Author: Investment Income for Life

Investment Portfolio Updates- 19 June 2019 (Market Rally In the Face of Imminent Global Recession?)

The see-saw ride in the global markets continues since my last portfolio update in April’19 with no clear end in sight. The US levying of tariffs on China and a swift retaliation from China leads to a tumbling of many blue-chip companies listed on the Singapore Stock Exchange. However, over the past 2 weeks, the market had rallied strongly despite weakening macroeconomic fundamentals. “Defensive stocks” such as Singtel and REITs have also seen their prices shooting up like a rocket. The surprising aspect of this is that while the Federal Reserve has given some indication of halting of interest...

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New Lease Accounting Rule Impact On Companies and Investors- Making Something Out of Nothing

The new accounting standard FRS116 on leases came into effect on 1st Jan 2019. The “right of use” asset model basically attempt to plug the loophole of off-balance sheet liabilities. Basically, for operating lease assets, companies are now required to capitalize the present value of future lease payments of such arrangement as a direct fixed asset and also to recognize a theoretical liability. This gives rise to a strange phenomenon whereby an arbitrary financing cost is also created monthly for the right of use of the asset during the unwinding of the interest component in the lease liability. From...

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Sing Medical Group Déjà Vu- Undervalued Stock Price Increased 20% But Price Collapsed Again Recently

Since my last posting on the “The Enigmatic Case of Sing MedicalGroup- More Money Earned Lead to Lower Share Price” on 8 January 2019, the price of Sing Medical Group has shot up by 20% from S$0.400 to S$0.485 within 2 months. However, its share price has since plunged by 22% to a low of S$0.380 on 7 June 2019. If one had the ability to see the future using a magical crystal ball, then one would have sold off in Feb’19 at S$0.485 and then buy again when it hit S$0.380 recently and locked into the profit. If...

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Frasers Centrepoint Trust Acquistion of Punggol Waterway Point and Death of Shopping Malls in Singapore?

On 16 May 2019, Frasers Centrepoint Trust (“FCT”) announced that it is acquiring a 33.33% stake (S$440.6Mil) in Punggol Waterway Point from its sponsor Frasers Property. The suburban mall is conveniently located next to Punggol MRT/LRT/Bus Interchange and integrated with Watertown residential component on top of the mall. It serves as the main shopping mall for residents of Punggol new town and the footfall catchment area is huge as evident from the large crowd of shoppers even during the weekday. 1. FCT is a great defensive retail REIT with excellent DPU growth track record and many assets in the...

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Thai Beverage First Half Profits Increased Relative to Last Year But Share Price Plummet by 10%- Oversold?

Thai Beverage share price plummeted by almost 10% the following day after the release of their 2nd quarter financial performance (ending 31 March 2019) to as low as S$0.735 per share from S$0.825 per share. This seems to be a knee jerk reaction to the unfavourable results for 2nd quarter relative to the previous financial period. However, the fact of the matter is that if I recall correctly, Thai Beverage is coming off from an abnormally highly skewed profit base for Q2 2018 which was mainly before the additional excise tax came in for acholic drinks hence agents and...

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Organisations Must Treat Employees As The Soul Of The Company

This week, I came across an interesting article on Channel News Asia by Sara-Ann Lee on “Always tired and worried about under-performing-when extreme meritocracy drives burnout.”  Sara-Ann Lee also mentioned that “Organizations must treat employees as the soul of their company, rather than as resources to be expended at their disposal.” While this is indeed true, it is always a two way street in terms of employer and employee relationship. Employees should also stop treating their organizations as a resource to exploit and be expended while pursuing their career and wealth accumulation. I list down some of the paradoxes...

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Developer SPH and Kajima Slashed Woodleigh Residences Price by 10%-13% from $2000psf to starting from $1733psf For Relaunch in May 2019.

Interestingly today, my property agent messaged me that Singapore Press Holdings (“SPH”) and its partner Kajima had slashed the price of Woodleigh Residences by 10% to 13% from S$2,000psf to as low as S$1,733psf. This was despite their initial assertion that the VVIP launch in October 2018 was a resounding success with over 60% of the launched units sold at an average price of 2,000psf. However, for the re-launch of Woodleigh Residences in May 2019, the developer SPH and Kajima must have decided that the risk of the market downturn may not be worth it and started slashing prices...

