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Portfolio Activities for Oct / Nov 2017

SRS Portfolio

October turned out to be a good month for the SRS Portfolio since my last update. As of last Friday, the SRS portfolio is valued at $232,501 (an increase of $22,991) due primarily to the increase in the value of UMS Holdings Limited. The decision to add on to the position in early September has turned out to be a good one. Below is the portfolio summary.

Fraser Commercial Trust

Fraser Commercial Trust announced a DPU of 2.41 cents for Q4 2017. The management presentation slides is here. Overall, my gut feel after reading the management slides is that the impact of HP not renewing its lease allows the Trust to rejuvenate its property. The REIT should continue to do well in the coming years as its asset enhancements initiatives bear fruit.


Mr Jack Lam, Chief Executive Officer of the Manager, said "We are pleased to have delivered a stable set of results for the full financial year despite the challenges present in the markets. We are also pleased to inform that we have initiated plans for the enhancement and repositioning of the retail podium in China Square Central, for a budget of around S$38 million. This asset enhancement initiative aims to update and upgrade the shopper experience and tenancy mix in the mall and increase its leasable area, among other things, to enhance its market positioning and long-term income-generating potential. This timely and forward-looking move will enable the mall to better capitalize on the uplift in human traffic and general activity level that will come about from the planned opening of the new Capri by Fraser hotel within the development in 2019."

Netlink Trust

Netlink also announced its results on 9 Nov 2017 where profit after tax for 19 June to 30 Sep is 4.9% ahead of its forecast at $13m. According to the announcement, it is on track to deliver the financial and distribution forecast in its prospectus. My IPO write up is here. No change to my portfolio for now.

Starhill Global REIT

Starhill announced a mediocre set of results where revenue and net property income decreased across the board. The DPU for Q1 is 1.20 cents, representing an annualised yield of 6.26%. The management presentation slides is here. While the outlook is not exciting (and even declining), the REIT is trading at a price to book of 0.834 (discount of 16.6%).


UMS Holdings Limited (SRS)

UMS Holdings continue to improve on its profitability whereby 3Q profits increased by 100%. While it seemed innocuous that the Company maintained its interim dividend of 1 cents, UMS had in reality, increased its dividend payout ratio! This is because it recently completed the 1-4 bonus issuance. If it maintains the 1 cent payout on the enlarged share capital, it will bode well for the shareholders.


In terms of outlook, the Company continues to be highly cashflow generative and cash flow for Q4 is expected to be improve further.


According to its press release, semiconductor shipments are currently at record levels, driven by proliferation of connected devices required for automotive, medical, wearables, and high-performance computing applications. Based on SEMI'S Forecast, 2017 fab equipment spending (both new and refurbished) is expected to increase by 37 percent to a new annual spending record of about US$55 billion. The World Fab Forecast also forecasts that fab equipment spending in 2018 will rise further by another 5 percentage points for a new high of about US$58 billion. The last record spending was in 2011 with about US$40 billion. The spending in 2017 is now expected to top that by about US$15 billion.

"These trends augur well for the Group and we expect to benefit further from the robust results of our major customer who has recently posted sterling 3QFY2017 results and has projected accelerated growth in the coming quarter. We will continue to reward our shareholders for their strong support with another interim dividend payout of 1 cent per share," said Mr Andy Luong, UMS' Chairman and Chief Executive Officer (CEO). 

It was also announced on the same day that Andy and Stanley both purchased an additional 75,000 shares each in the Company.

Non-SRS Portfolio

APAC Realty

As previously updated, I acquired this small 10,000 share position during its IPO. The Company has since announced a decent set of quarterly numbers where profits for the 9M jumped by 65%. 
DBS Research also initiated a "buy" recommendation in the Company with a target price of $1.03. You can assess the 53 page report here


Keppel KBS US REIT

I was allotted 50,000 shares during the recent IPO. The write up is here.  The yield is attractive enough for me to hold this for the longer term.

Dividends Received

During October, i received the following distributions:
  • $800 from the quarterly dividend of UMS Holdings
  • $2,331 from the semi-annual distribution of Perennial 4.65% bonds
Passive Income Update

I have blogged in Jan this year that one of my goals is to hit a passive income of $60,000 a year. Based on the latest set of results announcements and with the addition of 50,000 units in Keppel KBS US REIT, i re-underwrote my portfolio again assuming UMS is paying a higher dividend, REIT pays the last quarterly DPU and the semi-annual distribution of Keppel KBS US REIT is in Feb and Aug each year to create a nicer looking monthly chart.  This is how it looks like and the annual income is around $49, 763 (or $4,147 per month). The blended yield on my portfolio is around 6.5%. Considering that this passive income is for 2 person, there is probably still some way to go...


That is quite a heavy post today, till next time... happy SRSing.... and for the lucky winners of SGX Bull Charge, don't forget the event is on this coming Friday. Yours truly will be there too! 

Happy Bull Charging! 

