Watchlist Counter #2: Foreland Fabritech ($0.13) (A S-Chip Company)

One of Foreland's end customers (or so they claimed)

Definition of a S-Chip: Chinese companies listed on the Singapore Exchange, whose business are predominantly based in mainland China.


What general public associate S-Chips' with: Accounting irregularities and fraud


List of former S-Chip "market darlings" that currently suspended or busted: Sino-Environment, China HongXing, FibreChem, China Milk, China Sun, China GaoXian, SinoTech Fibre, Hongwei etc etc...


So why then even be bothered with S-Chips: Valuations are incredibly low, because investors (or rather skeptics) have grown so disillusioned that they believe "if it seems too good to be true, then it probably is."


So why do people at Kiasu Investors (KI) think otherwise? No we don't.


But you are recommending to keep an S-Chip on Watchlist!
This is purely for punting (ok, it's gambling, we admit! This is EPL off-season and we are suffering a bout of withdrawal symptoms, and being Singaporean, we simply cannot afford the $100 levy to enter our (in)famous casinos.


So why Foreland and not any other S-Chip? Because we like the fundamentals...


But you just mentioned that for S-Chips, fundamentals doesn't mean a thing! 
Yeah, but here is a brief summary anyway:
NAV: $0.1995
Rolling PE: $4.626
Dividend Yield: 2.72%
Gearing: Net Cash


Definitely not the cheapest among S-Chips.. 
Recent placements caught our attention. First placement was to a group of local (SG) investors at $0.1235. Notable among the placees: (Asdew Acquisitions - Founded by ex-Kim Eng head of research, SG star broker Han Seng Juan). For second round of placement at $0.16 (33% premium over previous closing price) to a major customer and a mysterious investor. Also, they produce umbrella fabric, not your typical sports wear fabric producer..


But other now dysfunctional S-Chips also had prominent investors, FibreChem had NewSmithCapital and Hongwei had Tembusu Partners just to name a few... 
Yeah, hence we say this is at best a punt, and if do decide to gamble, do make sure you get in at a decent price (preferably lower than first round of placees. So far $0.125 was the lowest since we first mentioned Foreland in our article on Wing Tai)

Watchlist Counter #1: Wing Tai Holdings ($1.43)

We return after our short "exile" from the market due to the decidedly negative forces ravaging world markets at the moment (in actual fact, we were busy crunching numbers to identify potential candidates to add to our watchlist). Indexes around the world have been suffering from bouts of selling. Of course, our "world-class" STI has not been spared and investors could observe many heavy weight index counters being sold down on relatively non-negligible volume over the last couple of weeks. We will not try to predict when the down trend will reverse but thought it will be good to start adding "value" counters to our watchlist so that we are prepared to "grab" when the right opportunity presents itself.


Why a property counter? And with government in markets like HK and SG (in which Wing Tai operates) clamping down on speculation and price increases, who in the right mind would want to look at property counters in the short term?


Considering the anti-speculative measures already implemented by the SG government, we are impressed that Wing Tai management continues to be able to off-load their holdings in various developments at more than decent prices.

Units Sold in May 2011

Ascentia Sky - 15 units (average $1318 psf)
Belle Vue - 2 units (average $2651 psf)
Floridian - 9 units (average $1793 psf)
Foresque Residence - 141 units (average $1108 psf)
L'Viv - 2 units (average $2179 psf)


Total units sold - 169 units.


Comparing to the total 1575 private residential units sold by all developers in month of May 2011 (excluding ECs), Wing Tai single-handedly accounted for more than 10% of the sales ( and we have to stress again, at quite decent prices too!)


On top of this, we like Wing Tai for its retail exposure in SG (Uniqlo, Adidas, G2000, Pumpkin Patch etc) and with forecasted record tourist arrivals (and buoyant local retail spending), we believe this sector will continue to support earnings in the short-term.

Counter closed at recent low of $1.43 last Friday. Overall, we feel Wing Tai do not have that many units left to sell in SG compared to other big developers and hence they could potentially stand to benefit from a severe downturn in land prices. Moreover, Wing Tai positions itself towards the mid-upper end of the market and hence should be less susceptible to fluctuations in demand of mass-market properties. We also like its Malaysia exposure and the selected collaboration with SG government in China. We are thus adding  Wing Tai to our "Watchlist".

