Marco Polo Marine: Still cheap.

I have not sold my shares in Marco Polo Marine as its price rose in recent weeks. In fact, I am looking to add to my long position if its share price should do a retracement to support.

OSK Research on 18 Jan 13:
Marco Polo Marine is enjoying 20% premia on its vessel charter rates in Indonesia, yielding a 50 - 60% gross margin on its Offshore Support Vessels (OSVs), due to the severe supply shortage in the country caused by the cabotage law. Target price: 61.0c.

Marco Polo Marine could be continually re-rated upwards over time.

For anyone patient enough, investing in Marco Polo Marine could be very rewarding. It is still under-appreciated and I hope it stays this way for a while more.

Drawing a Fibo fan, it is easy to see that the 20d MA is the immediate support and it also coincides with the 50% line. Share price could move higher from here, hit the 38.2% line before retracing to test the 61.8% line for support or it could move up from here in a fresh attempt to form a higher high. The resistance to watch is at 43c.

Related post:
Marco Polo Marine: Will buy more on pull back.

Good and cheap(er) pineapple tarts.

Chinese New Year is round the corner and I see pineapple tarts for sale everywhere! I have a severe weakness for pineapple tarts, you know.

I felt so tempted by the yummy looking tarts but they were all so expensive. $18 to $20 for a small container is quite normal. Nope! I refuse to give in to temptation. Actually, being turned off by the price tags made it easier to deny myself any gastronomical satisfaction.

Lucky for me, a friend recommended this brand which is being sold at NTUC Fairprice supermarkets.

450gm of yum yum!

Now, it is not the cheapest on offer at $7.80 for 450 gm but it looks quite good. I brought it home, left it in the kitchen and the next day my sister told me that my niece ate 6 pieces at one go. Verdict, it must be good!

Actually, it reminds me a bit of the ones sold at Bengawan Solo but with a smaller price tag.

Er, I am not related to the "Chewly" brand in any way and this is not a paid advertorial. Just sharing what I think is good value for money. Enjoy!
-------
P.S. I just looked at my Deals.com banner in the right sidebar. They have some special offers from more atas establishments for pineapple tarts. You might want to check these out. (9.50AM)

This sounds like good value for money:
CNY Cookies (Choice of any 3 Boxes)
– Only $20 instead of $54
- pineapple tarts ($7.80 for 1 box instead of $18)
For your convenience, here's the link: Pineapple Tarts.

Sabana REIT: An 8.14% yield even now!

Sabana REIT's unit price rose today as expected. It closed 3c higher per unit. Annualised, anyone who bought at $1.185 today would be looking at a distribution yield of 8.14%.

UOB KayHian has a BUY recommendation on the REIT and a target price of $1.30 which means a yield compression to 7.42%. Don't ask me how they determined the target price. I have no clue. However, their call could help push the unit price of the REIT higher if there are enough people who believe the recommendation.

What do I think?

Well, I wrote a piece not too long ago in response to a friend's question as to whether he should buy into Sabana REIT. Anyone who is thinking of buying into Sabana REIT or any other REIT for that matter might want to read that blog post: 5 steps to take in REIT investment.

What about my opinion on Sabana REIT in particular?

Well, although an 8.14% distribution yield is relatively high even when compared to AIMS AMP Capital Industrial REIT which currently yields some 6.4%, I would say that we should exercise caution as almost half of Sabana REIT's leases by gross revenue would be expiring this year.

Although I am optimistic that most, if not all, of the leases would most probably be renewed and with some positive rental reversions to boot, there is always a chance that things could go wrong. Mr. Market will be Mr. Market. Or am I wrong to say this?

For anyone who is attracted to the distribution yield and we can understand why this is so especially in the extremely low yield environment which we find ourselves, having a long position as a hedge even at the current price could be considered. However, bear in mind that we could see unit price retracing once the REIT goes XD in a few days from now.

You know yourself best (I hope). So, if seeing the unit price decline by a few percentage points would cause you anxiety, please think twice about buying now. Of course, there is no guarantee that a decline would take place but the probability is for this to happen than for price to go higher when the REIT goes XD.

