FY2017 passive income from non-REITs (Part 1).

4Q 2017 has been a relatively active one for me in the non-REITs space and being a rather long blog, I decided to take my time and publish it in 4 parts.

In its final days on the Singapore Stock Exchange, at $1.17 a unit, the total value of Croesus Retail Trust in my portfolio easily trumped First REIT as my second largest investment.

As Croesus Retail Trust was delisted and distributions made to its shareholders, the cash level in my investment portfolio rose significantly due to this reason alone.






I would have been quite happy to sit on a lot more cash and to do nothing if I did not see any compelling offers by Mr. Market.

This is because I look at the capital gain from the sale as receiving income distributions for many years in advance.

So, mostly thanks to Croesus Retail Trust, 4Q 2017 distributions received from non-REITs is a rather impressive figure:

S$ 391,775.11

Of course, I am also sadly aware that much of this would not be repeated.







Having said this, there could be another distribution of a similar nature in the near future although the quantum is going to be smaller as it is a smaller investment for me.

I am, of course, talking about Religare Health Trust, a business trust which owns healthcare assets in India.

Fortunately, I took advantage of a sudden intra day plunge in Religare Health Trust's unit price earlier in the year to increase my investment by 150%.

Pure, dumb luck, I am sure.









So, did I do anything in the non-REITs space in 4Q 2017?

I will continue to talk to myself in the next three parts.

Read part 2: HERE.

Meanwhile, you might be interested in:
FY2017 income from S-REITs.

Related posts:
1. Croesus Retail Trust.
2. Religare Health Trust.

FY2017 passive income from S-REITs.

Time flies and 2017 is coming to an end.

Time for me to take a look at how much income my portfolio of S-REIT has generated for me in the final quarter of the year.







The plan for Saizen REIT to transform into a REIT holding Australian industrial properties failed to materialise.

In the end, it was delisted from the stock exchange and whatever residual value was distributed to its shareholders.

This lifted my total income from S-REITs for the year rather nicely.

Of course, this is definitely the final distribution from Saizen REIT and it will not be repeated.

4Q 2017 distributions from S-REITs:

S$ 31,812.93









Did I change anything in my S-REITs portfolio in 4Q 2017?

I decided to use some of the income received in 4Q 2017 to increase my investment in Starhill Global REIT by more than 50%, paying 74.5c a unit.

This price is, of course, slightly higher than my initial purchase but I believe that even at 74.5c a unit, the REIT is still relatively undervalued.








Now, read this chat I had earlier this month:

In my blog published in March 2017 (see related post #1 at the end of this blog), I said that I was knocking off 5% from the REIT's DPU to be conservative but I did not expect it to take a knock in this manner.

So, everything else being equal, DPU could eventually be 4.75c.

This would give me a distribution yield of 6.37%.

If we would like to remain conservative and knock another 5% off its DPU, it would give us a DPU of 4.5c or a distribution yield of slightly more than 6%.

Being a slightly less compelling offer now, I merely nibbled.

Other than this minor addition, my portfolio of S-REITs is unchanged from the previous quarter.







In case you are too lazy to check my past blogs to calculate FY 2017 distributions received by my portfolio of S-REITs:

S$ 95,142.98

That works out to be approximately S$7,928.00 a month in passive income.

Without a leg up from Saizen REIT's final contribution, I expect my passive income from S-REITs to be some 10% lower in 2018, everything else being equal.

My next few blogs will be about my FY 2017 income from non-REITs and what I did in that space.



Read a message from AK as ASSI turns 8: HERE.

FY2017 passive income from non-REITs (Part 1): HERE.







Related posts:
1. Starhill Global REIT analysis.
2. Saizen REIT's bumper distribution.

A message from AK as ASSI turns 8.

Christmas Eve of 2009.

My blog was born.

Why did I start blogging?

It was out of boredom and curiosity.

On this day, the message I wish to share is more than

"If AK can do it, so can you!"





Instead, take a look at this:

Reader #1 says...
No need to think so much. Just buy, hold and sell when AK does. He's the Oracle.

