Tuesday, 2 January 2018

Four major events to look out for in 2018

Happy 2018!

It has been a hiatus since our last few posts. At every stage of our lives, things evolves which requires more of our attention. Nonetheless, triplehuat would like to wish all readers a blissful, peaceful and bullish 2018! Huat ah!!

As announced by PM Lee yesterday, Singapore's economy performed better than expected by growing 3.5%, more than double the initial forecast. This is good news for the country as we continue to ride on the global economic upswing.

As evident, the prospects for 2018 seems promising and likely to be rosier than past years. How true can this be? Let's delve into four events which could jolt the market this year.

1. US Tax Reforms
Recently, President Trump gifted all US citizens and companies a Christmas present by passing the biggest tax overhaul in three decades. The tax cuts were aimed to entice US companies based overseas to flow their investment back to US. This would certainly lift the economy, create jobs, boost markets and harness economic growth. However, how it truly benefits US remains to be seen. Some predicts that it only benefits the rich and widen the income gap. I view it as positive as we are likely to see higher earnings from US companies which is a big plus for the stock market and global economy.

2. Oil Prices
Lately, there are rising tensions between Saudi Arabia and Iran. The unrest in Libya, Syria, Iraq and Yemen are also going to threaten the oil productions. This would push oil prices up and provide some respite to the beleaguered offshore and marine companies and hopefully end the drought of earnings in the oil and gas sector. However, there is another threat posted by US Shale gas which is poised to increase production alongside the rise in oil prices. As such, oil prices may continue to hover around the range of $50 to $60-ish which could still be a sweet spot - high enough for oil producers but low enough for oil consumers.

3. North Korea Nuclear Weapons
Despite being slapped with tougher international sanctions, North Korea continues to march towards their vision to be a fully nuclear-armed country. They are determined to pursue their nuclear programmes to 'defend' themselves against external threats. Tensions are likely to escalate in 2018 should Kim Jong Un continues testing missiles after missiles. It will be a new test of relationship between superpowers such as US, China and Russia. This is worrying as it could depress investors' confidence in the market and results in the stock market to plunge. My view is all countries will still practice some form of restrain as waging a full-fledged war is certainly not win-win for everyone globally.

4. Rising Interest Rate Environment
This year, we are going to experience a rising interest rate climate as a result of global monetary tightening. The US Federal signals three hikes in 2018. This will impact individuals who own homes and companies who borrow funds from banks to fuel their growth. In addition, we are approaching the tenth year since the last global financial crisis in 2008-2009 coupled with the fact that stock market is trending on the high side. It becomes harder to find stocks to invest at low valuations. As monetary policies continues to tighten further, the fear is that it may lead to economic corrections, risk appetite changes and turbulent capital flows ahead.

What other events might cause market turbulent? Feel free to share your views.

Nevertheless, we hope 2018 brings more opportunities to all Triplehuat readers! Wishing all a bountiful year ahead. Huat ah!

With New Year greetings,

Friday, 4 August 2017

EzHuat's take on Viva Industrial Trust Q2 results

Viva Industrial Trust ('VIT') is a Singapore-focused business park and industrial real estate investment trust. Its portfolio focuses predominantly on business parks and industrial properties in Singapore.

Here is a summary of the Q2 report card:
(i) Distribution Per Unit (DPU) achieved a 6.3% hike to 1.861 Singapore cents.
(ii) VIT's gross revenue also grew 18.0% to $27.6m, partly driven by a $2.3m increase in contributions from Viva Business Park (VBP) and a $1.9m contribution from the Chin Bee acquisition.
(iii) Its Net Property Income (NPI) rose 17.5% to $20.2m from a year ago.
(iv) Occupancy at VIT's Jackson Square reported occupancy of 89% with >70 sq ft new leases signed
(v) Completion of Downtown Line interchange at Expo MRT in late Oct 2017 will potentially spur increase in rental reversions.

As a result of VIT's relatively good results, its share price has seen a good upward momentum lately. Now the question is, is it a good time to buy VIT?

While I am vested in VIT, I am of the view that there is nothing spectacular at current juncture. Nonetheless, I like the fact that VIT has positioned itself in pretty good locations. Most of them are strategically located near amenities and accessibility to transportation. With its yield of about 8%, it is indeed quite attractive amongst the reits community.

Some says that its property lease tenure is short as compared to others and likely lead to drop in valuation overtime. They run the risk if the land lease runs out which ultimately will impact their income. Personally, I see positive upside in the short-medium term as long as the Singapore economy remains healthy and VIT successfully renews or sign new land lease tenures.

