Quek Leng Chan ups stake in Guocoland. Is AK buying? (How much exposure to property developers does AK have?)

Someone asked me if I would be increasing my investment in Guocoland recently as it is still trading at a big discount to NAV.

In fact, he also asked if I would be increasing my exposure to the property sector since interest rates look like they will stay low for some years to come.

Although I like undervalued investments, there is always the possibility of such investments staying undervalued for an extended period of time.

Some readers might have noticed that this is usually the case with property developers.






My preference is, therefore, to invest in property developers that are able and have shown a willingness to reward shareholders with meaningful dividends.

The wait can be a long one and being paid while we wait makes it more affordable for most people.

Guocoland is a pretty good fit.

Since becoming a shareholder of Guocoland, I have received three rounds of 7c DPS.

Dividend yield is about 3.8%.

That is pretty decent for a property developer.








I became a shareholder of Guocoland in 2017.

That was when I noticed persistent insider buying and decided to do an incomplete analysis.

Then, I decided to invest in Guocoland which was trading at a hefty discount to valuation. 

Well, there is more insider buying now.

Following recent purchases, Mr. Quek Leng Chan's stake in Guocoland increased to almost 72%.

Although paying a price of $2.05 a share is more than 10% higher compared to what we paid back in 2017, the price is still a big discount to the NAV of $3.47 a share.






I am quite happy to hold on to my investment in Guocoland but I won't be adding now.

Reason?

Although individually my investments in property developers are not big enough to be in my list of largest investments, collectively, they are.

So, which property developers am I invested in?

They are:

1. Guocoland
2. Ho Bee Land
3. Hock Lian Seng
4. OUE
5. Perennial Holdings
6. Tuan Sing
7. Wing Tai

(If you want to read my past blogs about these entities, click on their names above as they are hyperlinked.)






Based on market value, together, they probably account for a sizable chunk of my investment portfolio.

For a retiree like me, I feel that is enough exposure to property developers.

For sure, I do not know when value would be unlocked and this unknown makes limiting the total investment exposure to 10% of my portfolio or lower sensible.

What if value is not unlocked in my lifetime?

Hmmm...






Although I am not interested in increasing my exposure to property developers, I have increased my investment in the property sector by putting more money into the following business entities not too long ago:

1. IREIT
2. Centurion
3. Accordia Golf Trust

(If you want to read my past blogs about these entities, click on their names above as they are hyperlinked.)






It should be obvious that the ability to generate a meaningful recurring income stream has always been an important consideration for me.

It has become more so as I grow more settled into my early retirement.

Of course, I am only doing what makes sense to me.

Others have to do what makes sense to them.

Oh, totally unrelated, I watched the following video by CPFB and had a good laugh:





Related post:
Largest investments updated (4Q 2019).

Voluntary contribution to CPF MA in 2020.

This blog is more of a personal reminder to do a voluntary contribution to my CPF MA in early January 2020.

Remember that interest earned this year in our MA will go to our SA if our MA is at maximum (i.e. 2019's Basic Healthcare Sum or BHS which is $57,200).

If our SA is at maximum or is in excess of the FRS, the interest earned this year in our MA will go to our OA.

So, at the start of 2020, we can do a voluntary contribution to our MA to hit 2020's BHS which is $60,000.





How much to contribute exactly?

2020's BHS $60,000 

minus 

2019's BHS $57,200 

= $2,800 

For those who are gainfully employed and paying income tax, remember that voluntary contributions to our MA will enjoy tax relief as well.

For me, being retired, I will not get any tax relief but I will enjoy more interest income like anyone else from my MA with this move.

How much interest will $2,800 earn in a year?

At 4%, that is $112 a year.

I like this.

Be inspired by Mr. Clarence Heng's life experience and his CPF story.






Of course, for most of us, money is a limited resource.

We can choose to save more or spend more.

I choose to save more and, in this case, to have free H&S insurance too.

Watch the video and learn more about Medishield Life which provides us with basic healthcare insurance for life.






Underestimating the power of compound interest is one of the biggest mistakes anyone can make.

