2016 Review

A year passes by so quickly and its time to set out my review again.

With kids and a full time job, I realise that you have less time to sit, think and savour a good cup of coffee, let alone have time to review your stock portfolio regularly. Hence, one of the things I did since 2015 was to set up regular savings plan for both SRS and cash funding. This is a good thing coz I stayed invested in the market.

So how was the year for me?

Dividend income (from RSPs and shares) = $5169
Capital gains = -12898

Yes, you saw that right. Negative capital gains. Why? I decided to cut losses on shares that couldn't recover. Namely, Hyflux which was a whopping loss of nearly 10k, NOL on a slight loss of 500 (but it was being bought out so I did not have much say) and another penny share which I had entered into recognizing it was a punt. I only made small gains on the sale of AHT.

Do I regret my sale? I guess I am learning to deal with cutting losses. I should have cut losses on Hyflux earlier but I just couldn't bear to. Months turn to years and losses went from a few thousands to many thousands. I couldn't even bear reading the AR for hyflux for months and when I finally did, the numbers were so terrible I decided to just cut loss. Interest rates are expected to rise and I am not sure how hyflux is going to deal with the debts they have at hand, and how they expect to pay off their perp bonds holders.

Current Local Share Holdings (in order of current size):
1. Nikkoi STI ETF
2. Keppel Corp
3. DBS
4. AIMS
5. ST Engineering
6. SPH
7. Wilmar
8. SIA Engineering
9. Ascendas India Trust
10. Ascendas Hospitality Trust
11. Comfort
12. M1
13. SembCorp Industries
14. Singtel
15. Nam Cheong
16. Keppel Reit

Things for next year:
1. I am going to stop RSP for Nikkoi STI ETF and Keppel Corp. Why? I have not sold Nikkoi ETF and I worried about the liquidity. It isn't THAT much since my entire portfolio is now 140k thereabouts but I haven't tried selling any ETFs as yet. As for Keppel Corp, my average price after being on the RSP is now $8.70. It isn't a fantastic price but with the amount of money invested hitting nearly 25k, I want to pull back a little and keep some cash for other dividend plays.

2. Purchase more DBS bank shares. So the good thing about RSP is that I have now build up a substantial DBS amount through RSP. I kept wanting to invest directly throughout 2016 whenever a pull back happened but kept thinking it would drop below 14. Look where that got me.

3. Research on ST Engineering /  Keppel REIT / SPH / SCI. I keep thinking of putting more money in but I haven't yet done the research. Better not be lazy.

4. Purchase Singtel / M1 / AHT on pull backs. Ok, so I have read up and I think ST / M1 is worth purchasing on pull backs. Singtel has a better moat but I desperately (shucks) need to average down M1. I am also expecting AHT to be able to bring in additional revenue next year and want to put more into it.

5. Sell off Wilmar, Nam Cheong. These were really wild cards to begin with. I should review and discard in time.

What was right about this year?
1. Putting money in RSP. It took away a lot of emotions. It is easier for a working mum to cope with it.
2. Concentrating more on dividend income. My dividend income has finally grown to 5k, which means about 400 per month. This covers some transport and food for me.
3. My total asset is finally more than my biggest liability - my share of the house mortgage.
4. Reading up a lot more on REITS and shares.

To a better 2017. 

2015 Dividends

2015 was a rather dismal year for me in terms of the overall value of my shares. Most of my shares went down, and i even had to cut losses on a particular punting stock that was recommended by brokers.

but 2015 was also the start of a new resolution, that to create more dividend yield stock and to keep trading / value investing opportunities to a mere 30% of my portfolio. Its a long journey since i do have a lot of crappy stocks but slowly and surely i need to make my way to the dividend portfolio. Its also imperative to hold onto to cash, although the drawback with holding cash is that one tends to spend it away. I have USD as well, which is good, coz i can't spend it, and USD is appreciating against the SGD. I also started more regular saving plan into blue chips stock and the STI ETF so as to avoid timing the market. However, i think i put in too much (like almost 30% of my salary!!!) and i don't have much cash hoard at the end of it all.

As at end 2015, some of my main thoughts on my numbers are as follows:

1. My cash:equities is 7:9. Seriously need to sell off some useless US stocks that i have to increase my cash funds. This cash also includes my emergency funds i should really increase cash.
2. My main portfolio of shares consist of: STI ETF, keppel corp (which seriously i need to relook to my current decision of putting almost 1k every month into a RSP for keppel corp); ST Eng, SPH. Really need to rebalance my portfolio as well. I also need to consider if i should be purchasing blue chips stock seeing that i am heaving investing into the STI ETFs every month
3. I do shop a lot after all, contrary to the belief that i do not shop as much as the average girl. I spend a whopping S$7,908 on personal shopping (doesn't include the family or for my kids) and that works out to almost $700 a month! I know this was because I bought 3 branded bags this year but i also sold off 2 branded bags ( i love carousell and madam milan) so if i take away the 2.4k i made from selling the bags, i actually spend $460 per month. which is still a lot considering that i always thought i spend less than the average girl. Time to relook into this!!!
4. I achieve $4331 as my dividends (including my regular savings plan) for 2015. This is significantly higher than the $2441 for last year.