AK says...
I am no Oracle and I am thinking of retiring or at least semi-retiring from blogging.
So, better do not rely on me. ;)

And I do mean it.





Reader #2 says...
I hope your readers know how not to go in or follow blindly...

AK says...
Everybody should have a plan, their own plan.
It is never a good idea to ride on someone's coat-tail.

We are very lucky that in Singapore financial freedom is not a dream for most of us.

By being prudent, pragmatic and patient, we can achieve financial freedom and we should.

However, it is a dream that AK can do no wrong and that AK will always be here.





Why be prudent, pragmatic and patient?

Read this and be wealthy:
Three attributes of a wealthy peasant.

MERRY CHRISTMAS!

Technical analysis of SingTel.

A reader saw my technical analysis (TA) for ComfortDelgro and asked if I did the same for SingTel?

Translated:

"Please share your TA for SingTel."

OK, I don't do TA on request anymore but since I am in the process of building a larger stake in SingTel, here is a quick TA on SingTel:

Since going XD, SingTel saw its share price plunging but I don't think this has anything to do with its business fundamentals which do not seem to have deteriorated enough to warrant the huge decline in price.

If the fundamentals at $3.79 a share are the same as the fundamentals at $3.58 a share, logically, what should someone who was buying at $3.79 do now?

Having said that, price movement is sentiment driven most of the time and this is what we call "volatility".

There is no accounting for prices and Mr. Market does not care what we think.

For those who bought at a much higher price only to "cut losses" now, I only hope they do not regret later on.

If I were in their shoes, I would ask if I did not buy at those higher prices, would I be buying now?

This question will probably yield a more rational answer.

Well, it has always worked for me.

To be fair and also to be rational, what they do depends on their motivation for buying into SingTel when they did.

Always remember that TA is about probability and not certainty.

It is quite clear to me that there is support at $3.58 a share but it is not a strong support per se.

The Fibo golden ratios are at $3.53, $3.49 and $3.45.

These supports might or might not be tested but if the downtrend should persist, these are the prices which could see me accumulating.

In terms of momentum oscillators, both MFI and CMF are pretty benign which suggests to me that the bears might lack the strength to push the price much lower although the huge gap down in price is bearish and that is what the MACD reflects.

Although I believe that investing in SingTel at $3.58 provides value for money and that money isn't flowing rapidly out of the stock, it might not be a good idea to throw in everything including the kitchen sink at this point either.

I anyhow talk to myself only. I blur.

Related post:
Technical analysis of ComfortDelgro.

Insure against longevity risk but not like this.

Reader says...
Hi need some feedback on annuity plans/rates.

Pay 16k per year for 5 years. 

Payout monthly $800 per mth for 10 yrs. annuity rate is 12% correct?





AK says...
It is not really comparable because this annuity pays only 10 years.

It is more like an endowment than annuity.

So, I think it might be wrong to valuate this like an annuity.

It is more like a savings plan without any insurance component.

An annuity is an insurance against longevity risk.

Reader says...
If like cpflife forever then it is more like wholelife policy?

AK says...
Life insurance is different.

That is more for your dependents.

We don't need life insurance unless we have dependents.

We buy annuity in case we are blessed with long life and it helps to fund our golden years.





Reader says...
U know of any annuity plans that u feel is worth considering?

AK says...
CPF Life 😉

Reader says...
What is the limit for CPF-RA?

AK says...
You will know the limit for your cohort when you turn 55. 😉





Reader says...
Just wondering if its u, wud u buy that plan?

AK says...
Basically, you are just getting back $96K for saving $80K.

That is a $16K gain.

And you are not even getting it in one shot but spread over 10 years.

20% gain and spread over 10 years is 2% per year.

It sounds innocent but it isn't

There is a cost to this.







Instead of paying us 100% all at once (like a regular endowment plan), they hold back and we are paid a very small % monthly over 10 years.

Conservatively, we could be losing another 2% every year because we could have placed the money in a Singapore Savings Bond.

So, what are we making here? Nothing!

They are not giving us more than what we could get from a Singapore Savings Bond.





