Unexpected passive cash flow from Colex

During this period with the Covid-19 pandemic on-going, it is not surprising to find many companies either slashing their dividend or suspending their dividend.

Shallow Focus Photo of Man Reading Newspaper

Among my holdings, I was pleasantly surprised by the recent announcement of Colex to issue a Special dividend of 10 cents on 4 August 2020. This company is bucking the trend. :p

On 3 Aug 2020, Colex shares were trading at $0.20 per share. A $0.10 special dividend is almost half that share price, and on 6 Aug 2020, Colex share price has rose to $0.33. A 65% increase.

Figures from Dividends.sg

Colex’s annual dividend payout is fairly consistent (see above), ranging from $0.005 to $0.006 (once in 2017 it was $0.011). Kind of predictable and boring. So yeah, $0.10 is a big jump. And the resultant dividend yield (inclusive of the other dividend payouts so far) is a whooping 31.67% (in the midst of a recession).

I am surprised from another angle, given that the earnings reports of Colex have been lacklustre for many quarters, given the rising operating expenses and staff costs, etc. Also the big kicker was the unsuccessful tender for public waste collection in Jurong sector (Colex’s 7-year contract expired on 31 March 2020). Colex was the lowest bidder, but the contract was awarded to Alba.

Their subsequent tender for public waste collection in Clementi-Bukit Merah sector in 2020 was also unsuccessful. Colex was the 2nd lowest bidder, contract was awarded to SembWaste.

Subsequently, these will be the tenders upcoming.

Expiry for the other 4 sectors:

1) City-Punggol – Jun 2021 (Existing operator: SembWaste; Tenders opened on 24 June 2020)
2) Woodlands-Yishun – Dec 2021 (Existing operator: SembWaste)
3) Ang Mo Kio-Toa Payoh – Dec 2021 (Existing operator: 800 Super)
4) Pasir Ris-Bedok – Oct 2025 (Existing operator: 800 Super)

Ok, to be fair, there are listed companies increasing their dividend payout during this period (such as SGX), but that is mainly because they are doing well.

However, in Colex’s case, given the loss of the Jurong Sector public waste collection, Colex’s revenue for HY2020 has decreased by 21.8% to S$26.359 million from S$33.725 million in HY2019.

From their recent 2019 Annual Report (below), Waste disposal revenue takes up approximately 57% of the overall revenue. With the loss of the Jurong Sector that could mean a substantial loss in the revenue (I am not sure if there is a further breakdown in this waste disposal revenue, but I am assuming most if not all came from the Jurong Sector public waste collection). So that is a permanent loss of around 60% revenue in the coming years, unless Colex managed to successfully bid for a PWC tender.

I would have expected Colex to be conserving cash at this period, given the global pandemic and uncertain economic outcome, as well as its own foreseeable revenue/income drop. Personally, to me, Colex is the typically boring company with an easy to understand business. In addition to these, it is also known to have a strong balance sheet (minimal debt and a cash hoard).

Colex latest annual report shows that it has $22.5 mil in cash and cash equivalent. A bit of context here, Colex has a market capitalisation of $43.733 mil. Colex’s cash is approx. 52% of its market capitalisation.

That is a lot of cash for a small company.

An off the envelope calculation: Given that Colex total share count is 132.52 mil. The special dividend is an outflow of approx. $13.25 mil.
As mentioned earlier, Colex latest annual report shows that it has $22.5 mil in cash and cash equivalent. With the above dividend outflow it is now left with $9.25 mil (not considering the other interim dividend payout this year).

The management has stated that the special dividend was issued as it was unsuccessful in the last two PWC tenders and is unable to invest its surplus cash during this uncertain period.

However, many others think otherwise.

You see, Bonvest Holdings Limited owns 78.94% of Colex or 104,611,560 Colex shares. And Colex Chairman, Mr Henry Ngo has substantial stake in both Bonvest and Colex (BTW the relationship of Henry Ngo, Bonvest, Colex and Goldvein Holdings is very complicated).

With the special dividend Bonvest is getting $10.461 mil from Colex.

It reminds me of the relationship between Comfortdelgro and Vicom. FYI, in Feb 2019, Vicom declared a Special dividend or 8.62 cents; there was no special dividend payout a year ago. Comfortdelgro is a direct beneficiary of that payout, since Vicom is two-thirds owned by ComfortDelgro. However, as compared to the current situation now with Colex, it is a different story. Vicom then, posted a 30.9 per cent rise in net profit for its full year ended Dec 31, 2018.

Vicom posts FY18 profit rise, announces special dividend (read here)

Bonvest as a company has 3 main core business: Property, Hotel and Waste Management (Colex).

Bonvest’s main revenue comes from Hotel (around 60.6%), followed by Rental (around 9.7%).

Given the Covid-19 induced global recession, it is without doubt that Bonvest’s main revenue generators are impacted. Hospitality is like ground zero in this pandemic devastation (next to the aviation sector & cruise lines). In its 8 June 2020 announcement (below), Bonvest has already mentioned that. As for the magnitude, we would have to wait for its earning report.

Nevertheless, Bonvest has stated that it has sufficient cash holdings and undrawn credit facilities and may further leverage on unencumbered hotel properties for new credit facilities.

Well the group does have a cash balance of $46.4 mil in 2019. However, it also has total liability of $460 mil. Current liabilities (due to be paid in 12 months) stands at $237 mil.

The Group has a gearing ratio of 27.71% and total borrowing of $339.5 mil.

So yes, the cash balance does pale in comparison to the liabilities and borrowings.

In additional, there are also other risks such as a downgrade of their property valuations at the end of 2020, etc (which will adversely impact their balance sheet and ability to obtain better / higher loans from banks).

Cash flow wise, they are lumpy (Bonvest being a property counter). 2019 Operating Cash flow was around $29mil, while CAPEX was around $24 mil.

I am not sure how 2020 Operating Cash flow will pan out. However, looking at the CAPEX it can fluctuate wildly from around $24 mil to around $54 mil. If we take a 50% cut from operating cash flow (of $29 mil), the free cash flow would be around negative $9.5 to $10 mil, provided CAPEX remain around the same as in 2019 (and that is a big IF).

Well the special dividend payout ($10.461 mil) from Colex this year as mentioned earlier would come in useful.

This move by Colex does raise some doubts (despite Bonvest stating that they have sufficient financial resources).

In the meantime, I am sure for retail investors, the special dividend announcement is a welcome news. This dividend payout or shall I say, transfer of cash, has benefitted the minority passive retail investors. This is especially so for this thinly traded stock, whose stock price has been on a down trend since the start of 2017. For me, my Colex stock holdings has turned green (unrealised profit). It has been underwater for quite a while.

However, I don’t think this Special dividend payout would last (the most another year), unless Colex’s financial performance pick up (with the successful bidding of a public waste collection tender).

Despite being cash rich, Colex with a market capitalisation of $43.733 mil is still small fry. Big brother – Bonvest with a market capitalisation of $355.343 mil, would need much more cash injection than Colex’s special dividend if the pandemic drags on (and Bonvest cash burn gets bigger).

It might have been a wonderful symbiotic relationship between the 2 companies, a bigger ‘brother’ (Bonvest) in charge of the more glamorous side of business, with world class hospitality real estate, while little ‘brother’ (Colex) stays in the shadow and play it safe with a super unglamorous smelly but stable business of waste collection, with a strong warchest to boot. What could go wrong? However, even prior to the Covid-19 pandemic, little brother’s business has already started to encounter hiccups, and a black swan event like this pandemic resulted in an unprecedented crisis for big brother’s business. It is like a candle with both ends burning (question is: which end has a bigger fire).

However, in the meantime, for the current retail investors who are vested in Colex stock, just enjoy the moment. I do doubt the intention of this Special dividend is to reward long time shareholders of Colex… they are just an accidental beneficiary (though minor) of this transfer. Cash after all, in this low interest (close to zero, and in some cases negative), is better used for other means as compared to being left in a fixed deposits.

For some, it is a good time to cash out. Perhaps that is how Mr Henry Ngo views it- as a warchest, which is to be opened in times or need. For others, it is a welcome change from the downward trend of the stock price.

Disclaimer: I am vested in Colex Holdings Limited stocks.

Posted in Colex | Leave a comment

To Speculate or Invest?

The month of June 2020 so far has been ok. It wasn’t as volatile as the previous months (but not as good – trending upwards). The US Markets were pretty much range-bound and Singapore markets did not outperform as well.

In terms of dividend, the month of June is a drought as I receive no dividend for this month. They do come in useful in helping me buy stuff for the household or for paying bills.

  • Dividends by Month (read here)

I have purchased some Sun Hung Kai properties stocks at the start of this month after the drop in HK equities prices due to announcement of the proposed national security law which would allow Beijing to override Hong Kong’s independent legal system and collect intelligence in the territory.

I am not particularly into politics, but my feeling is that HK is becoming more and more like Singapore in many ways. More sterile, a more authoritative top-down government, etc. Sometimes I reckon HK need some form of control to function. For many people on the ground, the riots and protest obstruct more to their freedom (rather than contribute). I like Daniel Dumbrill’s video on this (see below). Nevertheless being an outsider, I would never fully understand.

  • Why Hong Kong Needs National Security (Watch here)

Who knows maybe the Hong Kong Exchange will end up like the Singapore Exchange with the Index consisting mainly of government linked entities…(There is a trend there, if you have noticed).

