As some may know, I use simple criteria to pick my stock to invest (please read my strategy page). Does it work? I am not too sure. But most importantly, do I follow it closely. Sadly, I really don't. If I did, Saizen should not be in the portfolio. Saizen had some serious problem with its debt and had to stop distribution after just one distribution. Also it raised money by issuing rights and warrants. Why did I buy it?
In its financial statement for Q3 ended 31/03/2010, management said they have started to accumulate cash for distribution, but did not state how much (pg. 15). So I have to make an intelligent guess and sorry to say, mine guess is not intelligent at all.
In FY2008, Saizen's gross revenue was JPY 3,578,346,000 and its distributable income was JPY 1,697,165,000 which is about 47% of revenue (pg. 3 of financial statement ended 30/06/2008). For Q3 ended 31/03/2010, Saizen's gross revenue is JPY 1,025,064,000 (pg. 2) and I assume 47% of revenue which is JPY481,780,080 will be the distributable income since that's the ratio for its first distribution. Then, 90% distributable income is JPY433,602,072 and divide this by total units of Saizen which is 952,932,055 (pg. 11) and you get JPY0.455 for dividend which is about S$0.0071 by using exchange rate of 0.0155. Let's multiply S$0.0071 by 4 which equals to S$0.0284 and divide it by S$0.16 (Saizen share price) which is 0.1775. This means the dividend yield is a whopping 17.8%. How can I not buy!
Now let's look what happen.
Management declare S$0.26 cents for FY2010 (pg. 3 of financial statement ended 30/06/2010) and this is base on the cash accumulated for months of May and June (pg. 2) so S$0.26 multiply by 6 is S$1.56 cents and dividend yield is 9.75% which is way below of my assumption. Saizen FY2010 gross revenue is JPY4,132,792,000 (pg 3) and divide this by 6 is JPY688,798,667 for two months' revenue. And May/June distributable income is JPY161,912,000 (pg. 7) which is only 23.5% of its revenue. I am not sure how this happen. Maybe the finance expenses are now a lot more costly. Also, there is a whole bunch of warrants waiting to be exercised and once exercised, dividend will be less. Did I buy the right stock?
Saturday, August 28, 2010
Tuesday, August 24, 2010
Glimpse of three stocks
I spend some time looking into one old stock, AustraLand Property Group, and two new stock, K-Green and Treasury China Trusts. Actually, I did not spend much time on these because my criteria are simple as I stated in my Strategy page.
Let's look at AustraLand first. From it's 2010 half year presentation, we know it's gearing is about 27.1% (pg. 6) and it's operating profit is same as 2009 half year result (pg. 5), but dividend was decreased by A$0.05cent (pg. 6). With last done price at A$2.6, it's annualized dividend yield is at 7.7%, just shy of my 8%. All in all, it looks like a good one to collect, but I don't like decreasing dividend and it's quite illiquid (not many tradings done). Therefore, I need more time to look into why the dividend was cut before I invest into this. So for now, I'll pass.
In it's introductory document, the management of K-Green is forecasting 3.91 cents for 2010 (July~Dec) and 7.82 cents for 2011 (pg. 35). With its current price at 1.10, the yield is 7.1% for 2011. Since it has no debt (pg 39), the gearing is zero so assets could be added easily which will be yield accretive. Also the Management is projecting good profit in 2011 (pg. 41). All seems good, but it got no past performance to compare with. Anyway, I'll definitely add this after I read what assets they are holding which need a bit time.
From TCT's introductory document, I noticed it is not making any money in the past few years (pg. 30) and it's forecasting net loss for 2010 (pg. 33) so their performance is in question. TCT also forecast 5 cents of dividend for 2010 and with last done price at 1.53, yield is meagerly 3.3%. Debt is 712.88 millions and total asset is 2,116.7 millions (pg. 31) so gearing is 33.7% which is ok. TCT just make one of my three criteria so I'll pass.