Kiasu Investing Rule #1: Allow your idle cash to sit idle in the bank

Yes, you heard us right. Contrary to what most investment advisers out there advocate, we strongly believe in leaving plenty of spare cash lying idle in the bank. Yes, bank deposits interest rates are so paltry, they all say. After factoring in inflation, you are effectively suffering negative interest of x% per year.


Yes, we do acknowledge the above argument against keeping cash in the bank. However, we still firmly believe in holding on tight to your cash. This is especially true when markets (stocks and property) are close to or have already exceeded previous peaks. In such circumstances, we typically try to hold on to at least 50-60% of our "investible" capital (exclude emergency funds) as cash. This is of course much easier said than done for most investors. 


We are strongly of the view that it is also this "cash", which suffers from negative interest of x% per year, that has potential to land you the multi-baggers in the trough of a bear cycle, when cash is scarce and truly king. So what is a 10 - 20% loss against inflation compared to a potential 200-300% gain? For us this is a no-brainer!


P.S:
1) Some may ask, why not hold quality bonds instead of cash? Historically, equity and bond prices tends to go in inverse directions. Yes, to us this is also a plausible alternative but sometimes, you do need a large amount of cash to plough into bonds.


2) Above assume you are a better investor than a blindfolded monkey throwing darts, as you need to be able to identify potential multi-baggers to put your hard earned $$$ to work (and yes, we believe that even blindfolded monkeys can hit multi-baggers during times of doom and gloom).


3) If you happen to be those lucky ones who works for a bank (or your spouse do) that offers staff much higher interest rates on deposits... then this rule works like a charm.

Malaysia's Rich Man Robert Kuok Seeks To Take Allgreen Private For S$1.1B

This has to be the one bright spark in the ominous clouds of gloom today. Malaysia's Robert Kuok probably decided that enough is enough. Since the market does not appreciate the value that this baby has to offer, he took it upon himself to make a takeover offer of  $1.60 per share to take the company private. (that's a whopping 40% over the last traded price of $1.15)


For some keen observers of the local property counters, this does not really come as a huge surprise. Due to the strong run-up in property prices over the past couple of years, quite a number of local property counters are today trading at very attractive discount levels to their revised NAV. We at Kiasu investor could easily rattle off a full list of counters that are trading at very attractive valuations. The most commonly cited ones are of course counters like Wing Tai ($1.52), Wheelock Properties ($1.80), Heeton, Hiap Hoe, Ho Bee etc.


From this list, we like Wing Tai and Hiap Hoe the best due to various personal preferences (which we will elaborate in future posts). However, we think that the counter most likely to benefit from short term speculative activity generated by Robert Kuok's latest salvo should be Wheelock Properties. It's HK parent, Wheelock and Co Ltd,  had last year taken Wheelock Properties Ltd (HK), private for HK$6.9 billion ($889 million). This was at a 143.9 percent premium over the previous close and at 3.3 percent discount to NAV at end of 2009. Due to the booming property market prices in Singapore, if Wheelock SG can continue to sell off the remaining units of Scotts Square (currently > $4000psf) and Orchard View (currently > $3000 psf), the RNAV of the counter should be closer to $3 per share (versus last traded price of $1.80). 


Of course, we at Kiasu investors, do not truly believe that there is a high chance that privatization will take place in the near term (as the parent company is probably replenishing cash after taking the HK company private last year). But for those itching for a piece of the takeover action (choosing to ignore all the doom and gloom prophecies), Wheelock will probably be a good choice for a punt. (yes, we do equate this to gambling)

Post Election Updates: FJ Benjamin, United Engineers, Pac Andes, Oceanus

Fresh from our election break (despite the unbearably hot weather), we strive to bring you even "hotter" analysis and pictures from our Kiasu desk.


First, we kick off with a couple of results updates:

Hot contributions from new brand

1) FJ Benjamin announced higher earnings on record turnover for its third quarter ended 31 March 2011. This was due to a combination of strong consumer sentiment, higher tourist arrivals and contributions from new brand Givenchy. Improvements were seen across major markets of Singapore, Malaysia, Hong Kong, China and Taiwan. We expect the counter will continue to do well on the back of strong consumer sentiment and spending across the region.