So my main aims for next year is: 1) rebalance my portfolio some more 2) avoid spending on clothes and unnecessary items 3) increase my war fund 4) review my stocks more often.

As we move into a bear market, its helpful to pull out this little reminder on how much to invest every month.




With the 52 week high of STI being at 3,500, and my war chest at 50k (with some in USD so i need to decided when to change!), this is the amounts that i will be investing in:

1) when STI hits 3150, i invest 5,000
2) when STI hits 2975, i invest 11,000
3) when STI hits 2800, i invest 15,000
4) when STI hits 2450, i invest 5,200
5) when STI hits 2100, i invest 6,250
5) when STI hits 1750, i invest 6,250

Well, STI hit 2700 today, so technically, i can invest some 15k now. problem is that i haven't yet been sourcing for good stocks.

So next steps: high dividend yield stocks with good cash flow!

Possible stocks to purchase:
1) SIA Eng @3,.20
2) ST Eng @2.70
3) AIMS Capital @1.25
4) First Reit @0.85
5) Parkway Life Reit @ 1,3
6) Singtel @3.2
7) M1 @2,3
8) Soilbuild business space @0.73

living a minimalist life

I am fortunate to be in one of those industries that paid more when I was first starting out as a fresh graduate. About 10 years ago, my industry paid fresh grads about 3.8k, instead of the 2.5k which most fresh grads. It was a windfall for me. My dad, the sole breadwinner of the family, up till his retirement, only earned 2.5k maximum even after 30 years of slogging in the same company. Suddenly, my pay was about 1.3k more than his. I felt rich, really rich.

When I was an undergraduate, I often gave tuition and could earn up to 1k a month. Even with that amount of money, I was careful not to overspend. However, that 1k could give me a lifestyle that allowed me to keep up with my friends – think the usual clubbing, movies, eating at cafes, expensive coffee, taxis for the late night outs. When I started earning my first pay check, I was extremely happy. The hours were really long and to reward myself, I started taking more cabs, justifying the fact that I was too tired and money ought to be spend. I started having no qualms about purchasing $150 dresses, justifying it with reasons that I had no time to shop and if I found a dress that I really liked, then I should just purchase it instead of spending another 3 hours looking around.

However, even with my new found “wealth”, I guess frugality was already ingrained in me. I couldn’t bear to splurge on a $2,000 luxury bag (then, I must admit I have done so a few times since) even though all my peers were going crazy over reebonz.com at that time. I also could not bear to stay at upmarket hotels during my holidays or eat at michilin star restaurants. I rather use guest houses, bed and breakfasts and eat local cafes when I travelled. I was still a miser in clubs, much preferring to only go for ladies’ night than pay charges when I knew you can go in for free on Wednesday.

I assumed that the reason for my frugality was because of my past. As I have personally witness how difficult it is to earn money, and how the lack of money can constrained your lifestyle, I have no wish to splurge it unnecessarily. Funny enough, I realise that some of my peers who grew up in the same “lower income” group as me were the total opposites.

They grew accustomed to spending. Spending even more than those people who grew up among relative wealth. They thought nothing of buying a $15k watch, or a few $8k bags, or trying out fancy restaurants or going on luxurious holidays. When they got married, they felt it necessary to create the most romantic and fancy wedding ever, to don the most beautiful gown and throw an extravagant party. They wanted to make up for the lost times when they wanted to do such things, but could not do so.

I wonder. Why the difference between myself and them? Did we not grow up in similar conditions? Why was I refusing to spend for fear that I may one day lose my money? Why were they willing to splurge on everything – food, clothes, holidays, watches?

I think the key is in the upbringing. Even when my parents were poor, my parents never complained or commented that we were. They hardly mix with the rich crowd, they never crave brands. Whereas for some of my friends who fell into the latter group, their parents lamented their poverty, compared incessantly with the richer folks, and bought brands even though they could barely afford it. They desired richness and strived towards it, and put it as a goal to be achieved. What I wanted because of my poverty was financial security. What they wanted because of their poverty was luxury. 

Investing in Japan via REITS

Japan has been a sleeping giant for awhile now. With Abeconimics, there is hope that there may be revival in Japan's fortunes, and hopefully, there is money to be made from this.

I've taken look at 2 popular REITs - (i) Saizen REIT (ii) Croesus REIT

Saizen REIT deals with residential REITs all over Japan and caters mainly to small families or singles. This REIT is also very popular with savvy investors, and AK71 also buys into this REIT.

Croesus REIT deals with retail malls in Japan and is also highly recommended. If Japan consumption increases, then one strong beneficiary of this should be mall owners. More money = more shopping = happy lessee = happy lessor.

