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How Covid-19 Has Changed The Whole Dynamic About F.I.R.E (Guest Post)

How Covid-19 Has Changed The Whole Dynamic About F.I.R.E (Guest Post)

The Financial Independence Retire Early (F.I.R.E) movement has for the past few decades thrived on the ability to act on whatever you like, whenever you want, wherever you are at the expense of not anyone but yourself who can make that decision.

This post was originally posted here. The writer, Brian Halim is a veteran community member and blogger on InvestingNote, with username known as 3Fs and has 2169  followers.

The unprecedented case of Covid-19 which we are currently living through has clearly changed the whole dynamic of retiring, which as part of a subset also includes retiring early.
For many white-collar workers, including myself, we’re dealing with actual work by working from home for an extended period of time for the first time in our lives.

I must say it has been a very refreshing and invigorating experience on its own having to deal with it rigorously for the past four months or so, even if it means sometimes having to pick up calls at 8pm or catch up on work during weekends.

It works extremely well for an introvert personality like mine and not for a single moment do I relish the old hate-smell of corporate attire of long sleeve shirt and shoes in such a humid country like Singapore.
Still, the appeal of working from home does not work well universally in consensus with everyone.

While some do appreciate the flexibility of working from home, you may find it a distraction if you are staying in an unconducive environment where you have children running around the house or neighbours that are staggering noisy. Others may also prefer a face to face interaction between colleagues when discussion about work and the frequent use of online tools may be disconcerting at some stage.

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Key Summary (and My Thoughts) on CapitaLand Mall Trust’s Q2 FY2020 Results (Guest Post)

Key Summary (and My Thoughts) on CapitaLand Mall Trust’s Q2 FY2020 Results (Guest Post)

Retail REIT CapitaLand Mall Trust (SGX:C38U) released its second quarter results for FY2020 ended 30 June 2020 this morning before trading hours.

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This post was originally posted here. The writer, Lim Jun Yuan is a veteran community member and blogger on InvestingNote, with username known as ljunyuan and has 1241  followers.

As the period of review (between 01 April and 30 June 2020) encompasses the 2-month circuit breaker period (between 07 April and 01 June 2020) implemented by the Singapore government to contain the spread of Covid-19 in the community, where a huge majority of retail shops were temporarily closed, and with retail rebates handed out by the REIT, as an investor of the retail REIT, I am mentally prepared for a significantly weaker set of second quarter and 1H results (compared to the same period last year.)

In this post, you will find key highlights you need to take note of (as a unitholder), along with my thoughts about the REIT’s latest set of results to share:

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The Complete Guide to Keltner Channel Indicator (Guest Post)

The Complete Guide to Keltner Channel Indicator (Guest Post)

The Keltner Channel is a simple but powerful trading indicator. It helps you better time your entries, improve your winning rate, and can even “predict” market turning points. And if you want to learn how to do it, then today’s post is for you.

But first…

What is a Keltner Channel and how does it work?

The Keltner Channel is an Envelop-based indicator (others include Bollinger BandsDonchian Channels, etc.).

This means it has an upper and lower boundary to help you identify potential “overbought and oversold” levels.

Note: The Keltner Channel used in this post is the modified version by Linda Rasche.

Now, the default Keltner Channel settings have three lines to it:

  • Middle Line: 20-period Exponential Moving Average (EMA)
  • Upper Channel Line: 20 EMA + (2 * Average True Range)
  • Lower Channel Line: 20 EMA – (2 * Average True Range)

You can think of the Middle Line as the mean.

And the Upper and Lower Channel Line shows you how far the price is away from the mean.

Here’s how it looks like…

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The Beauty of High Yield Bond Funds (Guest Post)

The Beauty of High Yield Bond Funds (Guest Post)

When it comes to bonds, many investors still believe in owning individual bonds till maturity. It feels more right in that firstly you do not suffer from capital losses if you held the bond to maturity and secondly you get predictable coupon returns that was promised to you at the start.

This post was originally posted here. The writer, Kyith Ng is a veteran community member and blogger on InvestingNote, with username known as Kyith and has 1051  followers.

