On a break

Marksman's Investment Corner is currently on a short break - expect activities to pick up from July 2018 onwards!

Are you for or against the merger between Alliance Minerals Assets Limited and Tawana Resources?

Monday, July 2, 2018

Portfolio Update - 2Q2018 (and some assorted updates)

In the blink of an eye, we have left the first half of 2018 behind and venture into the second half. Volatility and uncertainty litters the market and investors will need to tread carefully - but nevertheless, I believe there are hidden opportunities hidden in the market now which will appeal to the keen-eyed long-term / mid-term investors.



Now, onto the Portfolio update for second quarter of 2018!



Income Portfolio





Counters
Units
Market Price (SGD)
Overall Value based on market price (SGD)
Allocation
1
Cromwell European REIT
1000
0.96
960
4.87%







Growth Portfolio





Counters
Units
Market Price (SGD)
Overall Value based on market price (SGD)
Allocation
2
Alliance Mineral Assets (AMAL)
50000
0.375
18750
95.13%







Cash and other Assets





Counters
Units
Market Price (SGD)
Overall Value based on market price (SGD)
Allocation
3
Warchest
1
0
0
0.00%

Total SGD


19710
100.00%


This quarter sees me top up a small position (+10,000 units) with Alliance Minerals Assets Limited. If everything plays out well, will see a merger with Tawana completed and become a mid-cap producer. Perhaps even a move from Catalist to Mainboard.

Other than that, I am seeing withdrawal of my remainders in the war-chest, heavy cash outflow, usage of credit and then saving up of emergency funds thereafter in preparation to move into my own home, so it is highly unlikely I will make moves, as unfortunate as it is - I have some stocks in my eyes now :(.

In the meantime, in addition to a reduction in my activities on the market, real-life has gotten a lot busier so my activities on Marksman's Investment Corner will continue to be limited. While I expect to update my blog in July beyond this post (I actually have multiple posts in the works), even then I will probably have not more than 2 more posts.

Next portfolio update will be towards end of September 2018.

Wednesday, June 6, 2018

60-month Installment Payment Plan at Courts - a simple lesson in cashflow and expenditure management?

Recently I went to Courts to check out some furniture for my home. While browsing, I realise besides having shorter term installment payment plan (IPP) which comes free of charge, there is also the option of 60 month IPP.

For a cabinet costing $899, there is a 60 month IPP option that lets you pay, wait for it...

$39.95 a month. Whattt?



Multiply this figure by 60 and you get $2397. One would be paying 167% more for the product overall. If you annualise this value, you are paying an extra 33.4% effective interest per year!

This is even higher than your typical credit cards' interest rate!

In fact, in the first year alone, you are paying $479.40. That's slightly more than 50% of the original cost. If one is financing their big ticket items such as furniture or electrical applicances costing 4 digit, it is naturally a better option to opt for IPP that lets you pay off over 24 months/36 months, and interest-free IPP are not that difficult to find?

Usually the choice of IPP is made based off managing cashflow (especially when it's 0% interest).  It got me thinking about just under what kind of circumstances would warrant the extremes of selecting a 60 month payment plan.

No matter how much I wrap my head around this, it sounds like either bad expenditure management, bad cashflow management or otherwise circumstances forcing one to select such a plan.

A lesson is drawn from this - one should never let debt overrun expenditure management; it is a surefire recipe for disaster.

Saturday, June 2, 2018

Termination of High Speed Rail Project - Impact on stocks?

Recently, there has been news announcing Malaysia's intention to terminate the High Speed Rail (HSR) project, with claims that this project does not financially benefit Malaysia at all. At the point of writing, this does not seem to be firm yet.



To share some background, the Jurong area is seeing development for Jurong Lake District. The HSR project is a part of this plan, as Jurong East will be or would have been the site of the Singapore Terminus. This would allow people to get from Singapore to Kuala Lumper (and vice versa) in the span of 1.5 hours, down from driving 4 hours. The project was slated to complete in 2026.

You may access some related articles here:

Two stocks that may be affected immediately comes to mind: Capitamall Trust (CMT) and Genting Singapore. Both are constituents of the Straits Times Index (STI). Note that this post contains significant speculations.



Capitamall Trust
CMT is a REIT that holds a portfolio of Singapore shopping malls under its name. The REIT currently has several malls in the Jurong Region. They are IMM, Westgate and JCube respectively.

Effect of HSR termination
I believe Westgate and IMM will not be impacted much despite taking a hit. In past AGM, CMT has highlighted JCube is being positioned as a long-term play towards the HSR project in that the shopping mall will see increased footfall on completion of the HSR project (link here). Some detractors however has also highlighted the benefit to JCube may be minimal, owing to the spendings more likely to be in Malaysia than in Singapore.

Should the termination be final, the HSR project will no longer be factored into Jcube's earnings growth. Overall the REIT might see some correction to its share price to factor in the reduced earning growth from the HSR project.

Having said this, I do not think it is a lost cause, with development of Jurong Region MRT. This itself should see increased footfall in not only CMT's malls in Jurong East, but also Lot One in Choa Chu Kang.


Another possible direction, should the management no longer sees the worth in keeping JCube, could be to divestment to obtain higher yielding properties.

The question we should then be asking is: where will then the money be used on to obtain or develop yield-accrediting properties? As far as I can tell, it's possible more malls could be built in newer or future estates. It might hurt, but it will not degrade the business.