Overall, my HK equities portfolio still underperform as compared to my US and SG equities portfolio.

So this comes at a time when I am contemplating what to do next… probably for next month (July). As Singapore moves into Phase 2 of its reopening strategy, for my portfolio I have already slowly moved into it.



Phase 1: To accumulate stable dividend-paying stocks.

I think to some extend ‘volume’ plays a part. Beyond a certain amount, the annual/monthly dividend payout becomes more meaningful. With an average dividend yield of 4%, a portfolio of $1,000 pays a minute amount of $40 a year (or $3.33 a month) – tax-free. Snowball that to a portfolio of $10,000, and we get $400 a year (or $33.33 a month). Still a small amount, but with $33.33 you can start to purchase some things (perhaps Kopi money for the month), pay the HP/Internet bills, etc. And when we manage to increase the portfolio to $100,000, we will get $4,000 a year (or $333.33 a month). Now that amount starts to make more sense.

I can go on, but you get the picture.

There is a reason why I like Joseph Carlson’s Youtube videos, cause he kinda drums it into my head.

Income such as dividend payouts or Bond interest payouts is probably the next best thing to having rental income investment property (or better). Anyway, lots of debate on that.

However, with interest rates going to be near zero for a long time, sticking with bonds may not be a wise choice. Leaving me focussing more on stocks… for now.

In general, I would think many of the dividend stocks in my portfolio are pretty stable. Sure, the Covid-19 outbreak has revealed the flaws of REITs and many other businesses. However, I am sure in the long term, many of these companies will survive and perhaps grow stronger (over their competitors).

However, when I dig into the financial metrics, they aren’t exactly the top of the league. ROE not in the 20s, balance sheets not exactly debt-free, profit margin aren’t very high, earning growth not high etc….Peter Lynch probably term many of them as Slow growers or Cyclical stocks.

Kind of like investment properties —- I probably won’t expect much innovations or high ROE/Earning growth when thinking about them, but rather the stability of the income and assets.

I think this interview (see below) with Guy Spier kinds of sum it up, pertaining to the investing environment now.

  • You need to adjust your valuation models in this market: Guy Spier (read here)

To quote the article:
“Buffett famously says interest rates act like gravity and they bring stock prices down. Now we are in a world where interest rates will remain low for a long time. There is a lot of liquidity, there is a compulsion to invest. If you do not invest now, and you will be stupid to invest in the bond market, so equity perhaps is the only game in the town?
The simple answer is what Charlie Munger says: this is not supposed to be easy. So you are actually right. You just presented the conundrum and how do you deal with that conundrum? Do you go in cash and miss out when equity market rises from here? Do you go to bonds that seem to be a termite here? Or do you stay invested in some extraordinarily inflated stock markets? Even within equities, you have the question do you invest in the market darlings, which just seem to be going from strength to strength? Or do you say dive in the whole classic value investor, where all your stocks continue to go down? It’s a very tough time……

How can you be a value investor when all the businesses that seem to be doing really well are ones that appear to have very high valuations? I will just give you a couple of simple adjustments so if you are in the software space, you will have a marketing expenditure that you would spend to grow the size of your business. The moment the marketing expenditure goes away, the minute you go into a steady state, you have to make that adjustment and look at the earnings of the company without the growth capex. Making those kinds of adjustments, some very smart value investors come to the conclusion that some of the FAANGs are actually great value investments.”


Phase 2: To accumulate growth stocks.

With the recent V shape recovery in the US stock market, you start to read and hear of people with success in stocks capital gains.

I am sure many would have found out about Chicken Genius Singapore‘s videos. With a video title like this “$440,000 gains in 2020“, I am sure many would be interested.

Or Adam Khoo’s video – 5 Reasons the Stock Market Can Go Much Higher

Or Dave Portney’s – Barstool Sports founder believes he’s a better investor than Warren Buffett and has determined day trading is ‘the easiest game’ there is 

Going back to what Guy Spier said – It is a tough time.

Well, I find Phase 2 of my investing journey hard. Adjustments had to be made when I think of these growth stocks. Nevertheless, looking at the forward PE ratios of the FAANG stocks – some are not outrageously high (not cheap also).

  • FAANG Stocks: Analyzing Their Valuations (read here)

Forward PE Ratio – Source from Yahoo on 21 June 2020

  1. Facebook: 32.68
  2. Apple: 22.57
  3. Amazon: 103.09
  4. Netflix: 71.43
  5. Alphabet Inc: 34.13

Then again, these are not the Tech stocks at the super growth stage. .. Mega Techs.

  • One chart puts mega tech’s trillions of market value into eye-popping perspective (read here)

There are arguments to stick with tech companies in the steady-state beyond the high growth Capex stage. And beyond these mega techs, I am sure we can find many more growth companies with stellar financials.


We often read and hear about the winners but not the losers.

My fear is probably towards senseless speculation. Not understanding what I am investing in or having no conviction in my investment over the long term. I am sure some of us would have read about the young man who committed suicide after seeing a negative $730k balance in his Robinhood trading account.

  • 20-year-old Illinois man commits suicide after seeing -$730,000 balance on app, family says (read here)
  • Robinhood’s stuck-at-home millennial day traders ignore danger signs to push US stock benchmarks to new highs (read here)
  • Leon Cooperman says speculation by Robinhood traders in stocks like airlines will ‘end in tears’ (read here)

Ah yes, Robinhood, the app-based pioneer of zero fee trading in the US.

Looking through the Robintrack website (which keeps track of how many Robinhood users hold a particular stock over time)… I came across some very senseless speculations. Sure there are many turnarounds plays in the top 100 holdings in view of the Covid-19 induced recession (eg. Delta Airlines, Carnival, Norwegian Cruise Line, United Airlines, Boeing, Spirit Airlines. – many among the top 20 popular stocks).. which I don’t see any near term turnaround.. and I have my doubts as long term holdings (after the Covid-19 blow over).

And I wonder what is with the infatuation with medicinal cannabis companies? Yeah, sure they have sticky business models. Interest is going up while stock prices continue downward trends for many of these stocks, while the general markets recovered Eg. Aurora & Hexo with deteriorating income and EPS. Probably turnaround plays as well.

To quote the below article:

“Earnings growth, or at least the prospect of strong earnings, is a hallmark of top stocks. But the marijuana industry, broadly, is losing money. The industry’s billion-dollar valuations dwarf million-dollar quarterly sales figures.

Not surprisingly, marijuana stocks have poor Earnings Per Share Ratings. Innovative Industrial Properties leads with a 77 EPS Rating out of a best-possible 99. Cronos Group had a 38 EPS Rating.”

  • Should You Buy Marijuana Stocks In A Pandemic? Here’s What The Charts Show (read here)

However, I am not even talking about these.

At no. 49 (in terms of popularity (among Robinhood users), we have Hertz (above Nikola, Luckin Coffee, Netflix, Nvidia, Nike, etc)


For a long time, the number of users holding this stock has been very stable, until recently. The numbers shot up when Hertz started filing for bankruptcy on 22 May 2020), while its stock price spiked briefly before crumbling.

  • Looking to buy a car? Hertz is selling thousands of used cars in its fleet in bankruptcy at bargain prices (read here)
  • All bets are off as Hertz pulls plan to issue $500 million in new stock (read here)

Denver-based oil producer Whiting Petroleum which filed for bankruptcy on 1 April 2020, also saw a surge in interest from Robinhood users.


GNC, which is said to be close to filing for bankruptcy, saw its shares soar and interest among Robinhood users rise.


The whole concept of investing is thrown out of the window, replaced by speculation (eg. hoping to be not that last fool). Hertz has even tried to capitalise on this by issuing new stocks to avoid bankruptcy (but failed).

That is the other end of being extreme. Beyond having no conviction and understanding the financials of the company I am investing, and even beyond having an innovative company with Proof of Concept and the Ability to Scale. It made no sense at all.

Hmm.. as stated in the Feb 2020 article below, the median age of a Robinhood customer is 30, and half say they’re first-time investors.

  • As Morgan Stanley buys E-Trade, Robinhood preps social trading (read here)

Maybe to quote Marc Rubinstein in his article below:

But a pivot from sports is a compelling explanation. The demographic of Robinhood’s customer base is similar to that of a sports bettor. Men aged 25-34 are the segment most likely to bet on sports on a regular basis. According to Deloitte 43% of North American men aged 25-34 who watch sports also bet on sports at least once per week, and that’s the same group that has flocked to Robinhood. The median age of a Robinhood customer has drifted up from 27 in 2017 to 31 now, and 80% of them are men…..

Robinhood customers also appear to be attracted to stocks for the same reasons they are attracted to sports events. In its S-1 prospectus DraftKings, a sports betting company, says that it delivers “betting experiences designed for the ‘skin-in-the-game’ sports fan — the fan who seeks a deeper connection to the sporting events that he or she already loves.” A look inside Robinhood portfolios reveals the sorts of companies that customers no doubt have deep connections to. Outside of the ‘cheap’ stocks (Robinhood gives away a free share, priced between US$2.50 and US$10, to every new account holder) portfolios are stuffed full of Aurora Cannabis, Disney, Snapchat, Tesla, Twitter. (Very few banks and financial services companies are in there.) On the basis that their customers love sports betting, there’s something meta about DraftKings itself having worked its way into more Robinhood portfolios than practically any other stock over the past month.”

