Capitaland Mall Trust Results Review (Q12016)

CapitaLand Mall Trust released its Q1 2016 yesterday.

1st Key Metric: Funds from Operations Per Share (FFOPS)
To assess Reits/Trusts, a very important metric to use is Funds from Operations(FFO) as it measures the profitability of the reit/stock after taking into account of depreciation and gains from disposal of assets. Funds from operations is a much more reliable metric to assess how well the trust/reit is doing.

The formula : Net income - Interest income + Interest expense + Depreciation- Gains on asset sales + Losses on asset sales = Funds from operations 
For CapitaLand Mall Trust, FFOPS:
1Q2015: 0.0297
1Q2016: 0.0317
There is an improvement of about 6%

2nd Key Metric: NAV Per Share
The NAV of a company is its Assets minus liabilities, divided by the outstanding number of shares, we get the NAV per share. It is the 'book value' of a stock. If the market price of the stocks is below the NAV, it may mean a good opportunity to buy the stock.

Current NAV (1Q2016): $1.88
Current Stock price: $2.17
Premium: 15%

Earnings implication- Saved by Bedok Mall

 

 

1. The revenue of Bedok Mall- $14.6m attributed mainly to the increase in revenue. This means that if CMT did not acquire Bedok Mall, its revenue would have been $152.7, a decrease as compared to 1Q2015 which inherently means the other malls are not faring as well. The improvement of IMM by $1.3m can barely save all the other malls.

This is why for a reit to grow, it is important to acquire new assets and improve on the existing ones.

 

2. Other assets- Jcube, Sembawang Shopping Centre, Clarke Quay, The Atrium @ Orchard are performing worse.

 

 



Looking at this chart, retention rate for:

Clarke Quay: 66.7%

The Atrium: 44.4%

Other assets (Jcube and Sembawang shopping centre): 71.4%

 

Not a very good sign..

This also means that Heartland malls are doing much better, which Frasers Centrepoint Trust is very strong at.

 

Overall- Will not buy now.

Better than expected performance results, DPU also increased. But the current price of $2.17 sets a premium of 15% to its NAV value.

 

Not a good bargain.

 

I am also cautious of how the other malls are doing in future especially Clarke Quay, Jcube, Orchard.

 

Bedok mall cannot save the day, all the time.





When should you sell a stock?

The market has been bullish these 2 weeks.

I would like to maximize my profits, sell at the peak (hopefully) and repurchase when the stock is low. However, to time the market is very difficult and I do not encourage that too.

But there are still some very valid reasons on when I sell my stock.

1. When it is very likely (i.e. beyond a reasonable doubt) that the stock is overvalued.

A P/E ratio that is ridiculously high or a very bullish stock that keeps going up within a short period(a few days) without any significant company news can indicate that the stock is being driven by speculators.

I monitor the stock market every hourly x8 hours x 5 days a week x 12 months a year, and so far it has been 1 yr 8 months. Really eat too free lol.

There was a time where Q&M irrationally shot up to $1.00 at its peak. The normal trading price was around $0.68-$0.72 over the year.

StarHub traded at its peak of $4.46 when the average over the year was about $4.05-$4.18 before the 4th Telco came in.

For one to see when your stock is overvalued, I think you would really have to know your own stock SO WELL until you know how it might behave according to STI's movements.

There are some technical movements and volatility (we call that 'Beta' in a stock) unique to each stock Some stocks have very high beta (Noble) whereas some stocks are forever so stagnant (Reits). You can only confidently sell your stock if you know it has suddenly behaved irrationally.

2. When its fundamentals have changed

 In 2015, the oil price started to spell trouble and that was a good time to sell oil stocks like Keppel when it was trading at $9+.

In 2015, the announcement of the 4th Telco came and there were already plans for its entry. That was a good time to say goodbye to Starhub and M1 :(

A shift of fundamentals include the overall industry outlook and the company's competitiveness.

3. When you know you have a better opportunity

I sold Capital mall trust when I earned some decent profits then and I believed that at that particular time, it has hit a high. I sold it off and bought Ascendas Reit when I honestly think it was undervalued (at that time).  This is a reason to sell a stock- to purchase a stock that is performing better (hopefully undervalued).

True enough, A-Reit hit a high about 2 months later and I sold it off again. I am still pessimistic about the market especially in the US side. I highly believe that US is heading for a recession this year.

Digress, I do need some funds for my war chest. I do not think that my opportunity cost to hold off a bit later will be that high.

