Asian Pay Television Trust (APTT): IPO.

Usually, when people ask me about IPOs and if I would take part, I would answer in the negative.

Subscribing to what Warren Buffett thinks about IPOs and that is IPOs of stocks are almost always bad investments, I have not taken part in IPOs in many years. Warren Buffett is of the opinion that IPOs are rarely undervalued offers.

What about the IPO of APTT? Is this an exception?

Well, APTT will be holding TBC which was a business in MIIF's portfolio and we know that TBC was the crown jewel of MIIF's portfolio of businesses. With TBC removed from its portfolio, MIIF saw its unit price tumbled almost 70% yesterday.

At a unit price of 97c, APTT's distribution yield is estimated to be 7.5% in the first year and this is estimated to increase to 8.5% in the second year. With relatively high yields like these waved around, the IPO has attracted a high level of interest from institutional investors.

Indeed, Dow Jones Newswires reported in an article dated 2 May 2013 that 8 cornerstone investors were secured. These are investors who are willing to commit to holding significant stakes which shows their confidence in the Trust.

In a yield hungry world, investors fed up with a low interest rate environment could push up the unit price of APTT when it starts trading on 29 May 2013. Of course, there is no way of telling if this would happen but look at how Croesus Retail Trust saw its unit price rose 23% on its first day of trading recently and we get an idea of just how things could turn out for APTT. Although not really comparable, it suggests that Mr. Market could be quite happy with distribution yield compressing to just 6.5%.

In case you are wondering about gearing (and you should), APTT's gearing is about 40%, while Croesus Retail Trust's gearing is at 47%.

If a distribution yield of 6.5% is what Mr. Market is willing to accept, APTT could trade at $1.12 per unit. If Mr. Market demands a minimum of 7% yield in the first year, we could see APTT trading at $1.03 to $1.04 per unit. If news that the placement tranche was 3 times oversubscribed by institutional investors is reliable, chances are we will see APTT trading higher.

If you are interested in participating in the IPO, take note to do so by 12 noon, 27 May 2013.

Related posts:
1. MIIF: Asian Pay Television Trust (APTT).
2. MIIF: Lower fair value.

Be a real estate owner the easy way (3).

As a follow up to my last blog post which questioned "Am I trying to be the most popular blogger in Singapore", I decided to Google "Singapore Investment Blogs" to see just how popular my blog might be. Curious, you know.

Well, I saw a link with a pretty face on the first page and, in case you are wondering, no, the face was not mine. Anyway, thanks to that link, this blog post was born. Unexpected, really.

The hyperlink says "Wendy Kwek Official Blog" and, apparently, she is a savvy and well known Singaporean property investor. Well known? I should know her but I don't. I should read up about her and I did.

The first line of the third paragraph in the "About me" section gels with me:

"I like to speak with people to engage and inspire them."

I like that although I am more a writer than a speaker.

"My mission is to help average people create extraordinary wealth through property investments."

Now, this sounds powerful. Pretty attractive too, no doubt.

The archives of her blog show that the blog started in August 2012 but I guess Wendy must have been reaching out to people long before that. She runs the "Property Riches Program" and her last blog post dated 9 April 2013 stated that the program saw its 14th batch of graduates and it was a big group, going by the photograph taken of the class!

Personally, I have not attended any program like this before and decided to do a bit more research online to find out more. I found this:

"Learn How To Own Properties With Little Or NO Money Down From Ms Wendy Kwek"

It was part of an ad on a property related website.

OK, this sounds familiar and I think I blogged about this before.
Read: Be a real estate owner the easy way (2).

Is the claim bona fide? Maybe, I don't know. I have not attended the course by Ms. Wendy Kwek before. So, I have nothing definite to say about it other than the fact that the claim sounds too amazing to be true.

Searching the internet to see if there are ways we can own properties with little or no money down, I came across 4 ways:

1. Borrow money to pay the down-payment
2. Co-Invest with other investors
3. Co-Invest with other investors using Central Provident Fund (CPF)
4. Buy overseas property with no money or little money down

Read the full article at Mr. Propwise: 4 ways to buy properties with no money down.

With even previously sceptical people now thinking that there is only one way for property prices to go which is up because of inflation, it is perhaps no wonder that Ms. Wendy Kwek et. al. are highly sought after by investors.

I took the following from the Facebook of Drizzt, the blogmaster of "Investment Moats":

"A condominium in a good location in Singapore can cost at least a million dollars and with the buyer having to fork out some 30% of the total purchase price, the upfront deposit can be a minimum of $300,000 excluding other miscellaneous charges. $300,000 is a figure that can take quite some time for a person on the street to save up to...

"But with property clubs, with a group of common-minded investors, together pooling a sum of monies for property purchases, the sum of monies an investor needs to fork out will be reduced. Take for example, the same $1 million property, with 20 investors, each investor would just need to fork out $50,000. Should the property price ascend to say $3 million, the $2 million profits would be shared among the 20 investors, this will translate to a profit of $100,000 for each investor! To maximise profits, some of these property clubs will ... purchase overseas properties with prices depressed due to the economic cycle."

 

When I commented that people should consider the possible downside, Drizzt said: "Think there is no downside with inflation the name of the game" which, in his opinion, is what the general public is thinking.