  • The Stock Market as Entertainment (read here)
  • Why So Many People Are Getting into the Stock Market (read here)

Sure perhaps it provides entertainment and adrenaline rush (that comes with gambling as well). Well, been burnt too many times to even wanna try. Actually, I don’t really lack entertainment by investing (even though I am always holding the same stocks for months – always get surprised from time to time). Just want to sleep well at night.

Sure reading the financials of the company will not ensure that I hit the big time stocks… but it does minimise my stupid and impulsive buys (won’t eliminate though). There is a certain amount of irrationality when it comes to growth stocks… that is just how it is. However, to speculate in Hertz is beyond that level. No numbers, no narratives, no future… don’t know what to cling onto.

“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” Peter Lynch

If I am to invest in Hertz now, I would probably tell my son (for the reason for investing in Hertz), is that Daddy does not love you and would like to burn your future varsity fund right before your eyes…….Muahahaha…. “p

Who knows, people probably made big money from Hertz stocks … but then again investing (or shall I say speculation) is one area whereby making a profit does not always mean you are right.

I can’t remember the exact words of Howard Marks, but as I recall, it is the ability to tilt the probability in your favour, but the final results may be still negative. He stated the example of a bowl with negative and positive lots. Even though one may choose a bowl with 70% positive lots, one can still draw a negative lot from it. However, that does not mean that the person is wrong (in the long run).

From time to time, I would look at the shared portfolios in Stockscafe. Inevitably I look at the stock holdings of the top-performing portfolios (be it 3 yrs or all-time) and get some ideas from there. However, ultimately, it still boils down to reading more about the stock/company narratives and studying the financials. I have to be convinced by at least one of them (narratives or numbers).

Oh Yeah, Tesla, Square, DataDog, Docusign, Mega Tech stocks featured quite prominently in many of the portfolios which achieved stellar gains recently. However, not too far down the list, there are portfolio consisting of Singapore Reits, banks, etc which are also doing well. I guess it has to do with a bit of timing and luck.

So moving on, I have been looking at more growth stocks. However, despite working from home, work is keeping me busy most of the time.

Anyway, the month of June is not over yet. Who knows … how things will change.

Posted in Portfolio | Leave a comment

My thoughts for the month of June

Time flies. And the month of June is around the corner.


Portfolio wise there has been some minor changes. You can check out the list of stocks in my portfolio in the articles below.

  • Plan forward for Month of May (read here)
  • Portfolio Update (read here)

For instance, I have purchased some more of Alphabet & Mapletree Logistic Trust shares and built up my war chest (from active income and dividend payouts – which is as planned.

Overall, the portfolio value dropped slightly.

My Singapore Portfolio has whipsawed in the month of May, but basically remain almost the same or slightly higher. The REITs have performed better compared to the rest. Even Ascott Residence Trust posted unrealised gains. And I am bemused by the strong performance of Mapletree Commercial Trust share price. The month of May saw more dividend income compared to previous months, having received dividends from Hongkong Land, Dairy Farm, Golden Agri, DBS, Mapletree Commercial Trust, ParkwayLife Reit and ST Engineering.

My US portfolio (consisting of just Mastercard and Alphabet) and Malaysia portfolio (consisting of just Heinkein) has been on the green side. The US portfolio, in particular, has been the out-performer. Tech seems to be lifted by the coronavirus related disruptions and global lockdown. Reading the revenues of some Taiwanese semi-conductor companies, there seemed to be an uptick in the months of March, April (compared to the same months last year). Quite a no. of tech stocks have rebounded and are reaching new highs (Facebook, Amazon, Netflix, etc).

Hong Kong (HK)

On the other hand, it is the Hong Kong Portfolio that has proved to be a let down.

I think we are all aware of the recent news. After months of Covid-19 hogging the headlines, we are now back with HK in the limelight again.

  • US move to end Hong Kong’s preferential status and cut ties with WHO ‘extreme, suicidal’: Chinese state media (read here)
  • China says U.S. action on Hong Kong ‘doomed to fail’ (read here)

I have been following the news from Hong Kong, and these days when I read the news of the actions by China (and subsequently by US), I just can’t help reflecting on the words by this British Professor to a bunch of students on rioting, and the students’ reaction to someone who mentioned that HK youngsters are destroying more than constructing. Looking at the date of the video, it was sometime back in Sept 2019 (and as what was mentioned by the Professor, it was week 17 of the protest).

The professor’s talk (like my lecturers during my Uni days) is strong on ‘lecturing’, but fell short on solutions. No student would like being lectured. Then again, that isn’t the point I reckon.

Yes, as a Singaporean living in peaceful Singapore knowing nothing about HK and what Hong Kongers are going through, I don’t think I am qualified to say anything. This is just my personal thoughts.

In the video, the professor was stating that Democracy in China (HK) is an illusion, what they are doing (rioting, defecating, beating people up, graffiting the walls, vandalising the streets) is stupid. Weeks after weeks of protesting is not going to yield any results. It is disrupting the lives/livelihood of their peers (countrymen). It is exactly what China wants. Their freedom (social media – Facebook, etc) will be taken away from them. What happened in Mainland China (I reckon he meant the Tiananmen massacre / crackdown) will happen in HK. He urged them to be more intelligent in their ‘revolution” (He mentioned Mr Robot and Cyber-attack – being anonymous, instead of buying products from China to riot). It is disruptive in the Wrong way.

Guess from an investor’s point of view… Sometimes the hardest thing to do.. is to Do Nothing. Will we see a HK version of Gandhi? Joking.

Here we are now, weeks after weeks, months after months of protesting, rioting….Albert Einstein is widely credited with saying, “The definition of insanity is doing the same thing over and over again, but expecting different results.”

As we approach June 2020, the professor’s premonition seems to be coming true. With the recent news, there seem to be no winners. And the biggest loser seems to be Hong Kong.

To quote the article below: “After 1997, if there are people in Hong Kong who scold the Communist Party of China, scold China, we will allow them to scold. But if it becomes action to turn Hong Kong into an anti-mainland bastion under the guise of ‘democracy’, what then? Non-intervention would not be feasible,” Mr Deng told members of the committee drafting Hong Kong’s Basic Law, or mini-constitution, in 1987.

  • Fear of foreign interference looms large in China’s version of Hong Kong law (read here)

It is really none of my business. However, I can’t help feeling for those working-class Hong Kongers with families to take care of / feed. After all, I am also a family man.

Yes, Democracy is important, but why are these people (who are not even protesting) suffering?  Can there be true democracy and independence without social stability or economic prosperity (even as simple as putting food on the table)? The video below was dated 7 Aug 2019. Wonder how is he and his family now…

With the world in recession due to the Covid-19 virus, it has been a double whammy for HK. Caught between 2 giants (often stressing that they have little to lose), HK itself a small pawn in the whole scheme of things.

HK itself seem to be trapped in a quick sand. The more it struggles the deeper it sinks, the more China tighten its grip on it. The more reasons China can find to do so.

With the world re-opening after the Covid-19 lockdowns, and economies set to recover (albeit slowly) for many countries, I can’t really say the same for HK.

And after months of rioting (coming to a year), what have HK rioters got to show? Any progress made in democracy? A country where the economy is at a standstill (earlier than most others), with no tourism revenue to speak of, hospitality, F&B, retail sector near collapse, unemployment rate hitting 9 years’ high.

  • Coronavirus: most Hong Kong hotels record single-digit occupancy as industry faces ‘life or death’ struggle to survive (read here)
  • Hong Kong outlook ‘pathetic’, ‘dire’ in near term, mall and hotel operator Wharf REIC says as it reports drop in revenue, profit (read here)
  • Hong Kong Disneyland’s Latest Losses Blamed on Politics, Not Virus (read here)
  • Hong Kong unemployment rate hits highest in more than 9 years (read here)

Even Jimmy Lai (founder of Hong Kong’s pro-democracy newspaper The Apple Daily) recently mentioned “I hope, for example, that the United States government does not completely lift Hong Kong’s privileged economic status. The city needs those special ties, so it can keep standing apart from the mainland and have at least some economic edge over it. Removing those privileges would only make Hong Kong more dependent on China.” 

The above is extracted from the article below.

  • Do My Tweets Really Threaten China’s National Security? (read here)

And the prolonged unrest has pushed six Hong Kong tycoons (including Li Ka-shing) to be supportive of the national security law.

  • Tycoon Li Ka-shing throws weight behind Hong Kong national security law, suggests it will ease Beijing’s ‘apprehension’ about city (read here)

The fact that I am still invested in Hong Kong stocks (of companies, many with businesses in Hong Kong itself), is that I have not lost hope for Hong Kong. And yes, I am really tired of reading news saying that Singapore stands to benefit with the ‘fall’ of Hong Kong. Instability in HK / China (and Taiwan) will only do more harm than good.

  • Hong Kong tensions unnerve world stock markets, oil tumbles (read here)

If I am to use Sun Hung Kai Properties stock as a barometer, the last time I saw SHK shares at this price (eg. HKD 90 on 29 May 2020) was in May 2012 (and then Feb 2016). The prices then in 2012 were depressed due to the saga of the Corruption trial involving Thomas and Raymond Kwok, the billionaire co-chairmen of Sun Hung Kai Properties Ltd. After so many years of progress, we are now back to 2012 (and even lower).

