Monday, May 15, 2017

STI at 50, GDP, HDB, Private Property Index and CPI

Draft: 2017/5/15

Source: Straits Times Article by Lorna Tan, her original article can be found online.

I read this article over the weekend, it is from Lorna Tan, editor of Straits Times Business Section.

I like this article, because it gives a lot of info from STI's history. 50-year is a long duration, with Singapore's own relatively short nation history, it is more precious to have such info.

Quick calc of annualized return on STI over 50-year is 7.2%, and for the most recent 15-year, it is 7.3%.

The benchmark index ended last week at 3,255.29 - a long way from its starting value of 100 points in 1966

During this period, the Singapore Exchange (SGX) has gone through many peaks and troughs, with the latter including the Pan-Electric crisis in 1985, the global stock market crash in 1987, the 1997 Asian financial crisis and, a decade later, the global financial crisis.

The first public mention of the index was on Jan 4, 1967

There are two ETFs tracking the STI that retail investors can invest in: the SPDR STI ETF and the Nikko AM Singapore STI ETF. The SPDR STI ETF has the longer track record, dating to April 17, 2002.

"Since inception, an investor would have received an annualised 7.3 per cent return over the past 15 years, not including dividends which are distributed on a semi-annual basis"

@copyright Straits Times

From this source and source. Singapore GDP were:

meaning:
It grows 300 times(check CPI section in the later part of this blog) from 1965 to 2015(50-year), and it grows 3 times from 2000 to 2015(last 15 years).

Now to ES3 ETF:
From its inception, the annualized return is ~7+% too, just coincide with the underlying STI, whose performance in term is aligned with underlying SG GDP growth. The performance of the Fund, inclusive of dividends, is net of all charges payable upon reinvestment.. While 7% is nothing fantastic, it is much better than a savings account, a fixed deposit, a usual corporate bond return, SGS, SSB, and even OA/SA in our everyone's CPF account,  although at any one time of a shorter period, it was beaten miserably by one and many of other 'so-called-safer' investment alternatives.

Thus, for any Singaporean who still has a long time horizon before retirement, ES3 is a good investment vehicle, and I'm happily invested into it.

==========================================
Caveat
The statistics tells only the history, whether it is to repeat in the future, anyone's guess.


==========================================
Updated: 2017/5/17
HDB
I thought to add another major asset category for comparison, HDB is almost the de facto option for most Singaporeans.

  • 2001Q4: 69.6
  • 2016Q4: 134.6
  • Nearly doubled in 15 year, ~5% annualized.

As usually, HDB flat is brought through a Loan, meaning leveraged, the return is much higher on the original capital outlay.


SG Private Property

  • 1976Q4: 9.8
  • 2001Q4: 87.6
  • 2016Q4: 137.9
  • 14 times in 40 years, ~6.8% annualized
  • Most recent 15 years, 157% increase. ~3% annualized (worse than that of HDB?)
==========================================
Updated: 2017/5/18
CPI (inflation rate)
With the help from Statistics Gov, I got annual CPI percentage change, a proxy for inflation rate
  • 1962 over 1961: 0.5%
  • Over 55 years, CPI increased by ~4 times
  • Over recent 15s, CPI increased by 1.3 times
Over last nn of Years  55    15  
Average1.026 1.018 
Median1.019 1.010 
Annualized1.026 1.018 
Product (times)4.033 1.310 

Std deviation4.15%2.16%


==========================================
I love my own study done in this post.

Monday, April 24, 2017

Keppel (BN4) and 2016 AGM

Draft: 4/21/2017, Price: S$6.56, Market cap: S$12b, PB: 1.08; Yield: 3%
Update: 4/25/2017, Source: 2016 AR


With my "First Reit" AGM experience and location of Suntec, I didn't have any issue to locate the meeting venue for Keppel's 2016 AGM. I got registered at counter and was passed a voting handheld device.
Many grey haired retirees were at the scene, most of them ethnic Chinese. It is quite surprised or pondering to me, since I didn't see other races, comparing with what I had seen at First Reit's AGM.