Let's look at AustraLand first. From it's 2010 half year presentation, we know it's gearing is about 27.1% (pg. 6) and it's operating profit is same as 2009 half year result (pg. 5), but dividend was decreased by A$0.05cent (pg. 6). With last done price at A$2.6, it's annualized dividend yield is at 7.7%, just shy of my 8%. All in all, it looks like a good one to collect, but I don't like decreasing dividend and it's quite illiquid (not many tradings done). Therefore, I need more time to look into why the dividend was cut before I invest into this. So for now, I'll pass.
In it's introductory document, the management of K-Green is forecasting 3.91 cents for 2010 (July~Dec) and 7.82 cents for 2011 (pg. 35). With its current price at 1.10, the yield is 7.1% for 2011. Since it has no debt (pg 39), the gearing is zero so assets could be added easily which will be yield accretive. Also the Management is projecting good profit in 2011 (pg. 41). All seems good, but it got no past performance to compare with. Anyway, I'll definitely add this after I read what assets they are holding which need a bit time.
From TCT's introductory document, I noticed it is not making any money in the past few years (pg. 30) and it's forecasting net loss for 2010 (pg. 33) so their performance is in question. TCT also forecast 5 cents of dividend for 2010 and with last done price at 1.53, yield is meagerly 3.3%. Debt is 712.88 millions and total asset is 2,116.7 millions (pg. 31) so gearing is 33.7% which is ok. TCT just make one of my three criteria so I'll pass.
Friday, August 20, 2010
The Economist House Price Indicator
In my article on HDB, I said, it's still reasonable for a Holland V's 3 room flat to go down 20%. Apperantly, I am not the only who feel that way.
http://www.economist.com/node/16542826?story_id=16542826
I don't know how Economist derive their numbers, but hey it's the economist. Anyway, Economist indicate Singapore's property is 20.3% overvalued and Australia is 61.1% overvalued. Maybe I should stop keep track of MacarthurCook PSF. Japan is the most undervalued, at 34.6%. What does this mean to Saizen?
When I was a college boy in US, me and my friend rent an apartment to live. Unlike in Singapore, these apartments are not usually own by individuals, but operate by a corporate company or in my case operate by college. It's actually quite normal in the US. Singapore also has apartments operate by companies, but its usually service apartments which is quite expensive. Anyway, I like Saizen's business model and we will see if they can re-start to declare dividend on 26/08/2010.
http://www.economist.com/node/16542826?story_id=16542826
I don't know how Economist derive their numbers, but hey it's the economist. Anyway, Economist indicate Singapore's property is 20.3% overvalued and Australia is 61.1% overvalued. Maybe I should stop keep track of MacarthurCook PSF. Japan is the most undervalued, at 34.6%. What does this mean to Saizen?
When I was a college boy in US, me and my friend rent an apartment to live. Unlike in Singapore, these apartments are not usually own by individuals, but operate by a corporate company or in my case operate by college. It's actually quite normal in the US. Singapore also has apartments operate by companies, but its usually service apartments which is quite expensive. Anyway, I like Saizen's business model and we will see if they can re-start to declare dividend on 26/08/2010.
Wednesday, August 18, 2010
Performance of Lippo Maple
Below is the table* of profit margin.
Don't ask me how Lippo Maple determine it's distributable income from here. I really not sure. But the latest quarter's profit margin decreased 100%. Not good at all. Let's look another set of numbers.
*The table was changed on 20/08/2010. Previous table I use comprehensive income to calculate profit margin which is incorrect because it includes whole bunch of unrealized gains or loss and revaluation of properties. I should have use net profit or net income (Revenue + Interest - Operating Expenses - Administrative Expenses - Financial Expenses - Income Tax - Withholding Tax). Sorry.
Dividend Margin is distributable income divided by gross revenue. In 08Q1, the management generated 29.27 million of revenue and was able to distribute 23.34 million to unit holders which is 79.74% of revenue. But the management was unable to maintain this ratio and in 08Q4 when sub-prime hits, the management distributed only 15.07% of revenue. Start of 2009, the management was distributing over 70% of revenue, but again in 09Q3, it started to decrease and the latest quarter is absurdly at 28%. I really don't care why, what, who, when and how this happen. All I care is a steady performance. The income statement of 10Q2 shows a comparison of 10Q2 and 09Q2 and it's just plain disappointing.
