Overdose: The Next Financial Crisis

Invest in REITS

What is REITS?

Real Estate Investment Trusts (REITs) - pronounced as R-I-T-S, not R-A-I-D-S, are trusts that are set up specifically to invest in real estates. So, you're actually investing in a property management listed company, so to speak. REITs invest their capital into various types of real estates.

Type of REITS

The REITs in Singapore can be broadly classified into the following types [1]:

1. Retail REITs - CapitaMall Trust, Fraser Centerpoint Trust, LippoMall (Indonesia Only)
2. Residential REITs - Saizen REIT (Japan Only)
3. Hospitality REITs - Ascott REIT, CDL Hospitality Trust
4. Healthcare REITs - Parkway Life REIT, First REIT
5. Office REITs - Frasers Commercial Trust, CapitaCommercial Trust, Keppel REIT
6. Industrial REITs - Ascendas REITs, Cache Logistics Trust, Cambridge Industrial Trust, Mapletree Logistics Trust, Mapletree Industrial Trust, Sabana REIT.
7. Hybrid REITs - Mapletree Commercial Trust, Starhill REIT, Suntec REIT

In summary, ranking by various qualities [1]:

• Defensiveness (From Highest to Lowest) – Healthcare, Retail, Retail/Office Hybrid, Industrial, Office, Residential, Hospitality
• Dividend Yields (From Highest to Lowest) – Hospitality, Residential, Office, Industrial, Retail/Office Hybrid, Retail, Healthcar
• Weighted Average Lease Expiry (WALE) (From Highest to Lowest) – Healthcare, Industrial, Retail, Retail/Office Hybrid, Office, Residential, Hospitality

Why invest in REITS? [2]

Great way to diversify your portfolio.

REITs solely invest in real estates and make money from leases and other forms of rental income. Such income has a very low co-relation with economic cycles as compared to other industries. Thus, this is an alternative vehicle to build a source of relatively stable, regular income. A must for long term investors to diversify their investment portfolios.

Fixed income and capital appreciation.

The income earned from rent and leasing out of real estate assets is passed on to investors through dividends. Typical dividend yield for Malaysia and Singapore REITs counters are in the 6%-8% range on average. Moreover, any increase in the value of a REIT’s real estate investment portfolio or increase in distribution per unit (DPU) leads to an appreciation in the market value of the REIT. Stable.

Convenient way of investing in real estate

1. Lower cost & Diversification: It will cost a bomb for retail investors to invest in real estates individually, and by doing so, it's like putting all your eggs in one basket. Via REITs, one is spoilt for the variety of real estates he/she can invest in at a lower cost.
2. Liquidity: One can invest in REITs and pull out anytime by selling off their units in the market fast. Selling off a property takes months to complete.
3. Professional Management: REITs have professional management teams to manage, maintain and upgrade the real estates, and also to collect rental incomes. Investors do not need to worry about late payments, plumbing problems...etc, and all the paperwork involved. 

How to invest in REITs?

Some pointers in assessing REITs [3]:

1. Competent management.
2. Ever increasing dividend payout.
3. It should be actively acquiring new assets or upgrading their existing assets.
4. The properties under management must be located at strategic location.
5. It should have sufficient and variety of tenants.
6. Must have promising long-term tenancies.

[1] Calvin Yeo, Making Passive Income, http://www.investinpassiveincome.com/

[2] Stock Investing 101, "3 Reasons Why You Should Invest In REITs", http://www.stockmarketinvesting101.com

[3] Personal Finance Money Tip, "How to invest in REITs", http://kclau.com

 

Disclaimer: This is a self-learning article for the author and the references are cited accordingly. This is not an invitation to buy or sell. I do not guarantee the accuracy or validity of the information above. Do your own due diligence before investing and invest at your own risk.

Oil Palm

Excerpts from some of Mr Koon Yew Yin posts on kclau.com:

I consider the safest shares to invest are undervalued oil palm shares. The reasons are:-

1. The production cost for CPO is about Rm 1,300 per ton and the average selling price has been more than double the production cost in the last 10 years or more. The average CPO price for 2011 is more than Rm 3,000 per ton. Which business can offer such big profit margins?
2. The demand and profit are sustainable due to population increase. Moreover, both China and India who are our buyers have been improving their economy. The financial problem in Eurozone and US has little or no effect on our palm oil market.
3. A palm tree will start fruiting after 3 years. It will continue to bear more fruits until it is about 16 years old after that age it will begin to bear less fruits. Only after about 22 years a palm tree needs replanting.
4. The land always appreciates in value.
5. There is good profit growth prospect and sustainable profit

If you look at the first quarter results of plantation stocks, you will notice that almost all of them have made more profit than the corresponding quarter of last year. Moreover, you can see that the average selling price of CPO was around Rm 2,600 per ton and average CPO price has been above Rm 3,000 for this year. You can also see in the Star daily that the CPO price for the next few months is above Rm 3,100 per ton. Basing on these information you can safely assume that almost all plantation companies will make more profit this year than last year.