For those who already have a long position in the REIT, buying when there is a retracement to support would seem like a more logical thing to do. Buying last month when unit price was at about $1.10 instead of now at $1.185 would give you an idea of what I mean.

Anyway, I will leave you with this technical picture and let's see if you can spot the signs which would suggest that caution on the part of bulls would be rather wise.

Have a good weekend.

Related posts:
1. Sabana REIT: 4Q 2012 DPU 2.41c.
2. 5 steps to take in REIT investment.

Sabana REIT: 4Q 2012 DPU 2.41c.

The management of Sabana REIT have once again exceeded their own forecast and they have announced a DPU of 2.41c for 4Q 2012.

The REIT goes XD on 23 Jan 13 and the income distribution is payable to unitholders on 28 Feb 2013.

Gearing: 37.6%

Interest cover ratio: 5.4x

NAV/unit: $1.07

All in financing cost: 4.3%

The numbers are all good except for the fact that 44.7% of leases by gross revenue are still expiring this year. There is no news on any progress made towards the renewal of these leases and that could explain Mr. Market's more cautious attitude towards this REIT.

Sabana REIT's distribution yield is currently the highest in the S-REIT universe. Annualised, we are looking at a distribution yield of some 8.38% based on the last closing price of $1.15 per unit.

Unless it is able to assure Mr. Market that all of the expiring leases in 2013 are being renewed and with positive rental reversions to boot, its unit price could find it harder to rise much higher.

In the meantime, however, we could see unit price moving higher as the REIT goes CD tomorrow.

See presentation slides: here.

Related post:
Sabana REIT: 3Q 2012 DPU 2.34c.

Bona fide invitation or phishing site?

I received this in my mailbox today. Highly suspicious!

Here, phishy, phishy, phishy!

Hello,

You were recently chosen to represent your professional community, deeming you eligible for the inclusion in the new 2013 Edition of Worldwide Registry for Business Professionals.

We are pleased to inform you that your candidacy was formally approved on October 1st, 2012. Congratulations!

Click here to verify your profile and accept the candidacy

The Publishing Committee selected you as a professional based not only upon your current standing, but focusing as well on criteria from executive and professional directories, associations, and trade journals. Given your background, the Director believes your profile makes a fitting addition to our publication.

There is no fee nor obligation to be listed. As we are working off of secondary sources, we must receive verification from you that your profile is accurate. After receiving verification, we will validate your registry listing within seven business days.

Once finalized, your listing will share prominent registry space with thousands of fellow accomplished individuals across the globe, each representing accomplishment within their own geographical area.

To verify your profile and accept the candidacy, please click here.

Please kindly note that our registration deadline for next year's publication is January 31st, 2013. To ensure you are included, we must receive your verification on or before this date.

On behalf of our Committee I salute your achievement and welcome you to our association.


Sincerely yours,

Robert C. Anderson
Vice-President, Publication Division
Worldwide Registry for Business Professionals

1833 Tennessee Avenue
Southfield, MI 48075
248-317-0041



So sweet! Must be bad for me!

I wonder what achievement are they referring to? Light on details and heavy on flattery. The Chinese have a saying for this. I can't quite remember the exact words. Help!

The email invitation doesn't even have my name on it! Oh, in case you think it was sent to my office email address, no, it was sent to my private email address. Duh.

Phishing is the act of attempting to acquire information such as usernames, passwords, and credit card details (and sometimes, indirectly, money) by masquerading as a trustworthy entity in an electronic communication. (Source: Wikipedia)

You might also be interested in:
ASSI received US$15m offer!

Staying optimistic about 2013.

Feeling worried about 2013? At least the Americans should be feeling optimistic. Well, that is according to Warren Buffet et. al. in this video clip:



At the end of the clip, everyone seemed to be saying the best time to buy stocks and to start a business is when the economy is in the doldrums. Words of wisdom.

If the American economy finds its feet again, logically, that would be good news for Asia.

We can only wait and see, I suppose, but if these people are right, the worst could be over. Then, the bull market could have legs!

Related post:
Why is Warren Buffet the world's greatest money maker?