Well anyway, after tracking SHK share prices for years.. it seems like the prices just oscillate around a datum.

  • Sun Hung Kai Properties Limited shares (Time to buy?) (read here)
  • Hong Kong landlord stocks trade like it’s 2009 all over again (read here)

Funny, a few years back, I was talking to my dad about properties. I made a ‘joke’ about properties in Singapore (just joking so don’t hold me to it :p), was saying in Singapore, people should buy when the government ‘tells’ them to buy. For example, there were periods (often during a recession, market crash) when restrictions are lifted and borrowing limits are loosened to encourage people to buy properties. But when properties prices are overheating, restrictions (cooling measures) are imposed discouraging speculation.

The thing is people are often reluctant to buy in the former situation due to fear. But often rush to buy (in the latter situation) when prices are overheating and huge penalties are imposed due to FOMO.

To put it simply: Buy property (for investment) when the government wants you to buy.


Moving Foward…

Yes, for the month of June, hold on tight.

I will still be looking to add more to my US & HK portfolio. Just the usual DCA. Holding on to my warchest. Yes given the valuation of many stocks in the HK portfolio, it does look tempting (esp. the stronger counters).

The tech stocks and the innovation subject is an evergreen theme (be it a recession or not). Valuations for many seem rich, still, the sector is growing, and the strong will keep growing. Why punish the overachievers? Nevertheless, I am not going to go crazy about it though.

Beyond Tech (the FAANG or BAT stocks), there are other fields of innovation. Just reading up on ARK Investment Management, you will find companies leading in Genetic sequencing (eg. Illumina, CRISPR Theraputics), industrial innovation in energy, automation and manufacturing (eg. Tesla), technologies that make financial services more efficient – blockchain (eg. Square Inc), etc…

With the Covid-19 cloud lifting, and the HK riot cloud not abated… HK would take time… so also not going crazy about it.

Posted in Hong Kong Shares, Portfolio | Leave a comment

Further thoughts for the month of May

Just 2 days back I penned down my thoughts for the month of May (read here).

Well, I am going to write some more.


Before I continue, I would like to point out that I tend to focus more on the companies and their fundamentals/earnings/dividend, prospect rather than the overall market or trend. However, what we are going through now is kind of unprecedented and there is just too many news about the market values and forecasts (bombarded daily). Guess I need to sort out some of my thoughts.

We often tend to read or hear what we believe is right. This is even more so during this unusual period of the Covid-19 crisis. The markets have been up for the month of April 2020. And that to many people, is a surprise since technically we are not really out of the woods yet. Even the billionaire investor Howard Marks in his recent memo ‘The world is more than 15% screwed up’: dated 21 April 2020 (read here) warned the recent stock rally doesn’t reflect reality. To quote: “We’re only down 15% from the all-time high of February 19,” the investor said, referring to the S&P 500. “It seems to me the world is more than 15% screwed up.”

Many attribute the rise in prices due to (A) the unprecedented monetary policies, (B) fiscal policies and that (C) there are early signs that the U.S. Covid-19 case and death counts may be levelling off, as the growth of new cases and deaths plateaus. These 3 factors I think are the major factors.

  • The economy is in free fall. So why isn’t the stock market? (read here)

Not many have taken advantage of the lows in March 2020 (or more specifically 23 March 2020). I have been reading a lot of articles from both sides, each has differing views (eg. some think 23 March 2020 is the bottom, while others saying we will go lower).

Nevertheless, US stocks in general, are not particularly cheap from a value point of view (even if we take the prices on 23 March 2020). Typically people use these two ratios: Shiller Cape PE (aka Shiller PE ratio for the S&P 500) and Buffet Indicator, to determine if the overall US stock market is over or undervalued.

Shiller P/E, or P/E 10 ratio, is a valuation measure usually applied to the US S&P 500 equity market. It is defined as price divided by the average of ten years of earnings, adjusted for inflation.

Buffett Indicator is the sum total of the market capitalization of all U.S. stocks relative to the nation’s gross domestic product.


  • Warren Buffett’s favorite stock-market indicator hits record high, signaling a crash could be coming (read here)

In the above article dated 30 April 2020, to quote: “The Buffett indicator now sits at a historic high of 179%, reflecting the US stock market’s rapid rebound since the coronavirus sell-off, and the 4.8% slump in annualized GDP last quarter. Its current level is well above the average reading of 107% over the past 20 years.”


From both graphs, we can clearly see that US stocks, in general, are not under-valued.

So that begs the question, should I even be invested or investing my hard-earned money now. For the pure blue-blooded value investors, it might seem obvious (eg. should not invest when stocks are over-valued).

However, when looking at the chart, a few thoughts came to my mind. Irregardless of the ~30% market crash which we had just witnessed, stocks have been over-valued for a long time (a very long time).

Shiller P/E


Let’s look at the Shiller Cape PE chart. The mean and median PE is 16.7 and 15.77. So technically I would be looking at a PE of less than 15.77 for stocks to be undervalued. That did happen briefly in 2009 (around the time of the 2008-2009 GFC)…. probably less than a year. And we all know that it is super hard to time the bottom and psychologically it is hard to buy near the bottom. So hypothetically, if we missed this period (probably hoping for the Shiller PE ratio to dive lower, but it went up instead)… what would one do? Stop investing for the next 10 years?


Similarly for the S&P/Case-Shiller index of property values (read here), if you are a property investor in the US, you would have been waiting very long for prices to be undervalued.


The Shiller Cape PE ratio was invented by American economist Robert Shiller.

When I watched videos on interviews on Nobel Laureate Robert Shiller, he highlighted that these days markets are more driven by psychology.

So yes in very simple terms – we are living in an overpriced period.

To quote the article below:

“All assets are overpriced, according to American economist Robert Shiller. The U.S. as a whole is a market where stock, real estate, and long-term bonds are overpriced, he said in a recent interview with Calcalist. “It is a period of abundance. The economy is strong, but strong is not the same as healthy.”

“He (Robert Shiller) promotes an economic field called narrative economics, the gist of which is that economists need to look beyond hard data and formulas to the stories that affect people’s behavior and decision making. According to Shiller, viral narratives, whether true or false, influence economic events like momentums, recession, or bubbles. This school of thought goes against many more traditional economic paradigms. “

  • This Is a Period of Abundance, But a Strong Economy Is not the Same as Healthy, Says Economist (read here)

From what Shiller mentioned, looking purely at hard data (which I reckon includes the Shiller PE) is insufficient, the other key is this ‘narrative economics.

Buffett Indicator

Moving on to Buffett Indicator. Like the Shiller PE chart, it has been in an overvalued position for a long time. Some time since early 2013 till now. It was below 100% from late 2007 to early 2013. Even with the 30% crash in the US markets we just witness in March 2020, the value is still firmly above 100%.

In the Gurufocus website, it states that as of 3 May 2020, the Total Market Index is at $ 28500.6 billion, which is about 132.3% of the last reported GDP. Its current level is well above the average reading of 107% over the past 20 years.


Again, if you are a true blood value investor and a firm believer of the Buffett Indicator, you would have stayed at the sidelines since early 2013. More than 7 years.

While listening to the Annual Shareholder meeting of Berkshire Hathaway, one interesting question popped up:

  • Warren Buffett discusses why Berkshire didn’t repurchase shares when their prices sank recently (watch here)

Despite the market crash, Berkshire is a net seller of stocks (as they could not find any companies at an attractive value enough). There are many other factors. For example, Berkshire given the size of the warchest, there are looking to buy companies outright at the US$10 to US$40 billion range (unlike us small time retail investors), and the swift actions by the Fed has no far cushioned many would be ‘in dire straits’ companies from the fall (hence – so far no urgent need for Berkshire’s elephant gun), eg. Buffett’s phone just started ringing prior to Fed’s swift actions (then stopped ringing).

However, it is interesting as to how Warren replied when someone asked him why he did not repurchase Berkshire shares in March 2020 (when they dropped to a price that was 30% lower than the price when he repurchased them in Jan & Feb 2020.

Warren’s first reply was that the crash was a very very short period. Then he added that he did not think that Berkshire shares at current value is not at a significant discount (than in Jan or Feb 2020). He also do not feel that it is more compelling to buy Berkshire shares now (to step up in a big way), and also given situation nows (eg. his decision to purchase airline shares was a mistake).

Actually, if you have been investing for long, you would have noticed that over the years / decades, crashes have became faster and steeper (I guess it is due to all the automated short sellers, margin calls etc, think May 6, 2010 flash crash). The pace of the sell-off is certainly alarming from a historical perspective.

He may just missed it. From a very long term perspective, it probably did not matter much.

  • US stock market falling faster than during the Wall Street Crash (read here)

I think many factors affect Buffett’s buying decision. But basically, I feel that generally, Buffett does not think stocks are at an attractive price now. When it comes to Berkshire own stocks, it is also the components (not just the price)… like his mistakes in airline stocks. That is my general feeling.

In gist

So yes, it is not a straight forward answer.

So in any way, looking at both the charts, (US) stocks are in general, overvalued for a long time.
Would I then keep all my cash at the sideline and wait for it to be undervalued? Probably not.

For one I would be missing out on all the dividend payout and the rise in earnings of the individual companies. The amount may be small relatively – but if we multiple it by years.. that is a significant amount. 10 years of dividend payout beats bond interest payout or money market fund payout hands down.