Unfortunately, the investors ran into some problems:

  1. They demanded a certain respectable interest yield on their bonds. If it is too low, they find that it is unattractive and would not go for it.
  2. They need to reinvest into another bond after the previous one matures. This maturity period may take place anytime.
  3. Prefers bonds in local currency
  4. For some, they might not have enough capital to diversify (traditionally the minimum you need to purchase bonds is $250,000)

With these requirements, what tends to happen is that these investors push themselves up the risk spectrum.

When they push themselves up the risk spectrum, they take on more geographical risk, currency risk, default risk, duration risk.

But in their mind, these bonds are as safe as a high quality government bonds.

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Summary of Mapletree North Asia Commercial Trust’s 7th AGM on 16 July 2020 (Guest Post)

Summary of Mapletree North Asia Commercial Trust’s 7th AGM on 16 July 2020 (Guest Post)

Retail and office REIT Mapletree North Asia Commercial Trust (SGX:RW0U) held its 7th annual general meeting for the financial year 2018/19 ended 31 March 2020 via virtual means (due to the ongoing Covid-19 situation in Singapore) earlier this afternoon (16 July 2020), which I have attended as a unitholder.

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This post was originally posted here. The writer, Lim Jun Yuan is a veteran community member and blogger on InvestingNote, with username known as ljunyuan and has 1241  followers.

For the benefit of those who were not able to attend the meeting, in this post you’ll find a summary of the most important pointers to take note of (as a unitholder):

Presentation on Key Performance Statistics for FY2019/20 by Mr Ng Wah Keong, Chief Financial Officer of Mapletree North Asia Commercial Trust

Financial Performance (FY2018/19 vs. FY2019/20):

  • Gross Revenue: Down 13.3% year-on-year (y-o-y) to S$354.5m (FY2018/19: S$408.7m) – the decrease was due to the temporary closure of Festival Walk (for repair works), lower occupancy in Gateway Plaza, offset by its Japan properties
  • Net Property Income: Down 15.7% y-o-y to S$277.5m (FY2018/19: S$329.0m) – Festival Walk contributed 53.7%, Gateway Plaza contributed 23.5%, Sandhill Plaza contributed 8.4%, and its Japan Properties contributed 14.4% (this includes the one month contribution from MBP and Omori, both properties acquired in February 2020)
  • Distributable Income to Unitholders: Down 5.3% y-o-y to S$227.9m (FY2018/19: S$240.7m)
  • Distribution Per Unit: Down 7.4% to 7.124 cents/unit (FY2018/19: 7.690 cents/unit) – Mr Ng informed that the REIT will be changing its distribution to unitholders from quarterly to semi-annual from FY2020/21 onwards

Capital Management (FY2018/19 vs. FY2019/20):

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Sri Trang Agro (SGX:NC2) – My Technical Analysis (13 July 2020) (Guest Post)

Sri Trang Agro (SGX:NC2) – My Technical Analysis (13 July 2020) (Guest Post)

One of the most hotly traded Singapore-listed companies of late is Sri Trang Agro-Industry Public Company Limited (SGX:NC2), due to the overwhelming demand for rubber gloves in light of the Covid-19 pandemic, where its subsidiary, Sri Trang Gloves (Thailand) Ltd, is the largest glove producer in Thailand and is ranked among the world’s leading glove producers.

This post was originally posted here. The writer, Lim Jun Yuan is a veteran community member and blogger on InvestingNote, with username known as ljunyuan and has 1241  followers.

Disclaimer: Whatever you may read in this post is my sharing for educational purposes only. It does not represent any buy/sell recommendation for the company’s shares. Also, at the time of writing, I am not trading in the shares of Sri Trang Agro.

So, how is the company’s share price going to move in the near-term? In this post, I’ll be sharing with you my technical analysis of the company’s share price movement (on a daily timeframe), which I hope you’ll find useful.