Of course, if you are very rich and not like the most of us, please ignore this blog.

So, how does the power of compound interest grow our savings?

AK is lazy to explain lah.

Watch the video.






Make full use of our CPF membership and we are taking a big step towards a financially secure retirement.

Believe it!

If AK can do it, so can you!

Believe in yourself!

Believe that you can do it too!

Related posts:
1. Voluntary contribution to CPF MA in 2019.
2. How to do online contribution to CPF?
3. How to get free medical insurance in SG?






Is there a maximum amount I can save in my Medisave Account?


"You can save up to the prevailing Basic Healthcare Sum (BHS) in your MediSave Account if you have not turned age 65.

"The BHS from 1 January 2020 is $60,000 for all CPF members aged 65 years old and below in 2020.

"The BHS applicable to you will be adjusted yearly to account for increasing life expectancy and healthcare costs until the year you turn age 65.

"For instance, if you are aged 65 in 2020, the BHS that is applicable to you will be $60,000 for the rest of your life."

Source:
CPF Board.

Centurion Corporation is still cheap and a strong BUY.

Regular readers know that a business which I like very much as an investment for income is Centurion Corporation.

I like accumulating stocks of businesses which have a proven track record as reliable income generators.

I especially like accumulating them when they are trading at a big discount to NAV.

If they offer an attractive dividend yield with a relatively conservative payout ratio, even better.

To understand why I invested in Centurion Corporation back in early 2017,

See:
Added Centurion Corporation to my portfolio.






In fact, I like Centurion Corporation so much that I increased my investment in the business this year a few times.

I shared this in a blog in July 2019.

See:
Largest investments updated (3Q 2019).

I bought more when Mr. Market wasn't paying Centurion Corporation much, if any, attention.

Persistent insider buying, however, prevented the share price from falling below 40 cents a share.

So, I would queue to buy at 40 cents a share but often would buy at 40.5 cents a share.






On 25 October 2019, Centurion Corporation's share price closed at 43 cents a share, rising on the back of very high volume.

It broke resistance provided by the 200 days moving average (200dMA).

A bullish sign.

Question:

Could we see share price moving higher from here on?

Answer:

Your guess is as good as mine.

Well, more importantly, what is the implication for someone like me who likes the business?

I think it could be more difficult for me to accumulate closer to 40 cents a share in future.

Look at the chart again.

The 200dMA is gently turning up now and should approximate 41.5 cents soon.

The shorter term 20 days moving average (20dMA) has risen sharply and is currently providing immediate support at 42 cents a share.






Fortunately, I am cool with not buying more at higher prices because my investment in Centurion Corporation is pretty significant right now.

However, for anyone who still wants to get a bigger slice of the pie, paying a slightly higher price now is something probably worth considering.

Why do I say this?

Centurion Corporation got the attention of the analysts at DBS recently.

This reminds me of the time when analysts in UOB Kay Hian sank my plan to continue accumulating Hock Lian Seng's stock on the cheap.

Some readers might remember this blog from December 2014.

See:
Hock Lian Seng: Robust order book.

I said:

"If Hock Lian Seng should attract coverage from more analysts and if they are mostly positive about the stock like I am, I think opportunities to accumulate the stock on weakness could be harder to come by in future."

A case of deja vu?

Maybe.

Newer readers might also be interested in this blog from February 2017.

See:
Hock Lian Seng returns 100% and more.







Some points from a report by DBS earlier this month:

1. Centurion Corporation's purpose built workers accommodation (PBWA) segment is resilient and the expected increase of 3,600 beds in this segment may boost income by 11%.

2. Centurion Corporation's purpose built students accommodation (PBSA) bed count increased by 12.4% so far this year and this may improve top line by 11.2%.

3. Demand for PBWA in Singapore continues to outstrip supply by about 135,000 beds and despite a tightening on the number of foreign workers, occupancy rate rose from 96.9% to 97.4%.

4. Over in Malaysia, Centurion Corporation's PBWA occupancy rose from 90.2% to 91.2% as the Worker's Minimum Standard of Housing and Amenities (Amendment) Bill was passed in July.