  • Warren Buffett compares buying stocks to being a farmer (watch here)

Secondly, I feel we need to look beyond just stock prices. Yes, it is an important component. Investing at a time of high stock prices is detrimental to the overall portfolio value, but I am sure many of us would have read articles about the importance in staying invested in the long run. The difference between investing at the right time vs staying invested in the long run (eg. via DCA, Dollar Cost Averaging) is not much.

Even Warren Buffett in the recent Annual Shareholder meeting acknowledged that the stock market “can do anything”…

And I think it is more important to review individual companies individually unless we are index investing.

  • Time, Not Timing, Is What Matters (read here)

FYI I do enjoy Peter Lynch quotes very much…

“I am invested all the time. It is the best feeling ever, getting caught with pants up.” Peter Lynch


In fact, you can argue that if you’re not willing to react with equanimity to a market price decline of 50% two or three times a century you’re not fit to be a common shareholder, and you deserve the mediocre result you’re going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations.” Charlie Munger

Thirdly, I think there are now many factors at play here. Personally although I do not really believe that the Fed can prevent a recession or a major market crash. However, looking at the Shiller PE ration during the 2008-2009 Great Financial Crisis, it did not really crash as much as what many has expected (as compared to previous great crisis). Only dropped to 15.

I reckon in a large part the Quantitative Easing (QE) and monetary policies (and fiscal policies) do have a large part to play. If we go way back to the great depression, or even the 1980s, the part that the Federal Reserve played then was relatively small.

Today the Fed seem to learned from the GFC and quickly deployed unlimited QE and unlimited Bond-Buying Plans to cushion the fall. Sure it will not make people go out and spend / restart the economy as a whole… but it sort of change the playbook from the past.

  • The Fed Goes All In With Unlimited Bond-Buying Plan (read here)

And yes, we are still having super-low interest rates… for more than a decade.

“Capitalism without bankruptcy is like Catholicism without hell.” Howard Marks

So back to my month of May plan.

I reckon instead of investing, given my relatively low war-chest (only approx. 10%). I think my current priority is to build up my warchest instead. Yes I will still stay invested, but my near term priority is to set aside my salary and dividend towards my warchest.
I need to have more ‘rainy weather” funds and funds I can deploy when stocks do become “undervalued:.

Deploy some when the US growth stocks (price) dropped significantly.

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Plan forward for Month of May

The last few days have been good in terms of stock market performance. Quite a no. of my counters have now turned green (with unrealised profits). This will be just a short post for myself to gather my thoughts, for my plans for the month of May 2020.


Typically the month of May is the dividend month. Looking at the projected dividend payout, typically most companies in my portfolio pay out their dividend in May. So yes despite the dividend cuts and suspension, I will be getting dividends from Hongkong Land, Dairy Farm, Mapletree Commercial Trust, Parkwaylife Reit and Mapletree Logistic Trust (so far announced – if I look at the list in my Stockscafe portfolio). And that will help provide some cash for further reinvestment.

My war chest is now running low. 10% left. Most of it in SRS, some in cash. However, I shall still carry out my regular DCA for the month of May.

The percentage of stock in my portfolio has increased significantly and with it, I must learn to deal with the volatility (comes in bigger absolute amounts). I try not to be too fixated on the prices, the unrealised losses or profits. Not easy when the first thing I see every time I log in to my brokerage account, is the unrealised losses/profits (rather than the projected or due dividend payout or companies’ earnings). Sub-consciously, I believe that is a major flaw in the system.

I have read a lot about the concept of barbell investing (with different versions). Some divide the portfolio into two baskets, one consisting of bonds and the other of stocks. While others group them into a basket of bonds/dividend stocks vs a basket of growth stocks.

For me, given the market crash which happened only recently – I would probably opt for the more aggressive version – bonds/dividend stocks vs a basket of growth stocks. To take more calculated risks now. Typically, I am quite extreme. In good times, my portfolio would be heavily skewed towards bond funds and money market funds (while I indulge in ‘thumb sucking’ aka doing nothing).

Currently, the portfolio is heavily skewed towards dividend stocks (95% dividend stocks vs 5% growth stocks). Basically I only consider Mastercard & Alphabet stocks in my portfolio as growth stocks.

Growth stocks typically are more volatile in terms of stock prices. For my portfolio, the mini-rally in stock prices have largely benefitted Alphabet Inc Class A (increase by approx. 9% in a single day). There are a handful of dividend stocks in my portfolio which has also have relatively large price increases (eg. Mapletree Commercial Trust, Parkwaylife Ret, ST Engineering & CK Asset).

Personally knowing myself, I do suffer from loss aversion. It comes in many forms. Like most people, I feel the urge to sell when the unrealised losses become too much eg. more than 50%. I don’t like to sell those stocks which are deep in the red. In a more subtle way, I also feel hesitant to add on to counters which have already a significant run-up in prices even if the future forecast and fundamentals remain good (or getting better). eg. I fear to lose what I have already ‘gained’, and perhaps lowering the % ‘unrealised profit’.

Currently – my plan for the month of May is to add on to the growth basket of my unbalanced barbell portfolio (eg. Master Card or Alphabet) using the cash in my war-chest, and adding still more dividend stocks (ST Engineering or Mapletree Logistic Trust) using the SRS fund in my war-chest, going forward. It is psychologically harder to add on to the growth pie given that their stock prices been on a rise in recent days… either I bite the bullet now or wait for a drastic drop in prices (no idea).



Posted in Portfolio | 2 Comments

The Index vs Main Street

I was reading some of Howard Marks recent memo and articles and given at how fast the markets changed these days, the tone of the memos do differ and have changed over the past few days.


a)  ‘The world is more than 15% screwed up’: Billionaire investor Howard Marks warned the recent stock rally doesn’t reflect reality, dated 21 April 2020 (read here). To quote: “We’re only down 15% from the all-time high of February 19,” the investor said, referring to the S&P 500. “It seems to me the world is more than 15% screwed up.”

b) Knowledge of the Future dated 14 April 2020 (Read here). To quote the end of this memo: The market seems to have passed judgment with regard to the future.  U.S. deaths have reached 23,000 and continue to rise.  Weekly unemployment claims are running at 10 times the all-time record.  The GDP decline in the current quarter is likely to be the worst in history.  But people are cheered by the outlook for therapies and vaccines, and investors have concluded that the Fed/Treasury will reduce the pain and bring on a V-shaped recovery.  There’s an old saying that “you can’t fight the Fed” – that is, the Fed can accomplish whatever it wants – and investors are buying it.  Thus, the S&P 500 has risen 23% since its bottom on March 23, and there’s little concern about the retrenchments that typically have been part of past market rallies. But Justin Beal, my artist son-in-law, is mystified.  “I don’t get it,” he told me on Saturday.  “The virus is rampant, business is frozen, and the government’s throwing money all over the place, even though tax revenues have to be down.  How can the market be rising so strongly?”  We’ll find out as the future unfolds.”

b) ‘I no longer feel defense should be favored’: Billionaire investor Howard Marks urges clients to take advantage of bargains in the market dated 8 April 2020.  (Read here) To quote: “The “uncertain, low-return environment” seen throughout the financial sector before the coronavirus pandemic tanked markets has given way to one rife with value, he said. “I no longer feel defense should be favored. “

c) Calibrating dated 6 April 2020 (Read here). To quote the end of this memo: “The bottom line for me is that I’m not at all troubled saying (a) markets may well be considerably lower sometime in the coming months and (b) we’re buying today when we find good value,” he wrote. “I don’t find these statements inconsistent.”


The stock markets has kind of rebounded from the 23 March 2020 lows. The S&P 500 currently is only 16% lower from the Feb 2020 highs.


The STI is around 21% lower from the Feb 2020 highs.


However, like what Howrd Marks mentioned, the world is more than 15% (or in this matter 16% to 20%) screwed up.

In fact, many of the small / medium sized businesses are hurting and are closed. Kevin O’Leary (one of the co-host in the show “Shark Tank”) has a no. of mom and pop /start-up businesses and he estimated recently in 17 April 2020 that about one third of these business will go out of business.

  • It’s Chaos out there: ‘Shark Tank’ co-host on post-coronavirus path for businesses  (watch here)

In Singapore, we will be seeing a lot more liquidation and winding up of companies.

“The number of companies and businesses that ceased operations in the first three months of this year jumped 78 per cent to 18,923, from 10,611 in the same period last year.

The number of companies that went into liquidation doubled in the first three months of the year, from 119 companies during the same period last year.”

  • Pandemic deals fatal blow to struggling businesses (read here)

However, we need to know that the index does not represent the whole picture. The constituents (in STI and S&P500) are these big-cap companies (typical multi-billion). Many of them are still in operation (though not fully). Yes the three big local Singapore banks are hit by the oil crisis as well (eg. Hin Leong exposure).

  • Big three banks’ $871.5m Hin Leong exposure adds to loan pressures (read here)

The 3 banks alone take up more than 35% weightage of the Straits Times Index.

The possibility of these banks going bust is very low.


However, SMEs contribute to 65 per cent of Singapore’s employment, while in 2017, SMEs added a nominal value of $196.8 billion, or 49 per cent, to the economy. (read here)

And many of them will be worse hit by the pandemic.

Looking at the index, it is indeed not a true reflection of what is happening on main street.