Sri Trang Agro’s Share Price Movements since January 2011

First up, let us look at the company’s share price movements (on a daily timeframe) since January 2011:
Share Price Movements of Sri Trang Agro since January 2011 till Time of Writing (on a Daily Timeframe)

The company’s share price slipped from a high of $1.27 in January 2011 to a low of S$0.40 in April 2016 – a fall by 68.5% over 5 years. Its share price then started to recover thereafter to S$1.00 in January 2017, before dropped back down to S$0.40 in April 2020 before skyrocketing to a high of S$1.75 in July 2020.

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The 50 Day Moving Average Trading Strategy Guide (Guest Post)

The 50 Day Moving Average Trading Strategy Guide (Guest Post)

Here’s the deal: There are endless possibilities when it comes to moving average. You’ve got the 50 day moving average, 100 day moving average, 200 day moving average, etc. So you’re wondering: “Which is the best moving average?” Well, there’s no best moving average out there because it doesn’t exist (as it depends on your objective current market structure).

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19 Charts That Explain the Global Listed Real Estate & REIT Markets (Guest Post)

19 Charts That Explain the Global Listed Real Estate & REIT Markets (Guest Post)

UBS Global Research got a pretty good special taking stock of the global real estate scene. This covers the REITs in various global markets as well. A lot of these reports would want to shape our views on where are the attractive investment opportunities. This one is no different but the report does provide a lot of good data that I find will help shape your view as long term listed real estate investors.image-75-min

This post was originally posted here. The writer, Kyith Ng is a veteran community member and blogger on InvestingNote, with username known as Kyith and has 1051  followers.

If you identify yourself as a long term listed real estate investor or a REIT investor, this article might be suitable for you.

They presented some data that tells you:

    1. 10-year compounded return of Listed Real Estate versus other asset classes
    2. Correlation of GDP downgrade and Listed Real Estate performance
    3. Different layers of Listed Real Estate Valuation Metrics and how the various market rank
    4. Range of Historical Vacancies in different office markets
    5. Typical duration of Office Lease Tenures in various office markets
    6. Correlation between Listed Real Estate company’s EPS and global GDP growth
    7. Correlation between Listed Real Estate with equity and bonds
    8. Sensitivity Analysis of Interest Rate changes and Listed Real Estate Returns
    9. Correlation of Long term Yields and Demographic Changes
    10. Correlation of Long term yields and CAP rates
    11. FED Rate Hikes and Listed Real Estate Performances

And much more.

Let us get down to it.

1. Performance of Real Estate Equities Compared to Other Category of Securities

In the past 10 years to May 2020, global listed real estate delivered 6.7% a year. Listed real estate felt the impact of the pandemic more than global equities, who returned 9.8% during this period.

Physical real estate delivered a better return at 8.3% a year to December 2019 (due to the lack of availble data).

You can also compare global REITs return against other asset classes during this period.

2. Performance of Various Listed Real Estate Markets During 2020

Overall, global listed real estate have fallen by 20% this year. However, we observe that some countries have it worst such as France and Australia. Singapore REITs and Germany listed real estate have recovered relatively better.

On the right side, we also observe that most property sectors were hit but hotel, retail was more hard hit. This is because our movements were restricted to such an extent that overseas travel could not happen. Social distancing have also prevent retail operations.

While the stock prices have fallen, it does not mean that the cash flow of the underlying real estate business has dried up. Property tenants are contratually obligated to pay rent despite not making full use of it. Some tenants were very hard hit as they have no revenue and not enough working capital to fully pay for it.

The share price fell because stock markets are forward looking. The price reflects the uncertainty whether work from home, lower demand would change the long term nature of the rental income.

The uncertainty over rental income will in turn, affect the property values, which in turn, will affect stock prices.

If there is a secondary lesson to learn from this slide, it is that not all property segments are the same.

3. Economic Impact and Listed Real Estate Market Performance

This chart plots the change in year to date performance against the downgrade to a country’s GDP.

We observe a loose correlation between the economic impact (GDP) and performance by region.

Germany is unique in that the economic impact looks better than other countries. This is driven by the resilience of their residential sector, which dominates the market cap in Germany.

