Recent Action- Sold Capitamall Trust

I sold CapitaMall Trust today and as such, I will not be entitled to its dividends.(ex- dividend date 28.10.15) After factoring this opportunity cost, I still think that at $2.06, it has reached its potential. I shall reap my profits now and gain entry again perhaps next year.

Looking at its 3Qtr 2015 financial report, below are my takeaways:

1. Net property income dropped.
Net property Income has dropped again, consecutively since 2Qtr 2015. The drop is about 0.7%. I expect that it will continue to drop until the 3 malls which are not faring well now brushes up in its rentals.

2. 3 main properties facing a drop in rental income:
IMM
Rental was affected due to renovation works but a link bridge to Devan Nair Institute is completed. Only after all renovation works done and the mall is fully operating then the property income will increase.

JCube
This is a headache.. seriously.
With three shopping malls at Jurong East, west siders are spoilt for choice. Jcube is also very out of the way for shoppers and most of the time, I do not make any effort to go there at all as it is really inconvenient. Furthermore, the toilets stink. The most disgusting toilets are awarded to Jcube, like seriously. Lol.

Anyway, recently there is a revamp at Level 2- a mini Bugis street look alike. I find that appealing since there are many clothes to shop and it really belongs to a league of its own- teenagers. The ice skating rink is a good attraction too.

Clark Quay
After the liquor laws kick in, Clark Quay has become much quieter than before. Previous tenants like MOF are no longer operating. Some clubs are finding it tough to survive too.

Good news is that Zouk will be renting a place here but that will only start in June 2016.

I expect that the rental incomes of these 3 properties will only start to improve in 2016 onwards which translate to weaker income for 4th Qtr 2015 and 1st Qtr 2016. Before I see this stock price dropping, let me sell it first.

3. I expect Finance cost to increase.
Finance costs for YTD Sept 2015 was lower due to low interest rates in Aug 2014, Nov 2014 and Feb 2015. However, moving on to the next Qtr, I believe that the interest rates have risen quite a bit and that will translate to higher finance costs.

4. Good move to buy Bedok Mall
Bedok Mall's business is buoyant and there is high human traffic. However, I do not think that this mall alone will be able to salvage the other three dropping incomes.

5. Better opportunities for my $
Frasers Centre Point trust is certainly doing much better. Almost all of the surb-urban malls enjoy good human traffic. The recent financials are good too.

I will accumulate my war chest by cashing out CMT and divest to other better performing stocks now.

As for CMT, let it sort out the ailing 3 mallsand I will make an entry again probably next year.

Ezra Review- What's wrong with this company??

The very 'hot' stock recently is Ezra. Not that it is bulling in hotness, but boiling in danger and facing so much uncertainty that it is so hot. Someone very close to me is vested in it and is very troubled, so here I am, trying to offer a little advice.

Today's financial results- 10th July was released.

Oh my.. So many things that I conclude (purely based on my very humble thoughts, may not be factual so pls don't send me a lawyer's letter)

Pls read this with discretion and kindly note these are just what I THINK*

1. Company seems to show that they do not know how to control expenses
Revenue dropped by 3%. By right when revenue drops, one should see a drop in Expenses such as income/administrative. However, for Ezra, their expenses increased by so much.

Wow, cannot cut pay of high mgmt.? don't wish to retrench people? cannot control expenses? MNCs will come out with drastic cost cutting measures, including cutting high salaries of top mgmt. and board wide retrenchment. I don't see it in Ezra.

If it needs to be done, it has to be.

Which leads me to the next point.

2. Operating profit dropped 81%

Erm. That's like so close to having a negative profit already. The company still tried to sugar coat the announcement that their revenue maintained despite such challenging environment.

Pls open your eyes big big and look at the financial statements.

3. Offering rights to repay perpetual securities

I *think* this means that the company might be unable to pay off their debts, so they have to offer rights to raise money.

Not that they are raising money to fund growth. They are using it to pay their perpetual securities and bonds!

Which means.. more debt?

Conclusion: My advice
1. If you are not vested: Good for you, pls do not buy. Wait until the Saudi Arabia and the shale oil producers in USA have worked out a win win situation for the oil price to start climbing up. Otherwise, oil price is likely to remain low for a few years more.

2. If you are vested:
1. Have you bought the rights?
If yes: If you bought the rights at $0.1, you should sell it when trading commence, of course at a higher price.
If no: wait and observe today's price, since you have a week more to buy the rights.

Keppel Corp Financial Results Stock Review

Finally I had some time to analyze their financial results which were released last week.

A key part of being a sound and informed investor is to really read financial statements properly and 'between the lines'.

It was posted that the net profit increased by 6% compared to the same period in 2014. I find that this figure is not meaningful as they used "profit attribute to shareholders" and not "operating profit. "

This is my analysis:

1. Operating profit dropped YOY
Operating profit dropped year on year. Looking at the red box figures below, the drop is about 4%.

2. Operating Profit dropped QOQ

Operating profit dropped Quarter on Quarter. I thought I saw wrongly when I compared the 4th Qtr of 2014 to the 1st Qtr of 2015.

This is the 4th Qtr 2014 results:

 

Take a look at the 1st Qtr 2015 Results:

 

 

 

 

 

That's like a 57.2% drop!? I am not sure whether this is seasonal so I would not really be overly concerned about this, albeit I would take a more cautious outlook.

3. Order book is disappointing

I get that oil prices have fallen drastically, and the oil and gas sector is not looking good now. But the new contracts secured so far for 2015 hasn't been assuring. It is only $0.5B so far..2015 has another 9 months to go and I don't foresee a miracle happening for new contracts being secured.

 

4. Other sectors not performing as well too

Keppel group comprise of 4 main sectors- Offshore and Marine, Property, Infrastructure and Investments.

 

 

Offshore & Marine: Dropped 17%

Property: Dropped 22%

Infrastructure: Dropped 26%

Investments: Increased by almost 6 times

The only redeeming factor was Investments, which they have attributed it to 'the sale of investments'.

The worst performing segment was Infrastructure which was due to a lower contribution from the power and gas businesses.

5. EPS increased

EPS has increased to 19.8cts, compared to 18.7cts for the same qtr 2014. I would take this with a pinch of salt though.

Conclusion:

It is no wonder that by the time you see this, Keppel Corp stock price has fallen to $9.27 (it was trading at $9.4+ before the announcement of results).

Haizzzz. Don't look promising as their business is highly dependent on oil (Offshore+ Infrastructure).

I shall wait for the 2nd qtr results before purchase. Perhaps I am looking into a $8+ (low) price now before entering. Unless Mr Oil price is up again.