5. PBSA occupancies improved from 90.3% to 91% in the UK.

6. PBSA occupancies in Australia improved from 80.7% to 89.8% in RMIT Village and from 82.1% to 93.9% in East End Adelaide.

DBS has issued a DCF based target price of 52 cents a share for Centurion Corporation.




I am more concerned with Centurion Corporation's ability to generate income for me consistently and meaningfully.

However, if DBS is worth their salt, there is more than 20% upside from Centurion Corporation's last Friday's closing price of 42 cents a share.

Time will tell.

I like being paid while I wait.

In the meantime, I will munch on an Old Chang Kee curry puff and watch the following video.





Related post:
More on Centurion Corporation.

Also see:
Centurion Corp posts 21% rise in 3Q earnings to $8.8 mil on higher revenue.

Wilmar: "Target reacquired" and target prices.

Regular readers know that I have been a Wilmar shareholder for many years.

It is difficult not to find Wilmar impressive as a business entity with its breadth and depth of activities.

Many years of Mr. Market's pessimism towards Wilmar gave believers a big window of opportunity to build their exposure.

In the last two years or more, I have been accumulating shares of Wilmar until 3Q 2018 when I decided to sell into the rally, reducing my investment significantly while keeping a core position.

See:
Largest investments (3Q 2019).

It is a strategy that regular readers should be familiar with.

It is so that I would still stand to gain in case the bull had legs.

Some might call it a hedge as, always, I don't know everything.

Well, as it turned out, the bull grew tired and needed a break.






If you are new to my blog or if you are rather forgetful, to understand why I was building a relatively significant long position in Wilmar,

See:
Accumulating Wilmar on price weakness.

You will see how I did temporal comparative analysis in that August 2017 blog.

To understand why did I buy more when Wilmar's share price went under $3.00 a share instead of cutting losses,

See:
3Q 2018 passive income: Wilmar.

Conviction.

Good reasons make it stronger.

Of course, being paid while I waited made patience more affordable.






I watched the latest Terminator movie recently and Arnold Schwarzenegger (aka Carl) in one scene said:

"Target reacquired."

A man of few words, as always.

OK, no spoilers in case you have not watched the movie.

Anyway, Wilmar was still an investment target for me after the partial divestment exercise to lock in gains earlier this year.

Using my limited knowledge of technical analysis (TA), I waited for what I thought could be the right time to increase exposure again.

Over time, as its share price retreated, I thought Wilmar's chart could form either a falling wedge or a cup and handle pattern.





If it was a cup and handle pattern, share price should find a floor at approximately $3.50 a share (i.e. the lowest point of the handle).

Could be a few cents lower or higher. 

I was also keeping an eye on the rising 200 days moving average (200dMA).

Being a long term moving average and a rising one at that, it should provide a stronger support.

By the time I decided to increase exposure again in a big way, the 200dMA was at $3.54 or so which tied in nicely with the approximate low (of the handle) in a probable cup and handle pattern.

I started buying at $3.60 and bought more as it did eventually hit $3.54.

Wilmar became one of the largest investments in my portfolio once more after that. 

If you do not remember reading about this in my blog, you might want to see related post #1 at the end of this blog.








As usual, I scribbled all my TA on a scrap of paper and, unfortunately, I cannot find that paper scrap now.

However, I remember the measurements I took from charting.

Measurements?

Yes, the measured target prices.

Prices?

Yes, that is not a typo.

In the plural.

If Wilmar's share price were to move higher after forming a falling wedge, the measured upside target would approximate $4.50 a share.

If Wilmar's share price were to move higher after forming a cup and handle pattern, the measured upside target would approximate $5.00 a share.






Take my TA with a pinch of salt because I am an amateur, after all.

I know some of you do not believe me but I am just being honest.

Well, amateur or not, if things pan out like I think they might, I would stand to book a pretty handsome capital gain.

If things don't pan out like I think they might, all else remaining equal, I would still stay invested as I am comfortable with my level of exposure in a business that provides me with both elements of income and growth.

Now, who says we cannot be an investor and a trader at the same time?