Posted in Uncategorized | Leave a comment

What investors are betting against (Hospitality – Ascott Residence Trust Management Limited & CDL Hospitality Trusts)

During the COVID-19 pandemic, one of the worst-hit sectors will be the hospitality sector.


Extract from the article below: “The hospitality industry here has been among the worst and most immediately hit by the virus situation, with a sharp dip in tourist arrivals.”

  • Singapore watching rapidly evolving global Covid-19 outbreak, is prepared to do more if needed: DPM Heng (read here)

To be investing or invested in this sector is really taking a bet against what is dire right now and forecasting better days. Oh yeah…Not many people want to invest in this sector at this time for obvious reasons.

  • “The key to making money in stocks is not to get scared out of them.” Peter Lynch

It goes without saying that what COVID-19 has done to the economy and the stock market as a whole, is unprecedented.

While screening through SGX companies’ announcements, it is common to see companies deferring their AGMs and the announcement of dividends (or even withdrawal of the dividend announced, and to be scheduled at a later date).

While looking through the companies’ announcements, I am curious as to how much dry powder these companies have in their war-chest to weather this downturn.

Two notices jumped out in particular.

  1. Ascott Residence Trust Management Limited (General Announcement: Update on COVID-19 ) dated 9 April 2020 – Read here
  2. M&C Reit Management Limited (General Announcement: Press Release – Update on Transactions Timeline and Impact of COVID-19 Outbreak on Portfolio) dated 9 April 2020 – Read here

I consider Ascott Residence Trust and CDL Hospitality Trusts, bellwethers of the hospitality sector. To give some context (see below).

1. Ascott Residence Trust



2. CDL Hospitality Trusts




Let me highlight the extracts (see below) from the articles stated earlier. Well, if you are not really into bad news or horror nightmares – you can skip the below.

1. Ascott Residence Trust


2. CDL Hospitality Trusts


So yeah, does not look pretty.

In times of crisis, cash is like oxygen.

Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent. When bills come due, only cash is legal tender. Don’t leave home without it.” Warren Buffett

There is another section in the articles that is interesting (see below).

1. Ascott Residence Trust


I am curious as to how much ART has in terms of cash, so I did a quick check from their 4th quarter reports (see below). Approx. S$246 mil.


2. CDL Hospitality Trusts


So from the above, we know that for ART has a gearing of about 33.6% and approx. S$409 mil cash eg. S$246 + S$163 (if I include the S$163 from the Somerset Liang Court sale proceeds), and CDLHT has a gearing of about 37.3% and $100 mil cash.

Ok, with the potential drop in valuation of their properties, this might affect the gearing. However, I am interested to know base on their cash balance, how long can they sustain, assuming that there is negligible income. Just a ballpark study. I do not know how long the pandemic will last, some people say weeks, some months, some years, etc.

Basically, these figures mean nothing if we don’t consider the size of the entities and their related expenses. After all, ART is a much bigger beast than CDLHT. As per previous reports, ART’s assets are valued at S$7.4 billion while CDLHT’s assets are valued at S$2.85 billion.

With the recent combination of Ascott Reit and Ascendas Hospitality Trust (read here) which happened sometime in Dec 2019, I will only be using the recent quarterly reports as a reference.

1. Ascott Residence Trust


I am not trying to be accurate here (no knowledge of accountancy), but lumping the various fees, staff cost, finance cost, Forex loss, etc (basically the direct expenses), it came to be around S$68 to S$73 mil, per quarter (round up to S$75 mil – let’s be even more conservative since expenses per quarter will fluctuate).

However, the actual cash expenditure per year is approx. S$36 mil, looking at the cash flow table below (from Yahoo Finance).

Note: Cash Flow Expenses – Items placed under the operating expenses section of a cash flow statement are things that reduce current assets, such as a decrease in inventory or accounts receivable. However, depreciation, which is subtracted as an expense on the income statement, is added back on the cash flow statement since it involves no actual expenditure of cash. Expenses under investment activities are expenditures for purchasing long-term assets (read here)


Assuming that ART properties totally closed down and has Zero revenue (and expenses stay the same), and if I just consider the cash on hand of about S$409 mil, it can last about 5 quarters or slightly more than 1 year considering all the various expenses.

However, if we consider actual cash expenditure, that period would become approx. 11 years (S$409/36).

I figure why should one bother with the intermediate.. just jump to the worst-case scenario (eg. Zero revenue). Looking at the news now and the above articles, that is not far fetched. And also assuming expenses remain the same (eg. no shorten work-week, no no-pay leave, no pay cut, no retrenchment, no tax rebates, still pay their shareholders and perpetual securities holders…. eg. being the model employer and listed company).

Well, that is two extremes: The complete loss in revenue and full expenses still payable.

In addition, that is also disregarding the potential drop in the valuation of their properties which might affect the gearing.

2. CDL Hospitality Trusts


By considering the difference between Revenue and Net Property income, I am estimating that the direct expenses for CDLHT to be around S$14 to S$16 mil per quarter (let’s round up to S$18 mil per quarter).

However, the actual cash expenditure per year is approx. S$46 mil, looking at the cash flow table below (from Yahoo Finance).


Assuming that CDLHT properties totally closed down and has Zero revenue (and expenses stay the same), and if I just consider the cash on hand of about S$100 mil, it can also last about 5 quarters or slightly more than 1 year considering all the various expenses.

However, if we consider actual cash expenditure, that period would become only approx. 2 years (S$100/46).

Again, that is disregarding the potential drop in the valuation of their properties which might affect the gearing.


In gist

Actually, every time we invest (or staying invested), we are making many assumptions and taking a stand as to what we think might happen in the future. Nobody can comprehend the full impact of the COVID-19 pandemic, but sometimes we just have to make some calculated guess or risks.

In a crisis, the better companies will become stronger subsequently, while the weak will be in trouble.

Will the pandemic last for more than a year? Your guess is as good as mine.

What we are witnessing now is unprecedented, and yes, it kinds of make forecasting difficult. Look around you, just take a drive or take a bus … go to town.

  • S’pore man shares photos of empty roads & deserted malls, says it’s like a ‘Resident Evil’ scene (read here)

The government can only offer so much help. Globally, if this continues, no amount of stimulus or tax rebate will make people stay in hotels, have holidays or hold conferences.

Since we first caught wind of COVID-19 at the start of 2020, we are now at the full-blown pandemic stage. The finances of the Trusts for 1st quarter 2020 would have already been impacted. In other words, the clock is already ticking. And assuming the Trusts use other means to raise some cash (or to reduce cash burn)… I would say they probably have until mid next year until their dry powder runs out. The ones with the deepest pocket tend to come out better in the long run, when there is a crisis.

To raise cash in the unthinkable event…Every action has consequences (from the perspective of the Trust):

1) Right issuance (offer new shares) – this will mean dilution of shares and still need to have distribution expenses downstream. And given the situation, there would probably be at a substantiate discount to last trading price. Existing shareholders may not look favourably towards it (if as a whole there is little or no revenue.. eg. further dumping of existing shares).

2) Selling of Assets – That is generally a bad idea during a crisis. Only the strong will stand to profit by buying distressed assets at a discount.

3) Issuance of Perpetual bonds: Again it would also mean more expenses downstream as still need to pay bond-holders (and I am not sure if they can sell at a good/low rate now given the situation.. like who would want to buy if the whole industry is in dire straits. Only the vultures).

4) Borrow from Bank… What is the collateral? Assets with declining values? Banks are not your friends in a crisis. Interest expenses will go up. And there is a cap (max 45% gearing).

Nevertheless, for Item 4:

As per this Jan 2020 DBS report, ART has a debt headroom of S$1.5 billion (see below) based on maximum gearing of 45%. That will significantly further lengthen the lifespan of a Trust with no revenue (by approx. 5 years or 41 years if considering just cash expenditure).


As reported by CDLHT (read here and see below), as of Dec 2019, they have a debt headroom of S$526.4 million based on maximum gearing of 45%. That will significantly further lengthen the lifespan of a Trust with no revenue (by approx. 7 years or 11 years if considering just cash expenditure).


Provided the net asset values of their assets do not fall off the cliff and they do not use the debt to purchase new properties. I probably remove a year or a few months given the potential drop on NAV of their properties.

Ultimately, nothing beats having cash in their own balance sheets.

My take is, give it approx. a year (or less, since first quarter is over) … some of these hospitality Trusts will feel the Heat (esp. CDLHT and those smaller ones with shallower pockets). Considering financial capacity and capital expenditure, ART seems to be in better shape. CDLHT has a lower cash holding, higher capital expenditure, and higher gearing. All these are not to its advantage.

Anyway, nothing is black and white. Who knows what will happen, a partial lift of the ‘circuit breaker’ measures when situations turn better.

  • “I deal in facts, not forecasting the future.” Peter Lynch

Note: I am currently vested in Ascott Residence Trust.

Posted in REITS | 2 Comments

Time to buy what you wish for…

There is this person whom I knew from work, and I meet him almost weekly.

I remember during the first few weeks of the market downtrend (that was when DBS was still hovering at more than $20+), he told me that he traded in his car for a new car. He told me that when there is a crisis, the rich would spend, not save. That should be around Feb 2020.

  • Asian tycoons hunt for cheap assets after market rout (read here)

His previous car (Asian brand) was not very old and suits his needs just fine, but the new car is more powerful and is considered a continental car. The car salesman told him, he was selling at the base cost to meet his marketing quota. And I reckon my friend got a steal for it. However, I also figured that the car salesman sensed that bad times are on the horizon and he had to unload the cars on hand.