 

If you have owned properties with little or no money down before, perhaps, you could share with us your experience here. I am interested in hearing your experience and I am sure other readers would be interested too especially if we could own an investment property (or a few) with no money down in Singapore.

Related posts:
1. Leverage up and buy investment properties now?
2. Selling a private property just got harder.
3. More cooling measures on the way?
4. Buying a piece of real estate within your means.
5. Rich Dad, Poor Dad: 2 are better than 1.

Singapore Police Force - Recruitment.

One thing which most friends and relatives don't know about me is that I wanted to join the Singapore Police Force when I was much younger but my medical status meant that it was a no go. With my degree, I would have been an ASP right away.

Till today, sometimes, I still wonder how I would have turned out as a person if I was accepted.

Anyway, if you are considering a career and if you are a person who values courage, loyalty, integrity and fairness, a career in the Singapore Police Force might just be what you are looking for.

Find out more at:
http://sg.sharings.cc/AK71SG/share/SPF

Plastic hazard in cup noodles!

I bought some Myojo brand cup noodles recently because NTUC Fairprice had a sale. It was $1.30 or $1.40 for two. Cannot remember exactly.

Anyway, in case you buy this, WARNING, do not pour hot water into the container as per usual practice! The smell of plastic was so strong that it was unbearable!

I quickly poured the hot water and noodles into my trusty Tupperware container which I use to bring oatmeal from home everyday. If I didn't have an alternative container close at hand, I would probably have thrown away the noodles, dissolved plastic and all.

No prizes for guessing what I had for breakfast and lunch today. Oh, I also had some very nice cake my sister baked which was a treat!

Myojo noodles are good. I prefer them to Maggi but the use of cheap plastic is really damaging and in more ways than one! Instant noodles lovers, please take heed!

Related post:
Korean noodles for lunch!

Not happy with government? Please emigrate!

I couldn't believe it when I read that the newly appointed Home Minister of Malaysia said that Malaysians who are unhappy with the country's political system should leave the country.

"If these people wish to adopt the list system or the single transferable vote used by countries with the republic form of government, then, they should migrate to these countries to practise their political beliefs," Datuk Seri Ahmad Zahid Hamidi.
Source: The Straits Times online, 16 May 2013.

I don't see how a statement like this is going to help make things better.

The Minister should realise that, like them or not, these unhappy Malaysians are still Malaysians! They have the right to express their desire for change even if the Minister might not agree with them. Simple, isn't it?

How could someone like this be a Minister? He is a Datuk too. Shame on him.

You might also be interested in this:
Take the good with the bad if we retire to Malaysia.

MIIF: Lower fair value with lower income distributions.

With MIIF divesting TBC, unit holders will no longer be getting income distributions twice a year from the Fund in future.

This is because MIIF receives income from TBC in March and September while it receives income from HNE and CXP in September only.

MIIF will have a DPU of about 0.7c in August 2013 which is from the final income received from TBC. A DPU of about 1.2c will be paid out in March 2014 which will be for income received from HNE and CXP.

In future, we should expect only once a year distribution from MIIF for income received from HNE and CXP. Also, do not expect 1.2c to be the norm either as it is expected that the tolling revisions for HNE will adversely affect DPU for the full year starting in 2014.

What would be a fair value per unit for MIIF when it resumes trading?

In recent past, MIIF was trading at about 63c a unit and with an annual DPU of 5.5c, unit holders were enjoying a distribution yield of some 8.73%. For ease of calculation, let us be generous and assume that an annual DPU of 1.2c will be the norm. This would give us a fair value of 14c per unit, thereabouts, in order to have a similar yield. This would mean a decline in price of some 49c per unit!

If this estimate should gel with Mr. Market, unit holders would have been better off selling at 63c a unit prior to the voluntary trading suspension since unit holders are only getting 44.329c per unit from the divestment of TBC either in cash or in APPT units (priced at 97c per unit).

It would also mean that anyone with a purchase price of 58c or lower per unit, prior to the trading suspension, is quite "safe" while anyone with a higher purchase price could lose money.

Of course, there is a chance that APPT could see higher unit price when trading starts and there is also a chance that MIIF might not see its own unit price plunging to 14c per unit. If this should be the case, then, this effort by the management to unlock value for unit holders could be declared a success.

Anyway, now that we have some ballpark figures, we will be able to make some snap decisions tomorrow, if required, keeping in mind that any investment at the right price is a good investment.

See: MIIF dividend guidance.
See: APPT offer price and MIIF APPT units.

Related post:
MIIF: Asian Pay Television Trust (APTT).

Am I trying to be the most popular blogger in Singapore?

Someone asked if I was trying to be the most popular blogger in Singapore. I don't know why she got that impression. Was it something I said or did? Hmmm...

Anyway, I really am too lazy to work much harder on my blog. Blogging is a hobby and I want to keep it that way. I mean I enjoy blogging enough to want to continue doing it but to work hard at it is really a different ball game, isn't it?

For anyone who has the ability and the will to become a popular blogger, there could be many financial advantages. No kidding? Yes, no kidding! There are enough examples out there.

Xiaxue

A blog I visit from time to time belongs to, arguably, the queen of bloggers in Singapore, Xiaxue.

She makes enough money from her blog to do it full time. I was told she makes $XX,XXX in certain months and has a manager to deal with advertisers!