In industry reit, I typically look at its growing NPI, healthy and rising occupancy rates and manageable gearing ratio. In addition, VIT manages to house a good mix tenant mix such as gym, Decathlon Singapore and a variety of food and beverage outlets. VIT looks stable to me for now and I will continue to monitor further.

What's your take? Feel free to share.


Related post:
Q1 2017 Update for Mapletree Logistics

GoHuat's Views on Current STI Market and Upcoming Plans

YoloHuat's 1H 2017 Report Ccard

Tuesday, 1 August 2017

GoHuat’s Views on Current STI Market and Upcoming Plans

Over the past few months, the STI has risen steadily to the current support level of 3300-3350. One potential thought is to sell off some shares in CPF Investment Account to preserve some of its gains. Based on current market conditions, my target sell prices for the shares in my CPFIA are as follows: OCBC@S$11.50; for STI ETF@S$3.52; and for Singtel@S$4.25. My CPFIA portfolio is expected to achieve an estimated returns of around 2.56% in 2017, based on total dividends over total purchase price. (Note: My first purchase was in end Mar 2017 so I missed out some dividends before that).
I am also planning to start selling my cash investment once STI hits 3.5K or if there is a change in the global outlook. Over the past few months, I have accumulated more Singtel shares. My current portfolio consisted of 3 “anchor” shares - Singtel, MapleTree Logistics Trust (MLT) and Ascendas Hospitality Trust (AHT). These 3 shares formed around 25% of my portfolio in terms of purchase value. The remaining 75% are shared between Finance (i.e. Banks and financial companies) and Oil & Gas shares.
My "anchor" shares have performed well while paper losses in O&G shares remained a sore thumb. However, I am happy that the damage has been reduced by my timely shift into “anchor” shares. My current view is that the O&G sector is starting to show some minor recovery signs, with indicators such as the rise in oil prices and early interest to buy over completed Sembcorp Marine’s rigs. Related to this is a recent report published by DBS on the potential merging of Keppel and Sembcorp Marine. I thought it would be interesting to share my facebook views here:

Will both companies merge? Though there are benefits of cutting cost during this downturn, I still think that the sector has a good chance of recovering  in the longer term. I also agree with this article that a merger will cause a monopoly issue in Singapore. Hence, my current belief is that the likelihood of a merger is low. What are your views on this?
Together, let us all Go & Huat ah!

Related Posts
Why should we ever use our CPFOA for Investment?

Tuesday, 25 July 2017

Q1 2017 Update for Mapletree Logistics Trust

MLT released their Q1 results yesterday. Here are some key highlight of their Q1 2017 performance.
  • DPU increased by 2% from 1.85 to 1.887 cents.
  • Slight decrease in Net Asset Value from S$1.04 to 1.02.
  • Aggregate leverage increased slightly from 38.5 to 39%.
  • 79% debt hedged into fixed rates & 70% of income stream for FY17/18 hedged into SGD.
  • Decrease in portfolio occupancy rate to 95.5% on 30 Jun 17 from 96.3% on 31 Mar 17 

While MLT's DPU has continued to rise, I am slightly surprised by the decrease in portfolio occupancy rate; which is likely due to the dip in occupancy in South Korea from 98.4% to 83.3%. Will continue to monitor if there are any improvements in the next quarter results. I still rate MLT as a quality purchase and there should be no major business issues in the near-term. 

Most of my shortlisted shares have already well-exceeded my target buy price. On the sell side, some stocks are reaching my target sell price. However I am likely to adopt a wait-and-see attitude before making any sell decisions as there are no significant changes to the global landscape yet. During this period I am likely to focus on building up my cash "war-chest" to prepare myself to buy in when opportunity arises. 

Related Posts

Friday, 14 July 2017

Should we use our Annual Performance Bonus to Top up our CPF?