Miles Junkie


In case you haven't noticed, I have recently changed the feel and look of my SRS blog. I have also decided, for my own sanity, to have only two blogs from now on ... (instead of 5 blogs covering different topics from trading to traveling previously).

Streamlining of blogs

The Singapore IPOs blog will continue to write about IPO stuff but the SRS blog will evolve into a personal finance and lifestyle blog (to attract more advertising dollars perhaps? πŸ˜‚)... and I will stop updating the other blogs (which I haven't been doing anyway πŸ˜…)

Here comes the first "lifestyle" blog post  for the November! 

Miles Junkie


Due to my frequent traveling, I consider myself to be a miles junkie, i.e collecting Krisflyer miles ("KF Miles") in whatever ways possible... ✈️ ... so what are the possible ways to collect miles? 

Tip 1 - Choose a Credit Card that meets your lifestyle and spending patterns 



Other than actual flying, earning miles from credit cards is probably one of the "fastest" way to earn KF Miles. 

I have had many credit cards (only some are shown above πŸ˜†) and over time, I just use those that have the best spending per mile conversion to rack up the highest miles possible. Some cards reward you for dining (eg HSBC Evolution) while others for buying air tickets and hotels bookings online (Privi Miles) etc.

You may want to read the MileLion for the best credit card or ways to earn miles but it has to suit your lifestyle and spending patterns. 

I heard of a dental surgeon who runs his own practice and uses credit card to pay for his medical supplies... you can imagine how many miles he racked up...

Of course, charging your daily expenses to credit cards and timing your "expensive" purchase in conjunction with promotional miles for new card application is another effective strategy. Make sure you pay all credit cards bills on time though as the interest rates are as good as loan sharks 🦈

My personal favorite is the UOB Amex Privi Miles. It has a few features which I like:



In addition to the above, you get to enjoy 2 Free limousine rides to the airport each quarter (if you spend >$1,000 overseas that quarter). If you spend > $50,000 per annum, you get your annual fee waived and an extra 20,000 KF Miles! (You can time your bulky or company purchases here)

Do note however that when you are traveling, you should charge those spendings in that country's currency. Don't select to pay in SGD, otherwise you suffer a double whammy of bad forex rate and local $ spend. (Refer to ST article here)

Tip 2 - Pump Petrol ⛽️ for Miles 

If you are brand agnostic like me, who don't care whether the gasoline for my car is from Shell or Esso or Caltex, then you may want to pump petrol from Esso. The smiles points accumulated can be converted to KF Miles automatically. 

Tip 3 - Make your travel plans πŸ– with Krisflyerspree

Some travel sites touting good miles like Kaligo are just a waste of time as they jack up the hotel prices for you to "earn" the miles. 

If you want the best hotel at the lowest price that also earn you the miles, book your hotel or airfares through the Krisflyerspree website from Singapore Airlines. Remember to clear your  web browsing cookies so that they can track your spending on websites such as hotels.com or booking.com

Tip 4 - Chope your way to KF Miles ! 
Look out for apps that give you miles (provided the conversion is reasonable)


Always look out for apps such as Grab or Passion Card that has tie up with SQ to earn KF Miles. However,  some are so ridiculously bad that you know that no matter how you spend, it will be difficult to convert them to KF Miles. 

One surprise find is actually from the Chope app. I have been using the app to make restaurant reservations over the last two years and has never converted the chope dollars. I was pleasantly surprised that the conversion is so reasonable and have converted my first 1,000 KF Miles from the chope app. Such a breeze! 


Tip 5 - Krisflyer Business Saver offers the best value for money redemption

You can refer to the SQ redemption page here. Always redeem the "saver" series if you can. For example a First Class Saver will cost less miles and is more "worth it" than a Business Standard redemption. (Guess you got the drift)

If you want to save the miles for the best "value for money" redemption, it will be the Business Saver redemptions. I wouldn't recommend redeeming the premium economy tickets as it is a total ripped off in terms of value for miles 🀣 I would rather take the economy seats instead...

Conclusion 

Earning miles to redeem for tickets is not as difficult as it sounds. You just have to plan for it. Go read MileLion if you need guidance and you can travel in style to check off the Bucket List. 

What is my bucket list? I will share with you in another post 😊

SRS Activities for Sep 2017

There isn't much activities in my SRS account in Sep except for interest received. I have blogged about my purchase of UMS Holdings in my last update here. The share price of UMS has since moved up since my add-on acquisition of 92 cents. The portfolio value of my SRS portfolio improved to ~$209k.

  

Hyflux 6% Perps

In terms of non-SRS portoflio, Hyflux Perps suffered a decline in value to around 92 cents after its Q2 results but has since recovered to 94-95 cents region. Many bloggers, have in recent months, expressed concerns on the viability of Hyflux and it is also no secret that they are looking to divest their TuasSpring plants. According to their presentation slides, they are also looking to spin off their consumer lifestyle "ELO" business. 

