Following the United States extending its deadline to raise tariffs on Chinese products and increased optimism that the two biggest economies are well on track to reach an agreement, outlook in the markets has clearly turned for the better. Because of this, China’s Shanghai Composite Index jumped 5.6 percent within a single trading day on 25 February 2019. Along with the rise of the Chinese markets, the local bourse also saw its benchmark Straits Times Index registering a year-to-date return of 3.9 percent. In the last two months, we noticed three stocks which had good run-ups achieving double-digit growth in their share prices. As investment guru Warren Buffett had pointed out, “be fearful when others are greedy”. While we cannot say for sure if these three stocks may continue to ru

There are many ways to find investment ideas. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue. Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they are doing, as a way to generate ideas. In this article, I will look at two Singapore REITs that have seen the highest net disposal in dollar value by institutional investors fo

REITs have always been a favourite investment choice for risk-averse investors because of their stable earnings quality. Moreover, the better ones can consistently grow their earnings, as well as distribution per unit (DPU), over time. Let’s take a look at three REITs that have grown their DPU in 2018. REIT No. 1 We’ll start with CapitaLand Mall Trust (SGX: C38U), or CMT, a REIT with 15 properties located in the suburban areas and the downtown core of Singapore, including Tampines Mall, Junction 8, Funan, IMM Building, Plaza Singapura, Bugis Junction, and others. For the year ended 31 December 2018, CMT grew its DPU by 3.0% year on year to 11.5 Singapore cents. The higher DPU came as a result of higher net property income. For 2018, CMT reported that gross revenue was up 2.2%

The current earnings season is winding down, and I’ve been watching as companies and real estate investment trusts (REITs) report their full-year 2018 results. Today, I’m looking at two REITs that produced good results. First up is CapitaLand Mall Trust (SGX: C38U). The REIT currently has 15 shopping malls that are mostly located in the suburban areas and downtown core of Singapore. The malls include Tampines Mall, Junction 8, Funan, IMM Building, Plaza Singapura, and Bugis Junction. For 2018, CapitaLand Mall Trust reported that gross revenue was up 2.2% to S$697.5 million and net property income (NPI) grew 3.2% to S$125.7 million. The improvement in gross revenue and NPI was driven by two factors: (1) The November 2018 acquisition of the remaining 70% stake in Westgate th

Real estate investment trusts (REITs) in Singapore often have a larger company as a sponsor. The sponsor is often also the major shareholder of the REIT, and is sometimes related to the REIT’s manager. A major role of the sponsor is to provide a REIT with the rights of first refusal on properties that are owned by the sponsor. Although having a sponsor is beneficial to a REIT for the pipeline of acquisition opportunities, there remain potential conflicts of interest between a sponsor and the REIT’s minority shareholders that could result in minority shareholders getting the shorter end of the stick. Here are some possible conflicts that investors should be aware of. Sponsors prioritise REIT Manager’s interests over minority shareholders Conflicts of interest arise when sp

In early 2017, Sabana REIT has been getting a lot of attention when a small group of unitholders moved to kick out the manager for delivering poor performance since its IPO in 2010. Early investors who bought Sabana at an IPO price of S$1.05 are now sitting on huge losses – Sabana last traded at just 41.5 cents per share at time of writing. If we look at the history, Sabana REIT isn’t alone. There are several other Singapore REITs (S-REITs) like Saizen REIT, MacarthurCook Industrial REIT and Allco REIT that have run into trouble before and caused a dent in Singapore’s REIT sector. Despite some casualties, Singapore’s REIT market remains vibrant – largely thanks to the majority of S-REITs that continue to deliver good results to income investors. In this article, we look at the pe

After ending 2018 on a bad note, the performance of the stock market in the first two months of 2019 has gave investors a reason to cheer. If you are looking to repeat the splendid performance, here are some strategies for you to consider. Investors Takeaway: 3 Strategies If You Want To Beat The Market Again By DBS Take Advantage Of Interest In S-REITs With Fed Chairman Powell re-iterating the Fed’s dovish stance to be patient on rate hikes, interest in REITs should sustain going forward. The consensus now appears to be zero rate hikes for this year as the Fed continues to monitor how the economy evolves. Previously, DBS recommended investors to focus on large cap REITs in resilient segments such as retail and industrial (warehouse and business parks). DBS likes these large cap REITs f

