"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!