As an employee, we would work very hard to secure our monthly pay-check and the ultimate annual performance bonus. Recently, I was engaged in various discussions on how to use our bonus. Some people even told me that the sum of money is causing them a headache because they do not know how to use it! Alamak, I really won’t mind helping you to solve this problem! 😜
So what would I do with my performance bonus?
For the initial years of my career, they would all end up transforming into shares investment or into my future funds such as emergency funds as well as expenses for wedding, house renovation, etc. From last year onward, I started to set aside up to S$7K to perform voluntary cash top-up to my CPF Special Account. Why? 
Like many, my initial considerations were just for the tax reliefs, potential gain from the CPF interest rate and to max up my CPF SA as quickly as possible. Later on, I wanted to open up the option of using my CPF OA money to pay for subsequent property investment. As I could only use the excess CPF OA savings above the CPF Basic Retirement Sum* for the purchase, cash top-ups & their interest returns would help to accelerate this process. My latest thought was that the money in CPF could also act as an “insurance” or “monetary support” for my wife/family members in the event that I suddenly pass on. Minimally the money could help to cover arising related expenses for my family. My personal philosophy on this is:
“We can be positive about the future but must be prepared and responsible for what happens next
Simply, I want to still be responsible for related matters even for the future beyond my life. If you are interested to find out more about cash top up to your CPF SA, I will recommend to start off with EzHuat’s article here.
Rambling a bit more about a related discussion among my fellow Huats, YoloHuat pointed out that people might not want to perform cash-top ups due to their upcoming payment needs. For this case, I fully agreed with her. Topping up our CPF is still an investment, and we should only do it using our spare cash! Recall that my personal experiences (see post) taught me to: ONLY INVEST WITH MY SPARE CASH.
There is no one-way of using our annual performance bonus and it would depend on the outcome that we hope to achieve. We have a choice on what we want to get out of it, for a good vacation to reward our family and ourselves, or for investments to prepare for financial-freedom, etc. Nothing right or wrong. Ultimately, we just have to be comfortable with the decisions made and be responsible for the subsequent outcome. :)
* Note that the Basic Retirement Sum is reviewed by CPF every year. As of now, savings in our CPF OA & SA (including amt used for investment under CPFIS-SA) can be used to meet this required amount.
Together, let us all Go & Huat ah!

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Tuesday, 4 July 2017

Do You Know the Meaning of Financial Freedom?

I want to be financially free!

This is probably the dream of everyone. What exactly is financial freedom? How do you achieve it?

By convention via a linear pathway, we were taught to study hard, get good grades, enrol into good schools, go to the University. After graduation, you find a good-paying job and then work work work to climb up up up the corporate ladder. 

After going through all the stressful periods farming your hard earned money, you then feel the urge to spend spend spend to satisfy your material needs, pamper yourself like royalty on holidays, buy bigger houses, cash in on the latest car models etc. After splurging on those big-ticket items, you then feel the pinch and obediently goes back to work to earn back the money again. Sounds familiar? 

Indeed, most people trade the bulk of their time for a paycheck. I'd term this a 'vicious cycle in perpetuity'. In other words, it is a self-imposed rat race. 

What is financial freedom?
As the name suggests, it means being free financially where you can maintain your lifestyle without worrying about a monthly paycheck, bills, food and entertainment expenses etc. 

Financial freedom is not merely about having more money. We have seen wealthy people fall from grace and become bankrupts, high-income earners who had to slog/borrow/beg to pay off debts or people who seems to be rich on the outside but actually poor on the inside.

On the flip side, we also witness ordinary people who earns modestly and lives simply. Despite that, they are able to do what they like. They work because they want to work, not because they need to work. They can afford a yearly holiday trip and some occasional splurges yet don't feel a pinch in their wallet.

Achieving financial freedom is about how you make use of money wisely with a peace of mind.

If money is not an issue, what would you do?
To understand financial freedom, you need to ask yourself the question above.

Would you travel around the world?
Would you start a new business?
Would you spend more time with your loved ones? 
Would you spend your time volunteering and help the needy? 
Or would you take on new hobbies?

Being financially free gives you these options. 

Take control of your life
To achieve financial freedom, here are some simple steps you need to take:
- Avoid debts
- Spend less than what you earn
- Invest your spare cash
- Generate multiple income streams 
- Set your financial goals. Know what you are working towards to
- The earlier you start, the better
- Be grateful with what you have, don't compare with others

What does financial freedom means to you?
Building wealth is just part of the equation. There are many more aspects in life to appreciate such as building your health, happiness, dreams.

For me, financial freedom is more than just financials. It means having the time of freedom to do what I want to do. Instead of material possessions, I prefer to have freedom to spend time with my loved ones. Having the freedom to change my career, start a new business, take some time off to gain new perspectives through meditation, pursue my passion and dreams, travel the world to learn more about what this splendid world has to offer and celebrate for. 

It’s not about what I choose to do, it’s about having the freedom to choose who I want to be or do what I want in my life fulfillingly and meaningfully. 

Go forth and plan your financial journey. Believe in yourself and you will reap the fruits of labour eventually. 

I would love to hear your definition of financial freedom! I would appreciate if you could leave your comments below :)