May 2016 Portfolio Update

Stock Name	No of Shares	Current Price	Current Value
Keppel Corp	2000	$5.430	$10,860
Accordia Golf Trust	9000	$0.650	$5,850
ST Engineering	1000	$3.210	$3,210
Total Value			$19,920

I had recently divested my NeraTel and AIMS AMP Reit in my portfolio and added another 1000 shares of Keppel Corp and ST Engineering this month. The reason I choose to divest NeraTel is, their payment solution business had sold to Paris-based Ingenico Group for S$88 million. Payment solution business although contributed 26% of Company's revenue which is not really that significant. But however, this payment solution business is very easy to predict their income generating and the revenue is recurring. Once they sold this asset, it is very hard to predict the growth of NeraTel. Are they able to continue giving a 5% dividend payout to their shareholders after this episode?

As for AIMS AMP Reit, I choose to divest is because, I can received another quarter of dividend payout without waiting for another 3 more months. I believe my portfolio will do better with this divestment and I can used the funds to purchase on Keppel Corp and ST Engineering. Oil industry is expected to recover more significantly by end of the year. I added another 1000 shares of Keppel Corp to bring down my average price to $5.70. I strongly believed they will recovered and gave me a better returns by the end of the year.

I also added 1000 shares of ST Engineering into my portfolio. This is more of a speculative play, if their price increased to $3.40 to $3.50, I will choose to divest it. If not, I will keep it for dividend play.

My portfolio position had increased by 3.37% as compared to last month. Next month, I will be receiving dividend from Accordia and AIMS AMP Reit. Accordia had been a good income generating asset for my portfolio. I had received 10.4% yield from them for FY 15/16. If they can continue giving me good income, I will increase my exposure on them.

Accordia Golf Trust 4Q FY 15/16 Result

Accordia Golf Trust posted their 4Q FY 15/16 earning report in summary below.

• Total Distribution per Unit (DPU) for FY 15/16 of 6.63 cents
• Second Distribution of 4.31 cents for FY 15/16
• Operating profit of JPY 8,828 million and Total Distributable income available for distribution was JPY 6,041 million
• Net Asset Value (NAV) stood at SGD $0.89
• Number of visitors to AGT's golf courses in FY 15/16 was 2.1% higher than the previous year

Japan Economy Outlook
1. The number of golf plays in Japan is expected to continue as golf continues to be a healthy leisure activities for the seniors.
2. Inclusion of golf as an Olympic sport in Year 2016 Rio de Janeiro is expected to enhance the popularity of golf in Japan.
3. Year 2020 Tokyo Olympics is expected to have positive impacts on the Japanese economy.

Inbound tourism in Japan
1. Estimated number of foreign visitors increase 47.1% y-o-y and reached 19.7 million in 2015.
2. Positive impact on demand for golf in the mid-to-long term.

Accordia Golf Trust has a very strong branding and is the largest golf operator in Japan. The operation team and management is very efficient in managing the golf course operation. Their strategy is to target middle class working people into playing golf in Accordia. They provide casual atmosphere with reasonable play fees. They had a large pool of loyal customers base that subscribed to their golf club membership.

With a strong set of good result from this FY 15/16, I am very happy to be vested in Accordia Golf Trust and they are rewarding me with a 10.4% income distribution yield. However they are at the mercy of weather conditions. Even if weather conditions is unfavorable to shareholders, I am positive they will be able to distribute good income distribution and there is still a potential growth in this counter.

To be Financial Literacy

Today I had the opportunity to educate my younger brother on financial literacy, which was not taught to us in our education. He had no idea about investing for income or for retirement. He only know that he need to save for rainy days. Just like a normal person, he put his savings into a normal saving account which earn a peanut interest annually. So I bring up the question to him, does he know that how much interest is he getting annually? How much interest will he be getting in his CPF account etc? To my surprise, he did not know how much interest is payable to his Ordinary, Special and Medisave in his CPF account. He only know his CPF account grow faster than his saving account. I almost fainted.

So as an elder brother to him, it is my responsibility to share with him some financial literacy. I told him how does CPF works and why the money grow so faster than his saving account. I share with him how he can replicate what his CPF account is giving him by investing on STI ETF. If a beginner like him who do not know anything about investment, my advice is to invest on STI ETF. The dividend yield for STI ETF give him about 3.5% annually which is way better performance than his saving account or the ordinary account in CPF.

