First Annual Report

Received my first ever "Annual Report" as a shareholder of Frasers. Fully colored!

In it, the management team lists out:

- How the company has performed over the past year, and the reasons contributing to its success/failure

- Summary of the company assets (value of each property, tenants mix, lease period, etc)

- Financial information (cash flow, liabilities, etc)

- Interesting Stuff (like how it organize charity events for the community)

- The forecast for the future, and how it intends to grow the company

- Proposed resolutions (i.e you get to 'vote') on plans for the coming year

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It's like you are now the boss, and the management are reporting to you; submitting their progress report. If you are not happy with the company, you are free to sell your stakes away.

It's what I like about long-term investing. Success is based on actual performance of the something tangible, not reading charts and candlesticks.

Too many people treat investment like gambling. They buy stock based on symbols and price, hoping to sell it at a profit to others quickly.

I buy the actual business, and makes decision to buy/sell based on fundamental changes to the company. It's a long and slow process that can't provide instant gratification, but I'm enjoying the process.

Value of a Car

For the past month, I've had the luxury of having the family car all to myself.

Driving it to work everyday, going to 'faraway places' to attend wedding dinners, etc...

And it makes me wonder, how much value would I place on a car?

To tell the truth, not much. I have no idea why some people place so much emphasis on having a car - to the point that they would pile on debts just to own one. 


1. How much does a car TRULY cost in Singapore? 

Many people underestimate this. Just look at this article for a good idea. 

I can safely say even if you take a cab to work everyday for the next 10 years, it'll still be cheaper than owning a car.


2.  What is the OPPORTUNITY cost of using the $ to buy the car, instead of compounding it?

A car is a depreciating asset that loses its value every year, until it reaches a big fat 0.

Let's estimate that value to be say, $200k. Do you know how much passive income you can get by investing that $200K?

If you use that same $200k to buy 100 lots of Frasers Centrepoint Trust, you can get about $12k a year, or $1000 EVERY MONTH.

Take a moment to let that sink in.

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That means in 10 years, you will get back about $120k worth of dividends + original capital = $320k. And that's not even including capital gains.

If you use it on the car? You can get back, $0.  Big fat kosong.

WOW.

Now tell me why the hell you would want to buy that car.


3. Miscellaneous

Maybe it's just me, but here are my thoughts after exclusive usage of the car for the past month:

- Yes, it's convenient and much more comfortable, but it actually isn't that much faster. It probably shaves off like 10-15 mins during the morning rush hour. Finding parking lot is sometime a huge pain too.

- I can spend the 1 hour on train reading news, watching movies, etc... instead of getting stuck in the jam.

 - Owning a car comes with many 'additional responsibilities'. People expects you to "give them a lift", etc... Not that it's much of a deal, but it's something worth noting.

Overall, I just feel the cost simply isn't worth it for the little extra convenience and comfort. There's always a cab available ($20, which equals to a day's parking in the city).


Bottom Line

Unless you're in a role that really need that car to generate much more income for you (e.g. Sales), or, you are damn frigging rich, then I see no reason to buy the car.

I have no intention of getting one either in the foreseeable future. I rather have the money generate more money for me.

Once again, compound your $. Even investing in an extremely safe place (e.g STI) will double your $ every 20 years.

First Dividends!

Got the first batch of dividends of my life!

$140 from Frasers (which I will get every 3 months!!!), and $140 from Super.

Haizz.... really regretted not learning about Stocks earlier in my life. Wasted a good 5, 10 years of compounding money.

One dividend payout already way higher than few years of 0.005% interest in the bank.

:(

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Still, better late than never!

I shall wisely invest my money now!

First Piece of Gold

Brought my first piece of gold back during CNY period.

Hedge against inflation!

My First Stock Report Card!

Got the first quarterly earnings report of my first stock today!

Wow, the feeling is kind of like camping for your own exam score - it feels good when the results are good.

Long story short, it was nothing short of stellar. Causeway Point and North Point continues to be the pillar of FCT (Monopoly of the entire North area. No other shopping malls within 5KM distance)

Overall - More rentals, more income, more dividends!

Aside from Bedok Point which is undergoing renovation, all other malls revenue have increased. Renovations are expected to complete by the next quarter, and together with the acquisition of Changi City Point, it's expected to do even further for the rest of the year.

