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.

Cheers,
EzHuat


Related post:
Q1 2017 Update for Mapletree Logistics

GoHuat's Views on Current STI Market and Upcoming Plans

YoloHuat's 1H 2017 Report Ccard

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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!

GoHuat

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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. 

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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!

GoHuat

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Do you know the meaning of Financial Freedom?

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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 :)

Cheers, 
EzHuat

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YoloHuat's 1H 2017 Report Card

The first half of the year is almost gone and doomsday never arrived. Instead, stock prices continued to make new highs. A parking spot in Hong Kong gets sold for a record HK$5.18 million (US$664,300), costing more than some Hong Kong homes - and housing there is already the least affordable in the world. A new 100-year Argentina (one of the most regular defaulters in history) sovereign bond apparently was 3.5x oversubscribed. Investors simply do not believe in the Fed’s hawkish zeal, and so the party continues.

Anyone who remained invested in the market should have seen pretty decent returns so far this year. I thought I was totally nailing it, until I generated some numbers to see how I stack up against the index:

My report card (as of 28 June 2017):

The blue bar is the XIRR of all cash flows from Jan until 28 June for my portfolio (I'm slightly bemused that it's such a nice round number), while the red bar is the annualised year-to-date return of the SPDR STI ETF. It is indeed disappointing to be lagging the index, and after some scrutiny I attribute it to poor timing - buying in too early. Clearly this result explains why there has been raging debate over active vs. passive investing.

With hardly any yield on cash and limited avenues to generate returns, for the common retail investor at least, this long upcycle has likely resulted in most of us being long and overweight equities. The slow nominal growth however, induced us to complement it with an income focus (thus the popularity of REITs and dividend stocks). A quick browse through of the local finance blogs and sell-side research reaffirms this view - and leads me to wonder if everyone has the same positions. In fact, it’s my biggest worry now, especially with the pervasiveness of passive index investing. Downside has actually risen, as any sell-off would lead to everyone trying to get out of the same door at the same time. (Meanwhile, upside is limited with everyone having bought already.) You may argue that you are in for the long term and will ride through the cycles, but how confident are you that you will not hit the panic button when shit happens, especially when money can be pulled out with only a few clicks? To be honest I’m not that confident myself. Plus, my emotional control hasn't really been put to the test yet. I draw comfort though from the knowledge that I do not depend on my portfolio for liquidity. Do read this post on spare cash by GoHuat if you haven't.

Cheers

YoloHuat  

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Confidence in Ascendas Hospitality Trust Paying Dividends?

I first took note of Ascendas Hospitality Trust following their failure to sell their business. At that time, I was  looking for REITs/TRUSTs with business operations across the Asia-Pacific region, instead of in Singapore only. My consideration for the hospitality sector is that Singapore was projected to have an increase in supply of hotel room over the next few years, and it is impossible to be certain whether more tourists would come to take them up.

Out of curiosity, I decided to go through AHT's financial statements. Besides having a good balance sheet, their exposure in Australia and Japan drew my attention as I believed both countries have the right business conditions such as low interest rate and then-depreciating currency. Moreover the share price was below my target buy price. Not difficult to guess what comes after that right? 😜

Here is an brief overview of AHT's business:

Credit: AHT 4Q FY2016/17 Financial Results Presentation

So how did AHT perform in FY2016/17?

Credit: AHT 4Q FY2016/17 Financial Results Presentation

Based on their 4Q FY2016/17 report on 11May, AHT have performed very well by clocking a record Distribution per Stapled Security of 5.68cents. Their Net Asset Value has also risen from S$0.85 in Dec 2016 to S$0.92 in Mar 2017.

 Credit: AHT 4Q FY2016/17 Financial Results Presentation

Credit: AHT 4Q FY2016/17 Financial Results Presentation

Net Property Income is an important indicator to determine a property portfolio’s profitability. I am interested to find out the breakdown of AHT's NPI by country, as the tourism business is geographical-dependent. 51% of AHT’s NPI comes from Australia and 29% from Japan. To this end, both countries have registered a rise in NPI of 12.9% and 24% respectively. 

Final Thoughts

Glad that my investment in AHT has gone well so far and I remained hopeful for more dividends to come in future. A key risk that I am monitoring closely are potential business disruptions such as AirBnB which has affected the business of traditional Japanese Inns and are gaining much popularity in Australia. Staying alert to the global trends remains important to me as these disruptions could snatch away our "lunches" really quickly!