When she got married, she didn't have to worry about most of her wedding expenses. She had so many sponsors!

See:
http://xiaxue.blogspot.sg/2010/03/my-wedding-solemnization.html
(Just scroll to the end of the blog post if you don't want to look at the photos.)

Then, recently, she got her matrimonial home renovated and, again, she had so many sponsors!

See:
http://xiaxue.blogspot.sg/2013/03/home-decor-part-1-living-room-and.html
(Again, scroll to the end of the blog post and you will see what I mean.)

Pretty amazing!

I think part of Xiaxue's success stems from not being a finance blogger in Singapore. Hahaha... I am only half kidding. Want to have more financial rewards as a blogger? Don't do what I do!

If you don't believe what I just said, you just have to search for blog awards in Singapore and there are quite a few annual events out there but you will never find a category at these awards that says "Best Investment/Personal Finance Blog".

Sobering for some.

Related posts:
1. A couple of thoughts.
2. Request for sponsorship.

AIMS AMP Capital Industrial REIT: Distribution Reinvestment Plan.

Regular readers know that I will always take the income distributions from REITs in cash when they offer a Distribution Reinvestment Plan (DRP) as an alternative.

There are two reasons why I do this and they are because:

1. I invest in REITs primarily for income and accepting new units in lieu of cash distributions means having less passive income.

2. There is a possibility that I could get to buy more units of the REITs cheaper later on.

These seem to be reasonable enough.





However, with the DRP offered by AIMS AMP Capital Industrial REIT with regards to 4Q FY2013's distribution, I have decided to accept some DRP units and the balance in cash.

See? Who said that people who invest in REITs are predictable? Could anyone have predicted this decision of mine? OK, why have I decided to do this?





Let us start with what we all know. The REIT went XD on 26 April 2013 with a DPU of 3.14c. Today, the REIT closed at $1.84 per unit. The DRP units are at the issue price of S$1.6727.

So, there is a 10% difference between the REIT's closing price today and the DRP issue price. 

If we were to take advantage of this, we would get 10% more money than choosing to receive the distribution in cash only, wouldn't we?





For example, if someone who was going to receive S$1,672.70 in cash distribution should opt for new units instead, he could sell these new units for S$1,840.00 to Mr. Market and make some nice pocket money! 

Of course, we wouldn't know if the unit price would still be at S$1.84 later on. It could possibly be lower, after all.

The solution to this is quite simple. The person could sell an equivalent number of units from his existing holdings now to lock in the price of S$1.84. These units sold would soon be replaced by the DRP units anyway.

I like to have my cake and be able to eat it too. Who doesn't? 

However, what I have described so far might not work for everyone. Why?

Although to receive about 10% more money is attractive, the operation would make sense only to those unit holders whose cash distribution from the REIT amounts to S$1,672.70 or more. 

Doing some simple calculations, with DPU at 3.14c, it would only make sense to investors who hold 54 lots or more of units in the REIT to do this. Any lesser, it won't be viable.





It would also make sense for unit holders who hold more substantial stakes in the REIT to calculate exactly how many of the units they currently hold should be used in accepting DRP units to avoid odd lots which could be quite a pain.

For anyone who is thinking of accepting DRP units, remember that the closing date is 23 May 2013.

Related posts:
1. AIMS AMP Capital Industrial REIT: Bumper distribution.
2. Made and still making money from S-REITs.
3. AIMS AMP Capital Industrial REIT: Making money.

Value for money holiday ideas!

The Vesak Day long weekend is coming up and so is the June school holiday. If you are wondering where you could go for a short vacation, check out these fantastic offers:

"Life's A Beach" Phuket: 3D2N Free & Easy Stay at 5-Star Cape Panwa Hotel (Private Beach Front) – Includes 2-Way Flight on SilkAir + 2-Way Airport Transfer + Daily Breakfast + Half-Day Coral Island Tour (Min 2 Pax) @ S$ 299.00 each.

Hong Kong: 3D2N Free & Easy Stay at Kimberley Hotel – Includes 2-Way Air Ticket by Tiger Airways + 2-Way Airport Transfer + Half-Day City Tour (Min 2 Pax; 4D3N Option with Half-Day City Tour & Disneyland Admission Available) @ S$ 248.00 each.

Shopping! Bangkok: 4D3N Stay at P2 Boutique Hotel – Includes Return Ticket by Singapore Airlines + Airport Transfer + Daily Buffet Breakfast + City Tour + In-Room Wi-Fi (Min 2 Pax; Limited Voucher Only) @ S$ 188.00 each.

These and more amazing offers are available at: Discounts

China Minzhong: Good results produced long black candle!

Share price of China Minzhong opened higher at $1.11 and touched $1.12 today before closing much lower at the end of the day at $1.025.

Why has Mr. Market turned bearish on China Minzhong? Did the company report dismal results? No, on the contrary, results although not stellar are pretty encouraging.

China Minzhong actually saw a 5.9% increase in net profit to RMB 255 m for 3Q FY2013. This was on the back of higher revenue which increased by 27.7% to RMB 962.2 m.

Both cultivated and processed vegetables segments did well. Driven by growing domestic demand, the former's revenue improved 36%, year on year, while, driven by export demand, the latter's revenue improved 22%. Revenue from other processed products improved some 51.5%, reflecting strong demand for China Minzhong's branded products which include beverages.