As you may already know, perps is probably one of the biggest "con" job in the industry, where in a dire situation, it ranks below bonds and in good time, it doesn't perform like equity. πŸ€’ The good thing is that i have received 6% of interest. so if i divest now, i would probably recover my cost. The next interest payment is due around 29 Nov 2017. My gut feel is that the Company wouldn't dare not to pay this as it will send very wrong signals into the marketplace. I will revaluate this position when the Q3 results is out.


APAC Realty

One pleasant surprise is the 10,000 shares in APAC which i got from the public offering has done really well (increase by 35%) since its debut.  I believe the current year's results (especially first half) will be excellent and the share price has now moved above the range i mentioned in my earlier post. While i like to dish out chillis on IPO stocks, please don't ask me whether you should buy or sell your shares after listing. Frankly, if i can predict share price movement, i would have become a billionaire by now πŸ˜…


CPF

Today there is an informative article on how you can "hack" your CPF in planning for retirement. The article is here. I would strongly encourage you to look at the 10 hacks. It is an indication of your stage in life as well. If you are already at Hack #10, it probably mean you have done very well for yourself and your family. 

In October, we have also fully "repaid" the amount which we have withdrawn from CPF to pay for the current property. From now on, it will be the government who will pay us the 2.5% interest on the cash, it is no longer own-self pay own-self interest any more! πŸ˜‚

That is all for now. This is your life and your journey but i am sharing my journey with you so that you can make "less mistakes than me". 

Happy retirement planning. 

Will Blackstone Succeed in de-listing Croesus Retail Trust?

I recently sold all my units in Croesus Retail Trust in Sep after holding this for 2.5 years... and including the dividends to be received on 28 Sep 2017, the total returns has been around 67%. This counter has exceeded all my return expectations as i have invested in it purely for dividends.



In an earlier survey, 53% of readers say that it is too attractive to give up the yield without a fight! πŸ€• and there is a chance that they may be right. As such, even though Blackstone offered to buy over my shares at $1.17, I divested them in the market at $1.155 cents. I am fine with giving up 1.5 cents per share for the binary outcome whereby if the scheme of arrangement fails to go through, the stock is going to tumble down. 

Scheme of Arrangement

Blackstone initiated a scheme of arrangement rather than a usual takeover bid is because they want to take Croesus Retail Trust private. This is a "all or nothing" transaction for Blackstone. Let's analyse what the "key ingredient" of success is for a scheme of arrangement by looking at two recent examples.


Temasek owned about 54% of the Company and through a scheme of arrangement, it took SMRT private by acquiring 75% of the shares it doesn't own. SMRT was operating in a challenging environment and the scheme represents a chance for minority shareholders to exit at a higher price.

Mr Sabnani also noted that SMRT is being taken private based on the Scheme of Arrangement where Temasek will need acquire 75 per cent of the shares. "In the case of General Offer, you need to secure 90 per cent of the remaining shares. So in SMRT's context, Temasek has to secure 90 per cent of the outstanding minority shareholders' votes (which is the 46 per cent it does not own). That's a high number, higher than (that of) a Scheme of Arrangement. And if they don't get that threshold, they will need to raise the offer price," he explained.



Northstar also tried to privatise Innovalues through a scheme of arrangement. In this case, the major shareholders who owned close to 39% of the company has agreed to vote in favor of the scheme.

Four major shareholders - including the CEO Goh Leng Tse, directors Pung Tong Seng and Ong Tiak Beng and substantial shareholder Koh Boon Hwee - collectively own 38.73 per cent stake in Innovalues and have undertaken to vote in favour of the scheme. The scheme will require the court's sanction and approval by Innovalues shareholders representing not less than 75 per cent in value of the shares held by those voting at the scheme meeting.

In both instances, the majority shareholder is either the acquirer or has agreed to be acquired by voting for the scheme. This seemed to be somewhat lacking in the case of Croesus Retail Trust?

Shareholders of Croesus Retail Trust


Looking at the list of shareholders of CRT, the shareholders are widely dispersed and the largest single shareholder is linked to Goh Yew Lin (GK Goh family). See report here.



Will Mr. Goh vote for or against the scheme? 

Mr Goh Yew Lin, managing director of GK Goh Holdings, which controls GKGI, told The Straits Times: "We haven't decided whether to accept. We invested in Croesus because it has an excellent portfolio of assets in Japan, and the trust was for a long time trading at an exceptionally attractive yield. Although Blackstone's bid is at a premium to the undisturbed price, they're very smart investors who clearly expect further upside by buying at these levels. We'll wait to see what the independent advisers recommend before making a final decision.

It's hard to imagine why Mr. Goh would vote for the scheme if he is still buying close to the takeover price but he is definitely one voter who can de-rail the privatisation scheme if he votes against it.

How to get the scheme approved?

My earlier post indicated that you need at least 75% of the unit holders in value present to vote for the scheme.


What happens if the scheme fails?


Looking at the share price chart, if the scheme fails, it will likely fall towards $1.00-1.10 range as the company has incurred expenses in organising this scheme of arrangement. 