By the way, he sold his old car at a ~$1k profit (unbelievable). Only in times of crisis, a ‘depreciating’ asset can change to an  ‘appreciating’ asset. I remembered the last time I heard that it was during the 2008-2009 GFC.

To quote the article below “I know it’s super expensive to own a car in Singapore and it’s really not worth it. But it’s just so much fun to drive around,” said Lin.

  • Why I bought a car in Singapore: What every first-time car buyer should know (read here)

Well, shortly after this, the market started tanking. And I remembered telling him that I have started buying stocks. Well, I did not say how much, just stated that I was buying. He mentioned that I bought too soon and should wait for a vaccine to be created. Nevertheless, I personally felt that since valuations are fair and for many stocks, they are at the cheapest valuation since (for many years), it was a good time to buy. And buy I did. Almost on a daily basis.

The last time I talked to him (think it was March 2020)… when DBS fell to below $18+, my friend said he kind of regretted buying the car (looking at DBS stock price). I can imagine that he hardly drove it for long (less than a month perhaps) and the smell of a new car is still fresh in his car. Geez, that must be the fastest I know of anyone who regretted buying a car.

I think we were all surprised by the speed and ferocity of the stock market crash.

  • Howard Marks says it’s time to stop playing defense: ‘We’re buying today when we find good value’  (read here)

These days I am seeing more advertisements on cars (with some fire sales) in the Facebook posts. With the current ‘circuit breaker’ measures in Singapore, sale of vehicles is not considered an essential service, and it has been suspended. Guess the car salesman was correct in his forecast.

“But with April tenders now suspended, motor dealers said uncertainty looms.

One asked: “There are a lot of unanswered question that we are still seeking from LTA, like what happens to the April quota – whether it will be combined with May’s, or be distributed evenly over remaining months of the year.”

  • Coronavirus: April COE bidding suspended but questions remain (read here)
  • Coronavirus advice: is now a good time to get a deal on a new car? (read here)

Well, I have always been more into stocks than cars.

I have no idea how things would pan out in the near future. However, I hope I have made the right choice. For some of the stocks in my portfolio, with the recent mini-rally, they are starting to turn ‘green’ eg. show unrealised profits (rather than unrealised losses).


Other than starting a Hong Kong-centric portfolio first (due to the HK riots last year). Personally, for me, I have broken my buying strategy into a few parts. The first few parts I have elaborated before. By the way, I find HK stocks much more volatile than Singapore stocks in general.


Part 1: Basically, the first few sectors to be affected are the aviation, tourism/transport, hospitality and retail sectors. This applies to the HK riot crisis as well as the COVID-19 outbreak crisis (here in Singapore). I personally feel that they will also probably be the ones that will take the longest to recover. Their dire situations seem edged deeply into many people’s mind. And to be fair, many are under financial difficulties and require financial bail-out by the government (eg. SIA).

I reckon after the COVID-19 crisis, people will take time to get accustomed to the idea of taking flights, cruises, holidays, frequent events jam-packed with people (like concerts or soccer matches, etc). Many countries are still grappling with how they will unwind the lockdown subsequently.


Well, I could be wrong (bad at timing anyway)….and the stock market can be irrational in the short term especially when it comes to timing.

The valuations of these aviation, tourism/transport, hospitality and retail sectors stocks are often the first to be affected (trend down). Hence, in my portfolio, I would start to accumulate some of these (eg. SATS, Ascott Residence Trust & Mapletree Commercial Trust). I will buy in drips using my war-chest (on top of the DCA) when they are trending down.

I did not know how things would pan out then. I was surprised when the situation worsened and many other indirectly affected companies saw their stock prices tank. The panic buying in super-markets, the division of work teams (to work from home on alternate weeks) in our company and the video conference meetings.


Part 2: So that came part two of the buying strategy: To start to accumulate solid companies (eg. DBS, Ascendas Reit, Parkwaylife Reit, ST Engineering, Heineken Malaysia Bhd).

There are quite a number of these stocks which I have been eyeing for years, but valuations were often way too high. Hence, I seldom consider them even when doing the regular monthly DCA. Only in times of crisis (like now), would I consider these stocks.

To be fair, many of these stocks appear immune to the crisis, eg. Vicom, SGX, Riverstone (to name a few).

It seems to be that every time the PM addressed the nation, the stock market dropped sharply (esp. before the address itself). I remember queuing up at our neighbourhood Sheng Siong supermarket, and making stock buy orders and checking stock prices. People are dumping stocks and buying food. And here I am picking up stocks from motivated sellers … stocks that many are dumping.

Sounds counter-intuitive … and mentally hard to do.


The first two parts are basically to add on to my dividend portfolio, which also consists of my HK-centric portfolio.

The reason for that is I primarily view stocks as assets that ‘pays’ me. eg. via their dividend. I look towards companies that can sustain their dividend over the long term and hopefully those that can grow their dividend. So yes, some of them do have relatively low yield (not in the double-digit % given the current market). Not to speculate for capital gains (well, if there are – it is a bonus).

  • “Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.” Warren Buffett

The current yield for my overall portfolio is 4.98%. It is not terribly high. However, I am happy with that.

Well, one reason is I have another bunch of stocks that have little or new dividend yields. And that brings me to Part 3.


Part 3: With the dividend portfolio more or less structured. I started looking for Growth stocks. I always feel that their stock price fluctuations can be relatively high. They can go up really fast and also crash down really fast… Esp. when it comes to the US markets. And I also feel that they are riskier since I often have problem valuating them. And there is really no dividend (so to speak) to fall back on in the long term.

Many fundamentally strong growth stocks are listed in the US & HK stock markets (sorry, Singapore). I tend to look at these markets more when sniffing out growth stocks. Many have wide economic moats, have strong network effect and user stickiness, good economies of scales, and basically operates in monopolies, duopolies, and oligopolies.

At the moment there are only 2 in my portfolio (Alphabet Inc Class A & Mastercard I ORD).


In the short term, this COVID-19 is creating a lot of disruption to our lives and the stock markets. It is also making tracking of projected dividend payout near impossible. The projected dividend payout amount in Stockscafe has been fluctuating. Companies are starting to cut dividend payout (eg. HSBC), and while others have deferred the AGM and dividend announcement in view of the ‘Circuit breaker’ measures in Singapore (eg. DBS & ST Engineering).

Nevertheless, I know for sure, the dividend this year for me will be a personal best as I have increased my allocation in stocks.

By thinking about dividend payouts, one is sort of forced to think long term. Look, a 3% to 5% increment annually is not going alter my net worth drastically. The list of stocks in my portfolio is gonna stay stagnant most of the time. And since the focus is going to be on passive dividend income, a more direct and important chart is the dividend payout chart over the months. Nevertheless, the War-Chest vs Stocks percentage is critical as well.

At the moment, I have approx. 22% war-chest left.




Not sure how it will pan out in the future. I do not rule out another crisis in the making.


A crisis tends to expose the flaws in the system and I am sure the global financial system is far from perfect. We are going to witness a global recession, high unemployment, high liquidations and bankruptcies, etc.


“What started as a health crisis is morphing into an economic, financial and debt crisis. Emerging market economies – including many in Singapore’s neighbourhood – are especially vulnerable, given their high dollar-denominated debts and dependence on commodity exports and tourism.”

  • Beware the lure of bear market rallies (read here)

Nevertheless, this post serves as a record. I do feel that now is a great time to buy what one wishes for (be it car or stocks) though. And if I am to relive the past few months again, I would probably do the same thing.

Perhaps now, more than ever… two words…Spend Wisely.

In a year (or two), I can look back at this post and decide if I have made the right call. Perhaps the money would be better spent on something else (like a car)…hahahaha



Posted in Portfolio | 2 Comments

Dividends by Month

I was talking to my broker today. She asked why I have so many counters but not a lot for each. Hahaha .. I am not that loaded (was thinking).

Anyway, not really a problem (from her point of view), but she just told me to be careful not to sell shares that I do not have (and not to be confused). Will be penalised for doing that.


Well, actually my thought was to have a diversified basket of stocks so that I can have dividend for each month. Tiny ‘drops’ per month.

Did a quick table based on what I can find in Stockscafe and Dividend.sg.


Seems like I have dividend payouts for every month except for June. Jan and April are also relatively ‘dry’ months and there is only 1 payout respectively.

I would not be surprised if dividend payout amounts are reduced in the near term.

Some news on earnings and dividend below. Dairy Farm and CK Asset surprise on the upside.

Well, HSBC and Standard Chartered announced today they would cancel their dividends and not launch any share buy-backs in 2020 after a financial regulator in the United Kingdom asked the country’s biggest lenders to suspend payments to investors and not pay cash bonuses to senior staff in light of the coronavirus pandemic roiling economies worldwide.

DBS has announced that their Annual General Meeting (AGM) originally scheduled for 31 March 2020 will be deferred to a future date to be determined. Accordingly, the announcement of the payment of the proposed final dividend of S$0.33 per ordinary share for the financial year ended 31 Dec 2019 will be postponed.