There ought to be 300+ shareholders at the site, a large ballroom was set up in Suntec for this purpose. It was said that this year's turn-up rate is already much lower than previous years' when shareholders turning in with long queue for getting their free buffet and their voucher; both 'goodies' were stopped this year. This change of practice was stated clearly in the 2016 letter to shareholders, nonetheless, the first two shareholders who grabbed the mic started whole sessions with still this topic, one of "Mr. Tan" who spoke with broken English, almost shouted his entire questions at Keppel Chairman Mr. Lee Boon Yang. Questions were asked by many shareholders, some of them well thought, some are simply being deployed to release shareholder's angers or grieves for the loss they might been suffered on the dropping share price. Quite interestingly, a few younger shareholders, in their 30~40s, came up with some relevant questions. Board members decided to take a 10% directorship fee cut, 8 non-executive directors took home S$2m fees this year. Other than "Mr. Tan" who created some 'spice' for an otherwise very dull/routine AGM, there is not much to write about. 

Now, let me take a look at mgmt and board directors' scorecard in 2016.

Keppel is a conglomerate, consists of 4 major business lines:
  • Offshore & Marine
  • Property (Keppel Land)
  • Infrastructure
  • Investment
or its strategy of "Multiple Earnings Streams" on "Urbanization".

It is ironic the cover of AR shows:
when its EVA decreased in a year by S$140m(Pg2) in 2016. A 3-year view shows revenue is steadily coming down..

This, coupled with mgmt's remarks on prolonged headwind faced by O&M sector, shows it still has a long way for Keppel to regain its glory.

From sector info in AR, here is the table of  each segment's business performance

There are also updates on Q1/2017 from the mgmt:
  • O&M order book S$3.5b (exclude Sete), it was 3.7b for year end of 2016
  • Property revenue stay stable, but profit boosted by divestment of two properties in Wuxi and Chengdu/China
  • Infrastructure, profit boosted by divestment of GE Keppel Energy Services.
  • Investment, profit boosted by sales of three pieces of land in Tianjin Eco-city project, and


Keppel's value can be summarized as aggregation of each segment's business value (one of the valuation methods).
  • O&M has an order book that lasts ~3 years, with 3b+ each year, with a barely break-even outcome at current Oil price level, what is the value of this segment, everyone's guess on Oil sector's future, difficult to value.
  • Property, constant residence flat sales, 2b revenue, with 11% growth(if last 3-y history record holds), if we use 13PE or 16EBITDA(from that of Capitaland), I value it at S$xxx.
  • Infrastructure business is stable, since it is more likely to get support from goverment, for power, gas, desalination plant works, I value it at S$xxx.
  • Investment, Keppel internal asset's unlocking vehicle, up to mgmt's plan & financial team's skill to show/release/hold profit, difficult to value.

Keppel is, in Chinese, a "昔日的贵族", strategy is "卖家产" to tide over.
===========================================
In addition, I feel 10% directorship fee cut, after reading the AR, is aligned with O&M segment, the HC has been reduced from 30k to 22k, and per HC cost reduction is just ~10%, so the directors are with the same percentage of cut.

However, one is directorship fee, the other is employee's lifeboat, can they be the same?

===========================================
Current yield, not attractive to me, with little light on O&M segment, the biggest contributor of Keppel in hisotry, thus My current plan: wait and part down my position where opportunities arise.

I originally intent to write more, but...


