Wednesday, 25 May 2016

Frasers Centrepoint Limited - Will it gets better with the opening of Waterway Point and Safra Punggol?

Frasers Centrepoint Limited (FCL) was never in my watchlist until I visited Punggol Waterway Point. Most of the malls are managed by Frasers Centrepoint Trust (FCT), who is listed in Singapore Exchange too. *Do not confused between these two.*

I don't stay at Punggol, but I would go that area about 3 - 4 times each month. There are a lot of new HDB BTO around the area in the recent years, but it is not crowded, at least at Punggol station.

Waterway Point

With the opening of Waterway Point in Jan 2016, the game changes. Suddenly there is a surge in crowds. From what I can see, Punggol resident are hungry for shopping malls. Waterway Point reported that have it has 90% of tenants occupancy for its soft launch, with major anchor tenants such as NTUC Fair Price Finest (24 hours) and Shaw. Not only that, it has Timezone arcade for the kids, variety of cafes and restaurants (which is always long queue) for the teens, adults and families. I can say that it just have all the magnets to attracts the residents from all walks, and of course Daiso, 穷小子 style favourite.
To add on, managed to get Shaw as its tenant is one of the great move by the Frasers Management.
Based on the MRT North East Line, the only one cinema from Punggol to Serangoon is at NEX, Serangoon shopping mall, before the opening of Shaw at Waterway point. I used to stay at Hougang, the residents from the area are hoping for a cinema.

Safra Punggol

Furthermore with the opening of Safra Punggol at Apr 2016, which is less than 1KM away from Waterway Point, adds another plus factor to FCL. Safra Punggol is a different concept from the rest of SAFRA, as it is the first eco-friendly SAFRA club. I can see that the audience which its targeting are mainly young couples and kids, the Splash@Kidz Amaze indoor water playground answers it all. The first three-storey indoor water playground will not only attracts Punggol residents, but also from the whole of Singapore. I went there during the first weekend since it launched, the crowd for the pool was crazy, all the time slots for entry were fully booked till it closed.

I do not know whether my observations would means the stock price will increase, but what I can say is that all of these are plus factors which will bring in crowds, and these are certainly benefits to FCL. Another financial factor is that the price is currently at an estimated of 0.60 of its book value only based on today closing price. In layman term means the price is discounted.
Except that I don't like its high debt ratio and the low liquidity in the stock exchange, other than that, FCL is not bad for a thought.

By the way, I'm not vested in this yet, still waiting for an opportunity. News of US interest rate hike may bring the price down for a good catch. Who knows.

Friday, 20 May 2016

First 穷小子's portfolio update

The month of April and May, which most of the investors are looking forward to. Dividend time!!

First 穷小子's portfolio update:

For the period of these two months, 穷小子 will be receiving a total of S$1,552.20 in dividends. Among which, $607.50 will be scrip dividend from OCBC, which means the actual cash received will be much lesser. Hope that this scrip dividend will be compounded and have some good returns over the time.

Dividends received this round: S$1,552.20

Year 2016
Total dividends: S$1,797.15
Average dividends per month: S$359.43
Average dividends per day: S$11.82

穷小子 started his actual investment portfolio in 2015, which means somewhere about this time of the year is his "Birthday". Despite making mistakes and a low dividend yield in his portfolio, at least he is having $4.91 per day for his meal.

News of US June rate hike is back again. Perhaps can get few REITS from my watchlist at a lower price.

Sell in May and go Away?
Be Greedy when Others are Fearful?

Thursday, 12 May 2016

OCBC Scrip Dividend Scheme

After waited for more than 2 weeks since XD date, have received the letter of notice for my scrip dividends from OCBC today. Finally.

What is scrip dividend?
Investopedia: A stock dividend is a dividend payment made in the form of additional shares, rather than a cash payout.
穷小子: Basically is payment to you by shares instead of cash for dividends.

From what I know, the 3 local pillar banks (DBS, OCBC, UOB) stocks may give their shareholders an option to choose between payment by shares or cash for each round of dividends payment. No, scrip dividend is not a mandatory for every year, it is a decision by the management and is one of the resolutions which the shareholders had to vote during the Annual General Meeting. In short, we wouldn't know whether the company would still have scrip dividend for next year until the next AGM.

How is the number of OCBC shares determined?
There is a formula for this actually. Using the amount of dividend (cash) which supposed to receive, divided by a 10% discount to the price which was determined during the price determination period, from 26 April 2016 to 28 April 2016 (both dates inclusive).
The price was determined at $9.01 for this round of dividend. which gives you a $8.11 after the 10% discount.
E.g. Supposing should you received $405.50 as cash dividend, you will have entitlement of 50 OCBC shares as scrip dividend scheme.

Should take up scrip dividend or cash dividend?
Let's weight some of the pros and cons which I can think of now if choose to receive in scrip dividend.

