A replacement for Croesus Retail Trust.

Reader:
Just wanna seek ur views with regards to Croesus retail trust as it's most likely soon going to be delisted.

Thereafter, I'm thinking of recycling funds into AimsAMP cap Reit to replace CRT to generate high dividend.

Recently, the share price of AimsAMP went down quite a bit and make it rather attractive to purchase. This dividend income is important to me as I use it to pay for the living expenses n accommodation for my child's overseas uni education for 2 more years. Hope u can talk to yourself

AK:
Er... See my latest blog post





Reader:
Thanks, noted n seen. Due to my needs to find dividend income replacement after CRT, do u think AimsAMP at current P/B at 1.0 and it's NAV is equivalent to current trading price at $1.385/unit provides a fare price to buy in? I'm rather attracted to 7.8% annually and hopefully this is sustainable for the next few years at least.


AK:
Actually, do you really need to hunt for replacement dividend income? The capital gain from the sale of CRT would provide more than 2 years of "dividends" in advance, more than enough to fund your child's expenses. That is the point I am trying to make in my blog.

I don't know if it is a good idea to buy more of AA REIT especially if AA REIT is already a big investment in your portfolio.

Apart from concentration risk, being hasty to deploy the funds might not be a good idea.



Croesus Retail Trust is quite different from AA REIT. So, when we are thinking of replacing one with the other, it shouldn't just be because their yields are comparable.

When I got into Croesus Retail Trust, partly, it was because I was looking to reduce concentration in industrial S-REITs which have most of their assets in Singapore. So, it was to reduce sectoral and also geographical concentration risk.

So, it wasn't a simple case of getting a comparable or higher yield.

Of course, it is about what gives me peace of mind. It could be that I think too much.



Reader:
Wow, AK..very thankful for your fast reply and details 🙏🙏🙏
Noted your pointers and I'll keep them in mind.
Currently my AA REIT is not as large as my CRT investment ( really thank u very much as I read n focus in this Reit). Hopefully if AA REIT price weaken further, then I'll look into it.

AK:
I am sure you will do what is right for you. 🙂
Take your time. I think there is no hurry to redeploy the funds from CRT.

That is the beauty of buying into an income generating asset at below fair value. We could see its value unlocked and while waiting, we get paid. That was the case with Saizen REIT too 😉



Reader:
No lal, AK... definitely u r not thinking too much, 小心驶得万年船!
u r definitely doing the right thing n doing things right 💪🏼👍🏼
It's really great to know you since 7 yrs ago 👍🏼
Even though I missed the Saizen REIT, but there will always be more of other good dividend income stocks along the way, I'm sure 😊 Just continue to read ur blog ✌🏼

Related post:
How to deploy Croesus Retail Trust money?

How to deploy the Croesus Retail Trust money?

Reader:
I understand u have pretty huge stake in CRT so I thought I can eavesdrop how you intend to redistribute the funds. If u could talk to yourself on that, I will be just eavesdropping.

AK:
I am quite happy to hold on to more cash for a while. No hurry. ;)

I do have a relatively large investment in Croesus Retail Trust but I had an even larger investment in Saizen REIT.

I am mostly an investor for income and I view the huge capital gains as having received many years of income in advance.

It means that I could wait for many years without deploying the funds and I would still be quite comfortable. I don't need to grow my wealth constantly.

Now, if you must see positive growth year after year, what I have just said will not sit well with you. You will constantly have to look for ways to make sure you do not "fall behind".

So stressful.




You are hardworking. I am lazy.

For me, well fed, I am quite happy to sit on more money while waiting for new investment opportunities to come along.

Related posts:
1. How much did AK make from Saizen REIT?
2. Croesus Retail Trust, HPH Trust, NBN Trust and SingTel.

Croesus Retail Trust, HPH Trust, NBN Trust and SingTel.

Reader on HPH Trust, its decreasing NAV and distributions:
Thanks for your reply. I knew a lot of readers were asking you to talk to yourself on may things so definitely appreciate your time on this topic.

AK:
HPH Trust's land leases are decaying rapidly. I blogged about the Trust a few times before and why I avoided it.
(They were holding back much needed CAPEX to maintain DPU for a while but CAPEX could not be held back indefinitely.)

Reader:
As u know, we received the CRT scheme document and the suggestion is for us to accept.
At current price, we are looking at yield of 6.6% or slightly higher if the scheme went through. But there isn't any obvious choices (trots or trust) in the market that would match or beat that. Would like to understand what are the top few choices you would have redeploy the capital return.