4. Valuation of Various Listed Real Estate Market

The analysts back tested different valuation metrics over time. They then weigh Price to NAV with a 50% weightage and 10% for the other 5 metrics.

Lower Z-Score reflects that based on that metric, the said market is cheap. (Blue is cheaper, red is expensive).

You can observe HK REITs, HK Property Stocks, China, and Japanese developers are the cheaper ones by all metrics.

The markets that are not cheap are Australia listed property companies and Singapore REITs.

I love spider graphs.

When we play a lot of computer games, this is one graph that shows which character or item is good. This spider graph presents valuation in a different view.

If all the legs of the graph is spread out wide, that region is cheaper.

We can see that Singapore REITs and Australia listed property companies are relatively expensive.

If there is one takeaway here, it is that there is not just one valuation metric.

If you want to have a greater margin of safety, layer price to NAV, PE, dividend yield and EBITDA divided by Enterprice together and you may find some company that is dead cheap based on all metric.

5. What Foot and Transit Traffic Tells Us About the Pandemic Recovery

The analysts trakc a number of unique data sets that can help inform their view of the markets globally during this pandemic.

What you see here is the foot traffic monitor. For most countries they have not recovered.
Here is one that monitors the public transit network traffic. Hong Kong did very well but the rest of the other countries were pretty depressed still.

6. Historical Vacancies in Different Markets

When you invest in a property company, management may update shareholders on the current vacancy rate or the amount of leasable space that are not leased out.

The best case is to have more spaces on lease, but it would be challenging for us to always have the best case.

To find out if this property is performing up to expectations, you can compare against the vacancy rate of the sub-market.

This chart above shows the vacancy rate of various office markets. London city has the wides range. Hong Kong office vacancy has climbed above the average.

Melbourne, Sydney CBD, and Tokyo Central 5 Ward vacancy are still within the historically lowest range.

7. How Different Are the Lease Tenures in Different Office Markets

The tenure of office lease term varies in different cities.

The tenure in major Asian cities tend to be shorter. The average tenure in Western cities tend to be longer.

 

8. CAP Rate Trends

CAP Rate is computed by taking the average net operating income of stabilized properties in that segment divide by the prevailing market value of the properties.

You can infer that this is like the average unleveraged net rental yield of the property segment.

If you rearrange this CAP rate formula, you can work out different things.

For example if your property rent for $10,000 a year and the CAP rate is 6%, if you take $10,000 divide by 6%, this will value your property at $166,666.

The CAP rate is in a way, like how investing people would use the discount rate.

Therefore, a high CAP rate lowers the valuation of your property, all else being equal. A lower CAP rate increases the valuation of your property.

The chart above shows the CAP rate change for different country segment from different time period.

You would observe that the CAP rate trend have been downwards. This reflects average property valuation rising faster than average rent. Most likely, this is due to greater demand for properties.

A lower CAP rate therefore leads to higher property value.s

Appreciate how high the CAP rate for Australia, UK and USA was in the past.

9. The Yield Spread Compared to Historical

This chart shows the physical property yield as a spread to the local 10-year bond yields. The rate at which the owners of the property lends at typically flows with the local 10-year bond yield.

So a wider spread means greater risk, greater value, possibly greater reward.

The current spread above the historical average for Hong Kong, Australia, UK initial, US, and continental Europe have been wide, indicating potentially greater reward.

10. The Leveraged Net Operating Income Yield of REIT’s Physical Property Indicates Attractive Value Versus Bond Yields

Because the yield spread is wider than the historical (previous chart), investors can possibly get a reasonable return on equity if they invest in REITs.

This chart shows the leveraged NOI yield of the properties belonging to REITs.

    1. This leveraged NOI yield is based on 40% debt 60% equity (40% LTV).
    2. NOI is equal to the stabilized rental revenue minus the stabilized cost expenses.
    3. The analysts assume the investors purchase this property with 40% loan. They then include the interest expense in the NOI computation.
    4. This NOI is then divided by the equity portion of the property.

What you see is the leverage yield.