Together, let us all Go & Huat ah!

GoHuat

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Rationalising Mapletree Logistics Trust ...

Mapletree Logistics Trust is one of the best performers in my portfolio. My interest in MLT lies in their well-managed business across the Asia-Pacific region and backing by a strong sponsor - Temasek. I managed to sieve out 5 key indicators from their 4Q2016 & FY2016/17 results which could be useful to note:

• Business performance, in terms of available Distribution Per Unit, has increased by 0.8% Year-on-Year.
• Increase in Net Asset Value from S$1.02 to S$1.04.
• Aggregate leverage fell from 39.6% to 38.5%. This could potentially provide MLT with the capacity to borrow more to fund further acquisitions.
• 81% debt hedged into fixed rates & 72% of income stream for FY17/18 hedged into SGD.
• Slight rise in portfolio occupancy rate to 96.3% in Mar 17, from 96.2% in Mar 16.

My confidence in their recent acquisitions in Australia and Vietnam has been rewarded, as these properties have been fully leased and are contributing well to the overall Net Property Income. I also like MLT's strategy to divest the old warehouse in Toh Guan, given its limited potential for re-development into a modern facility. The money from the sale can then be reinvested in other warehouses with greater potential. Overall, I still find MLT's business to be well-managed and a quality investment. 

So what’s next? I saw this article on Colliers International for USA and thought that it could potentially serve as a guide for the future Asia-Pacific region.

 

Extracted from: Colliers International, Knowledge Leader

As the e-commerce in the Asia-Pacific region is expected to keep growing, my view is that this would likely to continue fuel the demand for warehouse spaces in the next few years.💪 What do you think?

Together, let us all Go & Huat ah!

GoHuat

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9 tips for saving in Singapore! [Part 2]

We hope you have enjoyed Part 1 of our series for savings tips. We, TripleHuat, will once again bring you Part 2 of the series in this post!

Shopping

1) Utilising SAF Credits. If you are still an active NSF or NSmen, you will have SAF e-mart credits. Instead of letting the credits idle until the next In-Camp-Training or until its expiry, why not use them to buy some sports equipment for yourself? If you are working in the corporate world, do consider getting their black shoes & socks. You can purchase a pair of sports shoes for your girlfriend too!

2) Earning Online Cashback. The e-commerce world is getting more and more prevalent. You don't have to step out the comfort of your home to do your shopping. Go online and make your purchases! Make full use of ShopBack or/and credit cards to earn cashback. 

3) Be A Savvy Shopper. For shopping at international brands, always compare prices between online vs. local physical stores. For example, because of online sales, some items on the Victoria’s Secret US website are being sold for less than 50% of the price in local SG stores! Even before the sale, it can be about 20-30% cheaper online. Remember to check delivery options though! Besides cashbacks, making payments using credit cards that give you extra points/miles for online payments, such as UOB’s Preferred Platinum Visa card, will also ensure that you’re stretching every dollar. 

4) Leveraging on Sales. For new couples, you can explore buying items at Great Singapore Sales or warehouse sales which are occasionally held at SG Expo, Sia Huat or online platforms such as Taobao, Qoo10 or simply finding second-hand items on Carousell. Make sure you do your due diligence to check on vendors' reputation & items' condition! This would save you a huge sum which you can use for other purposes such as traveling. 

5) Buying Household Items from Chinatown. Little known to many, there is a corner in chinatown at New Market Road with shops that sell household items at cheaper price than many heartland shops. The first floor is made up of hawker stalls while the shops occupy the second floor onwards. You can buy household items or even items for chinese wedding there. Some of the more well-known shops are Swanston and 海洋.

Couple Time

6) Dating. Going out dating with your partner can cost a lot in a day. Instead of spending money and time to eat, watch movie, shopping, why not go out exercise to keep fit together, take a stroll at our UNESCO site - Picnic at Botanic Gardens, bask in the sun at East Coast Park, go on a hike at Coney Island, take a day trip to Kusu island or go for cycling in Pulau Ubin. There are many inexpensive activities you and your partner can do. It's the company and quality time that matters!