Older readers would remember this masterpiece of a pyramid drawing by AK the artist:

See:
Investing for income and dividend yields.

and also:

Motivations and methods in investing.

The former was a blog from March 2017 while the latter was a blog from July 2013. 

Newer readers who wish 

1. to know what the pyramid drawing is about 

and 

2. to understand my investment style 

should find the blogs useful.






Newer readers might also want to read related post #2 at the end of this blog. 

Why do I invest the way I do?

You tell me.

Related posts:
1. Largest investments updated (4Q 2019).
2. Peace of mind as an investor.

Eagle Hospitality Trust: Financial engineering and selling at 44.5 cents a unit.

When I analyse stocks, I am aware that I do not have the resources to do complete analyses.

Most if not all of my analyses are incomplete and I make decisions based on such incomplete analyses.

What?

Really?

Yes, really.

An example:
ComfortDelgro: An incomplete analysis.

I just have to decide on which bits of information are more crucial to my decision making process.

If I have access to those bits of more crucial information, I will be able to make a decision.

If I don't have access to what I think are more crucial, I should stay away until a time when things have changed.

Those few times that I ignored this advice to myself, I mostly regretted my decisions.






It is almost like a jigsaw puzzle.

We don't usually need to put every piece of the puzzle in its place to see the picture.

As retail investors, if we can be approximately right most of the time, we will probably do well enough in the long run.

When I blogged about Eagle Hospitality Trust recently, it was the same.

In the blog, I said "it is enough to stop me from investing in Eagle Hospitality Trust even now."

Of course, if you have read my last blog on Eagle Hospitality Trust, you know what I am talking about.






Yes, in the case of Eagle Hospitality Trust, what really struck me hard was the substantial shareholders selling at what seemed like ridiculously low prices.

Not just selling their investments at ridiculously low prices but also selling them in large chunks.

Guess what?

It has happened again.

Today, it was announced by Eagle Hospitality Trust that Compass Cove Assets Limited which is wholly-owned by Mr. Norbert Shih Hau Yuan sold 5 million units at 44.5 cents per unit on 7 November 2019.

See:
SGX: Eagle Hospitality Trust corporate announcement.






So, we see that even a selling price as low as 44.5 cents a unit is acceptable to this substantial shareholder.

I believe they are the people who sold 6 hotels to Eagle Hospitality Trust's sponsor who in turn injected the hotels into the Trust.

See: 
"Asset management firm ASAP sold six hotels to EHT's sponsor..."


We should ask how realistic are the valuations of these hotels?

Making an investment decision based on published NAV could be a bad idea as the valuation could be inflated.

Older readers of my blog would remember that I said the NAV of Saizen REIT was too low because they were able to sell their properties at a premium to valuation in the open market.

Newer readers might want to read this blog in which I talked to myself about Saizen REIT and Sabana REIT.

See:
Saizen REIT: Right price and luck.

If you would like to read more about Sabana REIT,

See:
Sabana REIT: History and current thoughts.





Anyway, we should ask if Eagle Hospitality Trust tried to sell these six hotels in the USA, could they get buyers to pay prices equal to the valuations by the "two reputable independent valuers" the manager of the Trust keeps referring to?

Good question, don't you think?

See:
Closer look at EHT's portfolio. 
(You can also go to the comments section at the end of this blog for a brief account.)

So, looking at the cash flow is probably a better way.

Really?

As more than 60% of EHT's cash flow is secured with master leases, there is some comfort there for investors.

However, as seasoned REIT investors know, master leases usually hide the real (usually lower) cash flow generated by the properties.

It was also probably the master leases that led to higher valuations for the properties.

Financial engineering.

Always amazing.





When Ascendas Hospitality Trust had its IPO so many years ago, I wasn't interested in it partly because of some financial engineering involved to make it more attractive.

Of course, older readers of my blog know that I usually avoid IPOs anyway.

So, how did Ascendas Hospitality Trust become one of my largest investments?

It was only after some time when the effects of financial engineering lapsed and when the unit price declined to a level that became more compelling that I nibbled.