AK:
If you are looking for 6.6% yield, I think it is not difficult to find but I would say yield isn't everything and it is obvious from the fact that I bought into SingTel instead of NBN Trust recently. 
See: Avoiding the instant gratification of yield.

Wondering to vote for or against the sale of Croesus Retail Trust? See related post #1 below for some of my thoughts.

Related posts:
1. Croesus Retail Trust.
2. HPH Trust.
3. SingTel or NBN Trust?

Sold DBS and want to buy back.

After re-sharing on Facebook that I was buying mostly DBS shares in 1H 2016,

Reader:
I saw your FB posts on DBS. Thanks for sharing again. I did buy some DBS shares after attending one of your talks last year. I made a bit of money. Been waiting for the price to drop. My broker told me it will go up higher. Should I buy back?





AK:
I wonder what did your broker tell you about DBS last year? Just curious.

Since you attended "Evening with AK and friends" last year, you might remember that I explained buying into DBS then was buying in at a nice discount to NAV and also at a single digit PE ratio.

Many were worried about the bank's exposure to the troubled O&G sector and I explained that only about 6% of the bank's loan book was exposed to that sector. Even if they had to write off everything, however unlikely, we would still be buying at below its NAV back then.






There was a margin of safety, I felt.

I also pointed out that the bank's CEO, Piyush Gupta, was buying more DBS shares at $13+ a share. His purchase amounted to more than $2 million. That kind of insider buying has to be a vote of confidence. I couldn't ignore that.

He is not buying more now and I believe he has, instead, cashed in not too long ago.

Why did he sell? I don't know. You have to ask him.






Looking at the numbers now, DBS is trading way above its NAV and at a double digit PE ratio. Mind you, it does not mean that its share price cannot go higher from here.

However, DBS is just no longer the bargain that it was last year.

Reader was referring to these blogs I shared on FB earlier today:
1. Wait for big crash to pick durians.
2. 2016 FY passive income (non-REITs).

Wait for a big crash to pick our durians?

Reader:
You have been through the times when you got stocks w div yield of 10+ or even 20%..

Why are you still keen to pick up stocks at 3-5% now?

Isn't it easier (and less work) to just wait out for the next crash to pick your durians again?

It shouldn't be too long from now right...?

Now, this was a CRASH!
Did anyone predict this?
This is what insurance is for.
It is for if a CRASH happens.
Our war chest is an insurance!

..




..

AK:
I cannot predict what will happen. 😞

Some people have been waiting for years for a big crash.

I will keep investing but keep a war chest ready. 

There will always be opportunities, bear market or not.

Just have to be careful so that I don't get killed by falling durians. 😛





Related post:
Make $1 million investing for income.

"I cry as I see how much the price has gone up."

Reader:
Thanks for always mumbling to yourself.
Have always been looking forward to your post daily.

Since i chosen to write to you, I really must say I appreciated your writings n enlightenment most times if not all the times 'cause sometimes I also got lost with your numbers crunching off the records.




Ok, back to your latest post on "To invest or not in Centurion Corp",

After reading the whole thing, at 54c a share n dividend yield of 3.88%( taken from your calculations), even though you mentioned ,"...on Guoccoland n Tuan Sing, a dividend yield of 2.37% is still relatively decent", I'll not bite simply due to the uncertainties in the market right now with many factors like the north korea, trump, etc

But if i"d bought at the same price like you at 38c with a dividend yield of 3.37%, I may consider adding more at 54c now since the yield has increased though my base price may have gone up after averaging, believing that it's a growth stock.






I know i may miss an opportunity but I dont have a big warchest like you :) :))

The last time I read your vested interest in the above company, I've questions about is imminent expiry of its warrants n possible dilution.
Hence, I hesitated.






Now, I cry as i see how much the price has gone up :((

May I hear you talking to yourself about market directions and your holdings.

I know that one cannot time the market but dont you want to cash out since you're sitting on very good profits.

N hope to catch the next wave again with bigger warchest?

AK:
Don't cry. There will always be other opportunities. Mr. Market is not lazy like AK and will never retire. ;)

OK, I am going to show you how lazy I am again. Read this:
http://singaporeanstocksinvestor.blogspot.sg/2014/11/sell-stocks-now-and-wait-to-buy-back.html





Related post:
To invest or not to invest?

Black market for "Evening with AK and friends"!

Although some readers suggested that reselling tickets to "Evening with AK and friends" could be a lucrative activity, I didn't take it seriously. 