The above was in June/July 2011, and recently the CPO future has been trading at close to RM3,500 level...hmm...better late than never.

 

 

Some of the plantation stocks to lookout for:

• KLK - M'sia
• TWSPLNT - M'sia
• BKAWAN - M'sia
• TDM - M'sia
• IOICORP - M'sia
• Wilmar Int - SP
• Golden Agri - SP
• Mewah Int - SP
• First Resource - SP
• Indofood Agri - SP
• Bumitama Agri - SP (Recently listed on SGX)

Disclaimer: This is not an invitation to buy or sell. I do not guarantee the accuracy or validity of the information above. Do your own due diligence before investing and invest at your own risk.

Invest with Fundsupermart. It's easy!

Fundsupermart has revolutionize the unit trust investment industry. Now you can easily sign up and register an account and start investing.

No more agent service fee and you can manage your portfolio anytime, anywhere!

Here's a good introductory to Fundsupermart by KCLau, plus the guide to register an account and initiate regular savings plan!

Happy investing!

ps: Fundsupermart site

Kaya Butter Crackers

I still remember the times San Yi (3rd maternal aunt) prepared those delicious crackers when we were young. She would first spread a layer of Planta's sinful margerine butter on the crackers, then bring those crackers to Grandpa's grocery shop, take a pinch of sugar and sprinkle on the buttered surface. Within seconds, we would each run off with a piece and happily nibble away. All those joy cost almost nothing but a few Malaysian cents.

Fast forward to today, four pieces of kaya butter crackers cost a staggering S$1.60 (~RM3.90)!

This my friend, is a simple lesson to Inflation :p

Placenta Juice

I have read about Cordlife few weeks or months ago and immediately develop an affection for this company. Why?

• This guy controls 62% of Singapore's market share.
• Has more than 35,000 units of cord blood banked in Singapore and Hong Kong.
• There are only 7 authorised cord blood banks in China and the country only allows each province to have a single licensed cord blood bank. And this guy owns a 10% stake in a PRC cord blood bank in Guangdong, the only foreign entity to have an equity stake in a Chinese cord blood bank.
• Most probably I will store my kids' cord blood with them someday.

This going-to-be new kid on the block public offer opens today and closes at noon on March 27, and will commence trading on SGX mainboard on March 29. Few points to note:

• Intend to raise S$26.3mil net proceeds from its IPO, issue 60mil shares @ S$0.495: 58mil placement/2mil public.
• June year end, will pay out at least 25% of FY2011's S$8.5mil NP as dividend.

Use of proceeds as follows:

• S$16.6mil to expand market in Singapore and Hong Kong and fund acquisition in Indonesia, India and the Philipines.
• S$3mil to renovate its HQ at Yishun to house 650,000 cord blood units, more than 10 times of its current capacity.
• The rest for working cap, i reckon.

I wouldn't want to blab about the wonders of cord blood here as you can roll over to wikipedia or google it effortlessly. I am more interested in the maths:
Say I buy Cordlife's share at 49.5 cents now and somewhere in October it pays out the S$2.13mil dividend, so per share I will be receiving 3.55 cents, which is a pleasing 7.17% DY without considering its upsides. And if this guy sort of plunges after listing, I will be ready to pump in my reserve to buy up more - this will increase the DY.

Think I better head down to one of the POSB ATMs today to apply for some shares and keep my fingers crossed.

Disclaimer: This is not an invitation to buy or sell. I do not guarantee the accuracy or validity of the information above. Do your own due diligence before investing and invest at your own risk.

World's Greatest Money Maker, Warren Buffett - BBC Documentary - 1 of 6

The Ultimatum as Promised

For those who has been following my blog all along, you'd know that it has been a rocky boat ride for me to use Maybank's online trading system.

Every now and then, I would have trouble logging into the system or loading the page due to site maintenance (during active trading hours) or server problems, again and again. I had tried numerous ways to feedback and hope that the issue will cease once and for all, emails, call ins... To my dismay, no one heed my call.

And so, before my blood pressure shoots up beyond the uncontrollable threshold. I think, I better pull the plug. Today, I transferred all my equities to Public Bank.

Bye bye, Maybank! Without me, you still have the "67%" to support you. So, please keep on with the lackadaisical attitude. They're lovin it!

ps: Oh, did I mentioned that when I wanted to transfer my money today, it took me more than an hour when I am the only one doing telegraphic transfer at the Maybank's Taman Universiti branch? And I had to fill up 4 forms, because I cannot transfer more than X grand in one form. Good job, Maybank!

I am sorry...

To those speculators and investors lurking out there, waiting for me to take up the shares that you all eagerly wanted to sell...

