Jan 13, 2016

Cory Diary : Fear is on Our Side

In the past, in order to be rich I need to be a Business man. Maybe professional fields like a doctor or a reputable lawyer, to retire comfortably. Bottom line is ... not easy for majority of people. In today Singapore, a working employee can have a million dollar investable asset just on Salary alone if they save diligently, and work in a good institution or company. Is still not a walk in the park though but chances are they are much more such people today.




This pose a big problem because commoners who are able to save that much could not catch up with inflation since they are drawing salaried income. People needs to understand this logic. A millionaire 20 years ago, today and tomorrow generation are all millionaires but in term of Real Wealth, they are far cry from each other. A comfortable lifestyle is still elusive to many millionaire today and worst for tomorrow generation. The basic issue is we did not breakaway from being a salary man. If we truly want to be rich enough to lead a comfortable lifestyle, careful here as I am not talking about saving every dollar in our twilight years, we need to do business. Well most of us are not cut out for this. Majority will fail and worsen our financial situation. Worst still if we give up our day job to do them.

The most practical way I feel is to invest in property or business/partnership. Property is Cyclic and can requires enormous amount of money. Is a one bullet kind of thing. And is not a sure win. The alternative is to invest in business/ partnership which I have said earlier is simply not for most people and may cost more than invested if the business goes indebted. The next best thing to it is Equity. A stake in the business relation through shares of listed companies. Hassle free and free from liability other than the amount invested.

The problem with Stock Investment is many people treat it as a gamble risk because they really buy on tips and speculates. Buying a property or running a business can have much more risk but people won't view it that way as it is not an easy come and go things. Therefore issue is within oneself. If we treat every stock we buy from the business point of view in growth, earning and returns, in the grand perspective of things, risk managed, I should not be far from financial freedom. With market low, every dollar we invest gives better return in the future. Fear is actually on Our Side !


Cory
20160113


Jan 11, 2016

Cory Diary : War chest

Even though Chinese Stock Market has been my primary concern in my earlier blog  ( link ) near end of last year. Never would I expect the Chinese Stocks to come down so fast and furious. Artificial brutal control do not work well in a capitalist market structure where there aren't good fundamental to support it. Is a good thing that they removed the newly introduced circuit control as this can allow the market to quickly stabilize to the right sustainable level. Question will be what is the Right Level ? If we look at the Shang Hai Index chart, there are few support level bands ~ 29xx, 26xx and 24xx. Considering China economy has not been growing well for more than a year, shooting to 5200 is really crazy. Now with correction on-going, back to 24xx level is not impossible. Whether authority will allow them to fall to that range is another matter. This is also complicated with local stock trading market conditions, de-valuation pace and market size.

In Singapore local context, is a double blows. In addition to China related issues, low oil price impacts are another serious concern. Huge industries and services are basically in a life damaging event. However all this issues may provide a life line to the local property sector. And I anticipate some of the curbs will be softened or removed. And despite poor Chinese export, import by America is not significantly reduced. In fact US GDP and Job Market are growing well. What this may mean is that other countries probably have eaten up China share of export. So I believe the world is still doing ok. Yuan will have to continue to devalue to make themselves cheaper. This process will stop the bleeding but will take years to reverse noticeably.

Therefore further drop in Singapore Market is likely sentiment and temporary. Soon we will realise we are over sold and STI will bounce back to a more reasonable stable level.

Below my War Chest Pie Chart ~ CPF, Pension, Property and Insurance info removed. Having tapped on 10% of my reserve, I am ready for more battles as it comes !




Cory
20160111







Jan 2, 2016

Cory Diary: Reading Frasers Centrepoint Trust Annual Report 2015

Just received the latest annual report this week. Taking some notes.

Titled "SUSTAINING LONG-TERM GROWTH". This tells me something or am I reading too much into it ?

Financial Highlights
Share price is below book value.  6.3% Yield. Less impacted by the poor retail environment.

AEI
Northpoint - 2nd largest mall in the portfolio will undergo AEI in phases over 18 months. There's hint on possible acquisition of new assets in their sponsor's portfolio. Nevertheless I look forward to the NPI number due to the AEI impact !

Occupancy and Expenses
84.2% occupancy in Bedok Point. Maybe they should sell it than holding the baby for the parent. Anyway is only 3.8% of the Reit. Changi Point will be something we need to understand in next few quarters. Overall expenses increased 14.9% which is above Gross Revenue and NPI growths.

Financing
Gearing 28.2% at 2.4% cost. If interest go up to 2.8%, cost may increase by $2.9M for $718M loan. Most of the debts (38.7%) is less than a year which means around $1.11M hit. NPI for Q4 alone is 31.7M. So impact looks minimal less market sentiment.




Thoughts
Northpoint NPI is $36M for FY2015. The integration and key spots upgrades will be nice and strategic. Let's put a $3M price tag to operation. Is the figure realistic ?

Headwinds are interests cost, lowering rental revision and reducing HEKTAR income. If another acquisition comes in 2016 this will further boost the distribution considering there is still some room to gear.


Cory
20160102