AK's AEI for Changi Airport!

These photos were taken in Las Vegas:

Looks like a casino?

Where is this place? There is a clue in the photo...

Gasp! The airport?! Bingo!

Singapore Changi International Airport could learn from this and generate extra revenue or not?

We have to make sure that the jackpot machines are found in designated areas only with attendants on duty to prevent under 18s from entering and losing their pocket money, of course.

Instead of painting yellow boundary lines around such areas, let us use green paint (the color of money) to differentiate them from the smoking areas.

You know what is the fantastic thing about this idea? Our country's airport already looks so fantabulous! There is no need to spend gazillions like MBS and RWS did just to house these jackpot machines!

Make full use of existing floor space! S-REITs call it AEI (asset enhancement initiatives)! I like it!

If Singapore takes to this idea, I hope the authorities would credit me with the idea.

Paying me a token (7 figure) sum in appreciation wouldn't hurt either. ;p

See photos of my recent trip to Las Vegas: here.

Related post:
Is gambling a bad thing?

Yongnam: Looking forward to further weakness.

I have made an interesting observation with regards to Yongnam's share price.

Do you see it? Supports and resistance levels seem to be at 1.5c intervals. I am looking forward to further weakness so that I could buy more at 23.5c or even 22c per share.

Related post:
Yongnam: The ADR effect.

Wilmar: Conflicting signals and what they could mean.

Wilmar's share price broke resistance at $3.64.

Volume has been declining as price pushed higher. Remember, volume is the fuel that drives rallies. Without rising volume, rallies could eventually sputter and die out. However, Chaikin Money Flow shows that smart money is still flowing into the counter.

The conflicting signals here suggest that Wilmar could do a correction using time and we might not see any hefty price correction. In case a price correction should take place, immediate support is at $3.64 and a stronger support is at $3.53.

The rising 20dMA will intersect the declining 200dMA at some point in the near future to form a golden cross. This suggests that the bulls have the upper hand and that any retracement in share price is likely to attract much buying interest.

It is always dangerous to try looking into the future with technical analysis but let me see if I am clairvoyant. With a healthy dose of patience and with a bit of luck, we could see $4.44 tested in the next two or three months. There. My powers are spent.

Related post:
Wilmar: Testing resistance with strong momentum.

Saizen REIT: Still a buy?

There is no doubt that anyone who bought units of Saizen REIT about half a year ago when its warrants approached expiry would have done very well with some 45% capital gains (based on the current price of 18.8c per unit). We would also have collected a DPU of 0.63c which translates into a half year distribution yield of 4.85% if we had bought at 13c per unit.

I have been asked by quite a few people whether Saizen REIT is still a good buy. So, is it?

A street in Shinjuku at night.

With the JPY having declined by some 17% since the last time I looked at it, Saizen's NAV/unit is probably closer to 25c/unit now. The REIT is flushed with cash from the exercise of its warrants last year and its gearing level is relatively low.

The rapid decline in the value of the JPY is a bug bear for investors who are after regular income. All else being equal, DPU would decline in S$ terms and at the exchange rate today, a DPU of 1.05c per year is a fair estimate. At 18.8c per unit, it would mean a distribution yield of some 5.59%.

Saizen REIT has acquired more residential buildings and is likely to continue to do so with its much stronger balance sheet. The type of residential buildings in Japan that Saizen REIT invests in are mostly selling at below replacement cost. Translation: they are good value for money.

There is a definite growing interest in real estate in Japan. Private investors from Europe, USA and China have been active investors. So, Saizen REIT's portfolio could see its value increase over time as its buildings are revalued. This could cancel out the effect of a declining JPY as it pushes up the NAV of the REIT.

As for distribution income, I would expect the management of Saizen REIT to employ some form of hedging strategy to protect DPU in S$ terms. This is necessary as Mr. Abe, the new Japanese Prime Minister, is determined to cheapen the JPY and to herald in an inflation target of 2% per annum for the country.

Over time, I expect DPU in S$ terms to be relatively stable although it could take a hit from the declining JPY in the next payout in March. In fact, DPU could increase in the longer run as Saizen REIT:

1. Embarks on more acquisitions.
2. Continues with share buy backs.
3. Has loans which are amortising in nature.
4. Negotiates for lower interests on new loans.