After today sharing with him, I am glad that he is very positive toward investing for income. He know that by putting his saving in a saving account will not be enough for his retirement. The next step is for him to digest what I had shared with him today and then open a trading account and start investing for income.

It was not his fault for not knowing how to manage his own finance. We were not taught in school and the peers that he mixed with does not invest as well. We often heard from our parents that investment will burn our finger and it is true on what they say. If we do not know anything about investment and we went in blindly, obviously we will get burnt. However, if we read more and learn more, we can better prepare ourselves to be financial literacy. The reward is priceless if we can master this. I will end this post by sharing one of the famous quote from Warren Buffett.

Frasers Centrepoint Limited 2Q FY 15/16 Report Card

Frasers Centrepoint Limited posted their 2Q FY 15/16 earning report in summary below.

• Revenue increased to $898 million, 103% higher than the corresponding quarter a year ago
• PBIT increased to $226 million, 14% higher than the corresponding quarter a year ago
• Profit before tax increased to $110 million, 11% higher than the corresponding quarter a year ago
• Profit after tax is $123 million, 13.8% lower than the corresponding quarter a year ago
• Declares interim dividend of 2.4 cents per share, same as corresponding quarter a year ago

The revenue and PBIT increased was due to profit recognition from the completion of Twin Fountains (an EC project, TOP in March 2016) and the progressive development profits from North Park Residences (a condo project, expected TOP in 2019). Profit after tax slips 13.8% was due to the FCL's share of fair value losses of joint ventures and associates.  

Property Development Key Highlights

FCL’s 80:20 joint venture with Keong Hong also recently launched its 628 units Parc Life EC project at Sembawang and also the 40:40:20 joint venture with Sekisui House and Keong Hong secured a tender for a 19,310 sqm private condominium land parcel along Siglap Road in January 2016 that can potentially yield around 800 to 900 apartment  units.

Commercial Property Key Highlights

Frasers Centrepoint  Malls officially opened Waterway Point (My visit to the mall) in Singapore in April 2016, building on a strong performance that has seen the mall receive over 6 million visitors since its soft opening in mid-January 2016. Meanwhile, the Group completed the sale of its 19% interest in Compass Point for around S$80 million in February 2016. The sale of One@Changi City for S$420 million by the Group’s 50% joint venture was also completed in March 2016. The sale of these assets were in line with the Group’s active capital recycling strategy.

REIT Key Highlights

Currently, FCL had 3 reits namely Frasers Centrepoint Trust, Frasers Commercial Trust and Frasers Hospitality Trust. Yesterday news release that they are looking to list their Australian logistics and industrial properties in the Singapore Exchange next month worth about S$800 to S$900 million. If this would to be materialise, it would be called the Frasers Logistics and Industrial Trust.

Looking ahead, development property transaction volumes will still remain low and are expected to
continue declining amid slowing economic growth and the ongoing effects of property cooling measures in Singapore. For the commercial front, with the increase in average household income and low employment, FCL will continue to support non-discretionary expenditure in the retail market. For office space, vacancy levels are expected to rise as major developments are completed. The outlook for the hospitality market in Singapore is soft due to the country’s uncertain macroeconomic
landscape and oncoming supply of 4,000 additional hotel rooms.

My thoughts on FCL is very optimistic. They are the 3rd largest property developers in Singapore after CDL and Capitaland. With a stable 8.6 cents of dividend per share yearly, we are looking at a 5% or more returns from this property giant. Not forgetting about the growth of this company, it is now trading at approximately 32% discount to its NAV of $2.22 per share. If you are looking for stable dividend income with potential growth, this company may fit your bill.

STI in the red for consecutive 8th trading sessions

STI had dropped by 6.4% from the recent high of 2964 points to today closing of 2773 points. This mark the consecutive of 8th trading days losses. Reasons for the weakness were the general worry over global growth starting in China, growing awareness that monetary stimulus by central banks has not worked, volatility in the oil market and concerns over whether US interest rates will continue to head upwards.

With all these negative sentiments, are we heading into bear run again or is it the effect of "Sell In May And Go Away" myth? One of the main reason I believe is, most of the stocks are going into exercise dividend in May and June period after the recent announcement of their financial earnings and together with the negative sentiments, this trigger a bigger fall than expected with referenced to the dividend payout they are paying to the shareholders.

My approach towards this episode is to stay on the sidelined first and observe if there are more bloodshed to come. With a small correction of 6.4% does not attract me to take out my warchest and deployed them. Probably a 20% correction or so, I will take action.