7) Visiting Malaysia. We heard that scores of people have went over to Malaysia to purchase many useful, bargain-hunting and affordable items to take advantage of the favourable SGD-Ringgit currency. But do be mindful of the borer restrictions and various taxes! For couples, you can consider a less expensive staycation in Johor Bahru or take a coach from Lakin to various parts of Malaysia. Hotel in a good location is likely to cost less than SGD100 per night during non-peak seasons.

8) Console Games. If you and your significant other are into console games, buy a good RPG game that can keep the both of you engaged for at least a month or two - save on eating out and dates! You can sell the game once you're done to recoup some of the initial outlay. The common option is to do this on Carousell, but there are some shops out there that let you sell back the games that you bought from them once you're done - one example is Qisahn. 

Personal Skills Development

9) SkillsFuture Credit. Every Singapore Citizen aged 25 and above will receive $500 worth of credits where we could use it for skills-related courses. If you want to stay relevant in this ever-changing world, it's time to take charge of your self-development and career progression. So go forth to plan your learning journey with your SkillsFuture Credit!

We hope you enjoy Part 2 of our saving tips! Keep a look out for more tips from us soon!

Huat ah! Happy Labour Day in advance!

Cheers, TripleHuat

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7 tips for saving in Singapore! [Part 1]

It's common to hear people lamenting that Singapore is such an expensive city to live in. The prices will only go up and not down. Aiyoh... money not enough leh. If you are willing to spend the time and effort to search for good bargains, there are still many ways to save a couple of dollars and cents which will add up to be a lot of money over time!

In this post, we the 3 Huats - EzHuat, GoHuat, YoloHuat - will share tips on how we can save money. We have compiled a list of items that will be useful for minimising the daily expenses in our lifestyle and through this post, we hope to share what we know. If you have other tips, we would be keen to find out more from you too!

Food & Drinks 

1) Coffee. Are you a coffee addict? If you are, it's time to do a caffeine check. One cup of Starbucks coffee can easily cost $6 or more. If you need a cup everyday, you would spend $42 a week, $168 a month, $2,016 a year! Imagine what you can do with $2,016! Maybe it's time to search for cheaper source of caffeine fix. How about kopitiam coffee? It probably cost below $2. Or you can buy the coffee powder and make your own beverage!

2) Eating at Hawker Centre. Instead of eating at restaurants, why not eat at hawker centres which cost lesser and the food can be as yummy too! A meal at Hawker Centre should cost between $3-$8 while a meal in restaurants will likely cost at least twice or even more than that. So go for value-for-money meals at hawker centres and you get to support our hawker heritage too! 

3) Cooking at Home. If you are sick and tired of eating out, you can consider cooking at home. Home-cooked food always taste better than outside food because it's cooked with love. It is also a good and healthy bonding session for couples or families to come up with new recipes together! All we need to do is plan your menu and buy the groceries at nearby supermarket. 

Transport 

4) Don't buy a Car. We live in a consumerism world. To own a car in Singapore is definitely not going to be cheap - with a significant amount going to the Certificate Of Entitlement (COE). Instead of spending a 5-digit sum for that piece of paper, why not take public transportation or use Grab/Uber? Besides, we can also make full use of Grab or Uber promo code. It's definitely cheaper than owning a car which you would have to pay for road tax, car insurance, petrol, parking, maintenance, ERP, etc. 

5) Free MRT rides. If you are an early bird at work, you can wake up earlier to take the free train rides if you tap out of the 18 designated stations before 7:45am on weekdays. The scheme has been extended to 30 June 2017. Not only do you get to avoid the crazy peak hour crowd, you also get a free ride! You can check out the 18 designated stations at this link.

6) Grabbing a Bicycle. Instead of driving cars or taking public transport, why not explore using bicycle to travel within a short distance. You can consider to buy second-hand bicycles or take up bike-sharing initiatives from companies such as Zaibike, ofo, Obike. Alternatively, you can explore purchasing a personal mobility device too. Save the planet!

7) Tapping on Travel Websites. Ever wonder whether you could enjoy a vacation while saving a bit more? Well it is possible if you are aware of all the available flight options and choose the less costly ones. Websites such as Skyscanner or Kiwi are useful platforms for us to tap on to quickly find out these info. Do sign up for budget airlines' mailing list too! Sometimes they do offer good promotions at different seasons or occasions. Essentially you can still travel but spend lesser at more affordable prices!

That's all for Part 1 saving tips. Keep a look out for Part 2!

Huat ah!

Cheers, TripleHuat

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