7 CapitaLand Giant REITs for Dividend (CMT + CCT = CICT) (双剑合璧)

Posted on April 29, 2020 Written by
CapitaLand Giant REITs for Dividend

CapitaLand is Temasek property giant stock, having 2 giant Singapore REITs: CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT). Many Singapore investors like REITs for passive income generation through quarterly dividend payment. After the announcement of merging, both REITs suffer about 40% price correction during global stock crisis with Coronavirus fear, dividend yields are more than 6%, attractive for long term investors.

Some potential REIT investors would like to know should they invest in CMT or CCT before the merging, which one has more potential, or should they wait until the merging of 2 REITs into CapitaLand Integrated Commercial Trust (CICT), the largest Singapore REIT by June 2020.

Read the article further to find out the critical answers for CMT and CCT, not learning only 2 REITs but all 7 stocks related to parent stock CapitaLand, including 4 REITs and trusts in the same group: Ascendas REIT, Ascott Residence Trust, Ascendas India Trust and CapitaLand Retail China Trust.

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CapitaLand is the largest property developer in Asia (after merging with Ascendas and Singbridge), becoming a key Temasek property investment portfolio.  CapitaLand has total of 6 REITs / Business Trust in Singapore:

1) CapitaLand (SGX: C31) – Singapore Property Giant Stock

2) CapitaLand Mall Trust, CMT (SGX: C38U) – Retail REIT Giant Dividend Stock

3) CapitaLand Commercial Trust, CCT (SGX: C61U) – Office REIT Giant Dividend Stock

4) Ascendas REIT (SGX: A17U) – Industrial REIT Giant Dividend Stock

5) Ascott Residence Trust (SGX: HMN) – Hospitality REIT Dividend Stock

6) Ascendas India Trust (SGX: CY6U) – Business Trust Dividend Stock

7) CapitaLand Retail China Trust (SGX: AU8U) – Retail REIT Dividend Stock

In summary, all 7 CapitaLand group of stocks have reasonable strong business fundamental, all 6 REITs / trusts may be considered for dividend investing but only 3 of them are giant REITs stocks (based on Dr Tee giant criteria): CMT, CCT and Ascendas REIT. Sibling stocks of Ascott Residence Trust, Ascendas India Trust and CapitaLand Retail China Trust are relatively weaker, more suitable for pure dividend investing but subject to cyclic stock market risk (eg. capital loss during global stock crisis with limited long term growth). Parent stock, Capitaland, is a blue chip stock, behaving as if a fund with all the subsidiary stocks, more suitable for low capital investor who needs diversification.

There are 30 STI index component stocks including CapitaLand Mall Trust and CapitaLand Commercial Trust (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), HongkongLand (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

By law, 90% of REIT incomes has to be redistributed back to shareholders in the form of dividend, therefore it is a popular passive income generator. If a REIT pay 4 times yearly, an investor with 3 REITs could receive 12 payments yearly, helping to offset monthly expenses. When return from monthly dividend is more than monthly expenses, an investor would become financial free. However, certain REITs may not pay consistent dividend due to unstable business and a few could even go bankrupt if not properly managed. Business Trust (eg. Ascendas India Trust) seems similar to REIT but it is not required by law to pay dividend, therefore creating an uncertainty in the future which dividend payment is not guaranteed.

In this article, we will focus on 2 giant REITs, CMT and CCT which will be merged soon. Sharing is for educational purpose, please make your own decision. Before merging announcement, CMT performs relatively better than CCT from overall investing consideration.  So, CCT investors would benefit more than CMT investor.

CapitaLand Giant REITs for Dividend CCT CMT

The merging deal is for CMT to acquire CCT by exchange every share of CCT with 0.72 share of CMT + cash $0.259/share.  Since the announcement from 22 Jan 2020 until today, CMT and CCT share prices are closely correlated as mirror image with this formula:

CCT = 0.72 CMT + 0.259

It means after the merging announcement, there is not much difference now as CMT and CCT prices movement of stocks follow the equation above closely. Even if an investor is interested in CMT, the decision of whether to invest now or after official merging in June 2020, should be based on stock market outlook, not expecting any drastic change in share price after the official merging.  In fact, over the past 2 months of global stock crisis, both CMT and CCT dropped by about 40% in share prices, even after recovering in the last few weeks, CMT is still at low optimism < 25%. In general, before merging, CMT is more defensive while CCT is more cyclic, therefore future CICT REIT may behave in between both REITs, more cyclic than CMT, more defensive than CCT.

Coronavirus pandemic has affected both CMT and CCT as some tenants may not pay rents on time but this could be recovered later when Coronavirus has ended or fading away over the next few months.  Occupancy rates of both REITs are high (about 99%), any withdrawal by tenant (eg. a few weaker F&B or consumer companies may not be able to sustain) may be quickly replaced by new tenant but rental increase would be limited. If Coronavirus is not a long term issue (under the worst case, vaccine could be developed in about 1 year), major correction in share prices for either CMT or CCT could be an opportunity to accumulate with dividend yield around 6%. Assuming the worst case of losing 20% tenants (dropping from 99% to 80% occupancy) if Coronavirus may stay for 1 more year with 20% people in the world staying at home during lockdown, average dividend yield is correct to around 5%, still better than keeping cash in bank with only 1% dividend. When crisis is over, an investor could enjoy the capital gains with potential share price appreciation due to market greed.

Before merging, CMT and CCT already has joint portfolio, eg. Raffles City (40% CMT, 60% CCT). After merging, the new CICT REIT would dominate both retail shopping malls and offices in Singapore, having more capital to expand in overseas.  However, inorganic growth through more acquisition (eg. overseas properties) may or may not add value to CICT as it depends on expertise of REIT manager, able to find high quality properties at discounted prices (eg. during economic crisis), adding more potential to DPU (dividend per unit). Over expansion sometimes may result in higher risk (higher gearing ratio, which would become higher after merging as CMT has to pay some cash to CCT investors) but acceptable for CICT with dual level sponsors of CapitaLand and Temasek.

There could be more merging and acquisition activities during the global stock crisis. A giant stock does not need to be the “biggest” company, more importantly, strong in fundamental with growing business, therefore even a small company could be a giant stock.

A smart investor may consider only the strongest subsidiary giant stock of CapitaLand group, which is protected by the sponsor CapitaLand, which is further protected by another bigger sponsor, Temasek.  This implies for the giant stock to fail (eg. go bankrupt), it has to hurt CapitaLand or even Temasek first.  However, safer stocks may not be the best choice for investment as growth are limited.