Genting Singapore
Genting Singapore PLC is a Singapore-based regional leisure, hospitality and integrated resorts development specialist. Genting Singapore has a hotel in Jurong East area, within close proximity to the site of HSR Singapore Terminus. Apparently the Hotel was developed with the HSR project in mind.




You can access a related article here:
According to a shareholder at the AGM, high occupancy was noted. Assuming these are paid stays and not free stays by members, this would mean it takes a minor effect as it is nearing its cap. 

Another way to look at this would be since it was mainly developed with the HSR project in mind, then the its potential would be hit. An arguing point against this would be it was touted to benefit from tour bus coming from Malaysia passing by the hotel to begin with. If Genting Singapore intends to expand the Hotel, I reckon that future growth will take a hit (Supply > Demand).

Disclaimer: These are my thoughts and opinions of the mentioned stocks and should not be taken as a solicitation or source of decision to buy or sell - please DYOR/DYODD. 

What are your thoughts of the HSR project being scrapped and its impact? Do share!

Thanks for reading.


Sunday, May 27, 2018

HDB Purchase Chronicles - Actual expenditure of flat purchase upfront

This article is part of a series that shares my journey to becoming a homeowner for the first time. Eventually there will be more article(s) that not only covers the actual cost on purchase upfront as in this article, but also the process of purchasing resale flat using the HDB Resale Portal, the recurring cost and renovation cost.

In a few days' time, I will finally become a homeowner! This month sees the usage of most of my CPF-OA balance as well as the cash for down-payment. Whelp, it looks like I will not be adding much (if any) position to investments for quite some time as expenses and saving a larger sum for emergency funds takes precedence - for now.



In this post, I'll share my actual expenditure of purchasing my home and compare it to my expected numbers as depicted in my older post here.



The verdict?
  • For the flat purchase price itself, I expected to use a bit less CPF and a bit more Cash. I'm pleased that I did not have to put down $500 more cash upfront in this aspect.
  • For the additional cost, I also spent less than expected overall. While Legal fees costed less than expected (I think this has something to do with mixing up some legal fees regarding mortgage?), Stamp Fee, Title Search Fee costed more than expected unlike as advised with the calculation using HDB's resources. I did not expect payment for the property tax to cover from the day I take ownership until the end of the year (but it makes sense).
Other interesting things to note:
  • When HDB and other resources mentioned CPF-OA will be zero-ed out for flat purchase, I had expected this to be taken literally, but it looks like there will be some small change (up to a few hundred?) aside from the sum meant for Loan Repayment that will start in the month of July. Note that you can set aside more of your CPF-OA by CPF Investment Scheme as well.
Interested in the other articles for the HDB Chronicles series? You can find it here!

Friday, May 18, 2018

Reflections - My performance investing in Fraser Logistics and Industrial Trust

Recently, I sold away my (tiny) position in Fraser's Logistics and Industrial Trust to free up more cash for my new home. I had bought 1000 units at IPO in June 2016 as a way to compound my gains from dividends and distributions earned from CMT and Cache. Subsequently I sold at $1.09, earning $258.5 in capital gain and dividends after subtracting commission, for a total return of 29.22%. 

Annualised, this is a solid 16.70% per annum.

Due to the size of my purchase, commission fee has a more substantial effort on the overall gains. To show diluted effect of commission fees on the performance, I will run a simulation of the gains and comparisons against SPDR STI ETF based on if I had 10,000 units instead of just 1000. I will subsequently do similar simulation whenever I do reflections for cashing out on purchases under $4500.


Units purchased
Purchase price per unit
(include comm)
Period held (years)
Yield on cost
Overall gain from distributions
Annualised Capital Gain on cost
Overall Gain from Capital Gain
Annualised Overall Gain
Total Gain
1000
0.892*
1.75
5.67%
9.92%
11.03%
19.30%
16.70%
29.22%
10000
0.894**
1.75
5.66%
9.90%
12.37%
21.64%
18.03%
31.55%

If i scale this up to a level where the effect of commission is watered down (in this case - I'll simulate having bought 10,000 units), I would have had an overall gain of 31.55%.

*The commission here only takes into account the commission charge for IPO 
**The simulation takes it that I purchased from brokerage hence nominal commission fees apply.



Comparison to STI ETF

Units purchased
Purchase price per unit
(include comm)
Period held (years)
Yield on cost
Overall gain from distributions
Annualised Capital Gain on cost
Overall Gain from Capital Gain
Annualised Overall Gain
Total Gain
300
2.980
1.75
4.56%
7.99%
2.91%
5.10%
7.48%
13.09%
3000
2.892
1.75
4.70%
8.23%
10.07%
17.62%
14.77%
25.85%

In comparison to SPDR STI ETF, this is a solid win as I had outdone STI ETF in the period, even when scaled up accordingly. The Capital Gain at 300 unit is greatly reduced due to the commission fees on purchase (and there's no way I could have bought an IPO of it, can I? Haha.).

What could have been done better
I'm pretty proud of this achievement actually. There are only 2 things that can be done better:
- Buying more of it while it sits in the range of < $1 early on
- Developing stronger purchasing and holding power overall so that the position can be held and then subscribe to the non-renouncable rights even after flat purchase. :P

Challenging the market?
Altogether that makes 1 out-performance, and 2 under-performance.

Enjoyed reading my reflections? You can read the rest here!