Now that i have fully divested my shares, i will watch from the sidelines. 

The exciting show will be take place on 13 Sep 2017 at 10am and investors will know whether they are croesuing, chorusing or cursing....😎


Do you believe in Insurance?



I never really believe in Insurance (or perhaps was brought up by my mum not to believe in them). My mum always said "δΏι™©ιƒ½ζ˜―ιͺ—δΊΊηš„" since i was young and those views was ingrained even though her views was a tad too extreme. Probably she was "bugged" by over-zealous insurance agents trying to sell her useless policies but maybe she was right.... because instead of buying policies, you should be buying the insurance company. 😁 That was how Warren Buffet became extremely rich by using "free money" from insurance premiums to invest.

Warren Buffett was able to build his fortune in two primary ways: by owning private companies that generate large amounts of income for him to deploy, and by entering the insurance business to get his hands on cheap investment capital. Warren Buffett abhorred debt; it wasn't his style to borrow money at 5% and try to invest it at 12% (Munger, meanwhile, built his large fortune by taking out margin loans to amplify his high conviction stock picks). Instead, Warren Buffett used the "free money" provided by insurance premiums allowed Buffett to use leverage—by investing the money for a return before he had to pay the money back to those making successful insurance claims, Buffett was able to use this spread to build quick wealth.... source

When did I buy my first insurance policy?

As i mentioned earlier, i was brought up not to believe in insurance. How did i ended up with my first policy then? πŸ€”

I bought my first policy when i was in the army. The agent was from Prudential and he was an ex-army sign-on who became an insurance after he left service. He basically convinced the whole group of us into buying the investment-linked policy ("ILP") which offers direct exposure to the Singapore stock market because history has shown that stock market will outperform the rest. The fund is Prulink Singapore Managed Fund and the fact sheet is here. Actually he was not wrong. My premium would have compounded at around 5.8% annually since inception and the return would have been decent.


For simplicity, assuming i put in $1,200 at the start of every year and it compounds at 5.8%, my premium paid of $28,800 would turn into $59,624 today after 24 years! Unfortunately, my surrender value today is only $30,680 (death benefit is now ~$75,000)... so what exactly went "wrong"?

Reason 1 - My agent asked me to increase my sum assured protection from $5,000 to $45,000 but this protection may not have come at a very high cost vis-a-vis a term insurance 

My agent called me one year into the purchase and said that i should increase the sum assured to $45,000 so that if anything happens to me, my family would receive some payout. Well, he wasn't wrong, except that it was a huge price to pay as the premium eats into the amount set aside for investment returns. Well, you can't have the best of both worlds can you?πŸ€” 

Reason 2 - When i started working, i decided to switch the fund from Singapore Managed Fund to Global Managed Fund and the latter under-performed big time. I think this is one of the biggest mistake i made in the ILP. I should just left the exposure to the Singapore market and my surrender value today would have been much higher. 

The fund size for the Global Managed Fund is small and the returns of 2.4% paled in comparison to the Singapore Managed Fund.


So how did my ILP performed after all these years. Let's take a look.... the premium paid of $28,800 turned into a surrender value $30,680.... Working backwards on the surrender value, it means that my premium was being compounded at 1% annually and that is worse than buying a life policy.

Assuming a life policy protects and compounds at the 10 year government Singapore Savings Bonds of 2.12%, the surrender value should have been at least $37,046... meaning that the ILP returns has severely under-performed due to the two reasons mentioned above. ILP is probably a black hole.... a huge part of the premium goes towards paying for some critical rider every year and only a small balance was used to purchase units in the fund.

When did i buy my second policy?

I bought my second policy from NTUC Income when my first kid was born for the both of us. Let's see how that performed. My sum assured was around $50,000 and the premium paid was $21,473 but the surrender value is $25,272. The NTUC Income Life Policy somewhat has performed slightly more respectably at 1.8% compounded interest than Prudential.

Am i going to get a third policy?

The answer is yes but this time round it is different and I hope i am much wiser now. πŸ˜‚

As my life progressed to 40s, the original policies taken when i am in the early stage of my life are no longer adequate. I have a family to think about and a mortgage to take care of should something happens to me. At the same time, i have been gradually building up my retirement portfolio so as i assess my current situation, what is important is that the family is taken care of should something bad happens to me. Do i intend to get a life policy again for coverage? The answer is no as it is just too expensive a product. My intention is to buy term and invest the rest of the money instead of relying on the insurance company to do that for me.

The third policy that I will be getting will be a term insurance that pays a lump sum of $500,000 for permanent disabilityπŸ€• , 36 critical illness πŸ€’ and death πŸ˜‡ from now till i turn 70.  

It is interesting to note that the premium is still relatively low if you pay till 60 years old and it escalates up exponentially beyond 60 years old. This is all about probability as insurance policies are 'underwritten' by actuary. While the good news is that i can terminate the term policy at any time, the downside is that the premiums has zero "returns" should you live beyond 70 and Singaporeans has one of the longest life expectancy in the world at 82 years old! πŸ˜‚

The reason why i stopped the coverage at 70 is that it gets prohibitively expensive beyond that and i believe i will be happy to "go' once i live past 70 years old and hopefully at that point in life, I will have adequate passive income for life. 

