, is it? 

It is like my position in Sabana REIT x 10 being free of cost. 

OK, somehow, using Sabana REIT as an example doesn't seem very appealing but I am sure you get the idea.





Although doing well now, AIMS AMP Capital Industrial REIT is facing headwinds and things might get tougher in the next year or two but it has a competent manager that is focused on improving value for stakeholders. 

That is very comforting.

On hindsight, I am glad I decided to get on board with Mr. George Wang so many years ago and I look forward to receiving soon to be free money every quarter for many more years to come.

·         DPU of 2.77 cents per unit for the quarter (increase of 0.7 per cent from last quarter);

·         Increased gross revenue and net property income for 3Q FY2017 by 1.5 per cent and 2.7 per cent respectively q-o-q;

·         Executed 19 new and renewal leases in 3Q FY2017, representing 82,149.3 sqm (13.1 per cent of net lettable area);

·         Portfolio occupancy of 94.0 per cent, above the industrial average of 89.5 per cent;

·         Achieved TOP of third redevelopment property at 30 Tuas West Road on 27 December 2016, on time and below budget, delivering better financial returns than previously announced. Partial income contribution from the property will commence in March 2017 quarter, with full quarter income contribution in 1Q FY2018;

·         Increased Net Asset Value per Unit to S$1.48 from S$1.47 in the preceding quarter mainly due to recognition of the development profit of 30 Tuas West Road.

·         84.0 per cent of the portfolio’s interest rate is fixed taking into account interest rate swap contracts and fixed rate notes with weighted average debt maturity of 2.1 years;

·         Reduced overall blended funding cost (including funding of the Australian asset with Australian dollar loan) of 3.7 per cent from 4.2 per cent a year ago;

·         Aggregate leverage as at 31 December 2016 is at 34.6 per cent.

Related posts:
1. AA REIT: A private tour.
2. My history with Sabana REIT.

Kingsmen Creatives Ltd added to my portfolio.

With the share prices of many of my investments (including those I recently blogged about) having risen by quite a bit, I decided to nibble at Kingsmen Creatives Ltd, paying 59.5c a share, as its share price remained in the doldrums.

The weakness in Kingsmen's share price today reflects Mr. Market's pessimism. Despite being a leader in the industry, Kingsmen was not insulated from a marked slowing down in the high end retail industry which led to a much lower demand for their services.

Now, 60c seems like the immediate support for its share price. Will the support hold? Of course, I don't know.

However, here are a couple of things I do know which give me some comfort:

1. Company did share buy back in 2015 and 2016, paying 62c to 65c a share. Could they have thought that it was undervalued back then?

2. Dividend per share (DPS) of 3c which means a dividend yield of 5% for me. Although if earnings should weaken, things could change, a net cash position suggests that a DPS of 3c could be maintained.

Some readers might point out that with NAV per share at 54c, I am paying a premium of 11%. 

It might be surprising to hear me say this but it doesn't matter. It would be nice to buy lower than NAV but not a must. Why?

Kingsmen is a services company and not a REIT or property developer which are asset heavy. Apart from cash and its equivalents, Kingsmen's value largely lies in the intangible (i.e. services) they provide.

The softer economy will challenge Kingsmen to bring home the bacon. However, a good track record gives me some confidence that the business would do reasonably well and that, over time, I would have another good income generator in my portfolio.

Finally, I should say that although Mr. Market is pessimistic, I am not being optimistic nor contrarian. I am staying pragmatic and, so, mine is a relatively small investment for now. 

UOB ONE Card cash rebate and the things we do.

I was chatting with a friend and ASSI guest blogger this evening about credit cards. He told me he had to spend $1,000 each month on a credit card recently in order to get a $100 rebate at the end of the quarter. 

OK, I think most of you would have guessed which credit card this is. Yes, it is the UOB ONE card.

Anyway, I have the same card but I make sure I spend only a bit more than $500 a month (together with 3 monthly GIRO payments) to get higher monthly interest income of about $100 on $50,000 deposited in my UOB ONE account. 

$1,200 a year and better than any fixed deposit can offer! 

Of course, I also get a $50 rebate for card spending at the end of each quarter.

Back to the story. 

This friend of mine is actually very frugal. I would say that he is more frugal than I am. 

To spend $500 a month on his credit card is already quite a challenge. Why did he try to spend $1,000 each month not so long ago?

Apparently, there was a month that he spent more than $1,000 on the card due to the purchase of a (once in a very blue moon) big ticket item. 

What he tried to do next was to spend $1,000 per month in the following two months in order to get $100 rebate at the end of the quarter instead of $50.

Pause.

Pause.

Pause.

OMG! 

For $50 more in rebate, my frugal friend forced himself to spend a lot more money! 

Being a frugal person, forcing himself to spend more money, I believe, gave him a lot of stress as he didn't know what to spend money on. 

I wouldn't have done it. I try to avoid stress in life.

Frankly, I don't think it was worth the angst. 

Also, that extra $50 rebate was probably insufficient to cover all the cost of all the stuff he bought which he didn't want or need in the first instance.

Even the smartest people do silly things once in a while. 

We are only human.

UOB ONE card,

Related post:
1. UOB ONE Account or OCBC 360?
2. Stupid AK learns about Y.O.L.O.