Well, these are just my opinions learnt through several heart aches; I hope I am improving :)

Another scam: Aquilaria Tree Scheme

The Aquilaria Tree Scheme

I read Straits Times today and saw this news:

Link: http://www.straitstimes.com/business/investors-cry-foul-over-tree-investments-gone-wrong

The "deal" in summary:
Pay $230 per sapling or $550 per semi-mature tree
Tenure: 6-7 years when tree matures
Returns: 6-7 times when Agarwood is harvested from each tree
What does this mean: 100% returns averaged out in 1 yr.

In 2013, my friend proudly told me her investment in this Aquilaria Tree. She said that she bought a few trees and when these trees matures, it produces Agarwood which can be sold. She can sell at $400-$600 for each tola of Agarwood oil harvested.

I told her then that this was very likely a scam. How can there be such a good deal? $400 return after 6 yrs when the investment is only $500?

SURE ANOT? 100% return?

She told me that she was very sure. The investors even told her they could bring her to see the actual trees planted. Furthermore, it was a Singapore based company.

Hai.. so now this Singapore company has folded and gone MIA. Hard earned money of my friend all gone..

Previously, I have written a post about Pre-IPO Scams, link here.

How to identify potential investment scams:

1. It promises high returns with a very low risk.
What is high return?

Returns through various investments:
0.025%  savings account
1.3%  1-year FD
3.25% OCBC 360 Account
7.8%  S&P 500
15% Warren Buffet
Warren Buffet, one of the richest person on Earth, returns from the stock market is about 15%.  Do you honestly think that you can get an investment that yields a higher return than Buffet consistently and at a low risk?

2. You are enticed through telemarketing
A good investment will be secretly kept in wraps and for traders/big investors to earn. Heck, if I can earn via arbitrage or if I know a very good investment, I will keep it a secret and profit hugely myself.

If a good investment has to be promoted through telemarketing, it is just desperate.

Lastly, some lessons to learn:

1. 'Alternative Investments' such as venture capital, private equity, hedge funds, real estate investment trusts, commodities as,precious metals, rare coins, wine, and art are normally directly sold to people with high net worth. You may  a private banker from a known bank helping you to invest in such things.
Such a creative idea... Aquilaria Tree and agarwood lol.

2. Read more and understand better before investing.  You should be sure of what you are buying, please read more and please read from expert reports. If you do not know anything, at least GOOGLE.

3. If you cannot resist the temptation to make money quickly and easily, you are bound to lose money.  I have written a post here . There is no easy and quick money in the world la alamak. Warren buffet reads 8 hours a day and is innately talented, and his returns are 15%.

Ok, that's all from me in this matter. :)

Sold off Ascendas-Reit

Sold Ascendas-Reit at $2.42, when it hit a high this week. My return from this stock is about 10%.

I don't have the time to write an essay to explain why I am selling A-Reit.

So.. this is becoming like Twitter, just a few sentences to say why.

1. When I buy Reits, I analyze its FFO (Free cash flow from operations) per share & NAV.

2. A-Reit honestly, is doing WELL in terms of these two matrices . Coupled with its high DPU, it is really quite a good stock to buy.

3. However, sentiments from the market seems to show that given the current volatile economy, this price is overvalued at the moment.

4. I am rather confident that I can enter at a lower price in a few months to come.

5. Economy is not doing well- US is headed for a recession (after reading so many expert reports). Sg export market has dropped, also heading to a technical recession. China is losing its steam.

6. Oh Well.. I am cashing out to build up a war chest first. Will purchase when the recession is confirmed ;)

It is here.. Robots replacing humans for jobs.

Last weekend, I went to MacDonald's to buy an ice cream. Wow.. when I stepped in, instead of the usual cashiers and tables in the usual lay out, I saw this:

SELF SERVICE KIOSK.

Now, instead of queuing, all I had to do is to press a touchscreen, make some selections, pay on the spot, and Tada! I get a queue no. and I wait for my ice cream, all done in less than 10 minutes.

JOBS REPLACED BY SOFTWARE BOTS-BILL GATES

In 2014, Business Insider wrote an article where Bill Gates states that "People don't realize how many jobs will soon be replaced by Software Bots"

This what he said:

“Software substitution, whether it’s for drivers or waiters or nurses … it’s progressing. …  Technology over time will reduce demand for jobs, particularly at the lower end of skill set. …  20 years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model.”

 

I digress a little. I am hugely interested in what experts say about future developments, especially when people like Bill Gates had been very spot on on their predictions decades ago.