So here is the poll question for today....once i have the 3rd policy in place, i will have adequate coverage. What do you think i should do with my ILP with Prudential? Take the poll here.

 Click to vote

Let me know what you think and i will update you on my next course of action when it has taken place. πŸ˜Ž

Happy Insuring !











SRS activities for July and August 2017

How time flies and today is already 1 September... 

Since my last update for Q2 (April to June), I have done the following in July:
Post the IPO of Netlink NBN Trust, more analysts (especially those who were in the blackout period) starts to release their analysts reports on the Company. You can download the 58 page report by DBS and the 23 page by UOB by clicking on the respective links. Now there are 8 analysts covering Netlink NBN Trust with an average $0.93 target price.


In terms of price movement, it is heartening to see that the price has finally break above the 81.5 cents resistance to close at 82.5 cents yesterday. This is a "giant" so i wouldn't expect it to move fast


Dividends

In terms of cash flow, I received the following dividends in July and August:
  • $500 from UMS Holdings
  • $355 from Starhill REIT
  • 534 shares of Fraser Commercial Trust (Scrip Dividend)

UMS Holdings

UMS Holdings announced a sterling set of results in August where 1H 2017 net profit already exceeded that of FY2016 and is rewarding shareholders with a 1-for-4 bonus issues. There was also a 1 cent dividend to be paid in 27 Oct 2017. The results announcement is here


Ironically, after the results announcement, both DBS and CIMB downgraded UMS Holdings to hold (whatever hold means πŸ€”)
The share price tumbled thereafter.... and on 29 August morning, Mr. IPO stepped in to support 30,000 shares at a price of 92 cents and see it dropped further to 90 cents at close of the day πŸ˜‚  The rationale for buying is that at 6 cents dividend a year (my projection), the yield is around 6.5%, which i am happy with. If the company maintains its 1 cent dividend based on the enlarged share capital post bonus issuance, lagi better.


Mr. Andy Luong (CEO) and Mr. Stanley Loh (executive director) then followed Mr. IPO and bought 300,000 shares at $0.905 and 50,000 shares at $0.90 respectively on the same day πŸ˜Ž (i am pretty sure i bought before them that day).

Passive Income


Based on the additional 30,000 shares of UMS Holdings and the latest projections, passive income for me and wifey will reach $46,822 (or $3,908) per month. The target for this year is to hit $60,000 per year. Just to be clear, the passive income target stated is for the two of us.

Croesus Retail Trust (non-SRS holdings)

After my previous post on CRT - Time to say Good "Buy", I received another reminder to vote! πŸ˜‚. The poll which i ran also drew 78 responses and the majority (53%) polled said that the yield is too attractive to give up without a fight. You can still vote if you want to here.


One of the strategy which i am contemplating (despite my kacang putih holdings) is to sell the existing shares at current price (say $1.155). If the vote goes through, i "loses" $0.015 cents). If the vote didn't go through, i expect the price to correct downwards to between $1 and $1.10, of which i can then load up more shares. Is there any chance the acquisition price will be further improved by Blackstone, i think the chance is low. So based on probability, it may not be a bad idea. πŸ˜‹

SRS Holdings


Post the recent purchases, my cash level in SRS account has dropped to $21,495. I was contemplating another counter that is yielding 10% per annum but it is rather thinly traded. Let's see how it goes!

Here is the update for now.  Happy SRSing! 




Croesus Retail Trust - Time to say Good "Buy"?

It was an interesting week, where i "received" two privatisation offers - Lafe Corporation and Croesus Retail Trust.

Not all privatisation offers are good and Lafe Corporation was one great wealth destructor

Lafe Corporation was for my dad and listed with much fanfare back in April 2000 with a market cap of $460m. The market cap today was $22m and for every $1 invested in the Company, it is worth only $0.0478 today, destroying wealth for investors in the Company πŸ€• 


While my dad didn't invest from the onset, his few thousand dollars worth of investment a few years back is now worth $36 after share consolidation. Without the share buyback at $0.90, he will be out of pocket by $4 if he had to sell the shares through his broker. Maybe i should send Christopher a "Thank You" letter on behalf of my father? πŸ™„

Anyway, the morale of the story is to invest in good companies and cut your losses if you are on the wrong boat - which of course is easier said than done! πŸ˜

The same week, i received the scheme document from Croesus Retail Trust ("CRT") as well as a 'non-transferable' invitation to a SIAS - CRT dialogue session (no proxy allowed).


Given my "kachang puteh" holdings, i am likely to give the meeting a miss but in case you don't know, the SIAS-CRT type of dialogues are usually paid for by the Company to SIAS as part of its media engagement plan to "smoothen" the path and allow management to convince shareholders why this is such a great deal for them. In any case, the scheme documents was also written as such. Perhaps they should also invite Blackstone (acquirer) or their investors to the meeting as well? πŸ˜‚

Let's see what is in the scheme document... i will just focus on the gatefold...