When unit price plunged even lower, I gobbled as I had clarity.

As an investor, I need clarity.

Without clarity, I cannot be sure if something is clearly undervalued or not.

Of course, if we cannot trust, we cannot invest.

See:
Ascendas Hospitality Trust: More income.

Of course, Ascendas Hospitality Trust will have a new name soon.

See:
Ascendas Hospitality Trust: Bad deal?





Anyway, back to Eagle Hospitality Trust.

At this point, it is almost impossible to believe that everything is fine and nothing is wrong.

Of course, it is only my belief since it could also very much be that I am growing old and cynical.

We should ask why are substantial shareholders selling at such low prices?

Unless they issue a statement on why they are doing this, we can only guess.

Will they do this?

EHT is due to announce results two days from now on 13 November 2019 but it should not distract investors from important questions that need answering.







Related post:
Is Eagle Hospitality Trust worth it?

Is Eagle Hospitality Trust worth it?

On 24 October, a reader left a comment here in my blog:

"https://www.businesstimes.com.sg/companies-markets/eagle-hospitality-trust-calls-for-trading-halt-after-reports-on-possible-lease

"The yield is almost 10% now.

"When trading halt is lifted, price is likely to crash and yield will shoot up above 10%.

"Do you think the risk is worth taking ? Thanks."






In reply, I said that the risk looked pretty significant.

I felt that I shouldn't take on too much risk in my retirement.

Basically, that meant I wasn't going to invest in Eagle Hospitality Trust.

The following day, on 25 October, Eagle Hospitality Trust's unit price crashed from 64.5 cents to 54.5 cents.

Of course, it did not stop there as it further plunged spectacularly to 44 cents on 5 November.






People say that IPO stands for "it's probably overpriced".

Well, it seems to be the case here.

Eagle Hospitality Trust's IPO earlier this year was priced at 78 cents per unit.

It is certainly not an exaggeration to say that investors who got in during IPO have suffered massive wealth destruction.

What to do?

For those already vested, should they cut loss or buy more?






Well, when even substantial shareholders cut their losses, it is rather ominous.

In fact, it is because of substantial shareholders selling a substantial portion of their stakes that created massive selling pressure leading to the catastrophic crash in Eagle Hospitality Trust's unit price.

When elephants stampede, it is the grass that suffers.

As retail investors, keeping an eye on what insiders do is usually a very good idea.






When insiders buy, it is usually because they think they are getting a good deal.

When insiders sell, it might not be because they think they got a bad deal.

To be fair, there could be many rather innocent reasons why they sell.

However, I would say that this is probably true when the stock is doing relatively well.

Insiders might want to take some profit off the table.

After all, it is never wrong to take profit, as the saying goes.






When insiders sell a significant percentage of their investments and take big losses in the process, however, the reason for selling could be less benign.

Alarm bells should go off when more than one insider take big losses selling down their investments.

This is the case with Eagle Hospitality Trust.

Insiders probably know something retail investors or outsiders don't.

If Eagle Hospitality Trust is a good investment for income, after a huge decline in unit price, insiders should be buying more.

Even if they don't buy more, they should be holding on to their investments.

They should not be selling.

This kind of selling by insiders is ominous and it is enough to stop me from investing in Eagle Hospitality Trust even now.






Not investing?

What about doing a bit of speculating instead?

This is when we buy and hope that the unit price will go up in the (not too distant) future.

Well, the selling pressure has weakened but it has not disappeared.

The slight recovery in Eagle Hospitality Trust's unit price now is due to reduced selling pressure and not due to strong buying pressure.

This is quite obvious when we look at the trade summary.

There is much more selling down going on than there is buying up of units.






After so much damage, unless there is very strong and sustained buying pressure, it is likely that Eagle Hospitality Trust's unit price will stay depressed for some time to come.

If there is strong and sustained buying pressure, we could see a rebound that moves the unit price to test resistance provided by the declining 20 days moving average.

Lacking this, the unit price could move sideways and the declining 20 days moving average will catch up in time which could create more downward pressure then.

The RSI, a momentum oscillator, says Eagle Hospitality Trust is oversold but there is nothing to say that it won't stay oversold for an extended period of time.