Wednesday, April 19, 2017

QAF (Q01)

Date: 4/19/2017, Price S$1.36, Market Cap: S$775m, PB:~1.45, Yield: 3+%
Source: QAF 2016 AR


QAF's most known brand to me is Gardenia bread. It focuses on:
Bakery  Manufacture and distribution of bread, confectionery and bakery products
Primary production  Production, processing and marketing of meat; feedmilling and sale of animal feeds and related ingredients
Trading and logistics  Trading and distribution of food and beverage products and provision for warehousing logistics for food items
Investments and others  Investment holding and other activities



 
A few things puzzled me after reading QAF's 2016 Annual Report, which I think QAF can improve in its report in the future:
  • Pg44, many different brands, why not consolidate into a few well known ones to leverage marketing power?

  • Pg 47, Independence of Mr. Didi Dawis, Chairman who is holding 8+% shares, is considered by Nominating committee as independent because of the % is below 10%, Really independent? (in comparison, it is considered significant shareholder for >5% in CN)
  • Pg 84, Advance payment to subsidiaries with no plan of repayment, why would group provision Adv. payment without a plan/expectation for return term, is that causing (at least the concern of) money to be siphoned out of the Group (if such subsidiary is not 100% owned)? The details of this Loan arrangement is surprisingly scarce.

  • Segment reporting, only until Note 41. then I found such info I'm long looking for, and it is not really format friendly. Seems QAF is trying to leave it less noticed in AR.

By sectors:


Too little cost details per sector.

By regions:




It is an Australia company?!?.

======================================
There is an one-time profit(divestment of  20% of  Gardenia Bakeries KL in 2016, and remaining 50% of joint-venture's fair value gain), if to normalize it by removing ~60m exceptional item, the PAT will be ~56m(or more, considering the tax impact); ROE 11~12%.

My Plan: to be updated.

Tuesday, April 18, 2017

Side effect of 2G shutdown in SG

This post is not about investment.

I have a dual-sim mobile phone: SIM1 for my SG number, SIM2 for my CN number; SIM2 is in roaming mode, anchored with 2G signal without data service, so that I could continue recv call and SMS from CN.

Due to recent 2G radio shutdown by Singapore's local operators, I got the following SMS yesterday from my CN mobile operator when I was on level 6 of a 5-star hotel at Orchard Road.

Quite amused, as I was no where close to Indonesia.

When Singtel, StarHub, M1 shut down their 2G network, has this use case been thought of?

Side effect: turning of 2G radio signal, renders SIM2 100% useless, and effectively turns it into a single SIM phone.


Only dual active SIM supported mobile is spared from this situation. For example: Huawei Ascend Mate 7, but too outdated a model.

My 'First' AGM experience

Date: 4/18/2017
Updated: 4/19/2017 (on REIT DPU composition)

There are two counters I'm holding have planned AGM today: CCT@10am and First Reit@9.30am, well, since it is my 'First' AGM, First REIT, by its very name, sounds better to me.

I hold First REIT only for less than a year, one of the reasons I like First REIT is its quarterly dividends.

Not being in SG for a decade, I was a bit disoriented when I walked out of Somerset MRT station and was lost in 313@Orchard shopping mall, the security lady pointed me the wrong way, I had to walk out of the mall to Orchard road under the hot sun to figure out my direction to the right venue.
Never attended any AGM  in China before, I'm totally new to the SG AGM and its procedure.

Registration is pretty easy, there are few clerks helping at the counter with IC presented to verify my number of units, the outgoing chairman Albert Saychuan Cheok shook hands with the earlier birds, including me:)

There are few interesting(and few very basic or strange) questions fired by unitholders during the Q&A session, Dr. Ronnie Tan Keh Poo(CEO & Deputy chairman) hold the mic answering majority of those, which I think it will be better if he let his fellow board directors the chances to answer some of the financial questions which he is not so acquainted with.

A show-up of 100+ shareholders, flocking to the adjacent ballroom for refreshment when Dr. Tan adjourned the meeting for counting of the votes on resolutions.