  • The determined price is still lower than the market price, which is $8.33 as of today closed price.
  • Although it became less than 2.5% discount instead of the 10% discount, we still had a free $0.22 per share from the scrip.
  • Fractional entitlements to a hundredth of a share or more will be rounded up to the nearest whole share. E.g.
    - 50.01 shares will be rounded up to 51,
    - 50.009 shares will be rounded down to 50 shares.
  • Is a good method for compounding if you are looking it as a long term investment.
  • Saves all the commissions and fees for the buying and selling transactions if one chooses to reinvest the dividend.
  • The value of the shares from the scrip dividends may increase in future. So long the price is more than $8.11, it means is in paper profits already.
  • No cash received, means no actual gain realised. Cash is King, some may say.
  • It may no longer to be seen as a 10% discount, because of the market price is getting nearer to $8.11. Might as well take the cash first and plan for the next move.
  • There will be odd lots in resulted, which may be inconvenient to sell in the market.
  • The value of the shares from the scrip dividends may decrease in future. If  the market price is less than $8.11, it is "eating" up the dividends, which means is in paper loss.
Scrip dividend or Cash dividend? You make the call.
This is the third time which I will opt for scrip dividend. Okie, I am bias, I can't think of much cons for this. It is a brown form this time instead of the green form which were received previously. Maybe because I had made a standing instruction for receiving scrip dividend as my permanent election for all my subsequent dividends until further notice.

Errmm. One more Pros pointers for 穷小子. He was entitled 100 shares for this round of scrip dividend, no odd lots for this time.

Tuesday, 10 May 2016

Should we rush to buy a stock when everybody is buying it?

From time to time, people made mistakes in investing, and myself is not spared from it as well. One of the common mistakes is one tends to buy the stock although the price keeps going up.
Maybe he want to get a slice of the cake which everybody is rushing towards. Maybe decision affected by families or peers when all are recommending it. Or maybe the reason can even be just because he is attached to this stock emotionally. Whatever the reasons it is, we should try our best not to buy it when the price keep going up, or at least this is what I believed in now. Most of the time, the stocks are already overpriced in such cases. It is not wrong by do so, but must do your homework well before making the buy call.
One good example for myself is that I bought Starhub during early of 2015, at around $4.1x. Main reason I bought this stock is because of the dividend yield, quarterly dividend pay out and payout ratio of 90% based on the the past records. The down point is that my dividend yield is slightly less than 5% only, which is consider as low for a dividend stock, but the price had always been more than $4 since 2013. With the psychological effects upon myself, I assumed it would be safe since it had been hovering around $4+ since 2013, but soon after, the price was heavily impacted by the news of the entrant of a fourth telco in Singapore telecom market.
A similar case which I seeing now is SATS. Will it be a multi-baggers stock in the future, or will it become a "trap"? Time will tell, especially when the opening for Terminal 4 & 5 of Changi Airport.

This lead me to have a thought.
Why would there have a long queue at the chicken rice stall? The price keep increasing but the queue only gets longer. Would you follow the queue blindly to get a packet of the chicken rice just because the queue was long? Is the chicken rice nice, or is it still as nice as before? Was the chicken rice over-priced? Or was it because it is the new "in" thing in town?
Of course, may not be neccessary a chicken rice, it's just an example. Ice-cream may work the trick too. ^-^

Ps. I am still holding my Starhub shares, hoping that there would not be a decrease in the dividend payout. *finger crossed*

Friday, 6 May 2016

Investment Link Plans, Buy or Bye

I personally don't like the Investment Link Products (ILP) offered by the insurance companies. I took the illustrations of benefits page and compared with my formula of compounding effects, the returns are almost the same. Perhaps the main difference is my method doesn't have the "effects of deduction" and "cost of distribution" column which will be deducted from the returns, in which means their fees and commissions in my layman terms.

Moreover, I don't think the portfolio will be maintained by those high-profile funds managers. It could be some normal staffs, or even grads with only few years of experience, maybe? There is no guaranteed one can make profits from ILP. Under worst case scenario, why let others (strangers) to lose your hard-earned money? Why not believe in yourself and start investing? More or less the same logic as what they are doing.
In my view, insurance companies are meant for insurance products. As for the investments products, I am not saying that you shouldn't buy it, but do your own homework first if you choose to buy.

Unfortunately, I have two of these kinds of policies which I had bought 10 years ago. The returns have not break-even yet, regretted buying them though, but let's moved on.

P.s. You would feel so much better if the money is lose by yourself rather than letting some strangers to lose your money. *touch wood*

Tuesday, 3 May 2016

Power of Compounding

Power of compounding. As some of you may or may not heard of. In simple terms, meaning to reinvest the gain(interest/dividend) from the principle amount which earned and reinvest them again and again. In another words, compounding effect - refers to generating earnings from previous earnings.
One may improvised it, optionally, may choose to periodically deposit the initial same amount of money together with it too.

Let's say initially I had $1,200 to begin with. I gained an dividends of 4% annually from stocks, and I reinvest them with my initially. After the first year, I gained $48, and deposit another $1,200 with it.

After 20 years...



After 20 years, I put in $24K, but I have accumulated $11,733.69 dividends, which is 48.89% profits. Free money!!
Not enough? See the power just after 5 more years later.


5 years later, dividends became $19.975.09, 66.58% of free money. What if I continue for 5 more years


After a total of 30 years, you could have $31,301.93 of free money, 86.95%!!

It may took 30 years to have 86.95% profit, sounds too long, but it is only $100 per month and it is free.

If you had started early, another 5 more years to make it 35 years, you would have a return of 110.43%. In another words, you have earned back your principle amount, any thing from there onward is free money of the free money!! The power of compounding gets more powerful at the later stages.

Lastly, the data shows much clearer after it was populated into a graph.

Trust me, I counted that, although there might be slight differences in actual case.

Warren Buffett once said that he wished he had started investment earlier.
Btw, he bought his first stock at 11 years old.
Youth is wealth.