2)United Engineers disappointed with a sub-par price-action performance post ex-date of dividend. (price dropped by 15 cts versus 10 cts dividend payout.) It went on to announce a decent but not too spectacular 20% increase in gross profit (10% increase in net profit).  Our kiasu instinct continue to get aroused by its huge discount to NTA (its NTA increased to $4.03 per share versus closing price of $2.35) and its relatively low PE ratio of about 3.5x. New hotels and retail space coming up at Vista Exchange (next to Buona Vista MRT) and UE BizHub East (next to Expo MRT) bodes well for the future recurring earnings of the group. In the meantime, we can only eagerly anticipate the awakening of this sleepy giant.

Former Specialists’ Centre/Hotel Phoenix and Orchard Emerald

3) Pac Andes announced plans for a listing of TDRs on Taiwan Stock Exchange at an indicative price of NT$18 (or 77 Singapore cts). Since each TDR unit represents 2 PARD shares, this works out to be around 38.5 cts each. This could potentially raise up to around S$219 million in a best case scenario (which we view as net positive for the stock due to its high gearing that we had pointed out in our earlier article). However, its share price continue to languish at $0.315 after a brief spike after the initial announcement. We might potentially see more favorable action subsequently if the market response to the TDR issuance is good (which we feel will be the case).

4) Oceanus directors had came out scrambling to issue an announcement (i.e. denial) that there weren't anything concrete behind rumors of an impending buyout by a private equity firm, KKR. We tend to believe otherwise and view the announcement as a "cover" to allow negotiations to continue in the background without too much disruptions in the share price.


Finally, if you had managed to bear with us through all our earlier ramblings, we reward you with our "hot" kiasu tip of the night.  DBS Group Holdings CEO, Piyush Gupta had made a maiden purchase of 100,000 DBS shares on 9-May at a price of $14.825 per share. This translates to a cool $1.5 million dollars! (Of course, this is "peanuts" compared to his >$8 million a year CEO salary, but still, we take it as a strong indication that the boss is confident in his own business). Also worthy to note is that tomorrow (11-May) will be the last day that the stock will be trading Cum-Div of 28 cts dividends. So what better time than now to try getting your hands on some? We at Kiasu Investors will definitely be giving it a shot...

Lunchtime Ideas: United Engineers

Like many other property and construction counters listed on SGX, United Engineers had recently announced an excellent set of results for FY2010. Today is the last day that the stock will trade Cum-dividend of 10 cents. This translates to dividend payout of 4% based on last traded price of $2.50.(certainly attractive enough to get picked up by our Kiasu antenna)

Of Cheap Air Tickets, Oceanus and Pac Andes

When we mentioned cheap air tickets, we are of course referring to the Singapore Airlines S$398 all-inclusive, promotional fares to Japan (Tokyo, Nagoya, Fukuoka and Osaka). After taking into consideration that typical taxes and fuel surcharges to those locations comes to around $350, the actual price of the round-trip ticket works out to be only $50! This is full-service SQ tickets at cheaper than budget airline prices! (ignoring the fact that budget airlines typically quotes one-way fares in their promotions)


So coming back to our original poser, what has cheap air tickets got to do with the two aquaculture stocks (i.e. Oceanus and Pac Andes Holdings) listed on the SGX?  For us at Kiasu Investors, it is a case of "alarm bells" ringing (BARGAINS) after the recent tsunami in Japan. Based on various reports, the giant tsunami wave that devastated the northeast coast of Japan had wiped out the region's coastal fishing industry, and cut the country's total seafood production by around a quarter. Similarly, abalone stocks were destroyed along the coast and it would take many years before new ones will grow to sizes large enough to be harvested.


Assuming the demand for fish and abalone were to remain fairly constant, the fishing industry in the rest of the world will either have to (1) make up the slack by catching and producing more or (2) the price of ocean catch will have to increase to compensate for the supply shortfall. In either case, companies such as Oceanus and Pac Andes (the two being major players in their own industry) would stand to reap the benefits.


We believe that savvy investors have already caught up to this fact and hence it was not too much of a surprise that there was a rumor last Friday that a private equity fund was arranging financing to buy out Oceanus (especially since private equity funds seem to be rather active of late. Refer to our previous post on another private equity fund active in Asia)

Fresh catch!

Of course, just like buying cheap air tickets, investing in bargains comes with it's risks. For Oceanus and Pac Andes, a large part of their operating costs are tied to energy costs and with oil prices hovering at elevated levels, investors would do well to take into consideration the impact to their bottom line. The other point to note would probably be the level of debt as both business are capital intensive in nature (this may not be a concern in low interest rate environment but may come back to haunt investors if interest rates were to rise too quickly). 