There are 52 REITs and Business Trusts stocks including CapitaLand Mall Trust and CapitaLand Commercial Trust (investor has to focus only on giant stocks for investing):
AIMS APAC Reit (SGX: O5RU), ARA Hospitality Trust USD (SGX: XZL), ARA LOGOS Logistics Trust (SGX: K2LU), Ascendas Reit (SGX: A17U), Ascendas India Trust (SGX: CY6U), Ascott Trust (SGX: HMN), Asian Pay Tv Trust (SGX: S7OU), BHG Retail Reit (SGX: BMGU), CapitaLand Commercial Trust (SGX: C61U), CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China Tr (SGX: AU8U), CDL Hospitality Trust (SGX: J85), Cromwell Reit EUR (SGX: CNNU), Cromwell Reit SGD (SGX: CSFU), Dasin Retail Trust (SGX: CEDU), Eagle Hospitality Trust USD (SGX: LIW), EC World Reit (SGX: BWCU), Elite Commercial Reit (SGX: MXNU), ESR-REIT (SGX: J91U), Far East Hospitality Trust (SGX: Q5T), First Reit (SGX: AW9U), Frasers Centrepoint Trust (SGX: J69U), Frasers Hospitality Trust (SGX: ACV), Frasers Logistics & Commercial Trust (SGX: BUOU), FSL Trust (SGX: D8DU), HPH Trust SGD (SGX: P7VU), HPH Trust USD (SGX: NS8U), IREIT Global (SGX: UD1U), Keppel Infrastructure Trust (SGX: A7RU), Keppel Pacific Oak US REIT (SGX: CMOU), Keppel DC Reit (SGX: AJBU), Keppel Reit (SGX: K71U), Lendlease Reit (SGX: JYEU), Lippo Malls Trust (SGX: D5IU), Manulife Reit (SGX: BTOU), Mapletree Commmercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), Mapletree North Asia Commercial Trust (SGX: RW0U), NetLink NBN Trust (SGX: CJLU), OUE Commercial Reit (SGX: TS0U), ParkwayLife Reit (SGX: C2PU), Prime US Reit (SGX: OXMU), RHT HealthTrust (SGX: RF1U), Sabana Reit (SGX: M1GU), Sasseur Reit (SGX: CRPU), Soilbuild Business Space Reit (SGX: SV3U), SPH Reit (SGX: SK6U), Starhill Global Reit (SGX: P40U), Suntec Reit (SGX: T82U), United Hampshire US Reit (SGX: ODBU).

Learn from Dr Tee 4hr Free investment course on global dividend giant stocks to collect passive income during low optimism in stock crisis, then enjoying capital gains with growing share prices when crisis is over.

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

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5 Cheung Kong Super Hong Kong Stocks (长江一号)

Posted on April 27, 2020 Written by
Cheung Kong Stock CKH CKI CKA Power Assets Fortune Reit HKEx HPH Trust

Sir Li Ka-Shing (李嘉诚) is the richest person in Hong Kong for decades, earning a nickname of “Superman Li” for his reputation in the business world. He was born in 1928 in Chao Zhou (潮州) of China (Dr Tee visited there several years ago, Li Ka-Shing donated a lot of money to his hometown), therefore 92 years old so far. Technically he has retired but mentally never stop working for 1 day, still an advisor to his children and his beloved Cheung Kong Holdings.

Cheung Kong Group is famous initially as a property company, then expanding over the decades, becoming a multinational conglomerate with diversified businesses. CK parent stock is assigned #1 stock ticker in HKEx stock exchange (长江一号), showing its strength as a Hong Kong blue chip giant stock. In Year 2015, there is a major restructuring of Cheung Kong, merging with Hutchison Whampoa, forming a new company Cheung Kong Holdings (registered in Bermuda, could be due to long term planning) with 2 main companies with 2 stocks:

CK Hutchison (CKH) – (HKEx: 1) – For non-property related business

CK Assets (CKA) – (HKEx: 1113) – For proper related business

This way, it is clearer to investors on choices of investment based on these 2 divisions. However, the reorganization has affected the long term analysis of Cheung Kong as there are significant relocation of assets between 2 divisions of companies.  Therefore, it is a born of 2 “new” companies with 5 years of history in integrated business reporting but share price of CKH is much longer due to its extension of former parent stock, providing additional references on share prices.  It is important for a smart investor to analyze each segment of business for both CK companies before making decision of which stock to invest.

In fact, CK Holdings have at least 11 stocks listed within the group (only 5 highlighted ones are giant stocks):

1) CK Hutchison (CKH) – (HKEx: 1) – CK Parent Giant Stock (Non-property Division)

2) CK Infrastructure (CKI) – (HKEx: 1038) – Utility Parent Giant Stock

3) Power Assets (PA) – (HKEx: 6) – Utility Subsidiary Giant Stock

4) CK Life Sciences – (HKEx: 775) – Biotechnology Stock

5) Tom Group – (HKEx: 2383) – Chinese language media stock

6) HPH Trust – (SGX: P7VU) – Port Trust Stock

7) Husky Energy – (TSE: HSE) – Energy stock listed in Canada

8) CK Assets (CKA) – (HKEx: 1113) – CK Parent Giant Stock (Property Division)

9) Fortune Reit – (HKEx: 778) – CK Giant Reit

10) Hui Xian REIT – (HKEx: 87001) – CK Reit

11) Prosperity REIT – (HKEx: 808) – CK Reit

Out of 10 CK stocks, there are 4 giant stocks included in 50 Hang Seng Index component stocks: CKH, CKA, CKI and PA.  So, technically Superman Li could move Hong Kong stock market (about 4%).  This is similar to “rival” Jardine Group, could move Singapore Straits Times Index (about 15%) with 5 component stocks. In 1980s, Li Ka-shing was aiming to “invest” more in Hongkong Land of Jardine Group but was defeated by cross-shareholding structure of Jardine (another long story, read Dr Tee earlier article on Jardine Group of 7 giant stocks).

Not all the 10 CK stocks are strong based on Dr Tee giant stock criteria. There is only 1 more giant CK subsidiary stock, Fortune Reit is a giant Reit (formerly dual listing, after delisting from SGX, now only listed in HKEx).

So, additional comments will be given below on these 5 giant CK stocks from different businesses. An investor may select either the parent group (CKH or CKA) if want to consider average of entire group business (non-property vs property) as if a fund, or focusing on smaller individual stock of subsidiaries (CKI, PA, Fortune Reit) on specific business segment.

1) CK Hutchison (CKH) – (HKEx: 1) – CK Parent Giant Stock (Non-property Division)

CK Hutchison has 5 main business segments in non-property division. Investing in CKH stock means investing in all business segments.

1.1) Port

The port businesses are relatively stable in the past but Coronavirus crisis in Year 2020 would affect the results for Year 2020. HPH trust (not a giant stock with limited business potential) is only a small part of CK port business.

1.2) Retail

Major business is Watson for health and beauty (15794 stores with 12 brands worldwide). Business growth in China and Asia are faster than in western world. This is consumer related business, therefore Coronavirus would seriously affect the business for a few quarters. Temasek is also a shareholder for Watson, was planning to sell it.

1.3) Infrastructure / Utilities

This is main passive income generator for CKH. More details later under discussions of subsidiary giant stocks CK Infrastructure and Power Assets.

1.4) Telecommunication

This segment of business is growing in general, having mixed performance in different countries. It is a more defensive business.

1.5) Energy / Investment / Others

Energy segment is making losses while other remaining business is less significant to contributing to entire group.