What do all these tell me? The business is growing rather nicely. Then, why is Mr. Market selling down the stock? I have no idea and it really doesn't bother me. What matters is what I am going to do and I am definitely not selling.

With lowering share price, valuation is becoming cheaper. Do I want to sell something cheap? Or would I rather buy something cheap?

Technically, however, a long black candle, an engulfing one in this case, no less, is very bearish. We could see share price declining even more as I have little doubt that this could have brought out the shortists amongst us.

It would, therefore, not surprise me if the recent low of 96.5c should be retested if the gap covers at $1.005. Immediate support is provided by the 20d MA at $1.025.

Of course, we don't want to catch a falling knife. Even if we believe that fundamentals are good, to wait and see could be a better thing to do now. What am I waiting to see?

See if price should retest 96.5c. See if volume dries up as price goes lower. See if the momentum oscillators form higher lows especially if price should form a lower low.

Cheap could get cheaper and I am sure everyone likes to buy a good stock cheaper. However, there is nothing wrong with buying cheap and buying again even cheaper later on (or is there)?

See China Minzhong's 3Q FY2013 results: here.

You might also be interested in these blog posts:
1. China Minzhong: Bought more at $1.025.
2. How to tell if a company is a potential takeover target?
3. Teach yourself fundamental and technical analysis.

Yongnam: Partial divestment at 33.5c.

Building on my observation that Yongnam's stock price seems to move in blocks of 1.5c, I have been putting in overnight sell orders at 34c for a few sessions. These sell orders did not manage to get filled even as the stock touched 34c in recent sessions.

With CMF forming lower highs, we have to think that smart money has grown less enthusiastic about the stock even as the recent high of 34c was repeatedly tested as resistance. So, I made a decision to partially divest at one bid lower than 34c today.

This batch of shares was purchased in February 2012 at 24.5c a share. So, the result is a capital gain of 36.73%. Of course, I also received 2 rounds of dividends of 1c per share in the same period. Total ROI is 44.89% over a 15 months period. Not too bad.

Yongnam's stock is trending up and the channel is clear to see. It is currently testing the resistance of the channel. There is a chance it could break out of resistance but with volume anaemic, the chance is slim. There is also a chance it could pull back to test support provided by the rising 20d MA or even the support of the rising channel.

Technically, it seems more prudent to lighten my long position in Yongnam and to wait for a pull back before loading up again.

Related post:
Yongnam: Partial divestment at 31c.

Happy Mothers' Day!

Today, my family had a very happy time together having lunch.

For dessert, my sister cut up some very sweet papaya and mango. She also baked a beautiful cake.

To all readers who are mothers,

HAPPY MOTHERS' DAY!

You ladies deserve it!

Eu Yan Sang: Weight management package.

Ads on slimming pills and courses are plenty. I am always sceptical about them especially when they are not cheap to begin with. However, if they are offered to me free of charge, I wouldn't mind trying. Free. Why not?

Now, Eu Yan Sang is also into the business of slimming! Yes, I didn't believe it myself but it is apparently true.

A Nuffnanger lost some 5.2kg and 10cm around the waist with the help of a physician from Eu Yan Sang!

Anyway, Eu Yan Sang is giving away 2 weight management packages worth more than $2,000 each. So, if you are interested, enter the contest and you might just be a winner:
http://sg.sharings.cc/AK71SG/share/1EYS2013

Saizen REIT: Refinancing expenses reduced net income.

Saizen REIT reported a 70.5% decline in quarterly net income from operations. What investors in Saizen REIT should be concerned with is the permanence of the decline.

Saizen REIT saw a 2% increase in gross revenue, quarter on quarter, but a 15% increase in operating expenses and this led to NPI reducing 3.3%. If the higher operating expenses are the new norm, then, expecting a marginal decline in future DPU makes sense.

The biggest blow comes from "other operating expenses". This saw a 7.5x increase. This was what led to such a big decline in quarterly income from operations. However, remember that this is a one off event.

Basically, Saizen REIT terminated certain loans to refinance under better terms and to extend maturities. Although with the early terminations came hefty costs, bearing in mind that these are one time costs, the REIT has emerged stronger from the refinancing efforts. Why?

1. The cost of refinancing will be recovered in less than two years from interest savings achieved from new lower interest bearing loans.

2. The higher loan to value ratios of the new loans lead to more possibilities in debt funded acquisitions which will up income and, most probably, DPU too.

3. The earliest maturity date of Saizen REIT's loans is now in February 2018.

The pain that comes from such a large decline in quarterly net income from operations will pass because the costs that come from refinancing are a one off event. However, the benefits of the mentioned refinancing are longer lasting and will benefit anyone investing in Saizen REIT for income, all else remaining equal.

A pertinent question would be how the weaker Japanese Yen is going to impact valuation in S$ terms. NAV/unit of JPY18.69 means 22.86c in S$ terms today. So, the REIT is still undervalued, trading at under 20c per unit. However, this is less so than a year ago.

In the absence of yield accretive acquisitions and further improvement in occupancy which has improved to 92.2% on average, it is reasonable to expect DPU to be affected negatively. However, I sense more acquisitions in future and with higher average occupancy too.