Lastly, we do hope our readers (like us) are enjoying a great Labour Day holiday! Below are more links for your reading pleasure.


http://www.bloomberg.com/news/2011-04-24/tsunami-speeds-terminal-decline-of-japan-s-fishing-industry.html
http://www.kansascity.com/2011/04/17/2806024/tsunami-devastates-abalone-fishing.html
http://www.singaporeair.com/saa/en_UK/content/local/SG/promotions/index.jsp

Lunchtime Updates: Oceanus, Pac Andes

Oceanus requested for a trading halt after price shot up in morning trading. Rumors are of a buy out deal from private equity firm.


Since Oceanus is halted, we switch to our Kiasu Analysis hat and target the next closest stock on SGX: Pac Andes

LVMH private equity fund eyes Asian brands

Most of us would probably have came across this piece of news in the papers over the past few days that a private equity fund that's part of luxury goods maker LVMH Group is aiming to invest $650 million in quality lifestyle brands in Asia.

The fund, L Capital Asia, has already invested $90 million in minority stakes in watch retailer Sincere, shoe store Charles & Keith and Chinese jeweler Emperor. It will likely invest another $200 million in companies this year, including a women's clothing chain in China and another in India within the next 60 days.


It was also mentioned that Ravi Thakran, the Managing Partner of L Capital Asia, expects the fund to eventually have investments in 14 companies that fall below the level of top global luxury brands but are above mass consumer goods.

Putting on our Kiasu Analysis hat, we tried to speculate on whether any of the counters listed on SGX could potentially be a target for some injection of funds.  In our opinion, we felt there were no compelling reasons to suggest L Capital Asia might be interested in any counters listed on the SGX, other than perhaps Hour Glass (why not, since they had no qualms about investing in rival Sincere Watch) and FJ Benjamin (often cited huge potential of company's RAOUL brand in US and Europe). Both counters have exposure to the Asian consumer retail segment which is expected to be well poised to benefit from increasing retail spending in the region.


Below is a link for your reading pleasure:

UOB KayHian starts FJ Benjamin at Hold; RAOUL the key
Tuesday, 22 February 2011

© 2011 - The Edge Singapore

Sabana REIT: Declares Bumper "Maiden" Distribution!

Sabana REIT announced first quarter results tonight after market closed. Management certainly did not disappoint as new shareholders were amply rewarded with a "maiden" distribution of 3.04 cents. As predicted in our earlier post on 17 Apr, this works out to be the highest distribution (in percentage terms) among all S-REITs this time round. With ex-dividend date set on 10 May, shareholders certainly have something more to look forward to in the coming weeks.

"Hot" on Hotung (Part 2): Countdown to 12% Dividend Payout

Hotung supporters can collectively breathe a sigh of relief today. The company announced improved FY11 1Q results after market closed today. However, it was probably the other announcement that got shareholders "excited". After having been made to "wait long long", shareholders can finally countdown to the book closure date for the NT$0.47 dividend payout, which is on 10 May (XD on 6 May next week). As mentioned in our earlier post, this translates to a "mouth-watering" payout of almost 12% based on last traded price of $0.17.

Ms. Tsui-Hui Huang, MD Hotung

For the benefit of fellow kiasu investors who are not already familiar with this counter, we have extracted a few statistics from the Q1 results announcement today:


Last Traded Price: $0.17
NAV: $0.326
Cash per share: $0.08
Short-term Borrowings: Nil
Long-term Borrowings: Nil


We are certainly looking forward to more "hot" trading action in the days ahead!

"Lock"-ing our sights on Wheelock Properties

Orchard View @ Angullia park

Based on the pathetic average daily trading volumes of this counter, one could easily have surmised that a lot of investors (and traders) out there have probably already dismissed the potential of Wheelock properties and switched their attention to more "popular" property plays like Keppel Land and Capitaland. 


However, this counter came to our attention at Kiasu Investors (KI) while we were carrying out our routine run through of Kiasu Investing Rule #3 & Rule #4 (more on Kiasu Investing Rule #4 in a subsequent post).


While applying Kiasu Investing Rule #3, we noticed that this counter is giving out a dividend of 6 cts per share. Ex-div date is on 6 May next week (a shortened trading week due to Labour Day holiday on Monday). Based on last traded price of $1.87, this translates to a dividend yield of 3.21%. (which is much higher percentage-wise than most of the quarterly distributions of REITs listed on SGX).