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Undervalued Stock- Global Investment Limited and Recent Share Buy-Back Activities

The share price of Global Investment Limited (“GIL”) has risen over 30% to S$0.136 per share since its lowest point on 7th December 2018 of S$0.103 per share. The main reason was due to the January 2019 market rally against the bear market sentiment that plagued the market during the last quarter of 2018. The other reason for the strong showing was due to the management of GIL exercising the share buy-back mandate. Ever since 8th January 2019, GIL has been pretty busy buying back shares almost daily. The last share buyback announcement was just as recent as 26...

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Will Recession in Italy Spread to Rest of Europe And Crash the Global Economy?

It is widely reported that Italy is currently stuck in an economic recession and there is a growing risk of a financial crisis emerging from there. Being on austerity drive also means their government cannot spend their way out of the economic slump. The country’s debt to GDP has reached an astounding 130%. We may be staring at a repeat of the Greek financial crisis soon. The only difference is that as Italy economy is so many times bigger than that of Greece (around 10 times) and any banking collapse is going to be contagious and spread to the...

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Investment Portfolio Updates- 18 April 2019 (Allocation of New Funds To More Defensive Investments)

Due to the US Federal Reserve keeping a dovish inflation outlook, interest rates have been maintained at the current level and no further interest rate hike is expected for 2019. This is actually a sign that the US macroeconomic condition is weak. But strangely, the stock market, in particularly, REITS rallied in valuation. However, my thoughts are that if one is investing mainly for income generation, then short term fluctuation does not have much meaning unless one is doing frequent buying and selling of stocks for allocation of funds to the most undervalued assets. One would need to overcome...

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First REIT- 5 Key Risk Factors

First REIT is currently trading below its NAV. It has fallen more than 40% from its peak of S$1.42 per unit. Even now, institutional investors and other retail investors have been busy selling of First REIT. From my analysis, the 5 key risk factors are as below: (i) The default risk for rental payment due to a liquidity crisis faced by its sponsor and main tenant, Lippo Karawaci; (ii) Non-renewal of master tenancy for some of the hospitals due in 2021; (iii) As alluded to (ii), even if master tenancy were renewed, it maybe on less favourable terms such...

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Rich Dad Poor Dad Story Fact or Fiction? Why Are So Many People Inspired By It?

Every once in a while, Robert Kiyosaki and “Rich Dad Poor Dad” will either get mentioned in my daily conversation topic with friends and relatives or emerge in some websites or blogs that I am reading.  Hence the purpose of this post is just to write down my own personal view. I first got introduced to the famous financial literacy book “Rich Dad Poor Dad: What The Rich Teach Their Kids That The Poor And Middle Class Do Not” by the great Robert Kiyosaki during my University days. My school mate from Indonesia asked me whether I got read “Rich...

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Singapore Press Holdings Transformation Into Property Giant Almost Completed

Singapore Press Holdings (SPH) recently announced its 1st half results and its property segment now contributes to almost two-third of SPH’s “Profit Before Taxation”. This is a significant contributor to operating profits and marks the close completion of its transformation from a Media Group into a Property Holdings Group. Nevertheless, from a revenue generation perspective, the Media segment is still bigger in size than the Property segment. Traditional Media remains profitable but is still declining and we just could not see any signs of the rock bottom being formed yet.  As such, traditional Media will most probably continue its...

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First REIT- Important Upcoming Events And Accumulation of Units (Will First REIT Soar Or Crash Further?)

3 key upcoming events to watch out for First REIT for this quarter. (1) The AGM for FY2018 will be held at Mandarin Orchard Hotel on 9th April 2019. There is a resolution tabled on top of other routine resolutions such as re-appointment of auditors. The additional resolution sought to change the Trust deed and proposed that the distribution payment period of First REIT be amended from 60 days to 90 days. (2) The other major event is the announcement of 1st quarter results on 10th April 2019. (3) The third event would be the AGM of Lippo Karawaci on...

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Hyflux Saga- PUB Turns Out To Be The Real White Knight

In an interesting turn of event, PUB- which I previously posted that it had single-handedly stopped the Salim Medco rescue package– turned out the be the real white knight because most stakeholders have mistaken its good intention. By taking away the loss-making Tuaspring desalination plant, PUB has let Hyflux off the hook on the business unit that is making its business bleed profusely. In addition, PUB added icing on the cake by further waiving off compensation claims for breach of contractual KPIs. What a dramatic week it turns out to be with the latest development.   Even though the...

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