The top right of the scheme document says "your vote counts"... so far still neutral as you can vote "no" to the scheme obviously. The scheme consideration was for S$1.17 in Cash via a scheme of arrangement (not takeover). 

Transaction Overview

Funds managed by Blackstone Group is offering to acquire CRT via a scheme of arrangement. If the scheme is approved by Unitholders at the meeting on 13 Sep 2017 10am at the Fullerton Hotel, then Unitholders will receive:


provided that, at least 75% of unitholders who are present or via proxy approve the amendments of Trust Deed and more than 50% in number of Unitholders representing at least 75% in value approve the scheme.... πŸ€”
In other words, unit holders who hold 25% of CRT will have a big say in whether the scheme goes through or not.... 


What does the "gatefold" says to Unitholders?

Gatefold are those special paper printed in colour to "highlight"  or tell a story in a prospectus or circular and these pages are prime locations in property terms, hence the key messages from the management can be found here. I will paraphrase it here for the semi-hokkien investors...  πŸ˜

Story 1 - "Mai Tu Liao (meaning don't wait anymore), this is a good chance for YOU to sell your shares at a si-peh (damn) good price"


They then present graphs to show that $1.17 is the historical high of the stock's trading history since IPO. All factual, so cannot say that they are wrong.

Story 2 - The Buyer is kam-gong (stupid), they are buying your units at si-beh swee (very attractive) valuation even higher than the most bullish analyst hor! Where to find...


They then proceed to you that the $1.17 on offer is higher than the NAV or the adjusted NAV and above the price targets of all analysts covering CRT

Story 3 - Ma kong bo (don't say I never tell you)... if you leeject (reject) the offer, next time bery bery difficult for you to run road...


This is the most absurb ah... lim-peh is only a small fry... still enough volume to run road lah... plus i have been holding it for the dividends, not to trade in an out leh...

Story 4 - Even the most kiang (clever) adviser also tell you the buyer is gong (stupid), so please take the money and run !!


Like that win liao... everyone says the buyer is gong.... so who is this gong buyer?


Errr... even though i beng but i not blur leh... i know what is a Black Stone hor... Black Stone is is "or giao tao" in Hokkien hor!!  Is the Blackstone Group so gong or not... let me go and see if can dig out some track record of Blackstone Funds....


Not bad leh... I assume the Blackstone Real Estate Partners Asia fund (2013 vintage) will be buying this and as of 30 Sep 2016, the net multiple and IRR is 1.32x and 16.9% leh.......Ok the buyer is not as gong even though everyone seem to tell me they gong... they are actually going to make more money after i sold this investment to them...


Who can actually "de-rail" the scheme?

Given the huge free float, how the voting will happen will actually be quite interesting! In addition, a Swing Voter - Goh Yew Lin also raised its stake in the Company to 7.11%. The article is here. It will be interesting to see how he votes and whether he will find a few kakis to vote against the scheme.

My View

Given the free float of 79.8%, it will actually not be easy to delist the company via a public tender or take-over, which is why the buyer is buying this through a "all or nothing" scheme of arrangement. In addition, if not for the offer from Blackstone, the share price would probably take a much longer time to hit the current levels. So if Blackstone is able to find value at $1.17, it's natural that they will want to take it  private completely so that they can do their own asset enhancements. 

What is the yield at $1.17. Assuming the distributions is maintained at 4 cents (for discussion sake), the yield is still a decent 6.8%. If the acquirer takes a leveraged position through cheap financing, the yield can be in the teens....

I have yet to decide whether to vote for or against or whether to attend the SIAS-CRT or the actual meeting... i think it can be an interesting learning experience! πŸ˜Ž

Is it time to say Good Buy or Good Bye? You tell me... vote here



A letter to my new "old" fan....

After my post on "which stage of your life are you at"... I received the following in the comments section. I thought it would benefit more if I share it as a blog post, especially from someone who has taken the time and effort to write to me. 

Hello Mr IPO, 

I recently became a fan of your blog. I am 55 and still working (civil servant). Planning to retire at 60/62 if I can keep my sanity till then:-) 

You mentioned that you have been traveling annually... well taking time off to recharge is how I keep my sanity till now ... 🀣

I hardly traded nor invested since I started working at the age of 20. My savings are all from my salaried income. I am frugal but I have been travelling yearly.  

I must say you had been a great saver! πŸ‘πŸ» It was pity that you didn't try investing or trading when you were younger so I am not recommending that you should start now as you are at a different stage of life.  My guess is that your risk tolerance and profile is low hence volatility in the markets is not something that you will "enjoy".  Given your frugal nature, you shouldn't need too much after you retire other than the travels which should increase.

I have two properties- HDB flat I am currently staying in (all fully paid up for) and a condo unit with sitting tenants since 2015. I have returned CPF all the money I withdrew for both properties with accrued interest and paying cash to service the mortgage loan for the condo unit. 