BOC Hong Kong (Holdings) Ltd’s profit for the year grew to HK$34,074 million, up 4.3% year-on-year. Return on average shareholders’ equity (“ROE”) stood at 11.51% and total capital ratio was 22.89%, both remaining sound. The Board has proposed a final dividend of HK$0.992 per share for 2019. Together with the interim dividend, our full-year total dividend will be HK$1.537 per share, representing an increase of HK 6.9 cents per share or 4.7% year-on-year, and a dividend payout ratio of 50.5%.

On 27 Feb 2020, Sun Hung Kai Properties reported profit and reported earnings per share attributable to the Company’s shareholders were HK$15,419 million and HK$5.32 respectively, compared to HK$20,469 million and HK$7.07 for the corresponding period last year. The company declared an interim dividend payment of HK$1.25 per share for the six months ended 31 December 2019, the same as the corresponding period last year.

On 11 Feb 2020, Sunlight REIT reported that their revenue and net property income registered 2.9% and 2.1% year-on-year (“YoY“) growth to HK$437.1 million and HK$345.7 million respectively. Distributable income for the Reporting Period was HK$233.5 million, up 0.8% YoY. They declared an interim distribution per unit (“DPU“) of HK 13.2 cents, which is unchanged from the corresponding period last year and represents a payout ratio of 93.6%.

Dairy Farm, on 5 March 2020, announced an unchanged final dividend of US¢14.50 per share, giving a total dividend of US¢21.00 per share for the year, which is in line with 2018. Interestingly, Dairy Farm’s 2019 profits skyrocketed 281.84% to $448.53m.

CK Asset reported on 19 March 2020 that underlying profit for the year ended 31 Dec 2019 increased by 19 percent from the year before, and will have a final dividend of HK$1.58 per share in respect of 2019 (a total of HK$2.10 per share for the year), a steady increase over the years.


Posted in Dividend & Yield, Portfolio | 3 Comments

Portfolio Update

I haven’t been updating in my blog for some time. There are just too many things going on at the moment. Both in the markets and at work.

To say that the market this month is volatile is a big understatement. Work-wise, I was working from home for the past week. Next week will be back at the office. Still, it was a hectic week.

I think the COVID 19 outbreak is beginning to turn out to be more serious than what I have initially thought. It is now a pandemic and many countries are in lockdown.

There was a mini-rally over the past couple of days and many are questioning if we have just witnessed the bottom of the crash or if it is a dead cat bounce. For me, that really is not the right question to ask. I know I will never know until the whole crisis is over.

There are many questions online about whether if it is the right time or shall I say the best time to invest.

Countless discussion in Facebook posts, Telegram groups, Investing Note posts, Blog posts etc…. At some stage, there is no point discussing or being an online warrior, just invest.  Oh yeah, second-level thinking is important, but beyond that (third-level, fourth-level, etc), I think I would be over-thinking.

However, is this the RIGHT question to ask in the first place?

To this, I think Howard Marks puts it succinctly, “Oaktree explicitly rejects the notion of waiting for the bottom. We buy when we can access value cheap. Given the price drops and selling we’ve seen so far, I believe this a good time to invest, although of course it may prove to have been not the best time.”

  • Covid-19 crisis proves there is no ‘magic potion’ in investment: Howard Marks (read here)

I think the Irrelevant Investor puts it simply as this: “Looking through this, one thing is crystal clear to me. It doesn’t matter when you buy, only that you buy.”

  • When Is the Right Time to Buy Stocks? (read here)

We will never know if it is the best time to invest. However, I do believe like Howard Marks, that over the long term, this is a good time to invest. Sure, things may get much worse before it gets better. Every crisis is the same. When we talk about the rising yield, due to the falling stock price, people will say that earnings and dividend payout will drop in the near future and yield will drop…. isn’t that the same in all the other crashes…end 2018, GFC, etc? In hindsight, even if you buy too early, and have set aside some money that you need for emergencies, in the long term, it will be alright.

I am not reviewing the companies based on their cash flow this year or even the next. I am imaging a situation when things get back to normal. When? I do not know.

Actually, that is not hard to do that now eg. to imagine when things get back to normal. For instance, when MRT trains are packed again, when we go back to the office to work, when children have schools every weekday and enrichment classes are open every week, when airport terminals are full of people and people go for holidays and hotels are packed, when supermarket shelves are packed and there is no panic buying, when there is no social distancing measures, no countries in lockdown mode.

That is NORMAL.

What we have now is NOT NORMAL. Just by going back to normal, companies’ cash flow will increase (some from 0% to +++++%).

If you ask me to imagine how the economy would be much better last year or early this year and how much higher the US markets can go. I find that harder. Sure we have the US-China Trade war… but we are also in the longest bull market ever (and Tesla stock price going ballistic). It is harder to imagine.

Currently, to imagine normal going forward is much easier (it’s a no brainer).

“You look at a company, you figure out what it could make in a normal environment and you figure out what that company would be worth to a strategic buyer, once its problems are largely resolved and once the capitalization has been restructured. Then you think about how that value will be divided up among the various classes of claimants and you figure out what a piece of a claim is worth and you see if you can buy it for less. And if you can make those judgements on the basis of conservative assumptions and still end up with good room for profit, then that’s a source of margin for error.” Howard Marks

However, I do believe in having a cash cushion and to break up the buying in portions. And I really really believe that I can’t time the bottom for nuts!

  • What If You Buy Stocks Too Early During a Market Crash? (read here)

Personally, for me, this crisis has been a long time coming. For the past couple of years, I have been looking at low single-digit yields in bonds & money market funds. And I have been dipping into the market. Hence, it really does not make sense to be doing blog posts nowadays, as my portfolio proportions kept changing.

Basically, I have been “shopping” for stocks.


Below show the proportion of stocks vs war chest proportion. The dividend stocks proportion has increased to 54%. It is still a sea of red FYI.


I have a simple strategy to create a dividend stock portfolio first. I like to think I get paid while waiting…hahahaha…

And strong growth stocks almost never ever or seldom goes to fair or below value.

And if have read my previous posts, I created a Hong Kong centric one last year in view of the HK market crash due to the Hong Kong riots. Now with the worldwide market crash (literally the fastest crash ever), I have expanded my Singapore stock portfolio and started a mini Malaysia stock portfolio (just one stock at the moment).

I have also started a growth US stock portfolio (just one stock at the moment).


In case the above font size is too small, I have listed the stocks below.


Long story short:

Other than Colex and Golden Agri, sometime late last year I started with the HK centric portfolio. Many banks, property counters / REITs (commercial & retail & hospitality), consumer staples, aviation and transport stocks were beaten down.

Then beginning of this year, we start to see China-related stocks get beaten down due to the Coronavirus outbreak. Basically, we start with the same sectors being hit again. With cities in China undergoing a lockdown, Singapore is affected. In early Feb 2020, the Singapore Ministry of Health stepped up their risk assessment from DORSCON Yellow to DORSCON Orange. Inevitably the Singapore market is affected (again same sectors start being hit again.. dragging down others not directly hit). Which led to me dipping into aviation, hospitality & retail-related stocks in the Singapore market (eg. Sats, Ascotts Residence Trust, MCT).

Now within a few short months, the whole world is having a pandemic & many countries locked down (including Malaysia), stock markets everywhere are crashing. And we start seeing defensive stocks getting beaten down (eg. DBS, ST engineering, Ascendas Reit….SGX not as much).

Not to mention the wild swings in the US markets. I do not think the FAANGs or BAT stocks are exactly cheap or fair value now… but they sure were a lot cheaper than what they were at a few months ago. Many heavyweight stocks are.

And the global economy just went into a recession. Singapore will be in a deep recession

  • IMF head says global economy now in recession (read here)
  • Singapore: A deep recession (read here)

The amount I invested in each stock is not big. It is a way of setting up the portfolios (and trying to set up a system to get dividend income almost monthly). I guess the next stage is to slowly add to each of the position, and get some strong growth stocks if markets continue downwards.

Basically, I see the dividend portfolios (consisting of Singapore Portfolio, Hong Kong Portfolio & Malaysia Portfolio) as cash cows. The projected dividend for this year for me should increase by a lot (however, I won’t be surprised if some of these companies cut their dividend for 2020). I am not really into growth stocks at this stage, but given the US market crash, many fundamentally strong growth stocks are looking very attractive.

I think the portfolios are called dividend portfolios (not capital gain portfolios) for a reason. And I try not to focus too much on the unrealised loss. I invest (not speculate for short term price gains), hoping that these stocks will provide me with long term recurring income.

For some of these stocks, I have been eyeing them for years, and have even written about them. I have dreamt about owning them for years but always felt that they are too expensive. The crisis (don’t know how long it will last) provided me with an excuse to purchase some of them. And I like to think quite a few of them are quality companies or REITs holding quality properties.

Timing-wise I reckon I could have done better. However, in retrospect, if I was to live through the scenario again, I would have made the same decision. My decision to start a small HK centric portfolio late last year would probably be the same if I am to go through it again. Knowing that valuations in the US were high at that time.

In hindsight, looking at the sea of red in my HK centric portfolio, it might have been better to invest now as compared to then, but I would have made the same decision then if I am to relive it. In HK’s case, it is not just one Black Swan, it is like a triple Black Swan event eg. HK Riot, COVID 19 and the Oil crisis

Hence the need for a cash cushion because I may be wrong again, and it allows me to continue buying.

Others on my watch list include Parkwaylife Reit, Nestle and Mastercard, and some others… still mulling. Who knows maybe I have already missed the boat.


“What we do now echoes in eternity” Marcus Aurelius 


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