A black market for "Evening with AK and friends"?

Who would do something like this?

I just found out that it is happening:

It is actually happening!

I will tell you right now that "Evening with AK and friends" is not worth paying $100 a ticket for. Well, at least I don't think so.





It irks me to think that black marketers are actually profiting from this when I am doing this for charity.

$65 for the black marketer and $27 for charity (after costs)? 

This is so wrong.

There will always be another "Evening with AK and friends".

So, say "NO" to black marketers.





If you have bought tickets from black marketers, please tell me. 

I don't know if it is possible to find out but I want to know who they are.

If you are a black marketer, I am appealing to you to stop doing what you are doing and return the tickets for a refund. Please.

There are many readers who are genuinely interested in attending my event and they should not have to pay more than $35 a ticket for it.





Regular readers know that ASSI is not about money, money and only money. 

It is also about decency and charity. 

I am very disturbed.

Please help to spread the message and I hope that, in the end, decency prevails.




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

UPDATE (11.40pm):
We have tracked down the black marketer and will process a refund and void the ticket.

Readers who are still interested in getting a ticket should check the ticketing site often in case some tickets are refunded. 

Do not pay more than $35 for a ticket.





Related posts:
1. Evening with AK and friends 2017.
2. 2018 Evening with AK and friends.

2018 "Evenings with AK and friends" in Kallang Theatre?

This was a recent chat with a friend.

Don't read if you don't appreciate my nonsense. You have been warned.

Friend:
How many tickets were available for your event.

AK:
About 150.

Friend:
How many readers do you have?

AK:
I don't know. A few thousand?

Friend:
Let us say you have 10,000 readers, what is the probability of a reader getting a ticket?

AK:
Er... My math is bad. 1.5% chance?

Friend:
You should have booked a bigger venue like the Kallang Theatre. Use your brain lah.

AK:
Kena scolding jin jia cham.

And on FB:

Readers who are interested in getting tickets to "Evening with AK and friends" happening in October should check the ticketing site regularly. 

Tickets could become available again as some readers give up for various reasons. Refer to the related post at the end of this blog.


Related post:
Evening with AK and friends 2017.

Get fantastic dividend yield and AK is like Jay Chou.

Recently, AK was like Xiaxue and, now, AK is like Jay Chou. 

Alamak. So confusing. 

How like that?

Reader:
Hello AK! Looks like things have been good for you recently (as always). 

Unfortunately I couldn’t get a ticket to your evening session. 

Its like Jay Chou concert! 

I do appreciate your jokes among your stock market insights.

Anyway, remember many were surprised you are >80% invested now? 

Well as I reckon many of your stocks were bought at a real bargain in 2008/09 with fantastic dividend yield on cost now.




Basically, I think it’s irrelevant to ask on your holdings now. 

However, if you are willing to share, may I ask what were your %age of stock holdings (vs cash) back in 2007, when stocks were at a all time high? 

Did you somehow Eat Bread With Ink Slowly too? 

Did you think that the market was over-valued and you were expecting a crash? 

Did you prepare yourself for the crash? 





When the bad news kept coming in 2008, how were you reacting? 

I know you kept buying but didn’t you have the slightest fear? 

How did you strategise your entries?




I do appreciate eating bread with ink slowly and I have equipped myself with some value investing knowledge. 

I have also accumulated some stocks that are doing pretty well while making sure I have a good warchest. 

But should we be extra cautious since we are approaching the 10th year after the last stock crash? What’re your views?

AK:
I always eat bread with ink slowly.
(See related post #3 at the end of this blog)

Unless valuations are super cheap, I always have a war chest ready.

I emptied my war chest during the GFC. 

I bought stocks of businesses which would generate good income for me. 




Investing for income, I wasn't concerned with prices going up or down. 

I knew I was getting a bargain.

I didn't borrow money to invest with. 

It was all my own money. 

I didn't have to worry.




A stock which I bought back then which I no longer talk about was Hyflux Water Trust, for example. 

Debt free, at the price I got in, it was generating 17% yield, if I remember correctly.

I don't have all the answers to your questions because I only remember what I feel are important.

Remember that eating bread with ink slowly is a philosophy. 

How we make it work for us, if we want to make it work for us, will depend on the individual.




Related posts:
1. Hyflux Water Trust.
2. Beating our fears as investors.
3. Peace of mind as an investor.

Why did AK want an early retirement?

Hi AK,

Possible to share some of the reasons which led to you opting to retire?