The US Federal Reserve has indicated that 2019 will likely see slower interest rate hikes. This comes on the back of mounting macroeconomic uncertainties, that has seen investors turn to less risky investments. This may benefit REITs in three ways: # 1 Traditionally, REITs take on a lot of debt to fund its capital-intensive property investments. Slower interest rate hikes in 2019 will ease the growing pressure on REITs, in terms of debt repayment. # 2 Markets are efficient – which means that prices of REITs would have taken into consideration that rate hikes would continue as normal. This stance of slowing down the interest rate hikes in 2019 is new information for the market, and may give REITs a boost. (Do note that most of this new information should already be priced into the markets

Whenever you mention income investing (or dividend investing) to certain investors, they may reply with one of many possible responses: “Dividends? I’m only earning 2-3% a year. That’s too low.” “If I’m earning a 3% dividend yield, I’ll need a large investment for my dividends to be worthwhile.” “I can make higher returns investing in growth stocks.” Do these sound familiar to you? Income investing is often viewed as a ‘slow and steady’ way to invest. If you look at the Straits Times Index, a basket of the 30 largest companies in Singapore, its dividend yield is only 3.60% (as at 28 February 2019). It’s a similar story in Malaysia and the U.S. – the FTSE Bursa Malaysia KLCI currently yields 3.18% and the S&P 500 yields 1.

Investors use a country’s stock market index to get a flavour of what the country has to offer. In Singapore, the Straits Times Index (SGX: ^STI) is our stock market benchmark. Similarly, in our neighbouring country Malaysia, the FTSE Bursa Malaysia KLCI is its main stock market index. Both indices have 30 index components. The Straits Times Index’s major components As of 31 January 2019, the top 10 constituents of the STI took up 69.8% of the index. The top three components of the index are all made up of banks – DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corporation Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11). Other heavyweights of the index include Singapore Telecommunications Limited (SGX: Z74), Keppel Corporation Limited (SGX: BN4) and CapitaLand

Following my last article which I wrote on Ireit Global, there’s been a good amount of discussion from readers regarding the concern on tenant concentration that surrounds Ireit’s leasing activity over the past couple of years. I am here to provide my own thoughts based on my working knowledge and a good balance discussion of both the advantages and disadvantages which I see and will use several case studies on it.The tenant concentration concern has been brought up several times during the AGM and the management has also taken steps to abate the concern when they bought the Berlin property in order to “diversify” their tenets of tenants spread across their 5 portfolios. But there's more to that reason alone.Here are my further thoughts:1.) David vs Goliath Ireit Glo

To understand a linear model, such as y = mx + b, you need to know that the dependent variable like y varies linearly with an independent variable like x. In real life, you can model almost anything linearly, such as modelling a person's math's score as a linear function of the number of hours studied, family socioeconomic status and number of accelerated classes.In the earlier math example, the number of hours studied makes the biggest difference in math scores, followed by number of accelerated classes, followed by socioeconomic status ( yes ! ). This coefficient m in the equation above measures the magnitude of the variable.Another concept in linear regression is the notion of significance or p-value. A low p-value of 5% or even 1% means that there is a large confidence that the coeffic

Hedge-fund managers are complaining that quantitative and algorithmic traders are stealing their lunches. Better known as quants and algos, these traders employ sophisticated techniques to exploit, what they believe, are opportunities in the market. They might sell in huge quantities, when they believe market conditions are suggesting weakness. They might buy when they think conditions are favourable. They might use high-frequency trading mechanisms to execute their orders. That could cause markets to behave erratically, at best. Flash crashes, at worst. It’s making life unbearable for hedge funds, who by comparison are like pussy cats playing in a lion’s den. They would prefer more predictable markets, where their long and short strategies are less likely to be disrupted. So, they wan

Both Singapore and Malaysia have an established real estate investment trust (REIT) market with a long history. Singapore’s first REIT to be listed on the local stock exchange in 2002 was CapitaLand Mall Trust (SGX: C38U). Meanwhile, in Malaysia, Amanah Harta Tanah PNB (KLSE: 4952.KL) became the country’s first listed REIT more than a decade before CapitaLand Mall Trust. CapitaLand Mall Trust remains the largest listed REIT in Singapore by market capitalisation while in Malaysia, the biggest REIT is KLCC Stapled Group (KLSE: 5235SS.KL), which owns the famous Twin Towers. Background on the REIT giants CapitaLand Mall Trust is a retail REIT that owns 15 shopping malls in Singapore, including Tampines Mall, Bugis Junction, and Plaza Singapura. It also holds slightly below 13% of CapitaLan