Let's look at the finances for Saizen first:

1. PE= 13.49
2. PB= 1.09
3. Revenue = 31.39
4. Revenue / share = 0.11
5. Revenue growth QoQ = -2%
6. Gross Profit = 2.52B
7. Profit growth QoQ = 4.1%
8. Cash = 42.24 M
9. Debt = 142.05 M
10. Debt / Equity = 63.24
11. current ratio = 2.42
12. book value = 0.79
12. diviend yield: 7.2%

issues: negative retained earnings; -ve cash flow.

Let's look at the finances for Croesus:

1. PE= 17.02
2. PB= 1.54
3. Revenue = 50.92
4. Revenue / share = 0.11
5. Revenue growth QoQ = 42.4%
6. Gross Profit = 2.97B
7. Profit growth QoQ = -51.50%
8. Cash = 11.09 M
9. Debt = 377.48 M
10. Debt / Equity = 124.52
11. current ratio = 2.10
12. book value = 0.759
12. diviend yield: 8.2%

issues: -ve cash flow
other information: occupancy rate of 90.9% in 2015 as opposed to 91.8% in 2014
NAV is currently 1.13 for 2015 as opposed to 1.22 for 2014. debt ratio high at 50%

All in all, i am not sure if either reit works for me! i need to carry on reading. for now, not investing. 

ST Engineering Review

ST Engineering brings to mind a good sturdy dividend stock. But is it really? Remember, even blue chips can fail as any one who has bought NOL will attest to (myself included). 

Let's check out the numbers:

P/E ratio is on the high side of 19.58

P/B ratio is 4.72

P//Sales at 1.59

ROA is a paltry 4.02% 

ROE is really pretty good at 22.54%. In fact in 2009, the ROE was at 30%!

Revenue QOQ is -2.6%, with earnings QOQ at -5/3%

EPS is 0.17 

Book value at 0.70 

What's great about the company is the cash on hand. Management has also been making prudent decisions as seen by its decision to bring down the current debt. There was a fall of 15% of cash for 2014, but there was also a drop of 25% in short term debt. 

The cashflow from operations minus capex is 400M. With the current price, the dividend yield is 4.5%. That isn't too bad. 

Verdict: I will keep a close watch on this and look to purchase on dips. This will be a good defensive stock to have in times of downturn. Even during the 2008-2009 crisis, the dividends remained constant. 

SIA Engineering - Now how brown cow?

SIA Engineering was one of the first few shares i bought when i got excited about dividends play.

Of course, I was the novice then and i still then now. Reading my review about the share must me want to laugh as there was absolutely no reference to fundamentals. Instead, the purchase was done because i believed it was a dividend yield share and faith in the airline and travel industry.

Still, with the slide in price from 4.88 to its current price of 3.87, I had better review this share again.

Let's start with the numbers:
1. P/E ratio = 22.82
2. PB = 3.29
3. ROA = 3.22%
4. ROE = 13.53%
5. revenue growth = -11.30%
6. earning yoy = -36.5%
7. cash = 465.46M
8. cash per share = 0.42
9. debt = 33.22 M
10. current ratio = 3.01
11. operating cash flow = 96M
12. free cash flow = 47M
13. dividends = 268M

Well, honestly, I am a bit worried about the fundamentals. The revenue growth is a negative 11%, and the earnings yoy is down -36%! What's happening? out of their three business lines, it seems like the problem is with Airframe maintenance. It has been dragged down so much because the phrasing out of older planes and replacing them with the new ones have resulted in less engine checks being done. That's a huge blow to SIA Engineering.

What does SIA Engineering have going for it then? A really good cash flow. If we check out the net cash flow, it is at 47M, however, the sinker is that they have been overpaying for dividends in 2015. 268M was paid out for dividends, so dividends i more than the free cash flow, and is also more than the operating cash flow. So will the dividends go down? I guess so, since the slide has already begun. It has decreased from 0.24 to 0.145 this year already.

With that, what is the dividend yield now? Taking current prices, dividend yield is 3.74. That's not worth it to put in more monies unless I am confident about the company's future prospects.

So what is the company's future prospect? The joint venture it has with Boeing and Investment Moat has done a very good review here.

Well, I will hold my shares and look to purchasing it when the price is right since i think there is still room to grow for this industry. What is the right price then? If i want at least a 4.5% yield, then this would have to be $3.20.

Well, so much for early mistakes. We pay the price for learning. 

The clash of the telcos

After reading and re-reading the wealth of information out there on telcos, I have condensed this information into the following:

1. for dividends - purchase M1
2. for possible growth outside Singapore - Singtel

Singtel is a mixed bag. They have been splashing cash trying to get into the digital advertising space rather unsuccessfully. Currently, the big boys are the US players and since there are no bounderies in the digital space, its not possible that Singtel has spotted a good deal which hasn't yet attracted these Internet Giants. It doesn't seem likely that Singtel can come up with anything creative either so I am rather wary if Singtel is going to keep splashing cash into acquisition.

Anyway, there are just too much information out there but if i had to pick a telco, then I will go with M1 for dividend play. Amongst the three market players, they seem to have the best cash flow but really, i am not sure how long that will be sustained for.

Enough of this telco research! Had spend a few days amassing just too much information. A wise man would say to leave the information gathering for now and let it crystalise into knowledge.