Investing in Saizen REIT is buying into a conservatively leveraged play on Japanese residential real estate and a conviction that the Japanese economy will see better days ahead. With the JPY much weaker than the S$ these days, anyone investing for income should temper their expectations in terms of DPU in S$ terms.

See Saizen REIT's 3Q 2013 results: here.

Related post:
Saizen REIT: DPU 0.66c.

Marco Polo Marine: H1 FY2013 EPS up 61.2%.

One of the numbers I always look at first in the reports of the companies I am invested in is earnings per share (EPS). As a shareholder, how the company performs on a per share basis matters a lot to me.

This evening, I got the positive results that I was expecting from Marco Polo Marine.

Results which were released at 5.38pm revealed a 61.2% increase in H1 FY2013 EPS compared to H1 FY2012. This is over and above my expectations.

With H1 FY2013 EPS at 4.06c, we could be looking at a full year EPS of close to 8c. This means that at today's closing price of 42.5c, Marco Polo Marine is trading at a modest PER of only 5.3x!

To trade at the 8x PER which I think is closer to fair value would mean a share price of 64c! This is much higher than my initial fair value estimate made many months ago which was 50.5c.

Realistically, I do not expect Marco Polo Marine's share price to trade at 8x PER soon. However, a re-pricing to 6x PER does not seem too far fetched. This would put share price at 48c or 12.9% higher than today's closing price.

Now, in my perfect world, tomorrow will see Marco Polo Marine's share price gapping up and hitting 48c. Of course, this is not my perfect world and we can only wait and see how Mr. Market will react to the rather bracing results tomorrow.

Read Media Release: here.

Related post:
Marco Polo Marine: Is this a good time to buy more?

 

Marco Polo Marine Ltd is an integrated marine logistic company which has expanded to become a reputable player in the marine industry in the region.
The Group’s ship chartering business provides Offshore Supply Vessel (OSVs) which are mainly Anchor Handling Tug Supply (AHTS) vessels currently being deployed in regional waters including the Gulf of Thailand, Malaysia and Indonesia, as well as tugs and barges to its customers, especially those engaged in the mining, commodities, construction, infrastructure and land reclamation industries.

The Group’s shipyard business undertakes ship building and maintenance as well as repair, outfitting and conversion services in Batam, Indonesia. Occupying a total land area of approximately 34 hectares with a seafront of approximately 650 meters, the modern shipyard also houses three dry docks which have led to the Group scaling up its technical capabilities and service offerings to undertake projects involving work of mid-sized and sophisticated vessels.

Sound Global: Fully divested once more.

I entered long positions at 50c and 52c because, respectively, I saw critical support levels holding up and because the reversal signal was confirmed. With the stock spotting weaker numbers, I got back in more with a trading mentality.

The question really was when to sell?

Technically, I was not convinced that the declining 20d MA was a strong resistance because I saw low volumes as price hit it and softened. A much stronger resistance, I thought, was at 57c. If you take a look at the chart, you will probably see why I thought so.

Fundamentally, Sound Global had a bad 4Q 2012. Earnings sank some 46%, quarter on quarter, and some 23%, year on year. All said, the company is still very profitable and it is still growing.

Its biggest problem stems from much higher finance costs and although I feel that the longer term big picture still looks good for the company, this will remain a bug bear for quite a while more.

Why do I remain largely optimistic about the company's prospects?

1. Sound Global has a huge order book of some RMB 3b, the largest in its history.

2. Sound Global has more than half of its BOT projects due for completion by end of 2013.

These will increase earnings, everything else remaining equal. Will earnings improve enough to make Sound Global a compelling investment once more? This is a harder question to answer.

Annualising 1Q FY2013's EPS which is, in RMB terms, 4.77c gives us 19.08c for the full year which is approximately 3.8c in S$ terms.

This means that at 57c a share, we are already looking at a PER of 15x for 2013. This would mean that we have hit fair value for the stock. Why?

The company's competition's PER is about there. The historical mean PER of the company is about there too.

If we choose to err on the side of caution, then, this valuation of Sound Global's stock and the looks of the technicals suggest that selling at 57c is not a bad idea. So, with price a bit higher than 57c this morning, I fully divested my stake in the company which makes this the second time in slightly more than two months.

See Sound Global's 1Q FY2013 results: here.

Related posts:
1. Sound Global: Full divestment.
2. Sound Global: Long position at 50c.

Buy direct from Japan with free shipping!

When I was in Japan in December of 2011, the Japanese Yen was S$16 to JPY 1,000.  Today, it is S$12.50 to JPY1,000. This is good news for anyone who likes Japanese goods!

If you enjoy finding great deals in Japan, there is some good news!

"Rakuten Global Market" is an overseas shopping service for the Rakuten Ichiba internet shopping mall and they will hold its first-ever free shipping event covering more than 200 countries and regions around the world for a limited time between 10:00am, Tuesday, May 14 and 9:59am Friday, May 17 (Japan Standard Time). 

Over 1,300 merchants with millions of products from Rakuten Global Market will take part in this limited time offer in which customers outside of Japan and Japanese nationals residing overseas can make purchases like fashion items, bags, watches, cosmetics, health goods, hobby merchandise, toys, games, and sporting goods, and have it shipped globally for free!

Check this out and enjoy value for money offers at:
http://sg.sharings.cc/AK71SG/share/RakutenGFS

Your might also be interested in:
Saving money with low prices and free shipping.