Fundamentally, Saizen REIT is still very much undervalued. Would I, therefore, say it is still a buy? Well, theoretically, it is. However, I would caution that compared to 13c per unit, the margin of safety that investors like to have is very much diminished now.

Know what you are buying, know the worth of it and decide if you are comfortable with the asking price.

Related posts:
1. Saizen REIT: Daily share buy backs.
2. Saizen REIT: 2H FY2012.

Bears and Samsung washing machines.

Samsung was having its new ad for the EcoBubble range of washing machines shot in British Columbia out in the snow when a huge bear surprised the crew!

See what happened next: Huge Bear Surprises Crew on EcoBubble Photo Shoot in BC

A simple concept to better mental health.

I used to buy and collect comic books when I was a student, believing the shopkeeper that they make good investments. 

See? 

Another example of AK's foolishness as a youth.

After a year or so, my collection filled up two small boxes. 







Till today, I still have no idea how much they might be worth or how to dispose of them for a profit. 

They could be worth next to nothing and the only value they could have is one of entertainment whenever I take them out for a browse. 

An exotic "investment" indeed.

Of course, it is not as exotic as investing in fine vintage wines, for example. 

That is big money and I have read horror stories of people losing large sums of money in wine investments. 






Anyway, I digress but if you should be interested, here is a story I read before:

"...historically fraudsters have capitalised on people's ignorance of the wine market to offer substandard products or – because of the delay between ordering and delivery – simply taken money without securing the product in return."
Source: Investors lose millions in fine wine schemes.





One of the things I have been doing more is visiting the public library near my parents' home. 

I really like the comics section although it is rather small. 

Although the selection is more limited and the comics are not "fresh", I have been out of touch for more than two decades and whatever is available is fresh enough for me.

Here is a pic of a comic book I borrowed recently:

In it, the wizard, Alben, said:

"Nothing really belongs to us... Things come and go... Just like life itself which lasts a mere moment, disappears and is born again..."

Being more inclined towards Buddhism, this resonates with me. 





Reminding ourselves that nothing is permanent, we will love people who love us more while becoming more detached to everything else.

Being more conscious of impermanence could improve our mental health.

Learn not to be too affected by the price movements in the stock market, for example. (wink)




Related posts:
1. Three point turn.
2. Counting our blessings.
3. Be comfortable with being invested.

Go on a journey to unravel what it is that makes us feel good about ourselves, our lives and our relationships.

Discover the conjunction between the classical teachings of Buddhism and the latest findings from today's sociologists, psychologists and neuroscientists. 

Discover who we are and what really makes us happy.

Get your personal copy:
Buddhism and the Science of Happiness - A Personal Exploration of Buddhism in Today's World

A letter from a 24-year-old fresh grad.

About a month ago, I published a very bracing email from a 66 year old retiree. The email affirmed that I have done good with my blogging efforts and I felt very much encouraged.

Of course, there are people, including eminent bloggers, who have been quite outspoken that my emphasis on investing in S-REITs in the last few years is only suitable for people who are older because they probably require a consistent income stream as they near or are in retirement.

My own stand has been and still is that what we invest in depends on our motivations for being invested. There is certainly nothing wrong with the young investing for income if that should be their inclination.

Today, I received an email from a 24 year old who has freshly graduated from the university.  He gave permission for me to publish his email which shows how pleased he is to be investing for income.

Hi Ak,

 

I've been a really avid fan of your site. I'm a 24-yr old fresh grad, who started investing 3 years ago.

 

When i first started, I read your blog with much interest, but great apprehension, because I didn't know much about investing early on.

 

After building a core portfolio, centering on S-Reits, my investing journey has been nothing but awesome.

 

First REIT is my best performing investment, and I would not have even bothered to look at it, if it weren't for your perspective.

 

In fact, my 3 year annualised gains for my entire portfolio is 22.67% per year! (In most part, thanks to you!)