A few takeaways:
  • A "Greenfield" private hospital needs 3-4 years to reach Op CF positive
  • A hospital makes money when occupancy rate stays above 60%
  • First REIT issued a perceptual notes(MAS classified as security) of 5.625% interest, renewable every 5-year
  • Total debt S$400+m, gearing at 31+%(still some room to 45% MAS regulation)
  • First REIT's current average interest on bond is slightly below 4%
  • Growth strategy: acquire 1-2 hospital per annum from Sponsor (LK group)




One thing I don't really get from Dr. Tan's presentation (dare not to ask) is:
Is "-Capital" in DPU a return of unitholder's own investment? if so, it casts a concern to me, while I'd much prefer a 6.6% yield, I definitely wouldn't like it to be achieved in this manner.










Updates:
Read more DPU articles after STE highlight some of his comment, First REIT's dividend history, but no idea of % of 'capital' return from it.

-----------------------------------------------
DPU:
REIT's distribution comprises the following types:
i) Taxable income
ii) Tax-exempt income
iii) Capital distribution
iv) Other gains distribution


The Trustee and Manager will deduct income tax at the prevailing corporate tax rate (currently at 17%) from the distributions made to Unitholders that are made out of the taxable income of REIT. This applies unless, the beneficial owners are individuals or qualifying Unitholders. In such instances, the Trustee and Manager will make the distributions to such Unitholders without deducting any income tax.A qualifying Unitholder refers to:
  1. A company incorporated and tax resident in Singapore;
  2. A non-corporate Singapore constituted or registered entity (eg. registered charities, town councils, statutory boards, registered co-operative societies and registered trade unions);
  3. A Singapore branch of a company incorporated outside Singapore;
  4. An international organisation that is exempt from tax on such distributions by reason of an order made under the International Organisations (Immunities and Privileges) Act (Cap. 145).
  5. An agent bank or a Supplementary Retirement Scheme ("SRS") operator who act as nominee for individuals who have purchased Units in the Trust under the Central Provident Fund Investment Scheme or the SRS respectively; or
  6. A nominee who can demonstrate that the Units are held for beneficial owners who are individuals or who fall within the classes of Unitholders listed in (a) to (d) above.
Distributions made to foreign non-individual Unitholders will be subject to a final withholding tax rate of 10% (until 31 March 2020 unless otherwise stated).

The above tax ruling does not apply to gains from the sale of real properties. Such gains, if they are considered as trading gains, are assessable to tax on the Trust. Where the gains are capital gains, the Trust will not be assessed to tax and may distribute the capital gains to Unitholders without having to deduct tax at source.

Any distributions made by the Trust to Unitholders out of tax-exempt income and taxed income would be exempt from Singapore income tax in the hands of all Unitholders, regardless of their corporate or residence status.

Capital distribution is regarded as "return of capital" in the hands of the Unitholders for Singapore tax purposes and is not subject to Singapore income tax.

============================
P.S.
CCT's hardcopy AR doesn't even print a section on "Notice of AGM", what a strange thing; I have to find its date/timing via web search.

Tuesday, April 4, 2017

So do I buy or do I sell?

Data: TNP 2017-04-05


My SG friend told me, anything associated with "Raffles" is considered elite, and thus a premium is required.

I read today's TNP with amusement. The following recommendations are side-by-side on the same page. or Editor did it on purpose?

So do I buy or do I sell Raffles Medical Group?

(Copyright: TNP)

As a market participant, I'm constantly facing such getting such 'recommendation'. Well in this case, two brokerage houses can be counter parties in the same transaction.

Am I right to conclude at least one of them is wrong?

This news clip just reminds me that anytime there could be an investor holding the opposite view as mine, it doesn't mean I'm any smarter or closer to truth than he/she.

Monday, March 27, 2017

Recent Activities: Ascott Trust R, Kimly, Super Group

Draft: 3/28/2017
Source: readings and my trading activities

All these happened last week, I was too busy with my work to blog. Finally got some time to pen down my thoughts and recent activities after getting a day off.