CKH business (non-property) is not as defensive as CKA (property), therefore over the past 5 years since the group reorganization, share price has been dropping to nearly to 1/3 from peak of $120 to $45. Despite the Price to Book (PB) ratio is 0.5 but the asset is non-property, not as high quality.  The main investing advantage for CKH is low optimism level < 25%, aligning to global stock crisis (following economic cycles) but it could suffer in business during Coronavirus crisis due to global lockdown.

Dividend yield of 5.7% is attractive but investors may need to prepare for potential 50% cut as the worst case scenario (despite CKH has good track record of consistent dividend payment) during the winter time of CKH business, implying 3% yield which is still better than holding cash with 1% interest for cash deposit in bank.  CKH has significant business in Europe, when economy is restarted, CKH quarterly business performance would improve gradually.

2) CK Infrastructure (CKI) – (HKEx: 1038) – Utility Parent Giant Stock

3) Power Assets (PA) – (HKEx: 6) – Utility Subsidiary Giant Stock

Both CKI and PA stocks may be studied together as CKH owns CKI, then CKI owns PA, all inter-related, just different ways of grouping. So, an investor may decide investing in parent company or subsidiary business specifically in utilities.

CKI has many global businesses of infrastructures and utilities (electricity, water, gas), holding strategic asset of certain countries and cities (eg. main electricity supplier of London). Power Assets invests mainly in electricity, eg. providing partial electricity supply to Hong Kong, duopoly with another giant electricity stock, China Light and Power, CLP (HKEx: 2). Readers may guess if CKH could get HKEx stock ticker #1, CLP could get stock ticker #2, implying it is another blue chip stock with proven history (if there is a chance, we may share further on CLP or other monopoly stocks in future).

Utilities business are defensive as people may not need to shop during Coronavirus pandemic or global financial crisis but they still need basic usages of electricity, water and gas. So, utilities or infrastructure related stocks usually show their strength during economic crisis as defensive stocks which could still pay dividend with steady cash flow generated, then gradual capital gains in longer term with recovery and subsequent growth of economy.

In general, both CKI and PA are having close performance in stocks, prices have dropped by half over the past 5 years (more defensive than parent stock CKH which dropped to nearly 1/3 from the peak price), dividend payment has been stable due to defensive industry, current dividend yield is over 5%.  The main “risk” of both stocks is bearish price trend over the past few years (despite at lower optimism level, buy low may still get lower in prices), not so much on business risks (minimal), therefore investors who are reluctant to catch the falling knife in prices, may wait for uptrend in prices, sacrificing passive income (dividend yield) with higher price to exchange for confirmation in price reversal to bullish range.

4) CK Assets (CKA) – (HKEx: 1113) – CK Parent Giant Stock (Property Division)

CK Assets are property-based businesses, listed as a new stock, therefore only having 5 years of share price history so far which are more defensive than CKH (dropping to 1/3), but price is cyclic in nature, dropping to half price. Price to Book (PB) ratio is also coming to a new low of 0.5, having 50% safety margin for high quality asset of property. 

However, Hong Kong property market (about 20 years for 1 market cycle) has been at high optimism after the average prices gone up by 4 times over the past 2 decades. Therefore, property stocks in Hong Kong in longer term, may suffer “loss” in valuation due to lower property prices if there are any crisis related to China or Hong Kong property bubble.  CKA at current price is 50% discount but “rival” property stock, Hongkong Land has 75% discount with PB around 0.25. So, after relative comparison with peers, CKA 50% discount in price may not be excellent.  In fact, there are many other property giant stocks in Hong Kong which are “cheap and good”, readers may learn from Dr Tee to explore more in future.

5) Fortune Reit – (HKEx: 778) – CK Giant Reit

There are 3 REITs listed from CKA parent group: Prosperity Reit and Hui Xian Reit are relatively weaker, so we focus only in Fortune Reit.  Previously, Fortune Reit has dual listing in both HKEx and SGX but now only left HKEx. There is little difference to Singapore investors as there is no capital gain tax nor dividend withholding tax for Hong Kong stocks, except HKD/SGD is currently at high optimism (HKD is pegged to USD, similar trend for USD/SGD), future potential forex loss (when USD or HKD is depreciated vs SGD) could be compensated by dividend and capital gains of Hong Kong or US stock.

Fortune Reit drops over 40% in share price over the past 2 months of global stock crisis, resulting in high dividend yield of 7.4% with consistent dividend payout of its REIT portfolio. Risks of Coronavirus is minimized as China / Hong Kong conditions are much better than the rest of the world. Social unrest (eg. Hong Kong protesters last year) is also a lower risk now. The REIT is protected by Price-to-Book (PB) ratio of 0.4, rare for a strong REIT with 60% discount, implying under the worst case scenario, even if the company goes bankrupt, investors could still get back the capital (unlike other investors would suffer permanent loss buying stocks with low quality assets).  Usually PB is not a strong criteria for REIT, consistent rental collection from tenants is more important which Fortune Reit has a good track record. The REIT manager is also another familiar name: ARA Asset Management, used to be a giant stock with good reputation in Singapore but delisted several years ago (not surprise as this company is too good to share in long term with the public).

In short, investing in Fortune Reit could receive the protection from sponsor, CK Group, in addition to 60% safety margin in share price to property asset value. REIT (rental payment) could be more predictable than property-based business (eg. parent company CKA) which may suffer when property value declines. For a reit, even property value may decline, rental won’t fall as much, especially if located in strategic places with higher populations.

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If you could read until this line, it means that you are a serious investor as Dr Tee has spend half a day to write this article, you only need less than 30 min to read but need a few more days to digest to align the right CK stocks (1 of the 5 giant stocks) to your own personality. Each of the 5 CK giant stocks has its own pros and cons, may not be suitable for everyone. Overall, they all are at low optimism < 25%, implying higher potential for longer term investors. Their main “risks” may not be on business (Coronavirus could affect for Year 2020 but may not for long term), but more on bearish stock price trends since the group reorganization in 2015 till now. Global investors still try to find a sweet spot of balance between price and value for the “new” CK group of stocks.

Cheung Kong has been blue chip stocks for decades in Hong Kong, paying consistent dividend despite bearish stock prices or fluctuation in businesses. The main intangible “asset” of CK Group could be Li Ka-Shing, a trusted icon of CK for decades. Despite Mr Li has retired, he has transferred his business and investment knowledge to his 2 sons, Victor Li (taking over his empire of CK business) and Richard Li (inheriting most of his cash to start own business beyond CK Group). This way, 2 “tigers” won’t be in same jungle (only 1 main decision maker), smart move by a father with far vision to minimize potential family conflicts in the same business.

So, if readers may not have the same wisdom as Li Ka-Shing on investing, we may leverage on him through investing in CK group of giant stocks at lower optimism prices. Li family are unlikely to sell their stocks, therefore they would work day and night for you to grow the business as they are major shareholders (interest is aligned). Better still, readers may contribute no effort except just capital for investment at the right price (ability to press the button when seeing the signal with strategy aligning to own personality), Li family could then work for you for another generation until Victor Li may retire one day as well or passing to the third generation. Of course, you may then sell the stocks for capital gains one day or transfer the stock to your own second generation to keep.