Friday, August 13, 2010
CitySpring vs. FSL
Which one I should sell? FSL's numbers are in USD except for the dividend which I use the exchange rate of 1.36 to calculate into S$. The ratios won't be effected by different currency.
With last done price at 0.41, FSL's yield is around 12.5%.
With last done price at 0.41, FSL's yield is around 12.5%.
Thursday, August 12, 2010
Streamline
Since beginning of this year, I told myself, I need to streamline my portfolio. It's just too many for me to manage. I suppose to cut to it to about 6 or 7, but I failed. Since it's midyear, I'll share my thoughts on my portfolio.
CitySpring
I want to get rid of this long ago because it raised rights to get more money and I believe the dividend will not increase anytime soon, but my partner, my wife to be exact, does not want to incur any loss. I need to sell it at 0.62.
Lippo Maple
I always like shopping mall trust so I chose this one because of high yield and low gearing. But its profit margin is rather disappointing, unlike its cousin, First REIT, which is much more steady. I use CPF to buy high risk stocks and I deem Lippo as high risk because Indonesia is more prone to terrorist attack and its democracy status is fairly new. Early this year, I convince my wife to use cash to buy some lots, but with it's latest result, I'll divest this if I get the chance.
Fraser Comm
This is the gravest mistake I ever made. I was so impress with its NAV and overlook it's debt. After its right issue and so call CPPU which I really don't understand and didn't see the point of subscribing it, it's now more stable and in F&N's hand. I think anything below 0.14 should be safe, but its gearing still high.
FSL Trust
Since I am planning of collecting rent as passive income, I really don't want my portfolio being expose to too much REITS. FSL was my main way out, but it did not work out. Now people deem it as high risk stock with flawed business model. I am keeping this because I just don't think is that bad.
MIIF
MIIF now has a lot of cash on hand and reduce its debt to reasonable level. Hopefully, it will not disappoint.
Plife
Somehow the stock went up to 1.5 and charts was showing peak level. I told my wife to sell it at 1.49 and buy back at lower price before ex-div, but my wife was too busy with her work and miss the chance. Now I don't see the point of sell it.
SingPost
It's steady as a rock, but dividend just not moving up. Because I need to streamline my portfolio, I wish to divest this. I told my wife to sell at 1.16, but again she miss it.
StarHub
I was not expecting good results and most broker firms are not calling buys so I want to divest it at 2.35, but results was better than expected. Keeping it for now.
SP Ausnet
This is a mistake. I told myself this one is backed by Tamasek Holding, how bad can it be, but I didn't realize that it was being sued because of bushfire and was unable to raise tariff in Australia. Next time, if I am buying something new, I'll read through all its announcement for the past year. Also, I should stick to my original plan, streamline the portfolio. I divest Cambridge at 0.505 and use it to buy SP Ausnet.
Saizen
To me, this is a gamble. Management has not prove itself. A better gamble than Informatics? Ha.
As you can see, I made a lot of mistakes. Try not be lazy like me. Do your homeworks!
CitySpring
I want to get rid of this long ago because it raised rights to get more money and I believe the dividend will not increase anytime soon, but my partner, my wife to be exact, does not want to incur any loss. I need to sell it at 0.62.
Lippo Maple
I always like shopping mall trust so I chose this one because of high yield and low gearing. But its profit margin is rather disappointing, unlike its cousin, First REIT, which is much more steady. I use CPF to buy high risk stocks and I deem Lippo as high risk because Indonesia is more prone to terrorist attack and its democracy status is fairly new. Early this year, I convince my wife to use cash to buy some lots, but with it's latest result, I'll divest this if I get the chance.
Fraser Comm
This is the gravest mistake I ever made. I was so impress with its NAV and overlook it's debt. After its right issue and so call CPPU which I really don't understand and didn't see the point of subscribing it, it's now more stable and in F&N's hand. I think anything below 0.14 should be safe, but its gearing still high.