Add the fact that you actually pay over a 5 year period (i.e. $16K x 5), without considering opportunity cost, you are getting less than 2% a year in return (when the $800 a month payout starts) because the waiting time for the first few $16K payments made is longer (i.e. 1 to 4 years more).

To me, it is rubbish.

We would be better off just placing the money in a Singapore Savings Bond.

This product gives an illusion that it is an annuity when it really isn't and even as a savings plan, it fails miserably.

There, I have said it.





Guess which insurance company is selling this product?

Really, no one cares more about our money than we do.

Don't ask barbers if we need a haircut.





Read another blog on insurance published yesterday:
Life insurance a heavy burden. What to do?

Related posts:
1. Rather have an annuity or not?
2. When to get a private annuity?
3. What is effective annuity rate?

Life insurance a heavy financial burden. What to do?

Reader says...
I would like to seek your self talk on whether a person should continue paying premiums for his whole life insurance policy.

Person A initiated a whole life policy with the premium payment duration for 25 years.

After 4 years, the surrender value is now around 20% of the total premium payment till date.









As the monthly premium is occupying a huge part of his monthly cash flow, he is considering to replace the whole life insurance with a term life insurance to "cut losses".

In addition, he is also considering to terminate his child's whole life policy which was initiated in 2016.

After spending time getting himself educated, he realised there might not a need for his child to have a whole life policy.

In addition, the sum assured may also be not that significant in the future, given the inflation rate.

What self talk would you give yourself if you imagine yourself to be Person A in the given scenario?












AK says...
In a nutshell, we need life insurance if we have dependents.

If we do not have dependents, we don't need life insurance.

We can get adequate life insurance and keep the cost of insurance significantly lower by buying term.

Whole life insurance is relatively expensive life insurance but it has a saving or investment component which might appeal to some people.

However, for people with budgetary considerations, term life is the best option.







We need life insurance because bad things do happen but we do not need whole life insurance.

Before terminating your existing whole life insurance, make sure that you get term life insurance of equivalent coverage first.

Ideally, your term life insurance should be for as many years as you think you would have dependents.

I cannot and would not give specific advice but I hope that talking to myself has helped to throw light on the matter.










Related posts:
1. Holistic approach to financial freedom.
2. Insurance weakened family balance sheet.

QAF's earnings down but cash increased. What is this?

Reader says...
Thanks for talking to yourself!

Really helpful in terms of long term planning for FI.

Just wanted to get some of your thoughts on QAF..






Latest results show much lower earnings (~60% less), and the stock price took a hit..

However, i see that their cash on hand has increased quite a lot.

With all the other news about it i.e. IPO not proceeding..

Could you talk to yourself on this?

AK says...
The weakness in earnings is probably cyclical (due to oversupply of pork in Australia).

So, I am waiting to buy more if Mr. Market should go into a depression.

You might want to read the related posts at the end of this blog.







Reader says...
How would you define a depression for them, and how would you conclude that their mgmt is taking the right steps? Thanks!

AK says...
If we accept that the weakness is cyclical and not structural, then, we understand that earnings will recover. 

It could take months or years but it will recover.


To be able to weather cyclical downturns, a company must have a strong balance sheet. 

This is what Marco Polo Marine has taught me. 

QAF has a strong balance sheet.





A company could become more valuable over the years but due to downturns which could be prolonged, its stock could trade at relatively low prices. 

That would be a good time to accumulate. 

This is what Wilmar has taught me.

QAF is more valuable today than it was a few years ago.

As for the management, I let their track record speak for them. 

Holding a relatively large controlling stake, they are driven to make QAF more and not less valuable.





Reader says...
I'm still young and willing to wait for recovery, just want to be certain of my decisions 🙂

1) Could i ask why you believe the downturn is cyclical?

Thanks for your time!

AK says...
The primary production business is a commodity business.

This is similar to Wilmar's businesses in agriculture.

This is a cyclical business.

I am referring to QAF's pork business in Australia, of course.

Related posts:
1. Plunging earnings at QAF.
2. Wondering about QAF.

ComfortDelgro's 51% stake in LCR good or bad?