Frasers Centrepoint Trust  (SGX: J69U) and CapitaLand Mall Trust (SGX: C38U) are two real estate investment trusts (REITs) with a focus on retail assets. The former owns properties such as Causeway Point and Northpoint City North Wing, while the latter is the owner of 15 malls such as Tampines Mall, Junction 8, and Funan. Given that both REITs are exposed to retail-related properties, investors might want to know which is a better buy now. To find out, we’re putting the duo to a test made up of three parts. In part 1 and part 2, we looked at the REITs’ track records of growth in distribution per unit (DPU) in the last decade, as well as their debt profiles. Frasers Centrepoint Trust came in ahead in both tests. In this article, we’re looking at the last part of our compari

Of the many tools and financial metrics investors use for their corporate analysis, one of the most useful has to be the return on equity (ROE). This ratio measures the profitability of the business per dollar of equity and is usually expressed as a percentage. The basic formula for ROE is relatively simple to understand: Take the net profit after tax of the business and divide it by the total equity of the company. American conglomerate DuPont has come up with a formula to further break down the ROE formula into three separate components in order to deepen the analysis and provide more insights. The ROE equation can be further split into the following: ROE = Net Profit Margin x Asset Turnover x Financial Leverage Let’s look at each component in turn. Net profit margin The net profit

Frasers Centrepoint Trust  (SGX: J69U) and CapitaLand Mall Trust (SGX: C38U) are two real estate investment trusts (REITs) with a focus on retail assets. The former owns properties such as Causeway Point and Northpoint City North Wing, while the latter is the owner of 15 malls such as Tampines Mall, Junction 8, and Funan. Given that both REITs are exposed to retail-related properties, investors might want to know which is a better buy now. To find out, we’re putting the duo to a test made up of three parts. In part 1, we looked at the companies’ track records of growth in distribution per unit (DPU) over the last decade, and Frasers Centrepoint Trust came out ahead. In part 2, we’re looking at the next comparison: debt profile. The showdown Let’s begin with Frasers C

Frasers Centrepoint Trust  (SGX: J69U) and CapitaLand Mall Trust (SGX: C38U) are two real estate investment trusts (REITs) with a focus on retail assets. The former owns properties such as Causeway Point and Northpoint City North Wing, while the latter is the owner of 15 malls such as Tampines Mall, Junction 8, and Funan. Given that both REITs are exposed to retail-related properties, investors might want to know which is a better buy now. To find out, we’re putting the duo to a test made up of three parts. In this first test, we’re looking at the companies’ track records of growth in distribution per unit (DPU) over the last 10 years. The showdown From fiscal year 2009 to fiscal year 2018, Frasers Centrepoint Trust has grown its DPU from 7.51 Singapore cents to 12.015

Every company juggles its receivables, inventory, and payables in different ways, and this is also determined, in part, by the nature and characteristics of the industry in which it operates. One method investors can use to determine how all of these attributes come together is to analyse the cash conversion cycle of a business. The formula is as follows: Cash Conversion Cycle (CCC) = receivables turnover (days) + inventory turnover (days) – payables turnover (days) Let’s now look at each component and how to make use of the CCC. Receivables turnover days This metric measures the average time it takes for a business to collect money from its debtors, and it’s a measure of the quality of customer collection from credit sales. Most businesses sell products and services on c

iFAST Corporation Ltd (iFast) (SGX: AIY) announced its full-year 2018 earnings this morning. As a quick recap, iFAST Corporation is an internet-based investment products distribution platform that has a presence in Singapore, Hong Kong, Malaysia, China and India. The company has two main business divisions, one that caters to consumers (B2C) and the other that caters to businesses (B2B). The company reported a decent set of earnings even though the fourth-quarter of 2018 (4Q 2018) saw increased volatility in stock markets which resulted in weaker investor sentiment. Here are 10 observations from iFast’s latest earnings update: 1. Net revenue increased by 11.4% year on year in 4Q 2018 to S$14.8 million, despite gross revenue declining marginally by 0.7% to S$28 million. iFast paid les