Win a Canon PowerShot N camera!

A Canon PowerShot N camera will be given away weekly to lucky readers who participate in the Singaporeans Get A Grip movement!

Find out how you could win at:
http://sg.sharings.cc/AK71SG/share/getagrip

How to tell if a company is a potential takeover target?

Sometimes, we see companies being taken over and, many times, at a huge premium. Have you wondered how takeover targets are determined?

Well, quantitatively, one way to determine if a company has the potential to be a takeover target is to look at its Enterprise Multiple. This is a financial ratio that is arrived at by dividing Enterprise Value by EBITDA (earnings before interest, taxes, depreciation and amortisation).

So, to understand Enterprise Multiple, we have to understand Enterprise Value and EBITDA.

Enterprise Value is the company's market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. This is a more accurate takeover valuation than just looking at the company's market capitalisation.

EBITDA is used to evaluate profitability of a company. EBIT looks at operating profits and EBITDA looks at earnings before any accounting or financing adjustments come into the picture.

Put Enterprise Value over EBITDA and we get a ratio. The lower the ratio, the more attractive the company is as a takeover target because a lower ratio suggests that the company's valuation is cheaper.

Of course, each industry has its own norms. So, a low Enterprise Multiple does not make a company a more attractive takeover target if every company in the industry has the same low ratio. If, however, a company has a much lower Enterprise Multiple than its peers, then, it is probably an attractive takeover target.

See the Enterprise Multiple of China Minzhong: here.
See the Enterprise Multiple of ASL Marine, Marco Polo Marine and Jaya Holdings: here.

The above links bring us to a service provided by "Infinancial Analytics" which I discovered quite by accident. I wish to draw readers' attention to the section on "About Market Valuation" at the bottom of the pages.

Although useful, EV/EBITDA is only one approach in valuing a company and shouldn't be the be all and end all.

Related posts:
1. China Minzhong: New substantial shareholder.
2. Marco Polo Marine: A neglected gem.
3. Recommended books for FA.

Inexpensive high class food ready in 5 minutes!

People sometimes have this impression that AK71 only eats oatmeal, barley, bread and cheap hawker fare. Well, AK71 consumes "atas" (high class) food also from time to time. Honest!

Today, AK71 decided to go Western because Western is atas. So, fish and chips? Atas or not? OK, ok. I know fish and chips was a working class food in Britain. Not very atas. How come it acquired an atas status in Asia?

What about sausages and mashed potato? In Britain, those who read "Bash Street Kids" would know, the dish is called "bangers and mash". This is a traditional British offering and also a common working class dish.

See? All these "atas" Western dishes are actually not so in Britain!

Anyway, I had a craving for sausages and mashed potato. So, I feigned ignorance and pretended it was atas.

At the supermarket, I picked a box which looked promising. The words "Vienna sausage" were printed on the box.

Vienna? Wasn't that place home to Mozart and Beethoven? Well, if the sausages are good enough for talented musicians, they are good enough for AK71!

Maybe, they will bring out the musician in me... You don't think so? Neither did I.

Ready to eat in 5 minutes and 30 seconds!

My good and rather old microwave oven. No fancy digital numbers and soft touch buttons.

Bon appetit!

Proudly produced in Singapore by Delifrance Singapore Pte Ltd. I wonder how much such a meal would cost in one of their restaurants?

How much did I pay for this? An "atas" $4.90. Burp...

Caution! The very health conscious type, please avoid.

More good deals? Check these out:

Cafes in Singapore up to 90% cheaper

LMIR: DPU improved 20%.

I am pleasantly surprised to see LMIR's DPU improving some 20% from 0.74c to 0.89c, quarter on quarter. At the price of 55c a unit, annualised, we are looking at a DPU of 3.56c and a distribution yield of 6.47%.

There is also a new face at LMIR. The REIT has a new CEO, Mr. Alvin Cheng. After many quarters of mediocre performance, I hope that having a new CEO would see the REIT doing better.

As it was revealed that the higher DPU was due to contributions from 6 acquisitions completed in 4Q 2012, any further increase in DPU, barring further acquisitions, will have to come from AEIs, improving occupancy and rental reversions. Efforts under the former CEO had been rather weak in these areas which led me to conclude LMIR was not run as well as it could have been.

I look forward to more good news with a new CEO at the helm of the REIT.

Related posts:
1. Unimpressive 4Q 2012.
2. Divested 42.5%.

See: LMIR 1Q 2013 results release.

Rickmers Maritime Trust: 1 for 1 Rights Issue.

I like rights issues when the money raised is used to fund yield accretive activities. Basically, it means I am investing more money for higher returns.

However, I don't like rights issues when the money raised is used to strengthen balance sheets. Returns, in all likelihood, would be watered down and investors end up immediately poorer.

In the last few years, I provided quite a few examples of rights issues, both good and bad, here in ASSI. Today, a full page ad and in full colour, no less, in The Business Times, encouraged unit holders to "SECURE YOUR 10% DPU YIELD" and "ACCEPT YOUR ENTITLEMENTS TODAY". This was an ad by Rickmers Maritime Trust (RMT).

It has been a long time since I followed developments at RMT. So, somewhat rusty, I went through the ad for details on the rights issue.

The main reason for the rights issue is to "repay bank loans and to strengthen balance sheet". OK, no need to read anymore. Flip the page.