In other areas, occupancy rates are stable. Interest cover have increased, and 94% of FCT's debt are fixed (meaning future interest rate hike will not affect it as much)

Overall, I am very happy with my purchase!

My First Stock - Frasers Centrepoint Trust!

Finally acquire my first stock today, Frasers Centrepoint Trust (FCT)!

Does the logo looks familiar?

FCT own a number of shopping malls in Singapore - its most prized assets being Causeway Point and Northpoint.

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Why did I buy this stock?

1) It meets all the criteria I stated in the previous post - strong fundamentals, high dividends yield, and a solid blue-chip (>1 billion market cap)

2) It is a defensive stock - even in economic downturn, people will still visit shopping malls to eat and watch movies. This fits my goal of holding an income generating asset for very long term. As long as its fundamentals are good, I will hold it and collect dividends till I'm 60 years old. :P

3) It is the most defensive among all retail REITs due to its mall locations. Unlike most other REITs, FCT mall cater more to the sub-urban, heartland areas. It serves place like Woodlands, Yishun, Yew Tee - where they have sole "monopoly". It's not like Jurong East where they have 5 malls competing with each other for traffic.

4) It is something I can understand, and I can see everyday! When I pass by Causeway Point, I know how flooded the mall is. I can see how many percent of the retail areas are rented out, etc...

5) It has enjoyed very good "reviews". From the bloggers I followed to the analyst reports that I read. Most notably, It just acquired Changi City Point (at Expo) recently - which will spur its growth.

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So, that's the 5 main reasons I brought FCT.

In terms of technical, my personal valuation is this:

Disclaimer: These are based on a newbie opinon. Do not follow blindly.

P/E: 16.2	Own adjusted calculation.
NAV: $1.77	Brought it at near NAV. Ideally I would have waited for a better discount. However, I don't think it will drop any further in the short term.
Gearing: 27.6%	Extremely good. Typically REIT gearing is around 30 to 35% This means there is more than enough debt head-room.
Yield: 0.06	Not the highest among all REITs. For a retail one, it is solid. It will grow with the acquisition of CCP.
Interest Coverage Ratio: 6	Again, very good ratio. This means their earnings can cover the debt interest 6 times. Anything above 5 is good.
Estimated Margin of Safety: 43%	Based on my personal extremely conservative calculation. Ideally, I would have wanted around 67% - but you can’t have everything perfect.

My First Investment?

After tons of research, reading, reading and more reading. From SGX, Money Sense, SIAS, Investopedia, Financial Times, Books, Forums, Blogs... [

I think I've now got a good sense of fundamental analysis - interpreting financial reports, figures and ratios.

I've done several exercises where I try to derive financial ratios and figures of the company, based on its financial report alone. (It's sort of like doing 10 years series assessment, then checking the answers at the back)

So.

I think I'm ready to make my first step into the world of investment.

My first security purchase.

As a new investor, my approach will be: Explore around, but be caution.

My personal opinion is:

- The stock market is kind of overpriced right now (STI at >3000). No one knows when the crash will hit.

- I could consider buying ETF (safest), but I feel I won't learn much from it. I want to be more involved and engaged, even if it means slightly more risk. I want to be vested in a company, so that I can learn. The ups and downs, the process, etc...

- I don't want to take on too risky (penny, even mid cap) stocks. I don't need to, and I also don't want to. Maybe when I become more experience, or have more capital, etc... I could allocate some to them. But not now.

- The most reasonable choice now would be blue chips. Unfortuntely, they feel really overpriced. The 3 telcos are high-sky. The 3 banks are out of reach for me. The others are either the same, or not my cup of tea (don't invest in something you don't understand).

- In the end, my conclusion is to wait for the 'crash' before buying stocks. Rather then buy a growth stock, I decide to follow my idol - buy an income stock.

- What are some of the best income generating stock? REITs. Are they without risk? No. They are riskier than the ETF, but safer compared to stock.

- The greatest threat to REIT now is the impending interest rates hike. Therefore, I must choose very carefully.

- Another reason for REIT: I intend to hold this stock for the long term - as long as I need to. Hence, I'm not worried about the price. It just needs to be my extra source of income. :)

- And hence, my first decision - allocate a portion to REITs, and keep the rest as back-up ammunition. Opportunities come to those who wait.