If readers worry Li Ka-Shing may go bankrupt during global financial crisis (he went through at least 9 times over his 92 years of life experience), then smart investor may look for Top 10 richest persons in the world (Li Ka-Shing is only the 30th richest in the world), investing in their best stocks with stronger business than CK Group, forming a portfolio of Top 10 richest person’s giant stocks as a dream team portfolio.  Of course, you may not get a good discount in share prices when their businesses are very strong now, therefore stock “crisis” is usually a good opportunity to own some of these giant stocks with growing businesses.

Li Ka-shing stocks are stronger than many 50 Hang Seng HSI index component stocks or 30 STI index component stocks (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

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Grandparents Blue Chip Stock SPH (远虑近忧)

Posted on April 7, 2020 Written by
Blue Chip Stock SPH T39 SGX SPHReit

Singapore Press Holdings (SGX: T39), SPH, is a well-known blue chip stock with 35 years of history of press business. It is popular especially among “grandparents” level of investors as a passive income generator through dividend payment.

In the past (over 20 years ago), there was little competition in this monopoly business, therefore SPH could gain income easily through advertisements with more circulations of hardcopy newspapers. However, in the internet era over the past 10+ years, disruptive technologies have changed the rules of the game, providing more channels of news (mostly free) through webpages, blogs, videos and social media (eg. Facebook).

As a result, number of SPH newspapers readers have been declining over the past decade (while Facebook and other internet users are booming), resulting in gradual falling of business fundamentals (revenue, earning, cashflow, even dividend) during the same period. The share price of SPH has fallen by half from the peak price of $5+/share, supressed further by recent global stock crisis, dropping to only 1/3 of peak price, $1.52/share, the lowest point at least for the past 26 years. Dividend yield is 7.1%, seems impressive (second highest in 30 STI component stocks, just behind Capital Mall Trust) but this could be a value trap.

SPH Historical Stock Prices T39 SGX

A blue chip stock suitable for grandparents time may not be suitable for next generation now. SPH has lost the giant stock title (based on Dr Tee criteria) since 10+ years ago. Long term investing is not simply buy any stock and hold, especially for weaker fundamental stock in a sunset industry (monopoly is not a protection) of press business, buying low in prices would become lower in long term. SPH is a classic example as company never lost money, simply making less profits each year, long term stock investors may suffer huge capital losses if never review the business condition for decade, assuming a stock paying dividend yearly must be worth holding for lifetime.

The high dividend yield (DY = Dividend / Share Price) is mainly generated by share prices falling (1/3) more than falling of dividend payment (1/2) over the past decade. A common mistake of beginner in dividend stock investing is to pursue high dividend yield or simply check company is profitable (SPH has over 5% ROE for the past decade, not a junk stock, despite it is not a giant stock). The understanding of economic moat and business climate is crucial which is disadvantaged to SPH with popularity of internet, full with free news (including when you read this article, no need to pay even 1 cent to SPH).

This negative business cycle would continue, making harder for SPH to improve the financial condition with press business segment, despite promoting digital media over the past few years and reduce the workforce to save cost. 《人无远虑，必有近忧》is a Chinese idiom of wisdom, educating that one needs to have a long term plan, otherwise there might be risks in near future.

SPH new management may know there is a natural limitation in press business (despite considering 101 ways of improvement), therefore a solution way is to diversify into other business. Since SPH with P = Press, therefore it is hard to abandon press business overnight, especially this is an important mission empowered by government to ensure true news are shared with people (instead of internet, sometimes could have fake news).

So, an easy way out is to create second revenue Pillar of SPH with P = Property. Over the past decade, SPH has successfully establish a portfolio of properties (eg. Clementi Mall, Paragon, Seletar Mall, Rail Mall, etc) and even spin off another stock, SPH Reit (SGX: SK6U), to collect rental for some of the properties. SPH Reit is a young REIT with reasonably good business performance but share price is also corrected by 40% over the past 2 months of global stock crisis. In fact, SPH property business contributes to over 50% net profit of company, about 2 times of press business, one day may become Singapore “Property” Holdings.

Besides, SPH also diversifies the businesses to healthcare (eg. Orange Valley Nursing Home), education (eg. Mindchamps) and even Telco (M1 through partnership with Keppel Corp, another blue chip stock which also depends on property business to last through cold winter of oil & gas crisis). However, unlike property business which may be more passive in nature (investment decision), other businesses in different sectors could be out of circle of expertise for SPH, results of diversification have to be proven over time (so far property business is proven to be in right path).

For long term stock investors of SPH who have been making losses (more than 50% capital loss, even if collecting dividend yearly), may be in a dilemma of whether to cut loss (painful) or give SPH a chance to grow in property (proven) and other new businesses (still uncertain) beyond press business. One possible option is to apply “Change Horse” strategy as shared in earlier article, which is to sell a weaker fundamental stock, using the remaining capital to buy another giant stock with strong business fundamental (eg. existing competitors of SPH, internet related giant stocks which have growing businesses with more readers each month) on the same day, as if stock is never sold, just name is changed.

If not, at least SPH stock investor may consider to change P of SPH from Press to Property through SPH Reit (swapping between parent and subsidiary stocks) which focuses on property rental (may not be a giant REIT but performance is better than SPH as a whole). In this way, decade of downtrend in SPH business may be changed to potential decade of uptrend in SPH Reit business (with condition REIT manager is making the right decisions, eg. buying new property at lower price during crisis, etc).

The story of SPH has many hidden learning lessons. Firstly, there are few blue chip stocks which investors could buy and hold for lifetime as disruptive technologies (eg. another grandparents blue chip stock, Comfortdelgro with new challenger in taxi business but condition is more stable than SPH) may change the rule of game or there could be unexpected business crisis at certain point of time (eg. SARS and Coronavirus crisis to airlines sector but this is a short term risk). A smart investor has to regularly monitor the business at least with half-yearly annual reports. Buy a stock means one is in partnership with company doing business together, sharing the pains (if losses or less profits) and fortunes (if more profits which could justify more dividend payment).

Besides, SPH press business is a mirror of some individual who could not control own active job (eg. could be a worker in a declining semiconductor sector or a staff who does not have pay increment for years, etc) as they have been working for decades, not able to change the profession easily. So, if one could learn to convert the active income (salary from a job who may not have a bright future prospect) into 10-20 giant stocks, then literary one has 10-20 “jobs” which could generate money at the same time. The best is these additional incomes don’t need active “work”, therefore it is called passive income with dividend yearly or even quarterly, when holding long enough, potential capital gains due to growing business (with condition focusing in a portfolio of giant stocks, ideally buying low during global stock crisis). If these 10-20 giant stocks could pass the yearly certification process as a giant stock, then an investor may have option to hold for long term or even for lifetime or passing to the next generation as family wealth (this is common for those rich families with investment funds but individual may pass a few giant stocks to the next generation).

Dr Tee is still a long term supporter of SPH newspaper (not stock, but a reader), could not change the habit of reading daily newspaper for several decades. Personally, I hope SPH could continue to be strong in property and new business, so that the press business is sustainable.