Fundamentally, a lot of ex-investors were attracted to Wheelock by its large cash hoard (and some on the extremely "slim" hope that the HK parent might privatize the SG company). However, plenty of hopes were prematurely dashed with management's recent announcement of the purchase and planned development of a new residential site in Fuyang city, Hangzhou. The total development cost for the 1,900 residential units is expected to come to about S$750 million, effectively wiping out the entire cash hoard (and all this coming at a time when the Chinese government is frantically trying to clamp down on investments in its overheated property market.) It is not surprising that many investors are thus giving Wheelock a wide berth.


Nevertheless, we, being the fools that we are at Kiasu Investors, somehow managed to conjure up a rule from nowhere to convince ourselves (and hopefully not others) that this counter is really a good investment. We shall be sharing more on our imaginary rule in our subsequent posting. In the meantime, "we would strongly advise investors to exercise caution and seek professional advice before trading in shares of this company" (our standard but not-too-helpful disclaimer).

"Hot" on Hotung

Hotung Investment Holdings will be holding its AGM on 26 Apr (tomorrow). One of the resolutions to be approve by shareholders at the AGM is the declaration of a first and final dividend for the year ended 31 Dec 2010 of NT$0.47 per share. Based on last traded price of S$0.17 and exchange rate of 1 SGD to 23.4 TWD, this translates to a yield of approximately 11.8%. We note that the share price of Hotung has been pretty much range-bounded for the past weeks (after factoring the adjustment due to the change in trading currency from USD to SGD). Thus we deem S$0.17 to be a decent entry level for a bite of the "dividend" cherry that is almost certainly to be "voted for" by shareholders during the AGM. (Additional notes for Kiasu investors: previous AGM was held on 23 Apr 2010, with Book Closure date for dividend payout on 4 May 2010 - though there is no assurance that the management will stick to similar timelines if the dividend is approved this time round.)

We felt body paint is "hot" too!

Lunch-break Updates: First REIT and Sabana REIT

Share prices of both First REIT ($0.755) and Sabana REIT ($0.945) have steadily firmed up along with the generally positive market sentiment. In fact, for First REIT, the gain in share price since 19 Apr (before result announcement) has already out-paced the amount of distribution declared (2 cts vs 1.58cts). We are still very positive on the prospects of First REIT but will be looking for good opportunities to divest our investment and recycle the capital for even greater returns. As for Sabana, the share price has risen 1.5 cts today but we are optimistic that it will rise even more if the bumper distribution that we are anticipating is to materialize on the 27 Apr (less than two days from now).

Hyflux 6% Class A preference shares - To Hold or to Stag?

Hyflux had announced balloting results for the public portion of the 6% Class A preference shares. As expected, due to the overwhelming demand, the Company had exercised the option to upsize the offering to S$400,000,000. Similar to the DBS preference shares balloting results earlier, everyone who applied was allocated at least some shares, with those applying for higher range being allocated more.


We at Kiasu Investor (KI), had applied for 1100 shares and a quick check of the refund monies in our bank account verified that we have indeed been allocated 180 shares. Trading in the shares is expected to start from 9.00 a.m. on 26 April 2011, and the shares will be traded in board lots of 10 shares. Based on historical performance of DBS preference shares, we expected share price for the first two weeks to be trading relatively close to offer price around the $101 to $102 range. Subsequently, once the short term "overhang" has been cleared, the price may be able to move slightly higher.

With trading expected to start soon, the big question on investors' mind would be whether to "Stag" or to hold on to the shares for its 6% payout (not guaranteed). Even though the 6% p.a. payout looks relatively attractive to the general public who are looking for "fuss-free" investment that are not exceedingly risky, we remained convinced that we should be focusing our funds on investments that yield even higher returns through active monitoring and management (using Kiasu Analysis). Hence we will be looking for an appropriate opportunity to "offload" our allocation. However, we do note that this is just a matter of "preference" (no pun intended) and there is absolutely nothing wrong and that we have many friends who are more than happy to just hold on for the semi-annual payouts. (note the dates 25 April and 25 October for those keen on applying Kiasu Investing Rule #2)

First REIT: 1Q FY2011, Prospects Looking Up!