FSL Trust
Since I am planning of collecting rent as passive income, I really don't want my portfolio being expose to too much REITS. FSL was my main way out, but it did not work out. Now people deem it as high risk stock with flawed business model. I am keeping this because I just don't think is that bad.
MIIF
MIIF now has a lot of cash on hand and reduce its debt to reasonable level. Hopefully, it will not disappoint.
Plife
Somehow the stock went up to 1.5 and charts was showing peak level. I told my wife to sell it at 1.49 and buy back at lower price before ex-div, but my wife was too busy with her work and miss the chance. Now I don't see the point of sell it.
SingPost
It's steady as a rock, but dividend just not moving up. Because I need to streamline my portfolio, I wish to divest this. I told my wife to sell at 1.16, but again she miss it.
StarHub
I was not expecting good results and most broker firms are not calling buys so I want to divest it at 2.35, but results was better than expected. Keeping it for now.
SP Ausnet
This is a mistake. I told myself this one is backed by Tamasek Holding, how bad can it be, but I didn't realize that it was being sued because of bushfire and was unable to raise tariff in Australia. Next time, if I am buying something new, I'll read through all its announcement for the past year. Also, I should stick to my original plan, streamline the portfolio. I divest Cambridge at 0.505 and use it to buy SP Ausnet.
Saizen
To me, this is a gamble. Management has not prove itself. A better gamble than Informatics? Ha.
As you can see, I made a lot of mistakes. Try not be lazy like me. Do your homeworks!
Saturday, August 7, 2010
My thoughts on Steel and HDB
Recently, I wrote an article about steel market to my colleagues. The article has nothing to do with HDB flats, but could it happen to HDB flats?
First, my thoughts on steel market:
A very interesting article and if you got time, it definitely worth the time to read.
http://www.economist.com/node/16432870?story_id=16432870
The article talks about what drive the commodity price to "absurd levels". Most of us feel that speculator like the futures trader are the blame of this, but the article points out that maybe speculator should not get the blame. Although the article did not direct the blame to commodity consumer, but did suggest they are in a bidding war that drives the price up.
Let's apply this to our beloved steel.
In the boom year in 2007, steel price rise to an outrageous level. We must ask ourselves, what drive the price up? Real demand or speculation? The article said "Similarly, in boom conditions commodity consumers will be so desperate to get their hands on raw materials that they will drive prices up to absurd levels, at least for a short time." This is so true. During that time, everybody are in fear of not getting steel that they just buy whatever is out there, but was the demand that great? Yes, the demand was there, but was never great as later we found out that consumers were able to stop all purchasing instantly. Steel price took a deep dive and we were amazed and baffled. The last sentence of the article said it so well, "When demand falters, or new supply shows up, the price bubble can evaporate as quickly as it arose, without a speculator in sight."
I think I'll stop here. Although, it’s nothing sensitive, but I still felt that the later parts are not suitable to publish in public. Anyway, just read the article by the Economist. It's very insightful.
Second, my thoughts on high HDB price:
Can a nation that creates 2 casinos continue to sustain its incredible economic growth? Do they want to cool off or continue its growth? If continues to grow, would the HDB price continues to rise? If HDB price continue to rise, can the people afford it?
Are these important questions to answer? Well, to me it’s very important. Most of us live in HDB and any effects on HDB will dramatically change our lives!
10 years ago, a 3 room flat at Holland V. cost about 150K, but now cost about 380K and still going up for a flat that is almost 40 years old. That’s a 150% jump! Don’t I wish my salary jump like that?
Should the government cool off HDB resale market? If needs to cool off, how to cool off? What measure should it take? Would cool off measures on HDB resale market affect Singapore’s economic growth? Current economic growth feeds current population. Any cool off measures will affect current growth which might create an outflow of foreign national who works here. How would this effect the rental of HDB? If you read the article I asked you to read in my previous thoughts, it might create a storm in HDB rental and would this lead to a ripple effect on HDB re-sales.
Most people use bank loans for HDB due to low interest rate and what if HDB price drops? In private property, if the value of property drops, banks may ask the mortgager to top up cash to fulfill the difference. I don't know about HDB situation, if banks do ask for top ups, does the mortgager has the money? Or banks can not ask for top ups for HDB flats?