I felt that if this is leveraged, an acceptable return with more margin of safety should be higher (perhaps close to 7-8%) in a normal interest rate environment.

However, on average, the leveraged yield is 6% which may mean the unleveraged yield is about 4.2% only. The yields in Hong Kong and Singapore should be even lower.

UBS has the opinion that these yields are attractive because if we compare them to the 10-year government rates for their respective countries, they looked very attractive.

In a yield-starved world, investors are on the look out for yield alternatives.

From this angle, REITs look more attractive vis a vis bonds.

11. The Correlation Between Listed Real Estate Company’s EPS and Global GDP Growth

This chart shows us that there is a reasonable correlation between earnings growth of listed real estate companies or REITs and global GDP growth.

By any indication, with the lower GDP growth, we should expect the EPS growth of real estate companies to fall drastically.

But I think, this time is a special situation. We have to wait for the rent collection to stabilize before making judgments if the EPS growth really becomes so negative.

 

12. Listed Real Estate Has Strong Equity Correlation and Weaker Bond Correlation

The historical relationship between bond prices (the inverse of bond yields) and listed global real estate is not very strong.

The average correlation is 0.15 since 1993.

However, a strong correlation exists for the relative performance of listed real estate against equities.

Listed real estate tend to outperform when bond yields fall.

Listed real estate companies, are… equities in general. If you are expecting listed real estate to help reduce the volatility of your portfolio, they might disappoint you.

Here is a sensitivity plot that shows the change in return from changes in US 10-year treasury rate.

We observe that when 10-year rate falls, the relative returns tend to be better but that is not always the case.

There are some outliers that, when rates increase, the relative returns were still quite OK.

13. The Correlation of Long Term Yields and Demographic Changes

This one is new to me.

The economist thinks that long term interest rates will remain low for some time.

The analysts think there are some structural changes in the economy, including aging populations and persistently high debt levels globally.

This suggests that 10-year treasury yields may trade in a lower range of 2-4$ over the next 20-30 years.

This chart shows the ratio of spenders (those in the 20-34 years old cohort) to savers (those in the 40-49 years old cohort) versus the 10-year treasury bonds.

The relationship looks strong.

This low rates trend looks supportive of listed real estate.

14. Correlation of CAP Rates and 10-Year Bond Yields

This chart above shows 2 different markets.

It shows that given enough time, there is a correlation between 10-year bond yields and the CAP rate.

Of course, bond yields are not the only influencing factors, with others including:

    1. rental growth expectations
    2. risk appetite
    3. weight of money

What I observed is that

    1. Office CAP rate correlation with 10-year yields is lower
    2. Retail CAP rate correlation with 10-year yields is lower
    3. Industrial and Apartment CAP rate correlation with 10-year yields are higher

 

15. Relationship Between FED Rate Hike and Equity, Real Estate Performances

There are 4 things overlayed in this chart.

The light brown line shows the real estate index while the dark brown line shows the equities index.

The light brown bars show the yield spread between the long duration treasury bonds versus the short duration treasury bonds.

This yield spread shows the shape of the yield curve. A region where the spread is high indicates that the yield curve is steep in a positive way. The yield curve narrows over time and then inverts. Correspondingly, we also see the bars becoming shorter and shorter.

Finally, the grey area indicates the period where the FED raised rates.

The grey area is where real estate investors traditionally fear the most because they believe higher interest rates are negative for real estate.

As we see on this chart, the grey areas coincide with the period where the light brown bars are at their lowest. This make sense because as the yield spread narrows and the yield curve flattens, the FED raised rates to make borrowing more expensive, to prevent the markets from overheating.

In the three notable periods where FED hike rates, the real estate and equity index did well together 2 out of three period. During the 1999 period, real estate did not do as well.

The main lesson learn here is that while higher interest rate puts pressure on the real estate business, other factors might matter more than just interest rates.

16. The Explosion of Debt Issuance in Asia and EMEA

This bar chart shows the debt issuance over time. What fascinates me was that, while more money was raised over time in America, the amount of capital raised in EMEA and the Asia Pacific grew by a crazy amount after 2010.