First REIT announced 1Q FY2011 results earlier today after markets closed. Our hopes for a special bumper distribution were like what Singaporeans like to say, "crushed like a cockroach." Distribution per unit (“DPU”)  was also lower y-o-y on a quarterly basis due mainly to the dilutive 5-for-4 rights issue in Dec 2010. This was because the increase in distribution due to the maiden contributions from the newly acquired Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals Lippo Cikarang were not sufficient to offset the dilutive effects of the rights issue.

Now that the bad news are out of the way, let us try to look for some positives in the results announcement. Firstly, management reiterated their aim to raise its asset base from the current S$584.6 million to S$1 billion in the next two to three years. This implies that we can anticipate more upcoming acquisitions to be made shortly (likely in Indonesia) and correspondingly, significant increases to subsequent distributions.

Secondly, management commented that divestment of the proposed Pacific Cancer Centre @ Adam Road (“PPCC”) has lowered First REIT‟s gearing to a low 13.8%! Meaning that the company can afford to go on the above mentioned acquisition spree without the need for more dilutive rights issues.

Thirdly, the announced DPU for quarter came in at a decent 1.58 cents, which still translate to an attractive annualized yield of about 8.66% (certainly beats the "red-hot" Hyflux Preference Shares hands down!)

Going forward, the prospects of First REIT certainly does look bright for the Kiasu Investor!

Link to presentation slides.

Kiasu Investing Rule #2: Manage your REITs as if you were managing your Fantasy Premier League goalkeepers

Before one can fully comprehend the above rule and put it to good use, the Kiasu Investor (KI) would first need to have an appreciation of what Fantasy Premier League (FPL) is all about.

Not exactly our idea of

"Fantasy Premier League"

For the uninitiated, Fantasy Premier League (FPL) can best be described as an online competition-cum-strategy game that involves millions of players from around the world (and yes, there is real and decent prize money for the ultimate winners). The game is based on the weekly performance of football teams from the English Premier League.

To put it briefly, the underlying premise (objective) of this game is to:

- assemble the best football players that you can from a limited budget (to form your team).
- each week, your team will get an overall score based on how well the footballers you have selected perform in the real-life Premiership matches.
- each footballer have a "price tag" that may fluctuate daily depending on how well he is performing in his matches.

- tinker with your team by transferring footballers in and out in an attempt to maximize your game score. (again restricted by your budget)

All this may sound very well, but one may start to wonder, "What the hell has the above mentioned got to do with my investment strategy??"

Allow us to explain: In FPL, one of the most basic but extremely effective strategy when selecting your goalkeepers is to "pair" two cheap keepers rather than go for a reputable goalkeeper that would cost dearly. This is because matches are typically played in "home" and "away" fashion, with the teams playing at home typically out-performing (due to home ground advantage). Hence by choosing two average goalkeepers and alternating them every week (always playing the goalkeeper at home), there is a good chance to earn excellent "returns" every gameweek and hence outperforming the score you would have gotten by playing the more "reputable" keeper week-in, week-out.
Coming back to our investments, by applying Kiasu Analysis (KA), we can also divide the stock counters that we favor into alternate groupings based on their distribution / dividends dates.

 As an example, first, we can apply KA to come up with a list of trusts / REITs that gives out half-yearly distributions (i.e Feb & Sep). Next we come up with a list that gives out half-yearly distribution in alternate quarters (i.e May & Nov).

In the 1st Group (distribution in May & Nov)

Ascendas India Trust  - 7.16% annualized yield

In the 2nd Group (distribution in Feb & Sep)

Saizen REIT - 6.933% annualized yield
K-Green Trust - 8.21% annualized yield


By adopting a "pairing" of perhaps Ascendas India Trust (AIT) with K-Green Trust (KGT), I can potentially extract annualized yield of up to 15.37%** by switching in-and-out between the two after receiving each distribution.


For Illustration:
Mar-May'11     - Buy into AIT
May'11            -  receive AIT distribution (approx. 3.5%)
Jun-Sep'11      - Sell AIT, buy into KGT
Sep'11             - receive KGT distribution (approx. 4.1%)
Sep-Nov'11     - Sell KGT, buy into AIT
Nov'11             - receive AIT distribution (approx. 3.5%)

**assuming nett zero gains (or losses) from switching between the counters

In this way, you get to receive distributions from both counters within the "pairing" but only need to stay invested in only one counter at any point in time.

The best part is, you can apply this principle to form any "pairings" of your personal preference (need not necessarily be REITs or trust, though the former typically provide more certainty in terms of distribution). In fact, for Grandmaster KIs, you can even do pairings of three or more counters.