So, until SPH becomes a giant stock again (to be proven, see if could pass Dr Tee criteria one day), an investor has the choice to invest in over 1500 global giant stocks, supported by growing business.

In Year 2020, SPH is officially removed from 30 STI index component stocks (investor has to focus only on giant stocks for investing, not just buying grandparents blue chips stocks):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

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Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 9000 member.

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Filed Under: Market Outlook, Property Market, Stock Market, Value Investing Tagged: , , , , , , , ,

Temasek Acquires Crisis Stock Keppel Corp (趁虚而入)

Posted on April 3, 2020 Written by
Temasek acquires Keppel Corp BN4 stock

Temasek has offered partial acquisition to Keppel Corp (SGX: BN4) shareholders at the price of $7.35/share up to 51% ownership over 1 year period (with some conditions applied). Since this is not a full acquisition, some investors may be confused of what is fair price for Keppel Corp. Let’s study this acquisition offer in details.

Temasek owns 20.45% of Keppel Corp, intending to purchase shares owned by remaining shareholders (100 – 20.45% = 79.55%) to top up to 51% (still need 51% – 20.45% = 30.55%). So, it is partial acquisition of 30.55/79.55 = 38.4%. It means for every 1000 shares, 384 unit will be acquired.

The offer price of Temasek at $7.35 is about 20% premium over the average price before acquisition, aligned with several other acquisitions in Singapore. However, it only has 38.4% power, not the same as 100% power as other full acquisition (eg. Breadtalk current acquisition offer of $0.77, price would surge near to this price overnight after the announcement). Assuming the Keppel Corp share price is $5/share (on certain day), the theoretical share price after 38.4% partial acquisition = $5 + (7.35 – $5) x 0.384 = $5.90/share. Reader may replace this equation of $5 share price with any latest share price of Keppel Corp before acquisition.

Over the past 1 month of global stock crisis, Singapore stocks fall by about 30% in average but Keppel Corp only falls about 20%, aligning with 38.4% potential acquisition by Temasek which is about 1/3, therefore the stock corrections is also reduced by about 1/3 from 30% to 20%.

It means the global stock crisis still has about 60% impact on Keppel Corp prices. Therefore, an investor has to make decision mainly based on global stock crisis and current stock market condition with Keppel Corp value, not to assume price would recover to $7.35/share price eventually.

==========================

Keppel Corp is a diversified corporation with 4 businesses: offshore &marine, property, infrastructure and investment. The 2 main pillars are Property (Keppel Land, contributing to about 50% company profits) and Oil & Gas (Keppel O&M, main source of losses over the past few years). Over the past 5 years after the oil price fell from $100 to $27/barrel, Keppel Corp suffers directly as main clients reduce the capital expenditure (eg. oil rigs), therefore Oil & Gas becomes a losing segment. 

Since 2015 crude oil crisis, Keppel Corp has temporary lost the giant stock title, currently a marginal giant (likely will become giant stock again after oil & gas sector recovery). Luckily Keppel Corp still has 50% earnings from Property (eg. Keppel Land and Keppel Reit), even Oil & Gas is a loss for several years (recovering to small profits in last 1 year), the entire company as a whole could still make a profit. Compared with competitor or sibling, Sembcorp Marine (SGX: S51, also owned by Temasek through Sembcorp Industries) which has full risk exposure to oil & gas crisis, losing money for several years, resulting in share prices falling from $5 to $0.70 (last 17 years low).

Some may think it is “cheaper” to invest in Sembcorp Marine stock (85% correction) compared to Keppel Corp stock ($13 falling to $5/share during oil & gas crisis, about 60% correction). This comparison is only valid if both companies are giant stocks (which are not) because “crisis is not opportunity” if business fundamental is weak, eg for the case of Sembcorp Marine. For Keppel Corp, it is still a 50% giant stock due to strong property business. Therefore, investor of Keppel Corp is actually investing in value of Keppel Corp property (main value) while taking advantage of falling share price (due to Oil & Gas crisis). It was a good move in year 2015 (beginning of oil & gas crisis) for Keppel Corp to offer full acquisition of Keppel Land which 100% profits of property business goes to Keppel Corp, offset the losses in Oil & Gas segment in Keppel O&M.

Assuming Temasek could successfully own 51% of Keppel Corp by end of 2020, it is a full control of company. This may allow possibilities of strategic merging of Temasek subsidiaries companies (eg. Keppel O&M and Sembcorp Marine) or restructuring of Temasek companies, eg. Keppel Corp and Sembcorp Industries (Temasek nearly has 50% control), etc, to maximize the asset values.

===================

During crude oil crisis with Keppel Corp at low optimism prices, Temasek leverages on crisis to have majority control of Keppel Corp at reasonable low price of $7.35/share. This also provides an option for Keppel Corp investors to sell for 20% profit. However, the global stock crisis has disturbed the plans as prices of Keppel Corp are falling even lower than before acquisition news. 

Analysis on Keppel Corp is beyond stock and Temasek, also requires understanding of property market and crude oil commodity market. So, it is a stock with complicated interactions of market signals, reflecting in final share prices. 

Temasek acquires Keppel Corp BN4

Here is a special Ein55 style, 50% Discount Method for investing in Keppel Corp during crisis (with or without Temasek acquisition) with multiple entries to fight against unknown market crisis ahead. Assuming $10 is a common high level prices (occurred during when economy and crude oil market are bullish), an investor may apply 50% discount in prices each time before each multiple low due several unforeseen market crisis.

$10 = High Level Price (potential future selling price level)

$5 = Crude Oil & Stock Crisis (3 times in 2009, 2016, 2020) after 50% discount x $10

$2.50 = Global Financial Crisis (17 years low) after another 50% discount x $5

$1.25 = Great Depression (20 years low) after another 50% discount x $2.50

This is a non-linear version of multiple entries for very conservative investor who hopes to buy low but afraid of prices could get lower. Assuming all the crisis come (hopefully not), this is average price after 3 entries (like Keppel Corp with property pillar could still survive):

($5 + $2.50 + $1.25) / 3 = $2.92

This is lower than using linear average down method at low optimism (assuming 3 entries with $1 lower each time):

($5 + $4 + $3) / 3 = $4

Each method (linear or non-linear 50% discount) has its benefits. Linear method is more likely to achieve in practical market, for those who wish to reduce downside risk through averaging (eg. 3 times x 33% capital). Non-linear method is for very conservative investor, demanding 50% discount each time before willing to take out precious cash from the pocket for investment. During the long holding period (could be 1-3 years, depending on severity of crisis), Keppel Corp investor may be given an average of 4-5% dividend yield (past 10+ years record), assuming the dividend is also cut by 50% due to crisis, one could still get about 2% dividend yield which is higher than fixed deposit in banks with 1% interest rate. After the crisis is over, assuming the average entry price is only $5 (only 1 crisis experienced), an investor may not need to sell at $10 average high prices for 100%, could even sell near to Temasek fair acquisition price of $7.35 which is over 40% higher than $5 price.