Returning CPF the money drawn for properties to earn 2.5% and paying current mortgage with cash is a good decision since you have no inclination to invest. If you can afford, continue to keep the cash in the RA account to earn a higher risk free return for as long as permitted by CPF. 

My combined CPF balances (OASARA) by the end of the year would be slightly more than $800k (not much I now). I just started contributing to SRS funds like 3 years ago (very late as well). I also have savings parked in 3 different banks amounting to more than $100K earning pittance. I will also be getting a total of $500K once my two endowment policies mature when I am 62/63.

Given you are debt free on your HDB, your basic needs are already covered. Hence, I would recommend selecting a CPF life plan that gives you a stable monthly cash flow needed to cover all your expenses as long as you live so that you can focus on living well. 

Once you retire, if the rental income exceeds the mortgage payment, you are in the pocket, so that would be an additional source of income. If not, you may need to consider how to make it cash flow positive by paying down the principal, extending the loan (which can be difficult) or consider selling it for a profit. 

I am writing you to get some wise counsel as to how/where/when I could do with my SRS funds, CPFOA and/or my bank savings. Dabble in trading/invest/or... Thank you. Kind regards- A newbie investor

I am not sure if you really want to dabble in stocks and shares after you retire 🀣. The reason why I am so focused on creating a stream of passive income is so that I don't have to be glued to the trading screens. These are stocks that I will invest for the long term and i ignore the price movements. If you are considering investments, I would suggest reading more about the subjects and putting small amounts to work subject to a certain limit. I would also consider corporate bonds but you would need to be highly selective and discerning. 

I have not explored this option but there are annuity plans which you can consider given your high savings.. I.e paying one lump sum of cash upfront and then getting a fixed amount for life. This could supplement CPF Life and you are assured a steady income for which you can live a good life and travel around. You may want to start exploring that option now but do remember to assess the counter-party risk and whether they are credible and reliable. 

Do stay away from Chinatown after you retire  as that is the fastest way to lose wealth... πŸ˜†

Enjoy planning your retirement. 
Mr. IPO 

Planning for Retirement - What stage of your life are you at?

Today's Sunday Times ran two articles in the Invest Section which i thought is relevant for young readers. The articles are "A Letter To My Daughter who has just graduated" and "New Grads? Never too early to think of retirement". Do find time to read them as she wrote from a perspective from someone who has been through the journey in life.

For the benefit of new readers, especially those who have became "Mr' IPO's fans" more recently, I have compiled a series of write ups which i have done in the past to encourage you in your journey for financial freedom. 

This post today is written based on the different stages of your life. 


IF YOU ARE STILL A STUDENT AND READING THIS POST

I have to say that if you are currently still a student, below 25 and reading my blog post, you have great potential ahead of you. I started playing IPO and trading the market during my army and university days. I have to tell you that was the best time to learn lessons from the market because you don't have much to lose but in the end, I still paid tons of school fees. The purpose of my blogs is to let you lose less while learning πŸ˜

If you plan it well, you are going to retire a millionaire by the time you reached 62. Time is your friend (for compounding) and if you catch the cycles well, you will do very well. You will have at least two to four big cycles in your life. Time it well (especially the property cycle) and you can retire early. 

Your world will be very different from mine, be inquisitive, focus on doing well in your studies, get a well-rounded education, cultivate good habits and build up your network and skill sets. Education is just a entry ticket to a career but make sure you do well in your chosen field! 


IF YOU HAVE JUST GRADUATED OR IN YOUR FIRST JOB AND IN YOUR 20s to 30s

Focus on building your income through your career - I have mentioned before that your career is very important. Take care of your own career professional and it will take care of you. The relevant posts in sequence are:



Focus on having integrity and a great Emotional Quotient. They will bring you far in your professional life. 

Saving up and keeping track of all your expenses, assets and liabilities - When you just start out and receive your pay checks, don't frivolously spend it. I can't emphasize enough the importance of saving up. Save least 20-30% of your cash each month. Here was a post i wrote previously - It's not how much you earn but how much you save. It is also important to track where you spend your money πŸ˜‹ as everyone has a little peculiar hobby that will "suck" money away. You can start spending when you are have established your career and have more disposable income (usually for those who crossed 35 years old)

Buying your first property or considering a second one

If you are 25-35, buying the first property is probably on your mind all the time. My advice is to focus on buying the right properties at the right valuation. If you have followed Mr. IPO's blog back in Oct 2008 (when he is still not so "famous"), you could have benefited from his call to buy a property back then in 2008. πŸ˜‚ If you currently hold a HDB flat, my advice is not to sell your HBD Flat if you can and don't take a naked position in the property market.

Many of you are probably new to my blog but i have documented my property journey and shared snippet of lessons along the way which may still be relevant since I even lost money on a HDB flat. πŸ€• If you are new to my blog, you may want to take some time to read them.  I have arranged them in sequence below.