I was wondering whether to blog about this but still feeling rather lazy, I just made a few comments in my blog's comments section and on my Facebook wall.

OK, if you don't know about the proposed acquisition, read the article: HERE.

"Taxi giant ComfortDelGro announced on Friday (Dec 8) its intention to acquire a 51 per cent stake in the Uber-owned rental fleet business, Lion City Rentals."

As things turned out, I received an email from a reader on the matter and I decided to do a little bit of "work" to share it in my blog.

Bad AK! Bad AK!

Reader's email:

I like your reply to your reader Lee Jiahui that CDG's deal with Uber will "stem the loss of drivers" and this is already helping CDG.

I also like your reply to your reader Kevin that "car rental business is actually a good business and CDG is an old hand at fleet management and they should be able to do a better job of managing LCR's fleet and reap some benefits." 

I am also glad that CDG did not invest in Uber and I also believe that the CDG's proposed majority stake in LCR is not a bad idea.





I would like to share the following:

1. CDG is paying S$295 million for a 51% stake in LCR.

2. It involves only 12,450 cars out of LCR's fleet of about 14,000 cars.

3. The NAV of the 12,450 cars is about S$642 million.

4. If utilisation rate of the fleet goes up in future, CDG would pay for more cars in the fleet.






So, although it is true that CDG is paying for depreciating assets, they are only paying for productive depreciating assets.

This is nothing new. 

Taxis are depreciating assets too but if they are put to work, they are productive assets.

Hack, 99 years, 60 years, 30 years leasehold properties are all depreciating assets.

Should investors avoid them?







Like you always say,

"All investments are good investments at the right price."

If we understand this, understand that this deal with Uber would lead to an increase in earnings for CDG in their car leasing department.

Also, we should expect CDG's engineering department's earnings to benefit.

So, is this really a bad deal?

(End)

From the comments here in my blog and on my FB wall, it is clear that not everyone is convinced that this is a good deal for ComfortDelgro.

However, to expect a fantastic offer from Uber to give away something precious to ComfortDelgro on a silver platter would be unrealistic.

As an investor, I try not to be overly optimistic or overly pessimistic. 

I try to be pragmatic.

Realistically, we cannot predict what Mr. Market is going to do next week.

However, as investors for income, all we need to do is to determine what is a fair price to pay and wait for offers from Mr. Market.

We can do it for fun but we are not in the business of predicting price movements.

We are in the business of preparing to buy from Mr. Market when he is feeling depressed.

If you just popped by, this is one of those rare days with more than one blog published in ASSI.

Read the blog published earlier today: HERE.

Related post:
Incomplete analysis of ComfortDeglro.

Rushing CPF with only 11 years left to 55.

Reader says...
I am now 44. my SA is about 100k now. 

My MA has reached BHS. 

I am thinking of transferring some OA to SA to reach FRS. 

I understand that I can’t VC anymore to SA.





Now what happens with monthly mandatory contributions? 

Will all my monthly MC all go to OA?

So does this mean that once SA reaches FRS, there is no other way to grow SA other than the interest earned within SA?

If now, my monthly MC is all going to OA, what else can I do with the faster growing OA to grow my overall CPF funds?





I feel that I want to work smart to build up my nest egg before I hit 55. 

I only have 11 years of doing this. 

I should have done it much earlier.

AK says...
Your SA has $100K and this is below the prevailing FRS, you can continue to Top Up your SA using cash.

Read this blog on the options available:
http://singaporeanstocksinvestor.blogspot.sg/2017/08/investx-congress-and-cpf.html

Your mandatory contributions (MC) will go to your OA and SA but nothing to your MA since it has hit BHS.

Read this blog and refer to allocation rates:
http://singaporeanstocksinvestor.blogspot.sg/2017/08/cpf-sa-savings-10-years-from-now.html





If you have used your CPF-OA money to help purchase your home, you could consider doing a voluntary refund to your CPF-OA to help grow your OA savings.

Read this blog:
http://singaporeanstocksinvestor.blogspot.sg/2015/09/how-to-stop-accrued-interest-we-owe-cpf.html

Let the government work harder to help fund our retirement.