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Charlie Munger (partner of Warren Buffett) said the big money is not in the buying and selling, but in the waiting. Global stock crisis may happen only every 5 to 10 years. Similar to a lion ambushed, waiting patiently for target, when opportunity comes near, only then strike for higher chance of winning. It is the same for current global stock crisis, for investors “ambushed” for many years, it could be the right time to plan for a strategy to take action in stocks.

Frankly speaking, there are over 100 global giant property stocks and 44 global oil & gas giant stocks (based on Dr Tee criteria), which are much stronger than Keppel Corp. Some of these giant stocks are also falling in prices 20% – 50% recently, “Crisis is Opportunity” investing in these growing business (value) with significant discount in prices.

There are at least 26 Temasek / GLC stocks in Singapore including Keppel Corp, controlling shareholder with 15% or more ownership directly or indirectly (investor needs to focus only on giant Temasek stocks):
Singtel (SGX: Z74), DBS Bank (SGX: D05), ST Engineering (SGX: S63), Singapore Airlines (SGX: C6L), SIA Engineering (SGX: S59), Singapore Exchange (SGX: S68), SATS (SGX: S58), Sembcorp Industries (SGX: U96), Sembcorp Marine (SGX: S51), Olam (SGX: O32), CapitaLand (SGX: C31), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Ascendas Reit (SGX: A17U), Ascott Hospitality Trust (SGX: HMN), Ascendas Hospitality Trust (SGX: Q1P), CapitaLand Retail China Trust (SGX: AU8U), Ascendas-iTrust (SGX: CY6U), Keppel Corp (SGX: BN4), Keppel Reit (SGX: K71U), Keppel DC Reit (SGX: AJBU), Keppel Infrastructure Trust (SGX: A7RU), Mapletree Logistics Trust (SGX: M44U), Mapletree Commercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree NAC Trust (SGX: RW0U).

Temasek stocks portfolio also affect about 15% of STI index stocks, which has strong impact on Singapore stock market. Here are 30 STI component stocks:
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), HongkongLand (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

==================================

Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 9000 members.

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Market Outlook, Property Market, Stock Market, Technical Analysis, Value Investing Tagged: , , , , , , , , , , ,

Formation of Singapore Largest REIT by Capitaland

Posted on February 4, 2020 Written by
capitaland reit

More merging within Singapore REIT sector. This time is joint forces of 2 Capitaland Giant REITs, Capitaland Mall Trust (SGX: C38U / CMT) and Capitaland Commercial Trust (SGX: C61U / CCT), forming Singapore Largest Reit, also the third largest in Asia Pacific. CCT shares will be converted into CMT.

Both CMT and CCT are better than parent company, Capitaland, in the perspective of stock investment. CMT (which owns about 70% shopping malls in Singapore) is relatively stronger and more defensive than CCT, less susceptible to economic cycle.

A giant is not defined by the size. An investor may not need to buy the biggest REIT (eg. American Tower, NYSE: AMT – largest REIT in the world, or LinkReit, HKEx: 0823 – largest REIT in Asia), but it has to be the strongest REIT. There are hundreds of REITs globally, an investor should carefully select a suitable REIT aligned to own personality, eg. as a dividend stock for passive income or as a growth stock for longer term investing or even for short term gain with momentum trading.

Learn from Dr Tee free 4hr stock investment course to master global REITs giants, as well as 10 unique stock trading and investing strategies. Register Here: www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Stock Market Tagged: ,

Top 10 Singapore REITs for Passive Income and Capital Growth

Posted on November 4, 2019 Written by

There are total of 40 Singapore REITs, a popular investment option for retirement through passive income. By law, 90% of disposable income from Singapore REITs must be redistributed back to shareholders through dividends.  However, not all the Singapore REITs are profitable, an investor could lose money if choosing the wrong one, eg. pursuing the highest yield REIT.  REIT is an integrated investment between stock market and property market, knowledge of both markets are required to be successful.

In general, a good REIT should have strong fundamentals and DPU (Distribution per Unit) should grow over the time.  At the same time, we could also profit from good REITs through capital appreciation of share price and net asset value of properties.  A good REIT investor not only knows how to choose the REIT, but also masters the investment clock to buy / sell / hold the REIT.  Let’s learn together with the case study below on Capitaland Mall Trust.

Singapore REITs

Capitalmall Trust (SGX: C38U) is one of the Top 10 Singapore REITs, based on Optimism Strategy with consideration of FA (Fundamental Analysis), TA (Technical Analysis) and PA (Personal Analysis).  The DPU, dividends and operating cashflow are increasing over the years, current dividend yield is about 5%.  At the same time, an investor could have profited over 3 times in capital gains of share price ($0.75 to $2.50) from IPO till now (see chart below).

Singapore REITS Optimism Strategy - Capitalmall Trust

Ein55 Optimism of Capitamall Trust is 48% now, implying the upside is about the same as downside for its share price in long term perspective.  When Optimism is below 25% for Capitamall Trust (Level 1), Singapore REITs Index (Level 2), Straits Times Index (Level 3) and MSCI World Index (Level 4), it will be an ideal time to become REITs investor.  The dividend yield could be significantly increased if an investor could wait patiently for this REIT giant to fall down in share price during the next regional or global financial crisis.  After buying low, when the REITs have recovered again, an investor will have an option to sell high to take profit for capital gains or hold long term for passive income.

We should learn to find the Top 10 Singapore REITs with excellent business for our investment portfolio, buying at discounted price at low optimism, ahead of other potential big buyers who are also looking for these valuable assets.  Certain REITs stocks could be in crisis when the interest rates are higher and the property cooling measures last for another few more years.  Therefore, we should only consider giant REITs stocks with strong fundamentals, not just any stock with price discount, buy low and sell high or hold patiently for both capital appreciation and passive income.

The safest time to buy a stock is when everyone is afraid the sky will fall down while the business is still operating normally with consistent performance. This could be a rare opportunity to buy during a crisis, we should learn how to take this advantage to truly buy low sell high.

When Optimism Strategies are combined with Fundamental Analysis (value investing & growth investing), Technical Analysis (support / resistance / trends), and Personal Analysis (mind control of greed and fear), it is very powerful when one is able to take the right action (Buy, Hold, Sell, Wait or Short) at the right time aligning with own personality.

Fresh from Oven: Download the latest 3 FREE high-quality stock investment eBook by Dr Tee & Collin Seow on (1) “Winning Trading Strategies“, covering 2 proven methods in swing trading and position trading  & (2) “Global Market Outlook“, covering comprehensive investment topics: Stock, Property, Commodity, Forex, Bond and Political Economy & (3) “Dream Team Portfolio” with Top 10 global stocks for capital gains and passive incomes. Past readers have benefited 3 stock investment ebooks, learning Simple and Powerful strategies which deliver incredible results in stocks.

Are you worried or excited about the current global stock market, especially with the controversial US President, Donald Trump with US-China trade war?  Every crisis is an opportunity for investing. You will learn useful methods step by step from 3 valuable FREE stock investment eBooks by Dr Tee & Collin Seow which work in stock market. Take action now to surprise yourself!