Well, since it has been quite a while since I encountered a rights issue, curious me went on reading.

After the rights issue, RMT's gearing ratio will decline to 51.8%. So, then, is the balance sheet "strong" after the rights issue? It does not seem so. Gearing is still pretty high.

Since investors are probably in this for income, what about DPU? As this is a 1 for 1 rights issue, the number of units in issue will double. Since the proceeds are not used to fund yield accretive activities, DPU logically should reduce by half. However, in this case, it will stay unchanged at 0.6 US cent per quarter for FY2013 as RMT will double its income distribution to unit holders.

Therefore, it is not that the Trust is generating twice as much income as before, it is simply paying out twice as much as before with the same level of income!

Digging around a bit more, I discovered that a few of the charters will be expiring in 2014 and chances are for rates to reduce. Why? The charters are locked in at rates of above US$25,000 a day which is at least 3 times more than current spot rates for similar vessels!

This is why RMT only made mention of DPU maintaining at 0.6 US cent per quarter for FY2013. There is a chance and a high one that DPU will reduce in FY2014.

Thus, as an investment for income, beyond FY2013, RMT does not inspire much confidence. As an investment for growth, RMT simply does not make the cut.

If there is one good reason to invest in RMT, it is its NAV/unit of US$0.50 (S$0.60), post rights issue. Paying S$0.30 per unit, simplistically, investors will be buying container ships at half price! Unless they are corporate raiders, however, this fact is most probably only of academic interest to these investors.

So, to invest or not to invest? The answer lies in understanding our motivations and risk appetites as investors. Ask if the investment adequately compensates us for the risks we are being asked to undertake.

See research by S&P: here.

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Continuing interest in S-REITs.

We might have heard people saying "low can go lower and high can go higher" and if we have been an investor for a while, we would know that this is indeed the case.

S-REITs' performance in recent times has been nothing short of stellar. I will admit that I am turning cautious on S-REITs and I have said as much in an earlier blog post:

Never lose money in real estate and REITs?

In that blog post, I said I had turned cautious on S-REITs but I had not turned negative on them. This has not changed.

Conditions remain benign for S-REITs and as long as they stay this way, S-REITs will continue to be attractive to yield hungry investors. Money will always go to where it is treated best.

But while Singapore-listed REITs may seem expensive after a rally over the past year or so, they aren’t when compared with equities and bonds, says Tim Gibson, head of Asian property equities at Henderson Global Investors, which manages US$106.7 billion.

REITs are generally required to pay out much of the income from their underlying properties as dividends. Gibson says S-REITs offer the highest yields, both on an absolute basis and compared with the country’s five-year government bonds.

The yield on the FTSE ST REIT Index is around 5.17 percent, while the five-year Singapore bond yields around 0.5 percent and the Straits Times Index’s (STI) dividend yield is around 2.8 percent.

“As long as interest rates remain under control, S-REITs are in the sweet spot to continue their strong performance,” Gibson says.

Henderson’s new Global Property Income Fund will invest around 25 percent of its assets in Singapore-listed REITs.

Source: Dow Jones Newswire.

U.S. Investors are rediscovering their appetite for foreign real estate... putting more money into overseas funds that invest in offices, malls and apartment complexes than they have in six years.

New Jersey's pension fund recently invested US$500 million in a new US$4 billion real estate portfolio that Blackstone Group is raising for real estate investment in Asia.

Commercial real estate provides diversification away from stocks and bonds, and boost income while reducing overall risk because it acts differently than stocks and bonds over time.

Foreign REITs that own top-notch property in many parts of the world tend to be cheaper than those in the U.S.

REITs usually trade at premiums to the value of the real estate they own because investors are willing to pay for the liquidity that REITs offer, and because the value that many REIT management teams can create through acquisitions, developments and superior operations.

Source: Reuters.

Could S-REITs see their unit prices climbing higher? Well, if the reports are to be believed and if S-REITs are viewed as being more attractive investments than REITs in other countries, we could see their unit prices going to a level where distribution yields are much lower than they are now.

Some readers might remember that I mentioned Saizen REIT is relatively inexpensive compared to residential properties J-REITs and, not too long ago, Mr. Market woke up to this fact. Even so, the REIT, at 20c per unit, is still trading at a discount of about 20% to its NAV.

Although I reduced my overall investment in S-REITs last year as I moved resources to certain undervalued stocks, S-REITs remain a big part of my portfolio as I enjoy the relatively high distribution yields they generate for me.

Related posts:
1. Saizen REIT: A brief break through.
2. AIMS AMP Capital Industrial REIT: Making money.
3. 2012 full year passive income from S-REITs.

HPH Trust: Storm clouds over a safe harbour?

The last time I blogged about HPH Trust was in August 2011 or almost two years ago. I was not really keen on the Trust primarily because I felt that the distribution yield was not high enough compared to the alternative investments available.

Now, I think all of us must have read or heard of the strike by port workers that is going on in Hong Kong. It has been going on for a month or so by now. There doesn't seem to be an end in sight.

I was told by a friend in Hong Kong that she sympathises with these workers because apparently their salaries are kept really low to help the port operations keep cost levels almost unchanged in the last 10 years! That is truly amazing.