I am sorry.

To those people out there waiting to buy the blue chips from my portfolio...

I am sorry.

Because, once again, Maybank has done it again. I'd been stucked at this stupid page multiple times today. No matter what I tried, the trading page just wouldn't load.

Who am I to blame but my stupidity to stay with this horrible system?

Wait for my ultimatum, you SOB. 1Malaysia Boleh!

One Ire Maybank Customer

meow...purr

Since I am on it, let's strike the iron while it's still hot.

Malaysian Standard of Customer Service

Was trying to take position this morning at 8.30am, half an hour before the market commences. So as usual, I intend to access Maybank2u.com but the page took a long time to connect and couldn't load. I closed the tab, open another one, still can't load the page. I restarted my lappie, opened up Explorer, made another attempt and the problem persist. Well, normally I would shrugged it off and wait for an hour later an retry, but I had a very important deal to execute and I need to do it soonest possible. So I called up the securities branch in JB.

Operator: Good morning, Maybank securities.
Me: Hi, I can't access the Maybank2u website. Is there any problem on your end?

Operator: You can try to logout and re-login.
Me: Sorry, I can't access the Maybank2u website, can't even login.

Operator: Ok, is your password correct?
Me: No, I can't even load the page. The page is blank. It's taking forever to connect, so I was thinking if there is any problem with the server on your end.

Operator: Oh. Like that. I think no problem. (Pause for 5 seconds.)
Me: You sure?

Operator: Yes, because other customers also didn't complain.
Me: Are you accessing the website in the office now? (So I am not customer lar? Never mind, put on my blue hat, trying to debug the situation.)

Operator: Yes. (Lying.)
Me: And you can login? And access to the online stock trading interface?

Operator: Yes. (Lying again.)
Me: (Starting to think it's my connection problem.) Then I have a problem.

Operator: Ya, because no other customer call in to complain about the website this morning.
Me: Ok, can you direct me to the technical support, probably they can help me troubleshoot my problem.

Operator: There's no technical support.
Me: (WTF?) You have no IT engineers to assist when there is a glitch with the system? What if other customers have the same problem?

Operator: Oh, there is no customer calling in on this issue. You can wait and try again later.
Me: Ok, I will try again and see. I will call back if the problem persist.

Minutes later, I tried to access the page and the HTTP 500 Internal Server Error showed up. Ok, not my problem. So I called in again.

Operator: Good morning, Maybank securities.
Me: Hi, I called in earlier. I retry and it's an internal server error.

Operator: Yes, we have a problem with our server.
Me: So how? Cannot trade today?

Operator: You want to check price is it? What counter?
Me: No, I want to execute my trade!

Operator: Oh, now cannot-lah.
Me: ......Salam 1Malaysia.

No wonder in Singapore, when the media report on the daily performance of the Asian bourses, normally they will leave out KLSE. Why? How can your indices be influential to the financial realm when your system is so inefficient and inconvenient to the investors?

Not sure if this is true back in 2007, if you deal with Maybank, you might want to check it out.

The inefficiency and the lacklustre attitude of the authority is one thing, what irks me is that how the public is accepting all these with apathy. It is similar to what the rakyat has been doing for 5 decades, swallowing the bitter pill in silence, granting the government to exploit us all this while and for many more years to come.

On the newspapers every now and then, I read about students from Chinese schools going to the public soliciting donations for their new classrooms, canteens, hostels, school hall, computer laboratories...etc. And I wondered why students from the Sekolah Kebangsaan never need to ask for donations barefacedly?

I read about Tenaga giving out green packets to the bumiputra orphans during Hari Raya and can't help but wonder when will Petronas give out ang pao to the Chinese during Chinese New Year or any other GLCs to dish out free gifts or muruku to the Indians?

The JPA scholarship issue, universities entry quota issue, hike in expressway toll...etc are bound to haunt us continuously, indefinitely. Occasionally, there will be some startling scandals like the Altantuya's murder, Lingam's tainted judiciary case, PKFZ defalcation, Teoh Beng Hock's death. But worry not, because all these cases will remain unsolved. At times, some jokers will pull out the keris, kiss and wield the weapon in some very important meetings, crying out loud for Malay lordship, some would use a cow's decapitated head as a soccer ball in order to disgust the Indians. Worry not, as no one will be held responsible or punished.

Because after all the ruckuses, we are still 1BigFamily. We are 1Malaysia. Because before Najib popularizes 1Malaysia, I thought we have multiple Malaysias. Thanks for the consistent reminder over the media with "Salam 1Malaysia", dude! But under the 1Malaysia exoderm, I don't really think that the flesh and blood will bond well if the dna is genetically handicapped. Change will surely come, but don't forget that evolution takes time and each and every seconds it takes is at the rakyat's expense.