The MACD, another momentum oscillator, is still declining in negative territory and from the looks of it, it will take a rather long time before this is repaired.

A trade is usually safer when we see a positive divergence and I do not see one now.






Remember,

"Never risk what we have and need for what we don't have and don't need." - Warren Buffett

Unless we have deep pockets like the substantial shareholders, whether we are investors or speculators, it might better to stay away from Eagle Hospitality Trust even now.

It could be that I am missing out on a fantastic deal but when in doubt, I should stay out.

I might be tempted but I don't need this.

Peace of mind is priceless.






You might also be interested in this blog:
Trump won the election and I lost my life savings.

A river called CPF and the stubborn horses.

In my last blog, I said that as long as personal financial conditions permit, I would like to continue making voluntary contributions to my CPF account at least till I am 55 years of age. 

See:
How much passive income is enough for you?

I believe that it should not come as a surprise to anyone that this plan is ridiculed by people unhappy with the CPF.

Some people unhappy with the CPF even got angry at me for sharing my thoughts on how to make the CPF work as a cornerstone in our retirement funding strategy.

See:
Unhappy with CPF and angry with AK.





Looking through some of my unfinished blogs which are pretty numerous, I decided to spruce up one on the CPF.

There are so many reasons why many blogs remain unfinished.

Of course, AK being lazy is one reason.

However, this blog was left unfinished probably out of respect for a friend.

I say "probably" because I am not sure if it was out of respect or out of pity.

He is actually more of a friend's friend than a friend.

What's the difference?

Anyway, it was something that happened more than a year ago.







The original blog went like this:

I am once again reminded of human mortality as I attended a funeral wake recently.

As I grow older, I suppose I might be attending more of such necessary and unhappy events.

I will avoid them if at all possible.

I sat at a table with some friends and in the chatter, someone said something about the CPF locking up our hard earned money and that it is as good as gone.

It was in response to another person who said it is better to live life to the fullest and there is no point in dying with lots of money left behind.

Anyway, I wasn't feeling talkative and I wanted to go home as soon as I was done with the dinner buffet.

AK is so anti-social.

So, I kept quiet and kept eating.

When they started talking about children and parents, I gulped down my drink and said farewell.

Why do I prefer my own company?

I wonder.





I know that there are quite a few out there who do not trust the government.

It is good not to be too trusting.

That is for sure.

Too trusting and we are in danger of becoming gullible.

However, if we become overly suspicious, we are in danger of becoming irrational.

We should ask the right questions before making a decision, absolutely.

When we become irrational, however, we ask all the wrong questions or start imagining things.

Anyway, this is a topic that I have covered multiple times.





1. The CPF is not a national PONZI scheme.

There is a maximum amount we can contribute to our CPF account each year.

Want to contribute more?

Sorry, not allowed.

Does a PONZI scheme work this way?

Read:
CPF is really a PONZI scheme!







2. The CPF is designed to help all members achieve a basic level of retirement funding adequacy.

"The CPF is a system that is meant to help the masses to help themselves.

"If we think the system cannot help us, it is probably because we have not tried to help ourselves."

Read:
Purpose of the CPF is to make the rich richer?







3. If we are very rich, we probably will have to look for other tools on top of the CPF.

"For most ordinary Singaporeans, if they want to hold some bonds to prepare for retirement, maxing out their CPF membership benefits is all they need."

Read:
CPF is all we need unless we are very rich.

Read: $800K in his CPF!

The CPF is a good thing and we Singaporeans are a fortunate bunch.

Unfortunately, many who really need to make better use of the CPF do not realise what a good thing the CPF is.

We can bring horses to water but we cannot make them drink it or so the saying goes.

Fortunately, the mandatory component of the CPF makes the horses drink some water.

LOL. ;p

The horses might not be grateful and they complain a lot but they sure are lucky. :p





Related post:
CPF interest is passive income and CPF savings is real money.

You might also be interested in these blogs:
1. How much passive income is enough for you now?
2. CPF SA time and income lost due to peer pressure.