I thought she could be exaggerating but reading the weekend edition of The Business Times this morning gave her account credence. Ideally, a raise of some meaningful magnitude has to be given.

The port workers are asking for a 20% increase in salary but have been offered only 7%. This explains the gridlock.

The strike is costing the port millions in losses every day and if the port were to give in to the request for a 20% increase in salary, unit holders of HPH Trust could see DPU reduce some 5 to 7%.

Honestly, if I were a unit holder of HPH Trust, I would vote to give these workers the raise they are asking for even if it means having less income distributions for myself. 10 years without a raise is pretty bad.

Then, the question of whether HPH Trust is a good investment comes to mind again. Why would Li Ka Shing spin off his port assets? He is a savvy businessman, an old ginger. If a business is very lucrative and growing, why would he list it?

Well, some might sell a fantastic asset because they need money but definitely not Li Ka Shing. So, why?

In the article today, it was reported that Hutchison's market share of Hong Kong port operations has grown to 53% by 2012 although container volume has been shrinking.

"The port has been in a slow decline despite the double digit growth in China's trade over the last decade; falling victim to competition from Chinese ports and Singapore. The fast-rising costs of living at home in recent years could worsen the crunch. Last year, total throughput volume decreased by 5.3% year on year."
The Business Times, 27 April 2013.

This seems like a business that is fiercely competitive and HPH was already losing out to competition even before the strike by port workers. Could things get any worse?

At US$1.01 a unit, the IPO of HPH Trust was definitely a good deal for the issuer.
Added (1 Feb 17):

http://www.hphtrust.com/distribution.html

Related posts:
1. HPH Trust: Interim Financial Results.
2. HPH Trust: A weak debut.

China Minzhong: Bought more at $1.025.

By end of February, I had divested a big part of my investment in China Minzhong, locking in some sizeable gains. The remaining shares which I am holding are from a purchase made in June 2012 at under 60c a share. I can say that these shares are free of cost as the gains from the partial divestments are enough to cover their cost.

If the share price of China Minzhong had continued rising, I would have been quite happy to simply hold on to my remaining investment until a time when I feel valuations are no longer cheap.

However, as all of us know, prices do not go up in a straight line and will climb a wall of worries. So, if there should be pull backs or corrections, I would be quite happy to add to my long position.

Some might say that China Minzhong is now in a downtrend and that it is risky to add to our long positions. So, we should instead short the stock. There is perhaps some truth in this but I would argue that the uptrend which started in early August 2012 is very much intact, that the share price is now merely retracing to a longer term trendline support.

Of course, no one can tell if the share price has bottomed until it has happened. So, why not wait for more clarity before buying more? Shouldn't we wait for the dust to settle?

Indeed, the safer thing to do is to wait for the dust to settle and take action when we can see clearly. However, when everyone could see clearly, it could be too late. So, I am taking a chance here by buying more at $1.025 when I feel that the dust is not fully settled.

Not fully settled? Well, the longer term trendline support will be at $1.00 some one month from now. So, in the meantime, there is some room for volatility and I would not be surprised to see share price dip under a dollar in the next few weeks even. What would I do then? Buy more.

Why am I so confident? I see higher lows in the Chaikin Money Flow as share price formed lower lows. This positive divergence suggests to me that smart money is flowing back into the stock even as share price declines.

This observation suggests to me that although we could see more downside, it could be limited. Even if we do not see a big upward movement in share price in the near future, it could be rewarding in the longer run to buy in now.

Related post:
China Minzhong: Going higher?

Tea with Matt: First hand experience with an earthquake.

Chengdu is a big city with about 7 million inhabitants within the municipality and another 7 million in the region surrounding the city. It appears like Singapore with skyscrapers and many shopping malls.

There are two MRT lines and it is still expanding. Cars are choke a block and traffic jams are common. Luxurious cars like Maybach, Rolls-Royce and Bentleys are a common sight. Needless to say, luxurious goods like Rolex and Ferragamo have a presence too. Fast food chains are ever present.

The most popular brands of merchandise are present and the latest fashions are available. Isetan and Parkson have stores there. There were numerous Uniqlo and G2000 stores.

The shopping malls are crowded on weekends. So too are the tourist attractions but more with locals rather than foreigners. The city is vibrant.

I was preparing to go for breakfast on Saturday morning and while chatting with my business partner, we felt a slight tremor. Nothing major and we knew immediately that it was an earthquake. Less than 30 seconds later, there was a violent tremor, shaking the whole hotel. There is not mistaking it for a major earthquake. It felt as if the hotel will collapse anytime. Both of us ran out of the hotel and we were lucky to be staying on level three of the hotel. We ran past a lady, who appeared to be in the middle of a shower moments ago, wrapping herself only in a towel, running down the stairs with us. Many others were in their pyjamas. None of us knew where the epicentre was and hope that it was not Chengdu itself.

When we were outside the hotel carpark with the other guests, I realised that I was barefoot and my business partner was wearing those thin slippers provided by the hotel. After a few minutes when there were no more tremors, I decided to run back to my room to get my shoes and at the same time grabbed my business partner’s shoes as well. But after another ten minutes of waiting, most of us returned to our rooms and switched on the television for more news.

The foreign news agencies were the first to report the quake, quoting the US Geological Service. It would be hours before the first live report came from the city of Ya’an, the epicentre of the earthquake.

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