So why not "bend the bamboo while it's still a shoot", albeit the bamboo is now mature and the culm has hardened. Nevertheless, it's better late than never, don't you think?

Dare to Challenge!

I was among the first few hundreds to receive a copy of "The SIAS Story". Didn't really pay any attention to the slideshow when the emcee introduced the book and by looking at the cover, I reckon that I would not even finish the first chapter before I chuck the book somewhere which will be eventually buried under the newspapers pile and being thrown away when I get rid of the old newspapers. Well, you really can't judge a book by its cover.

As I was on my journey back from City Hall, I started to read the book due to boredom and was immediately hooked up by "The CLOB saga".

Financial ethics damned, Malaysia's outspoken Prime Minister Dr Mahathir Mohamad launched an offensive to freeze the CLOB (Central Limit Order Book) shares of foreign equity investors. (All in all, a hefty US$4.47 billion in value.)

If you remembered back in 1997, how the ringgit was hit badly when Malaysia was facing the brunt of the Asian economic crisis and how wise our premier then was to peg the ringgit against the US dollar. The CLOB saga is something which was initiated by Mahathir then, victimizing Singaporean retail investors, which led to the establishment of the Securities Investors Association (Singapore), a body which unified the retail investors

Tun Daim, then Malaysian Finance Minister, urged CLOB shareholders to either accept Effective Capital's offer(Effective Capital offered to pick up all the shares at an atrocious 50% discount.) or their shares would be transferred to the Malaysian Government. His threat was echoed by Dr Mahathir, who irked the Singapore investors with his impatient demands.

"Obviously, the threat was designed to engineer a hasty settlement on their terms," retorted David Gerald. "I was not impressed."

This is a story of how a group of resolute small investors joined forces and took on the challenge to free the frozen shares from the Malaysian government and subsequently became the largest organized investor lobby group in Asia actively promoting investor education, corporate transparency and corporate governance.

I am moving on to the second chapter. You might want to grab a copy today!

Warren Buffett of Malaysia

30 年股票投资心得 - 冷眼

This is one very good book in equity investment for retail investors written by the ex-chief editor of Nanyang Siang Pau. The Perak born retiree has been researching and analyzing equities for more than 30 years and is thoroughly familiar with more than 900 listed companies on Bursa. He was also once a financial journalist for Nanyang Siang Pau back in the 1960s and had published numerous financial article write ups with the pseudonym - Cold Eyes (冷眼).

This book was published in 2004, and I got a copy in 2005, was very fortunate that my buddy recommended this book. And I am really glad that I bought it as in a way or another, this book has saved my ass on several occasions. I finish reading the book back in 2005, but it is only these recent 2 years that I started to apply the investment strategies as advocated. As not to give you any false expectation, this guy is pro-WB, yeah, so we are talking about fundamental or intrinsic value investing. And to be frank, the tips are really helpful.

It is amazing how Cold Eyes is able to condense more than 3 decades of experience and technical know how of research-analyze-evaluate-invest into a 350-page investment bible, and in a comprehensive and apprehensive way. It is really easy to read and one can easily finish the entire text in one day, though putting the teachings into action is a different story. Personally, I think reading this book is so much better than reading all the books on Warren Buffett on investment, anyway, all those books on the shelfs about WB are overrated as they are not written by WB himself.

So, I would recommend this book to newbies in equity investment as well as more advanced retail investors. Basically, do your homework and crunch the numbers, it really helps. There is really no short cut to reap a profit from the stock market. Good luck.

Money as Debt

Paul Grignon's MaD illustrated the banking system aptly and gives us an insight into how money is created - out of thin air.

I am waiting...

Itching badly...need to be patient.

Crouching...

As AMANAH SAHAM 1MALAYSIA will be launched on August 5, 2009, offer period for 30 days.

"Fifty per cent of units have been reserved for Bumiputeras during the offer period, while the quotas for Chinese, Indians and others have been fixed at 30, 15 and 5 respectively."

So you can choose to go line up at the bank and buy the units or you can start to hoard some UMNO-backed equities, my friend. I am sure there will be a rally in September.

Oh no!

Burnt my fingers today...the "cut loss" muscle is still not strong enough:p

股海无涯，回头是岸。

Lucky lucky

A switch of hand within 2 days and I am 600 bucks richer this month. Too bad, this can't be replicated everyday. From my 2 cents, the trick is concentrated counters, punch in with volume and a couple of ticks later you can withdraw the net and count your fishes.

And my portfolio return is now 10.2993%:) Sort of know why most unit trust funds would require 3 years to be able to generate capital return. Time to go back to the numbers crunching and screen out some quality companies for my portfolio.

Adios!

Finally...I am in green zone

After months of dollar-cost averaging, finally today I am seeing some gain.

0.809% profit is better than nothing:)

Market is going crazy

Hold...hold...