Maybe PAP government can stabilize HDB resale price which is at all time high without hurting the economic growth. Singapore’s economy is in good position but the world is in a fragile state. Here is a good interactive graph of world debt.
http://www.economist.com/blogs/buttonwood/2010/06/indebtedness_after_financial_crisis
Also a special report on world debt which I did not read.
http://www.economist.com/node/16397110?story_id=16397110
If you ask me, we are approaching a cliff and should be cautious. Does PAP see it as I do? Who knows? Maybe I am being pessimistic. Maybe I am way, way wrong since I am no accountant, no banker, no financial planner, and know nothing. Future eventually will play it out. For now, I am thinking about how to accumulate cash before it’s too late.
First, my thoughts on steel market:
A very interesting article and if you got time, it definitely worth the time to read.
http://www.economist.com/node/16432870?story_id=16432870
The article talks about what drive the commodity price to "absurd levels". Most of us feel that speculator like the futures trader are the blame of this, but the article points out that maybe speculator should not get the blame. Although the article did not direct the blame to commodity consumer, but did suggest they are in a bidding war that drives the price up.
Let's apply this to our beloved steel.
In the boom year in 2007, steel price rise to an outrageous level. We must ask ourselves, what drive the price up? Real demand or speculation? The article said "Similarly, in boom conditions commodity consumers will be so desperate to get their hands on raw materials that they will drive prices up to absurd levels, at least for a short time." This is so true. During that time, everybody are in fear of not getting steel that they just buy whatever is out there, but was the demand that great? Yes, the demand was there, but was never great as later we found out that consumers were able to stop all purchasing instantly. Steel price took a deep dive and we were amazed and baffled. The last sentence of the article said it so well, "When demand falters, or new supply shows up, the price bubble can evaporate as quickly as it arose, without a speculator in sight."
I think I'll stop here. Although, it’s nothing sensitive, but I still felt that the later parts are not suitable to publish in public. Anyway, just read the article by the Economist. It's very insightful.
Second, my thoughts on high HDB price:
Can a nation that creates 2 casinos continue to sustain its incredible economic growth? Do they want to cool off or continue its growth? If continues to grow, would the HDB price continues to rise? If HDB price continue to rise, can the people afford it?
Are these important questions to answer? Well, to me it’s very important. Most of us live in HDB and any effects on HDB will dramatically change our lives!
10 years ago, a 3 room flat at Holland V. cost about 150K, but now cost about 380K and still going up for a flat that is almost 40 years old. That’s a 150% jump! Don’t I wish my salary jump like that?
Should the government cool off HDB resale market? If needs to cool off, how to cool off? What measure should it take? Would cool off measures on HDB resale market affect Singapore’s economic growth? Current economic growth feeds current population. Any cool off measures will affect current growth which might create an outflow of foreign national who works here. How would this effect the rental of HDB? If you read the article I asked you to read in my previous thoughts, it might create a storm in HDB rental and would this lead to a ripple effect on HDB re-sales.
Most people use bank loans for HDB due to low interest rate and what if HDB price drops? In private property, if the value of property drops, banks may ask the mortgager to top up cash to fulfill the difference. I don't know about HDB situation, if banks do ask for top ups, does the mortgager has the money? Or banks can not ask for top ups for HDB flats?
Maybe PAP government can stabilize HDB resale price which is at all time high without hurting the economic growth. Singapore’s economy is in good position but the world is in a fragile state. Here is a good interactive graph of world debt.
http://www.economist.com/blogs/buttonwood/2010/06/indebtedness_after_financial_crisis
Also a special report on world debt which I did not read.
http://www.economist.com/node/16397110?story_id=16397110
If you ask me, we are approaching a cliff and should be cautious. Does PAP see it as I do? Who knows? Maybe I am being pessimistic. Maybe I am way, way wrong since I am no accountant, no banker, no financial planner, and know nothing. Future eventually will play it out. For now, I am thinking about how to accumulate cash before it’s too late.
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