Property is a good levered play and an inflation hedge, so make full use of it. I have made money from my property investments previously but I am at a different stage of my life today. I am focused on being financially free and paying off my remaining mortgage. Buying a property, with the additional buyer stamp duty, is not something that "appeal" to me right now. In fact, since i first blogged about it, i have repaid the CPF drawn to pay for the existing property. 


I am happy with the "unrealised capital gains" from my current place. My downside scenario in the event that circumstance changes (e.g my kids don't want to stay with me or if i can't afford it anymore), will be to "downgrade" and move to a smaller place.

Trading - If you are in your 20s and 30s, you are likely to be trading more than investing. This is because you will want money fast. As such, you are punting IPOs, trading stocks and finding ways to maximize your returns. I have no issues with trading at all. It helped me hone my investment acumen and made me know myself better. Just make sure you know what it entails in trading as cutting losses in trading is absolutely critical. 

Punting IPOs is not going to make you rich, so you have to expand your investment scope - While my nickname is Mr. IPO, IPOs will not make you rich (I repeat) πŸ˜‚.  You have to move on from punting IPOs and start investing into shares and bonds. Recently, someone I met asked if i believe in IPO stocks and was "shocked" when i gave him a resounding "NO" and the reasons are listed here (see Lesson 3)


IF YOU ARE IN YOUR 40-55 RANGE

You are probably quite established in your chosen career path and have a decent amount of regular income and some savings. The goal now is to become financially free and build up a passive income when you retire. The passive income will come from the assets you hold post-retirement. It is important that the assets are generating enough to cover your regular expenses. I am currently at this stage of my life where i am accumulating assets for retirement.

CPF should form part of your retirement plans

I have previously shared with you about using CPF for retirement. You should read the post together with very helpful comments from a reader here

How much cash will be in my CPF when I turn 55? 

Here is a post by Wilfred Ling on whether it is possible to get $1m in the CPF by 57. 

Assuming I stop working today and CPF Ordinary Account still pays 2.5% and CPF Special Account pays 4% annually, thanks to the effect of compounding, my combined OA and SA balances will be $908,164 when i turn 55. As such, i will definitely hit $1m in my CPF when I turn 55 since i am still contributing to CPF now. So don't hesitate to use CPF as your retirement plan tool.  Tools to consider including topping up your own account voluntary if you have yet to hit the minimum retirement sum, so stop thinking that the government is out to take your CPF money away (ok probably i will get a few opposing whacks here) ... πŸ˜€ ... need to wear mask again. πŸ‘Ί


Other tools and assets to consider

In addition to CPF, you should probably consider using your SRS account for both tax reduction and retirement planning (for which the purpose of this blog). You should then accumulate assets using all the different accounts, CPF, SRS and Cash.  Some assets you can consider will be properties, shares and bonds. I am documenting my progress as we speak and hopefully you will be able to gain some knowledge from it. 

Start Investing and into global stocks - Once i past my 40, i slowed down my trading activities and started investing more seriously. As such, you will see investments that are more long term. One of my aim is to start investing in US companies (such as the likes of FANG - FaceBook, Amazon, Netflix and Google) in small amounts. With the advance of technology now, there is no reason (or excuse) why we cannot be global in our investment approach.

Passive income - My target is to be able to retire well and have a passive income that will enhance or maintain my lifestyle. My latest passive income chart is here and my target is to reach >$120,000 per year when I retire. You can track my progress at this blog. 


IF YOU ARE AT 55 YEARS OLD AND BEYOND

Here is a booklet from CPF when you turn 55 this year and needs to decide what to do with the CPF.

Life after retirement - I would like to retire before 55 and take on some advisory role. Maybe i might even start a fund management or financial planning firm.  (Don't be shy - I am sure you will want to sign up to be my client after eating my free chillis all these years right?) πŸ˜‚  I hope that after retirement, i can start traveling around the world, probably using AirBnB to stay a few months in the warmer countries. I will eventually update my travelogue blog ...hahaha. just be patient ok...  provided you still want to see a not so young man blog about his travel exploits.

Here is a toast to retirement and I hope you will reach your target too! If you plan for it, i am sure you will reach there sooner rather than later.

Related image


Net - LinkedIn

A further update to my earlier Netlink Trust post where i managed to add another 25,000 shares of Netlink Trust to my SRS account at 81 cents on 2 Aug 2017.

This bring Mr. and Mrs. IPO shareholding in Netlink Trust to 100,000 shares and based on the projected yield of 5.73% in FY2019, the annual income will be around $4,641

The passive income will reach $44,886 using the higher projected yield and the monthly "distribution" is presented below. Still having gaps for Feb and August.


On a non-related note, i have finally set up a LinkedIn account for Mr. IPO ! πŸ˜‚ I have never found the need to create one for my "real self" and ironically, now i have one for Mr. IPO.

You can find my LinkedIn profile here. If you want to add me to your professional network, please feel free to do so πŸ˜. I promised you won't be "turned down" 


Happy LinkedIn Networking!