 

So from the bottom of my heart, I sincerely thank you for all the good work that you have done, and for all the time and effort for crafting such good analysis and entries. :)

Sincerely,

ZZ

 

There isn't a holy book that everyone has to follow to invest in the stock market as far as I am concerned. There is more than one road to Rome and because others walk a different path from us does not mean that they are walking through rubbish.

 

There is room for diversity in this world and if a road takes us to where we want to go, it is in the right direction. Of course, we must first be clear on where we want to go and that is something we have to decide for ourselves.

 

Related posts:

1. A letter from a 66-year-old retiree.

2. Wealth creation in the stock market.

3. Market gyrations, my portfolio and a sabbatical.

 

Achieving $1m in retirement funds: Epilogue.

This is the final blog post which should be read together with the two I wrote this weekend to encourage young people to save and to invest in the stock market.

The aim of  "Retiring a millionaire is not a dream!" is to shake all negativity from the mindsets of the young who think that it is impossible for them to have S$1 million in cash (without counting the money in their CPF or selling their HDB flats) when they retire at age 65 in the distant future.



With the help of numbers provided by The Business Times, the companion blog post "What is S$1 million dollars at retirement? Peanuts?" aims to demonstrate how $1 million is enough for retirement expenses, given certain assumptions.

In this final blog post which would complete the trilogy of blogs, I am going to tell you that there is no need to constantly invest to achieve a 5% annual return on your investments. Then, why did I bother to say that in the first instance?

Simply because it was the easiest way to illustrate how being disciplined savers who invest our savings, we could make reality out of a dream.

You know what is the best way to make money from the stock market?

It is to buy at the depths of a bear market when even the best blue chips are bombed out. During the GFC, I bought many more units of First REIT at 42c and LMIR at 18.5c. During the deep correction at the end of 2011, I bought more AIMS AMP Capital Industrial REIT at 95c. There are many such examples.

However, without any money put aside, there is no way we would be able to take advantage of opportunities to buy on the cheap!

Indeed, we might not even have to wait for a bear market to buy bombed out stocks as mispricing by Mr. Market could happen anytime and my large purchase of units of Saizen REIT at under 13c per unit middle of last year is a good example.

So, once we have savings put aside for investment, we should hedge by investing some of it but we should not invest all of it because we must always have a war chest ready to take advantage of any mispricings by Mr. Market.

We want to buy low and sell high. This means to sell stocks which are overvalued and to buy stocks which are undervalued. The former usually takes place in times of great optimism while the latter usually happens in times of great pessimism. Doing this will make us quite a bit of money from the market. Add to this our monthly savings and any dividends received, we would do quite well.

Making financial projections with average rates of return is all fine and good in theory but, in practice, making money from the stock market requires a little more diligence on our part but it is definitely not rocket science.

With this, we end this weekend's trilogy of blog posts which hopefully have demonstrated to the 25 year old reader whose email started all of this that his scepticism could be put to rest. The ball is now in his court.

Related posts:
1. Retiring a millionaire is not a dream.
2. What is S$1 million at retirement? Peanuts?

Marco Polo Marine: Will buy more on pull back.

Marco Polo Marine is a turnaround story which is simply at the right place and at the right time. Of course, they have also positioned themselves to ride the next wave up. In the shorter term, however, we could see some weakness in its share price.

A retracement could see share price declining to the top of the recent base formation at 37c, give or take 0.5c, where we should see very strong buying interest. The formation of a white candlestick with a very long upper wick on the back of heavily increased volume in the last week suggests that a pull back is a strong possibility.

Weekly chart.

I would definitely buy more if support at 37c should be tested as the reaction to Marco Polo Marine's much improved numbers including the listing of its subsidiary in Jakarta seemed relatively muted. Marco Polo Marine's valuation is inexpensive compared to peers even at the high of 43c a share last week.

When Marco Polo Marine's numbers continue to improve and good news continue to be announced, more market participants will become believers and buy the stock. That is when we would see a truly breathtaking winning streak.

Related post:
Marco Polo Marine: Longer term buy on weakness.

CapitaMalls Asia: Buy more at $1.93.