 Ascott Trust Rights issue (CFIR)

It is rather difficult to find its trading code on SGX. Not even mentioned in its Offer document.

Here is trade summary of its Mar-20’s trade against its underline instrument, I captured during one night via an online trade platform which I seldom used.  I couldn’t do it with my POEMS account, not sure why.
CFIR
Last Done Price
0.159
Volume
5,068,500


Change
0.024
%Change
17.78%


High
0.162
Low
0.132


Others* : off-market transaction
Price
Trades
Volume
Sold to Buyer
Bought from Seller
*Other
0.132
1
3,400
3,400
0
0
0.133
32
751,300
625,300
126,000
0
0.134
86
709,400
481,700
219,800
7,900
0.135
73
581,600
388,900
157,500
35,200
0.136
49
411,000
249,100
106,100
55,800
0.137
35
231,900
20,200
145,900
65,800
0.138
16
111,600
36,000
58,800
16,800
0.139
13
74,500
5,100
57,400
12,000
0.14
9
70,200
5,000
65,200
0
0.141
1
4,300
4,300
0
0
0.142
32
80,900
28,100
52,800
0
0.143
8
7,900
1,100
6,800
0
0.144
6
1,400
0
1,400
0
0.145
5
60,200
0
60,200
0
0.147
6
60,000
0
60,000
0
0.148
11
43,900
29,100
12,300
2,500
0.149
2
4,600
1,400
0
3,200
0.15
21
113,900
75,800
38,100
0
0.151
6
51,400
0
7,000
44,400
0.152
8
97,600
40,300
57,300
0
0.153
13
89,900
60,900
25,700
3,300
0.154
12
190,700
83,000
107,700
0
0.155
4
59,800
1,400
0
58,400
0.156
19
160,300
125,400
34,900
0
0.157
12
273,200
73,200
200,000
0
0.158
55
357,600
260,500
81,900
15,200
0.159
38
253,400
186,000
64,100
3,300
0.16
22
105,000
56,000
22,400
26,600
0.161
22
42,600
27,000
15,600
0
0.162
5
65,000
0
65,000
0
TOTAL:
622
5,068,500
2,868,200
1,849,900
350,400







Avg Vol/Trade
 8,149




Avg Trade($)
$1,167.70




Avg Price($)
 0.143



(Don’t understand what is off-market transaction)

A68U
Last Done Price
1.08
Volume
8,536,800

Change
0.025
%Change
2.37%

High
1.09
Low
1.06

Price
Trades
Volume
Sold to Buyer
Bought from Seller
1.06
317
765,100
765,100
0
1.065
545
3,798,400
1,138,800
2,659,600
1.07
189
974,600
3,500
971,100
1.075
106
624,400
362,400
262,000
1.08
592
1,694,400
842,500
851,900
1.085
155
679,800
106,000
573,800
1.09
1
100
0
100
TOTAL:
1,905
8,536,800
3,218,300
5,318,500

With 481milion new units rights issued, considering Sponsor(Ascott) and few key investors committed to subscribe to the new Units, they are unlikely to trade Rights on the bourse, so the % of eligible rights owner changing hands is higher. A good observation over the following few days is, specially when Ascott announced its financial results, Rights issue could be up/down more volatile in a single trading day due to its leverage. For 1 right @~0.14-~0.15, and offer price of 0.919, it is ~6time leverage, meaning every 1% movement of Ascott, could bring 6 times of % change to its rights price. I believe a lot of traders are gonna like this: 17.78% in a day.