3 Investment ebooks by Dr Tee & Collin Seow
Download 3 investment eBooks by Dr Tee & Collin Seow

Table of Contents (FREE Stock Investment eBook #1: Winning Trading Strategies)

  1. Swing Trading Strategy （短期波段交易策略）
  2. Position Trading Strategy （长线头寸交易策略）
  3. Bullish & Bearish Setups （牛市与熊市布局）
  4. Critical Candlestick Patterns （K线主要阴阳烛）
  5. SET Price Strategies (Stop Loss / Entry / Target) （SET 股价策略 – 止损/进场/平仓）
  6. Summary of Winning Trading Strategies （致胜投资策略总结）

Table of Contents (FREE Stock Investment eBook #2: Global Stock Market Outlook)

  1. Mass Market Sentiment Survey （大众市场情绪调查）
  2. Review of Global Stock Markets （环球股市回顾）
  3. US Market Outlook （美国市场展望）
  4. Regional Market Outlook (Europe, China, Hong Kong) （区域市场展望）
  5. Singapore Market Outlook (Stock & Property) （新加坡市场展望）
  6. Conclusions and Recommendations （总结及建议）

Table of Contents (FREE Stock Investment eBook #3: Top 10 Global Stocks – Dream Team Portfolio)

  1. Personalized Stock Investment Portfolio （个人化股票投资组合）
  2. Ein55 Global Top 10 Stocks （10大全球高潜能股票）
  3. Summary of Actions （投资方向总结）
Download 3 investment eBooks by Dr Tee & Collin Seow

The unique Optimism Strategy developed by Dr Tee provides a special advantage to know which investment (stock, forex, property, commodity, bond, etc.) to buy safely, when to buy, when to sell, including the option of long term holding.  So far over 30,000 attendees have benefited from Dr Tee high-quality free stock investment course to the public. Take action now to invest in your financial knowledge, starting your journey

Bonus #1 for Readers:  FREE Investment Course (including Singapore REITs) by Dr Tee

Dr Tee Stock Investment Course
Dr Tee Stock Investment Course



Bonus #2 for Readers:   Dr Tee Investment Forum with over 9000 members (Private Group)

(Please click “JOIN” with link above and wait for Admin approval of membership)

  • Market Outlook (stocks, properties, bonds, forex, commodities, macroeconomy, etc)
    市场展望 (股票、房地产、债券、外汇、商品、宏观经济等)
  • Optimism/ Fundamental / Technical / Personal Analyses
    （乐观指数 / 基本分析 / 技术分析 / 个人分析）
  • Investment risks & opportunities （投资风险及机遇）
  • Dr Tee graduates events and activities updates （Dr Tee学员活动最新消息）
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Filed Under: Market Cycle Investing, Property Market, Stock Market Tagged: ,

Dual Roles of REIT Investing as Defender and Striker

Posted on September 14, 2019 Written by
reit investing

REIT investing is a popular investment choice to collect passive income through dividends. By law, 90% of net income from a REIT has to be redistributed back to shareholders in the form of dividend.  A REIT could give dividend 4 times (4 quarters) a year, if an investor could gather a few strong REITs, it is possible to generate a stream of consistent quarterly or even monthly income. One could become financial free with REIT investing as the income (passive income of dividends and capital gain of stock prices) depends on the capital for investment which is scalable and dividend yield which could be maximized (depending on dividend / share price).  Singapore REITs could give out more dividends due to tax exemption, therefore the average dividend yield is usually higher than overseas REITs.

Due to stock market uncertainty over the past few years, Singapore investors prefer to invest in defensive sector such as REITs or blue chip stocks (eg. 30 STI component stocks). As a result, REITs prices have gone up to higher optimism of 53%, resulting in lower dividend yield, narrower spread with nearly risk-free return such as Singapore Saving Bond.  Most people consider REITs for longer term investing, aiming for 5-10% dividend yield yearly. However, over the past 1 year, some REITs are behaving as striker with over 20% return in only 6 months of trading.

As investor or trader has 2 options when considering REIT investing:
1) Investing REIT for Long Term (Defender)
Successful REIT investing requires selection of REITs with strong fundamentals, eg. consistent uptrend quarterly dividend payment, supported by steady free cashflow generated from REITs portfolio.  However, during global financial crisis, unlike property market which is more defensive in nature (dipping by only 25%), REIT has speculative element of stock market, therefore REIT price could even drop by 70%.  It is crucial for long term REIT investing to align entry with a low optimism price during global financial crisis. However, during a very bearish stock market, most retail investors may not take actions due to great market fear (also fearful when others are fearful), therefore missing the opportunity of lifetime to buy low and hold for long term.

2) Trading REIT for Short Term (Striker)
Successful REIT trading requires selection of REITs with reasonable fundamental, supported by uptrend share prices in a bullish stock market (for long strategy). Short term trading mainly aims for capital gains in a few weeks or a few months, following either Buy Low Sell High, or Buy High Sell Higher strategies. When price trend is reversed, a REIT trader has to follow the exit strategy to sell the stock or even cut loss.  It is risky for a REIT trader to enter for short term gain but reluctant to exit as a trader when price trend is reversed, changing to a role of investor halfway, may end up Buy High Sell Low, losing in REIT trading.  Although overseas REITs may not be suitable as defender for dividend income, some strong giant REITs are excellent choices as strikers for capital gains with rising prices.

Successful REIT investing requires understanding difference between investing and trading, aligning with own unique personality (Personal Analysis).  REIT investing also need the knowledge of Fundamental Analysis of business, Technical Analysis of prices, Level Analysis and Optimism Analysis of global stock market.

Readers may learn from Dr Tee FREE 4hr stock investment course on how to invest and trade REITs, applying LOFTP (Level, Optimism, Fundamental, Technical, Personal Analysis) Strategies to select global REITs and blue chip giant stocks, knowing What to Buy, When to Buy and When to Sell.

Register Here: www.ein55.com

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Stock Market, Trading, Uncategorized, Value Investing Tagged: ,

$155,000 Charity Courses Donations for Tzu Chi (慈济) with Summary of Global REITs Course

Posted on May 12, 2019 Written by
charity REIT course

Dr Tee, Ein55 Mentors & Graduates have together organised 8 charity investment courses (REITs/Business Trusts in Nov 2015, May 2017 and May 2019, High Dividend Stocks in Mar 2016 and Oct 2017, Capital Growth Stocks in Apr 2018 and Discounted NAV Stocks in Sep 2016 and Nov 2018) in the past 4 years, donating net income of around $155,000 to Tzu Chi 慈济 (Singapore). We hope to inspire more Ein55 Graduates to reach out the society, helping others who are in need.  More importantly, they have also learned the secrets of making money through investment. When more Ein55 Graduates are successful financially, they could also contribute back to the society to help more people in future.

Here are key learning points from the recent Charity Course on Global REITs:

1) REITs are collective investment schemes that invest in a portfolio of income generating real estate assets such as shopping malls, offices, hotels or serviced apartments and hospitals.  It is also a type of security that can trades on major exchanges like  other listed securities.
1.1) Assets of REITs are professionally managed ie REITs Manager.
1.2) Revenues are derived mostly from rental payments, >90%.
1.3) Net income generated from assets must distributed at  least 90%, quarterly or half yearly to unit holder.