Thks.

Ben

Hi Ben,

I don't want to spend all my life working for money because there are so many things I want to do in life. 

My time is limited.

See:
Life is about many things and my time is in short supply.






Don't want to be in a situation where I do not have enough time to do what I want to do.

See:
Financial freedom and not enough time.

I really have so many things that I enjoy doing and I need more time for them.

See:
Preparing for retirement.






Did I work too hard in my younger days and sacrifice too much? 

Well, I think achieving financial freedom makes it all worthwhile. 

See:
Did I work too hard in my younger days.

Yes, I know.

See:
Financially free AK should be ashamed!






Related post:
Passive income and a higher purpose.

"My investment program costs $4K and AK is like Xiaxue."

Reader:
Hello Ak,
I was at (an investment event) over the weekend and one of the very good speakers from XXX had me sold immediately on the spot. 

So out of impulse purchase, I've signed up a >$4k worth of investment program on value investing.





Now back home and doing abit of research on XXX reviews, its hard for me to further convince myself to further go on the course due to the mix reviews. 

I know you are one of the most straightforward person on the blogosphere other than xiaxue, and with your knowledge in the investment and finance world, may I know what's your take? 

I really need your brutal honest advice.

You can talk to yourself on this and accidentally reply my email. Thanks!

AK:
Alamak. AK straightforward like Xiaxue?

OK, maybe, I take that as a compliment. ;p

What would Xiaxue say to you in this case? Hmmm... 

OK, I don't know but I know what I would say.




Let me guess. 

It was a free event but there was plenty of aggressive selling going on?

Impulse buying har? 

Bad! Baaad!

$4K is a lot of money too and I know for a fact that you have to pay a few K more after that to get into an "inner circle".




I have never attended atas investment courses nor paid lots of money to be in any related program before and I probably never would. 

Despite this, I think I have done OK.

Alamak, I accidentally tapped the "send" button!

Please ignore my email. 

It was an accident. 

Really, please ignore me.






Education is essential but how much should we pay for education? 

Cheap things not good? 

Good things not cheap?

Aiyoh. 

Don't ask me. 

I blur.

OK, I confess. 

I don't know if I am like Xiaxue but I like Xiaxue. :)

What? 

Wrong answer? 

Cham lah liddat.




Related posts:
1. Little Book of Value Investing.
2. Secret of my success.

Evening with AK and friends 2017.

As promised, here are the details of the only session of "Evening with AK and friends" in 2017:

Venue:
Lifelong Learning Institute
11 Eunos Road 8
Event Hall 1-1
Singapore 408601

Date:
6 October 2017 (Friday)

Time:
7:00 PM – 10:00 PM

Buy tickets: HERE





This is, as usual, a chit chat session with AK. Nothing too cerebral. 

Just bring along your sense of humour and, if you like, a pen and notebook.

Bring a pen and notebook for what? Take note of AK's jokes? Er...

You blur? I also blur. 

---------------------------------
I am absolutely amazed that all 160 tickets were sold out in less than 4 hours.

However, readers who are still interested in getting tickets should check the ticketing site regularly up to 7 days before the event. 

It is possible that some tickets could become available again as some readers give up their tickets for various reasons.

Related post:
Attended "Evening with AK and friends"?

Do this to inject more funds into CPF-SA?

InvestSg:
Got a question: Is it possible to max out SA, use the money to buy SG gov bonds, then top up SA again to max, and then sell the SGBs and return money back to SA? workable bo?

From AK's FB wall:

Click to enlarge.

AK:
I have yet to see anyone do this. Personally, I don't think it is advisable unless we want much more of our funds in our CPF-SA which we cannot access till we are 55. Liquidity should be a pertinent consideration.

Definitely, like I have always said, it is prudent to treat the CPF-SA as the investment bond component of our investment portfolio but, for the average investor, going beyond the FRS is probably overdoing it.

The exceptions would be investors who are very rich and the FRS is too low a percentage of their total portfolio.

Even in such cases, it could be a good idea to consider genuine bonds (like the Singapore Savings Bond) and not a pseudo bond like the CPF to park the spare cash.

It is my belief that I should use the CPF as a cornerstone and not as the entire foundation of my retirement funding strategy.
----------------
Update:

Oliver Tan:
What you have in SA +any investment (using SA money) cannot exceed prevailing FRS. So answer to InvestSg should be "impossible".

Related posts:
1. 4 ways to boost our CPF savings.
2. Build a cornerstone in retirement funding.