More examples of counters that gives half-yearly distribution: 
CapitaComm, CapitaRChina (i.e Jan & Jul)
SPH (May & Dec)

Perhaps you can discover and share with us your personal favorite pairings or combos?

Potential Bumper Distribution from First REIT from Sale of Adam Road Hospital?

First REIT ($0.735) will be announcing first quarter 2011 results tomorrow (Wed, 20 April). The sale of Adam Road hospital was completed on 25 Mar 2011 with a net cash gain of approximately S$8.3 million. In the announcement dated 23 Feb 2011, it was stated that if the full estimated gain from the sale had been distributed for the financial period 1 January 2010 to 31 December 2010, the DPU would have worked out to be 9.06 cts. This translates to a full-year distribution yield of approximately 12.3% on last traded price. Of course, it is entirely up to the REIT manager's discretion on how much of the gain (if any at all) to distribute. However, being the ever optimists that we are, KI is "secretly" hoping for a bumper distribution this time round.

How to benefit from US stocks plunge after credit rating outlook downgrade by S&P?

Kiasu Investing Rule #3: Always try to pick-up "Cum-Dividend" stocks as close to Ex-Dividend date as possible and at as low an entry price as possible (the ideal is to time entry at the lowest price point between CD and XD dates).
Given the slew of Ex-Div dates that are rapidly approaching, and the timely plunge in US stocks caused by the credit rating outlook downgrade, the coming sessions may present us with a golden opportunity to not only put into practice Kiasu Investing rule #3, but also possibly at an ideal entry point as mentioned in the rule above.
For the benefit of fellow KIs, I have attached two separately compiled list of upcoming dividends for your easy reference.
The first one is from UOB Kayhian shows the list of SGX stocks with significant payouts with Ex-dates in April 2011

The second list was kindly compiled by my broker from CIMB.

Good luck and have fun!

Sabana REIT yield potentially the highest among all S-REITs?

Potential for higher distribution this coming month?

One characteristic of a true-blue Kiasu Investor (KI) is to always target the highest-yielding investment among those of a similar risk profile. In Singapore, there are plenty of choices for high-yielding investments. Most of the REIT counters are trading at relatively large yield-gap when compared to Singapore Government Securities and bank deposits. The commonly cited counters with the highest yields are namely AIMS AMP REIT ($0.21), Cambridge Industrial Trust ($0.505), Sabana REIT ($0.935) and Cache Logistic Trust ($0.935). All four counters are focused on the industrial and logistics sector, with the first three expected to provide yields of > 9% based on last traded prices.

At a quick glance, there doesn't seem to be too much differentiating the four. Delving in deeper, an investor may consider other factors such as gearing level, discount to NAV, the strength of sponsor (or rather the lack of one), the past performance of management etc. Applying the above analysis, one would observe that Cache Logistic Trust has a lower gearing level and a relatively stronger sponsor and hence is compensated by a lower yield and trades at a slight premium to NAV.

However, being a die-hard KI, I applied Kiasu Investing Rule #2 (more on this rule later), which is when I came across a line in Sabana's IPO prospectus stating that "Sabana Shari’ah Compliant REIT will make distributions to Unitholders on a quarterly basis, with the amount calculated as at 31 March, 30 June, 30 September and 31 December in each year for the three-month period ending on each of those dates. However, Sabana Shari’ah Compliant REIT’s first distribution after the Listing Date will be for the period from the Listing Date to 31 March 2011 and will be paid by the Manager on or before 29 June 2011." This effectively means that the upcoming distribution, being the first for Sabana since it's listing on 26 Nov 2010, could potentially include distributions for a period of slightly over four months (i.e. from 26 Nov 2010 till 31 Mar 2011) compared to the typical three months. 

Putting on our Kiasu Analysis (KA) hat, it is worthwhile to note that Sabana REIT's manager had forecasted DPU of 8.63 cts for the period from 1 Jan 2011 to 31 Dec 2011 (twelve months). Assuming a similar distribution rate for the period from 26 Nov 2010 to 31 Dec 2010 (four months), we are potentially looking at a potential distribution of 2.876 cts for this quarter (8.63/12 times 4), or approximately 3.076% based on last traded price of $0.935 (potentially making it the highest distribution in percentage terms among all the S-REIT counters for this quarter!)


P.S: Please note though, there is the risk that the forecasted distribution for the year may not be evenly spread out over the four quarters like we have assumed in our calculations.