Read this blog:
http://singaporeanstocksinvestor.blogspot.sg/2015/01/how-did-ak-amass-so-much-money-in-his.html

Gambatte!





"What if I had done this too?"

Read this blog:
http://singaporeanstocksinvestor.blogspot.com/2014/12/if-i-had-done-this-i-would-have-hit.html

Cutting losses in REITs.

Reader says...
You have been very successful in investing in Reit.

May i ask if you have any cut loss plan for taking up reit position?






I know investing in reit is a long term investment, looking for distribution return.

As investing are about probability and there is no certainty, if the price of reit falling below the entry price, do you get out or continue holding your position?

Really hope to hear from you soon. Thank u Ak.

Your willingness to share help gain alot of knowledge for me.

AK says...
I have in the past sold down some of my investments in REITs.

Examples of such REITs were Lippo Malls and Sabana REIT.

In both instances, I sold because I thought they were no longer as good an investment for income and that the management was mediocre.






If I believe that a REIT is still a relatively good investment for income and that any price weakness is due to (seasonal or cyclical) externalities, unless structural, I won't sell.

You might be interested in the blog on Sabana REIT: HERE.

And the blog on Lippo Malls: HERE.

(I was lucky not to lose any money in both instances and made some money instead.)

I should have invested in Bitcoin.

Reader says...

I should have invested in Bitcoin when my brother in law told me years ago.

Really regret.

AK says...

I think you mean you should have "speculated" in Bitcoin. ;p

When we buy something with nothing more than the hope that we would make money from it (i.e. that its price would go up), we are speculating and not investing. :)

(Actually, the same goes for selling something. Think stock market. Think short sellers.)

It is like buying 4D, TOTO or Big Sweep.

Yup, if you have bought some Bitcoins, you would have won the lottery.

That is what it is.

A lottery.

I don't mind a bit of speculation but we have to know what we are doing.

We have to know that we are speculating and not investing.

I see even financial bloggers getting a bit mixed up sometimes.

Sometimes, we see a blend of investing and speculating going on which isn't anything wrong per se.

We just have to know what is going on.




Anyway, read this blog to have an idea what I am talking about:
Centurion Corporation to double in price!


(And also this blog:
Investment philosophy and property market.)

ComfortDelgro's massive short interest.

Reader says...

Many are concerned that shorting will continue to push the share price down.

What do you say to this?

AK says...
Definitely, ComfortDelgro has been a favorite for short sellers.

There is now a massive amount of short positions in ComfortDelgro.





I see this as a good thing because it has created a buying opportunity.

Short positions have to be covered eventually and, unless ComfortDelgro's fundamentals are rubbish, short covering together with genuine buying interest would send the stock price up.






All else being equal, I would welcome more aggressive shorting as it would let me accumulate at even lower prices.

As I do not believe that ComfortDelgro's fundamentals are rubbish, I believe that the larger the short interest, the stronger the eventual price recovery would be. :)




Related posts:
1. ComfortDelgro's FA.
2. ComfortDelgro's TA.

"Noble Group will be worth $7.00 a share."

Reader says...
I followed the call of a famous trader in Singapore and bought Noble in May.

He drew a chart and said it will go up to $7.00.




I am still holding but the price keeps falling. I put in a lot of money. I don't know what to do now.

Should I cut loss?

AK says...
When was the last time I did a TA on Noble Group?

See the blog: HERE.

I always say that TA is about probability and not certainty.





It is too dangerous for me to suggest if you should hold, cut or add.

However, I would suggest that you pick up TA if you want to be a trader.

See recommended books for TA: HERE.

Regular readers know that I used to do quite a bit of trading and I said as much in this year's "Evening with AK and friends".

See the blog: HERE.






If you want to start a zhi char store, make sure you know how to handle a wok.

If you don't know how and pay a shi fu to do it, you are at his mercy.

So, if you want to trade stocks, make sure you know how to read charts. :)




---------
In case you just dropped in, there was a blog published earlier today:
Investing in high yield Asian bonds.