To invest or not to invest in Centurion Corporation?

I only became a shareholder of Centurion Corporation Limited in February this year and, since then, its share price has gone up by quite a bit. 

A question I have been asked more than a few times recently was whether Centurion was still good to buy?

Of course, regular readers know that, for a long time now, I don't answer such questions. 

Even if I do answer, it is usually cryptic which could be quite valuable an answer looking at the trend in cryptocurrencies now.

What? Not funny? Alamak.

The thing to do is always ask what do we want out of something, see if that something does the job and we will know if that something is suitable for us.




What I do in my blog is only to share my thoughts and how they guide my decisions. Think of my blogs as simply sharing an approach and not the answer.

I don't know if there is any value in this but I like to think that there is some value from learning someone's approach, good or bad.

Ultimately, your decision should be guided by your own thoughts and not someone else's.







With that out of the way, I am going to talk to myself a bit about Centurion.

Almost all my investment decisions have investing for income as a consideration. 

When I looked at Centurion earlier this year, this was also an important consideration as I was looking for reliable income generators to replace certain income stocks which I voluntarily or involuntarily sold in the recent past.




I am prone to repeating myself as I grow older. 

So, if you are interested in my initial analysis on Centurion, please see related post #1 at the end of this blog.

Of course, what I did not know was that Centurion was planning a dual listing on the HKSE which was approved earlier this month. 

I see this as a good thing. See related post #2 at the end of this blog for some speculative flavor.





Centurion is heavily in debt but it is good debt because they are using borrowed funds to generate more earnings from their investments. 

However, debt fueled growth can be dangerous as my misadventure with a certain locally listed O&G related company constantly reminds me.

So, raising funds from a secondary listing to help fuel their growth in the student hostel business in Australia instead of borrowing more money is a good idea. 





Of course, there were other reasons given for the decision to have a secondary listing in Hong Kong but I zoomed in on what I thought was more important to me as a shareholder, as an investor for income.

A larger equity base without any increase in borrowings would mean a lower gearing level. 

A stronger balance sheet is a good thing especially for an entity as highly geared as Centurion.

However, when there are more shares issued, something must give. 

We cannot have our cake and eat it too, after all.







Centurion is preparing to offer another 36,000,000 shares in Hong Kong. This will lead to some dilution for existing shareholders. 

On a per share basis, earnings would be impacted, everything else remaining equal.

So, is my original thesis to invest in Centurion for income still valid?

If we look at related post #1, back then, I assumed an EPS of 3.7c a year. I also assumed a payout ratio of 40%. 

I decided that a dividend yield of about 4% from a growth company was attractive enough.




Centurion has about 737.4 million shares in issue. Now, with the offer of 36,000,000 new shares in Hong Kong, we would see EPS diluted to 3.5c a year.

If the almost 74.8 million warrants (with an exercise price of 50c per warrant) expiring on 27 October 2017 should be exercised as well, we would see EPS diluted further to 3.2c a year.

OK, math was not a strong subject of mine. 

So, I hope my calculations are up to scratch.




Anyway, if we go with the numbers above, a 40% pay out ratio would mean a DPS of 1.28c. 

Based on my entry price, that is a dividend yield of 3.37% and based on 54c a share, it is 2.37%. 

If you have read my blogs on Guocoland and Tuan Sing, a dividend yield of 2.37% is still relatively decent.







However, things have progressed quite a bit since February and Centurion reported an EPS of 3.5c for 1H 2017. 

Could we see a full year EPS of 7c?

In such an instance, after listing in Hong Kong and with all the outstanding warrants exercised, Centurion's fully diluted EPS could be 6c. A 40% payout ratio would give a DPS of 2.4c. 




Based on 54c a share, it would give a dividend yield of 4.44%.

Centurion is still in growth mode and it is very likely that the management will deploy funds from the warrants, if exercised, into new projects as well. 

So, debt is likely to remain high. 




It would be prudent to retain the assumption that I made in February that we could see 0.8c knocked off from its EPS from a future 1% increase in interest rate.

In such an instance, fully diluted EPS could be 5.3c and a 40% payout ratio would give a DPS of 2.1c. 

Based on 54c a share, dividend yield would be 3.88%.

What? 

Should you buy or not?




Alamak, how to buy 4D? 3.88. Only 3 numbers lah.

What? Wrong answer?

Aiyoh. I blur.

Related posts:
1. Invested in Centurion
2. Centurion to double?
3. Centurion's earnings sky rocketing.