Bill gates, in 1999, predicted about Social Media/Home monitoring/Internet payments/ mobile devices/ price comparison sites ..etc.

It was scarily accurate.

Now, I have to sit up and seriously look into what he says lah!

Instead of jobs being replaced by foreign talents, I think the real danger is software bots -_-

WHAT DOES THIS IMPLY?

In 20  years time, these jobs will become irrelevant:

In 20 years time, I will be in my 40s-50s and my job falls nowhere near the 'safe zone' :(

In 20 years time, our children will be the ones facing the brunt and unless they have high skill sets, it's going to be difficult for them.

Lastly, CANNOT BEAT SOFTWARE BOTS? JOIN THEM.

Become a software developer.

Unfortunately, it is really 'easier said than done'. A coder needs to possess really innate logical thinking and clearly, not anyone can do it.

Why I will not top up my CPF SA voluntarily

Personal financial planning is a topic which I seldom talk about, but I do have my own plan and I would like to share it here.

About topping up my CPF SA account voluntarily.

The good:

4% interest.
I find that topping up the CPF SA account is very good viable option as it earns you a 4% interest and when compounded over the years, the amount of money can be substantial. The earlier you start, the better the effects of compounding is seen.

Tax benefits
Up to $14k. If you do that for 10 years, you would have saved $140k!!

BUT BUT BUT..This is not my plan.

My plan is this:

To invest in stocks/ liquid assets and get my 2nd property/3rd property in years to come.

If I were to put my money into SA account, the move is IRREVERSIBLE. So how can I get to buy my 2nd property ?

Investment in Real Estate
I want to invest in real estate, at least this is what I believe works in Singapore. Many people say that Singapore is heading a property crash, but the real estate, like stocks, goes through cycles too.
In Year 2003, some condos are for sale at $300k. Right now, in Year 2016, these condos have doubled or even tripled in value.

If you are investing for a long term 10-20 years horizon, houses, due to increase of prices in land/construction/manpower (inflation) , will likely appreciate decently too.

And yes, Do not think of buying properties in Malaysia/Cambodia/Vietnam, I am not referring to investment in these countries, not for properties please.

What i like about real estate is I can utilize leverage (mortgage) to get some passive rental income, enjoy some capital appreciation, and if all things goes badly, at least I can stay in it!

Lastly, plan early.

Do what you are comfortable with, but at least plan ahead and stick to it. The worse is not planning anything and making haphazard investment decisions!

Looking elegant with the least $$

First impressions matter.

I think that looking presentable and elegant, while emanating some sophistication for a modern woman is very important in the workplace.

The cosmetics industry is always so lucrative, thanks to woman who always want to look pretty.

Anyway, I am no exception.

Except that savings and value matter to me a lot and I spend only the very minimal on looking good.

This is where I...

1. Get my hair dye done:

I watch youtube videos on "how to dye your own hair" and buy Liese Hair dye to do it myself.  I can say that I am really impressed with my own work. Lol.

This Liese works wonders! It is easy and convenient.

Damage: $20.
Damage if I go to hair salon instead: $100
Savings: $80

2. Rebond my hair:
Aunty XiuZhen at Jurong West home salon.

This Aunty specializes ONLY on rebonding hair and she has been doing it for 10+ years. Her work is awesome and she uses Sheseido hair products ok.

Damage: $65
Damage if I go to hair salon instead: $150
Savings: $85

3. Makeup products
Silkygirl cosmetics

Don't need to spend on Chanel products which costs over $100+.  Simple low cost cosmetics like Silkygirl will do. I watch youtube videos on how to makeup and learn it. Really, the skill in making up is more important than buying expensive make up products!

Damage: $20+
Damage if I buy branded: $100+
Savings: $80+

4. Clothes/Household items

Taobao is a god send!! I save SO much money over the years buying from Taobao instead of brick and mortar shops. Clothes/baby clothes/household items/ winter clothes/ toys so many things!

And I do not use agents like 65Daigou. I learn how to ship direct from Taobao.  Just spend some time figuring out how to use China agents to ship over. It is much cheaper that way.

I am also vested in Alibaba shares as I can see its great potential in time to come ^^

Cost savings: 50%

Conclusion..

I often read AK's blog on the importance of saving and spending prudently. Really, it all adds up.
Spending prudently is also learning about 'delayed gratification' -the notion of enjoying your rewards later.

First impressions matter and really, it does not need a lot of money to do that.