Kimly(1D0)
It is sizzling hot for this coffee shop counter. Not unexpected.
Here is its first day debut performance on Mar 20th, 2017.
Last Done Price
0.44
Volume
108,499,100


Change
-
%Change
-


High
0.565
Low
0.425


Others* : off-market transaction
Price
Trades
Volume
Sold to Buyer
Bought from Seller
*Other
0.425
33
777,000
777,000
0
0
0.43
91
2,664,900
2,231,400
433,500
0
0.435
247
5,028,100
2,306,700
2,721,400
0
0.44
216
4,175,400
2,350,000
1,825,400
0
0.445
230
5,964,900
2,795,600
3,169,300
0
0.45
571
10,228,800
5,263,200
4,884,100
81,500
0.455
446
8,613,900
3,541,700
5,072,200
0
0.46
284
6,122,100
2,669,800
3,452,300
0
0.465
124
2,150,900
1,362,300
788,600
0
0.47
162
3,438,800
1,128,600
2,310,200
0
0.475
127
3,118,300
1,178,300
1,940,000
0
0.48
155
3,315,500
2,016,300
1,299,200
0
0.485
152
2,910,300
1,467,300
1,379,500
63,500
0.49
99
1,678,800
691,500
884,100
103,200
0.495
29
1,220,700
761,100
459,600
0
0.5
100
2,151,600
2,006,500
145,100
0
0.505
147
3,028,400
1,838,100
1,190,300
0
0.51
107
2,059,500
550,300
1,509,200
0
0.515
77
2,324,900
1,840,100
484,800
0
0.52
68
1,957,600
754,200
1,203,400
0
0.525
64
1,257,600
1,207,000
50,600
0
0.53
74
1,407,400
542,700
864,700
0
0.535
130
2,619,100
1,961,000
658,100
0
0.54
125
2,083,200
1,276,400
499,100
307,700
0.545
200
4,960,000
3,529,600
1,430,400
0
0.55
555
17,871,300
15,118,600
2,707,900
44,800
0.555
110
3,271,300
1,182,300
1,866,000
223,000
0.56
72
1,919,200
473,400
1,076,200
369,600
0.565
1
179,600
0
179,600
0
TOTAL:
4,796
108,499,100
62,821,000
44,484,800
1,193,300







Avg Vol/Trade
 22,623




Avg Trade($)
$11,123.44




Avg Price($)
 0.492



In the end, I turned sideline to become an observer for the entire week, partly because I have no spare time during the day last week to check its price movement. So it is not my money when it hit a bottom price of $0.42~$0.43.

While I could claim that if I could have purchased Kimly at $0.42 and sold it $0.50, it is illusive from a back-view mirror point, unless I consider Kimly's value is more than that.


Super Group
I tendered my consent form for accepting Super Group’s voluntary acquisition proposal. The price offered is S$1.30 in cash by JDE(Jacobs Douwe Egberts BV) unconditionally, valued Super Group at S$1.45b. The delisting from SGX will take place if after JDE acquires more than 90% shares. Offer was planned btwn Mar 14th to Apr 11th, but extended to Apr 25th.(Is it because acquirer would like to make certain of collecting enough shares?)

Quote from its announcement:
As of 5pm yesterday, shares of Super Group that are owned, controlled or agreed to be acquired by Sapphire Investments stood at 872,408,213, representing 78.29% of Super Groups shares.

Super was traded at S$0.97/piece just before its trading halt on Oct 31st, 2016. I got to know this news when I was still in China, planning for my moving back to SG. 
The trading halt was lifted on Nov 3rd when the price of the counter shot up to 1.2x. After knowing that founding family and Mr. Sam Goi gave their irrevocable undertakings to accept the offer, and JDE paid more than $10m as a goodfaith deposit, I got in at 1.25~1.26.

Here was my thought:
If it took a year to complete the transaction, I’m going to get an annualized return of 3.2%, any date earlier will improve the RR. Downside is almost nil.
Fast forward, 5mth later:
Current calculation, assuming close at end of April: XIRR=~6.6%.

Nothing spectacular, but this is my money I could reliably estimate when I got in, very little dependency on the general market movement when looked back in Nov 2016.

An important lesson I learnt thru these number of years is: we don't play retrospective games in investment.