Thanks to accumulation at much lower prices, my long position in CapitaMalls Asia is firmly in the black. The question I am faced with now is whether to sell.

Breaking out of a double bottom formation almost one year ago, the share price of CapitaMalls Asia has been climbing a wall of worries. On the weekly chart, the uptrend is clear to see. Could this continue? It could, of course.

Weekly chart.

However, with the MACD histograms not forming higher highs, we could see a pulling back in share price. When? That is harder to say.

This possibly impending weakness is, however, likely to be short lived as the CMF shows smart money pouring back into the stock. Hence, a pull back to support is likely to see strong buying interest.

Drawing a trendline to connect various lows, it is easy to see that the 20w MA is the support to watch. Using Fibo lines, we get a rough idea of where is the support in dollar terms in case a retracement should take place. In this case? $1.93 seems likely.

Remember, as always, that TA is about probability and could help to optimise returns but there is no certainty.

What is S$1 million at retirement? Peanuts?

In my last blog post, I made certain assumptions which would see a 25 year old saving and investing S$650 a month today having S$1,000,000 by the age of 65. As the blog's purpose was to show that retiring as a millionaire is not a dream, I only had to show that it is indeed achievable.

The next question which is of relevance is whether we can retire with S$1 million in cash in Singapore? This led me to search through my stack of The Business Times because I remember reading a recent article on this.

Cai Haoxiang wrote a piece on 7 January 2013 in The Business Times on the topic. In the article, he made certain projections as to what an average household's expenses on a monthly basis could look like in 2042. The projections were made using the Household Expenditure Survey 2007-2008 from the Department of Statistics as a base.

It was revealed that from 1997-1998, an average HDB household's expenses was S$2,681 and 10 years later in 2007-2008, it was S$3,138 or an increase of 17%. By 2042, assuming a core inflation of 2%, an average HDB household's monthly expenses would become S$6,400.

So, over a 34 years period, expenses could increase by some 104%. Let us assume that expenses would increase another 17% over another 10 years like it did from 1997/98 to 2007/08 and we would see monthly expenses for an average HDB household at S$7,488 a month.

S$1 million in the bank would last an individual 133 months or roughly 11 years assuming that the banks did not pay interest on savings and that there would be no inflation. Of course, these assumptions are unrealistic but we get an idea of how things might look like then. So, S$1 million would only last 11 years from 2052?

Let us not be too pessimistic. Remember that the survey is about average HDB households. What is an "average" household like?

In the article, it was mentioned that an average household would mean one with 3 to 4 members. However, it is unlikely that by the time we retire at age 65, we would still be supporting children or our parents. OK, with the former, it is possible if we became parents in our 50s and with the latter, it is also possible if our parents had us when they were very young or are of hardy stock.

However, these would be more exceptions than the norm, I would imagine. As both husband and wife retire in their 60s, it would be more realistic to imagine an average household with only 2 members, therefore. Then, their average monthly expenses would be much lower than a household with 3 or 4 members. Sounds less scary now, doesn't it?

Less scary it might sound but is S$1 million still enough for a couple of retirees in their 60s to live off in Singapore? Enough is really subjective, isn't it? So many questions need to be asked but with a household size of 2 average elderly folks, it could actually be enough.

Remember how I made the assumption of a 5% return on investments in my last blog post? If the 25 year old reader should stay invested, by the time he is retired at age 65, his S$1 million portfolio would be generating S$50,000 annually. Instead of re-investing the gains, it would be time to use it for his expenses in his golden years.

Now, let us not be chauvinistic. Let us assume that the future wife of the 25 year old reader should do the same thing he should be doing, setting aside S$650 a month in savings for investment and at the same rate of return, she could retire a millionairess! At age 65, her portfolio would also be generating S$50,000 annually assuming a 5% annual return.

Pause and imagine that. Smiling?

Remember that the journey is the hardest at the beginning. I would even describe the early years as being rather miserable. So, every time you are tempted to stray, every time you are thinking of giving up, come back and read these blog posts.

We don't have to be very rich when we retire but we should have enough and we should be happy.

Related posts:
1. Retiring a millionaire is not a dream.
2. To be a happy peasant.