2) 7 Risk factors for REITs analysis are :-
2.1) Market Risk and Income Risk which are intervene each other
2.2) Foreign Country risk especial currency exchange rate change
2.3) Concentration risk – depend on single property or few tenants
2.4) Leverage risk – revalue down of asset resulting hit gearing limit
2.5) Refinancing risk – unable to secure new loan or new loan at higher cost
2.6) Liquidity risk – difficult to buy/sell portfolio asset

3) 4 common growth strategies adopting by REIT manager are :-
3.1) Acquisition – from sponsor or 3rd party
3.2) Asset Enhancement Initiative (AEI) – shopping mall to increase NLA
3.3) Organic growth – positive rental revision and increase occupancy
3.4) Development & re-development – cap limit increase to 25% from Jan 2017

4) 3 Key Criteria in Valuation of  REITs:
4.1) DPU – look for stable or growing adjusted DPU
4.2) NAV – look for growing NAV & lower PB
4.3) Debt – look for lower interest cost & lower gearing

We should drive the money (helping others when you are successful), not driven by the money (making money only for own gain).  Investors should learn the unique Optimism Strategies with FA (Fundamental Analysis) + TA (Technical Analysis) + PA (Personal Analysis) developed by Dr Tee to choose strong global stocks, buying them at low price, then holding for consistent dividend payout or selling for high capital gains.  High-quality free stock investment courses are provided by Dr Tee to the public.

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Fundamental Analysis, Value Investing Tagged: , ,

First Reit Crisis with Lippo Group Analysis

Posted on March 27, 2019 Written by
First Reit Crisis

Ein55 coaching students just review First Reit (SGX: AW9U), a giant dividend stock in Singapore, which mainly collecting rental income through Reits to Siloam Hospitals (owned by same sponsor of First Reit, Lippo Karawaci Group) in Indonesia with triple-net lease without forex risk (pegged at fixed rate to SGD).

However, investing analysis in stock is never on just 1 business, one has to also consider related parties, eg. sponsor of First Reit, Lippo Karawaci (contributed to over 80% of rental income for First Reit), which has a poor credit rating of CCC+, mainly due to long term negative operating cashflow for many years, which expanding in a mega property project aggressively.

Despite strong fundamentals of First Reit, the fear on Lippo Group has corrected First Reit share price from about $1.50/share to $1/share over the past 1 year, dividend yield has climbed up to an impressive 8.7%, comparable to year 2008 during the last global financial crisis.

Ideally, one should buy dividend giant stocks during a crisis to get lower price with stable growing dividend to maximize the dividend yield for long term investing. However, there are different qualities of crisis stocks. Price correction during Level 4 crisis (global financial crisis) is the highest quality if the business remains intact. For the current situation, First Reit is only under Level 2 crisis (despite strong fundamental of First Reit at Level 1, price falls due to fear of deteriorating fundamental of sponsor, Lippo Group), therefore an average quality of low optimism stock.

OUE of Lippo Group is now the second sponsor of First Reit, creating new variable to future of First Reit on dividend growth as the new Reit component may come from Singapore property of OUE (worst if priced at higher level) which may not have the unfair advantages Siloams Hospitals with triple-net lease, fixed forex rate (highly subsidized by sponsor) with high growth of health care industry in Indonesia. However, the change will not be overnight as average lease expiry is about 8-9 years.

For investor who could take calculated risks (in the same boat as Lippo Group and Riady family, waiting for the revival of mega city project), First Reit may be considered for dividend investing but technical analysis should be considered (eg. investing above $1/share which is a critical support, avoiding possible risk of buy low get lower in prices with more future uncertainties) with risk management through diversification over 10 giant stocks. Alternatively, one has the choice of not to invest in average quality low-optimism dividend stock, there are still other better opportunities which are relatively safer.

First Reit & Lippo Group


Learn from Dr Tee free 4hr course on how to investing in global giant stocks (dividend investing, crisis investing, momentum trading, etc), understanding the risks and opportunities of current stock markets in Singapore, US, Hong Kong and China.

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)


Filed Under: Fundamental Analysis, Stock Market Tagged: ,

Ein55 Charity Courses with $70,000 Donation to Tzu Chi (慈济): REITs & Business Trusts Investing Strategies for Passive Income

Posted on May 24, 2017 Written by

Ein55 Newsletter No 069 - image - Charity - REITS

Dr Tee, Ein55 Mentor & Graduates have together organised 4 charity investment courses (REITs/Business Trusts in Nov 2015 and May 2017, High Dividend stocks in Mar 2016, and Discounted NAV stocks in Sep 2016) in the past 2 years, donating net income of around $70,000 to Tzu Chi 慈济 (Singapore). We hope to inspire more Ein55 Graduates to reach out the society, helping others who are in need.  More importantly, they have also learned the secrets of making money through investment. When more Ein55 Graduates are successful financially, they could also contribute back to the society to help more people in future.

Here are key learning points from the recent Charity Course on REITs and Business Trusts:

1) Invest for dividend income is one of the important criteria that stock investor must not ignore because historical data shown that

– S&P 500 (1932 to 2014) – dividend contributes to 45% of portfolio return

– STI 30 (2003 to 2013) – dividend contributes to 49% of portfolio return

 

2) What is REITs (Real Estate Investment Trusts)?

REITs are collective investment schemes that invest in a portfolio of income generating real estate assets such as shopping malls, offices, hotels or serviced apartments and hospitals.  It is also a type of security that can trades on major exchanges like other listed securities.

– Assets of REITs are professionally managed

– Revenues are derived mostly from rental payments, >90%.

– Net income generated from assets must be distributed at least 90%, quarterly to unit holder.

 

3) What is Business Trust?

Business trust is an investment vehicle structured so that a single company, known as the “trustee-manager”, holds and operates business enterprises for the benefit of its investors but the unit holders do not have any operational control or shareholders’ rights.  Business trusts allow retail investors to have a direct exposure to cashflow-generating assets, such as utilities, shipping, sea port and it is suited to any businesses involving high initial capital expenditures with stable operating cash flows.

 

4) 7 Risk factors for REITs & BTs analysis are

– Market Risk and Income Risk which are intervene each other

– Foreign Country risk especial currency exchange rate change

– Concentration risk – depend on single property or few tenants

– Leverage risk – revalue down of asset resulting hit gearing limit

– Refinancing risk – unable to secure new loan or new loan at higher cost

– Liquidity risk – difficult to buy/sell portfolio asset

 

5) 4 common growth strategies adopting by REIT manager are:

– Acquisition – from sponsor or 3rd party

– Asset Enhancement Initiative (AEI) – shopping mall to increase NLA

– Organic growth – positive rental revision and increase occupancy

– Development & re-development – cap limit increase to 25% from Jan 2017

 

6) Best timing to Invest in REITs and Business Trusts will be

– Long-term Optimism and Mid-term Optimism < 25%

– Average dividend yield over 8%

 

Filed Under: Uncategorized Tagged: , , , ,
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