Thursday, 9 March 2017

Ascott Reit Issue Rights to Raise S$442.7m

A few days ago on the 6th of March, Ascott Residence Trust ("Ascott Reit") announced that they will be launching rights issue to raise S$442.7m (download the official announcement here)

Just to give a quick overview for those interested: 

For every 100 shares of Ascott Reit you own, you are entitled to subscribe to 29 shares of rights units at $0.919. The theoretical ex-rights price is $1.114. Majority of the gross proceeds will be utilized to fund the  acquisitions of Ascott Orchard Singapore and two other German properties in Hamburg and Frankfurt. 

Indicative Timetable for Ascott Reit Rights Issue

The new rights unit will be issued and available to trade on SGX on 11th April. 

I have always been planning to open a position in Ascott Reit. Upon reading this announcement, I purchased 1 lot of Ascott Reit so that I could apply for excess rights (trying my luck, although I highly doubt they will be available). 

All the best to those that are vested! 

Best,
AT

Sunday, 12 February 2017

New Shoes for CNY, A Lesson on Trade-offs

Bata shoes for $49.90.
When I was just a bit younger, I would never have stepped foot into Bata as it means "Buy And Throw Away" among many of my friends. Truthfully, I have not been shopping there after finishing my primary school. 

However, as I started working, I started to value comfort and functionality instead of branding in things I buy. A pair of $49.90  shoes can be as comfortable as a pair that costs $499. I guess the main reason is because every purchase and expenses, will pull me further away from my financial goals. 

There are always trade-offs in life. For me, I would rather spend my money on food and travelling. Some other person might not think twice about spending $500 over a pair of shoes but save on food and other items. As long as we have a clear sense of our financial goals and can achieve them, I think it is important to live our life while we work towards financial freedom. 

There are some though, that spends on everything, living the present without any trade-offs. If you find yourself constantly overspending month after month (some to the extent of being in debt), do remind yourself that the trade-off in this case, is your future

Best,
AT

Sunday, 5 February 2017

StarHub and M1 Financial Results - Part 2



Previously, I posted about the upcoming financial results release by StarHub and M1. They have since both released their full year 2016 results as of this continuation post. 

You can download StarHub FY2016 financial report here and M1 FY2016 financial report here. Overall, the performance for both telcos is nothing to cheer about. There was flat growth in revenue and earnings per share yoy dropped approximately 15% for M1 and 8% for StarHub. In addition, dividend payouts are estimated to be cut in FY2017. M1 will remain its 80% payout ratio on net profit after taxes (if net profit drops further, then dividend will be further reduced) while StarHub guided 0.4c per quarter for FY2017 (20% cut in dividend from FY2016).

With the fourth telco TPG Telcom set to commence operation in mid 2018, StarHub and M1 still have some time to devise strategies to retain their market share or diversify their income streams. Despite the dividend cuts, StarHub and M1 will still pay a dividend of more than 5% based on current market price. Will continue to monitor closely and might add more to these 2 companies if they get too undervalued in 2017.

Best,
AT

Tuesday, 31 January 2017

CNY Topic: Gambling vs Investing

Happy Chinese New Year all! It has been a fruitful rooster year so far, visiting relatives, gambling and stuffing myself with CNY goodies. Besides eating, I believe most of us enjoy some gambling (it is actually a great activity, if not done excessively) with our relatives. 

As a matter of fact, when I share with some of my relatives that I dabble with the stock market, some of them tried to advise me against it. "Eh, don't put your money in the stock market, might as well go gambling". Some of them liken investing to gambling as they have heard so many horror stories of people losing a majority of their wealth to the market. Furthermore, they have either lost money themselves in the market or they are clueless of how the market works. So, what is the difference between gambling and investing?

The main difference between gambling and investing is that you acted on calculated risks with information you received. In the stock market, there are many uncertainties just like in a game of Black Jack. However, a stock wins by its earnings and growth potential. Unlike the next card in Black Jack (which cannot be seen or predicted), these earnings and growth potential are often released to the public through annual reports and financial statements. By analyzing the management team, the strategies of the company, the financial figures and its business model, it is clear some companies will make it while some will not. 

Assume you are playing Black Jack (I am guessing everyone knows the rule of Black Jack, so I won't explain further), and you receive 16 points for your first two cards. You do not know what is the next card, but you decide to draw anyway. This is gambling whether you win or lose. 

However, what if you can see through the deck or predict the next card? Perhaps you have x-ray glasses that could tell you the next card with 50% probability. The next card seems like a 5, but it turns to be 6. You lost money but this is investing.

In reality, we are often unable to be 100% sure if an investment will make money for us. We can only make sense of the information available to us and try to do our best. A blue chip stock can quickly face liquidity crunch and lose 70% of its market value in a year (e.g. Noble Group). Both StarHub and M1 lost at least 30% of its market value in 6 months due to emergence of 4th Telco (from Jun 2016). However, if we are sure that the business is fundamentally sound, and that it will continue generating returns for its shareholders, then it will be worth taking calculated risks to invest our money in them for the longer term.

If you are taking a gambling approach to investing (i.e. not doing your due diligence before your purchases), don't forget that the house always win.

Best,
AT 



Tuesday, 24 January 2017

StarHub and M1 Financial Results

I bought into both M1 (end Oct 2016) and StarHub (end Dec 2016) recently as I believed they were way oversold. In 2017, both of the telcos have been recovering from their lowest point mainly due to a MOU that has been signed between them to share mobile infrastructure

For those vested in M1 or StarHub, I am just here to share that both telcos be releasing their full year FY16 results in the coming 2 weeks. M1 will be releasing its financial results on 24th Jan 2017 (today!) while StarHub will be releasing theirs on 3rd Feb 2017

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Financial freedom = Passive Income > Expenses. Always remember that there are two sides to the equation of financial freedom. Beside working on how to improve our passive income through investing, we should never neglect the expenses portion. By striving to improve both side of the equation, we can achieve our financial goals and win in the game of money.

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