Once again, this article is a guest post and was originally posted on Kyiths profile on InvestingNote. 

Become a part of our community and also see what other investors are saying about the current market right now: (click on the view now button)

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4 SINGAPORE DIVIDEND STOCKS WITH INCREASING DIVIDENDS FOR THE LAST 10 YEARS. THIS STREAK COULD CONTINUE IN 2020 (Guest Post)

4 SINGAPORE DIVIDEND STOCKS WITH INCREASING DIVIDENDS FOR THE LAST 10 YEARS. THIS STREAK COULD CONTINUE IN 2020 (Guest Post)

It is pretty rare for Singapore stocks to have a consistent track record of paying dividends. Unlike in the US where there are hundreds of companies classified as Dividend Aristocrats (companies that have increased their dividend payments for 25 consecutive years or more) and a handful of Dividend Kings (companies that have increased their dividend payments for 50 consecutive years or more), Singapore stocks typically do not have a good track record of consistent dividend payments.

4 Singapore dividend stocks with increasing dividends for the last 10 years. This streak could continue in 2020

This post was originally posted here. The writer, Royston Tan is a veteran community member and blogger on InvestingNote, with username known as Royston_Tan.

https://newacademyoffinance.com/singapore-dividend-stocks/

(For those interested, you can check out the site for the graphical representation of their dividend track record)

It is pretty rare for Singapore stocks to have a consistent track record of paying dividends. Unlike in the US where there are hundreds of companies classified as Dividend Aristocrats (companies that have increased their dividend payments for 25 consecutive years or more) and a handful of Dividend Kings (companies that have increased their dividend payments for 50 consecutive years or more), Singapore stocks typically do not have a good track record of consistent dividend payments.

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What You Need to Know about Mapletree Commercial Trust’s FY2019/20 Annual Report (Guest Post)

What You Need to Know about Mapletree Commercial Trust’s FY2019/20 Annual Report (Guest Post)

Retail and office REIT, Mapletree Commercial Trust (SGX:N2IU), which is also a component of Singapore’s benchmark Straits Times Index, have released its latest annual report for the financial year 2019/20 ended 31 March 2020, along with details of its upcoming annual general meeting (AGM).

5 reasons why I plan to never sell Mapletree Commercial Trust ...

This post was originally posted here. The writer, Lim Jun Yuan is a veteran community member and blogger on InvestingNote, with username known as ljunyuan and has 1241  followers.

As a unitholder, I have gone through the report to learn about the REIT’s latest developments and in this post, you will find all the notes I have taken (which I feel that as a unitholder, you need to take note of), along with my personal thoughts to share…

Letter to Unitholders by Non-Executive Chairman and Director Tsang Yam Pui, and Executive Director and Chief Executive Officer Sharon Lim

Impact of Covid-19 on VivoCity:

  • As a result of the Covid-19 pandemic in Singapore, VivoCity’s 4Q FY2019/20 performance has been negatively impacted (as a result of a reduced footfall and tenant sales, along with approximately 3.5 months of rental assistances over March to July 2020 which the REIT has rolled out to support the tenants)
  • While there remains uncertainty as to when normalcy can resume, the REIT have decided to exercise prudence by retaining S$43.7m of distribution in the fourth quarter

Acquisition of Mapletree Business City (MBC) II:

  • The REIT completed the acquisition of MBC II on 01 November 2019 at an agreed property value of S$1.55b
  • The acquisition was funded through a fund raising exercise, which received a resounding support from both its existing and new investors, along with securing a S$670.0m of green loan facilities
  • Together with MBC I, it forms one of the largest premium campus-style environment with Grade A building specifications in Singapore

Asset Enhancement Initiative (AEI) Works in VivoCity:

  • In 2Q FY2019/20, the REIT completed its fifth AEI in VivoCity, comprising the changeover of the hypermarket (from Giant to NTUC FairPrice Xtra), and partial recovery of anchor space to accommodate new and expanding tenants
  • The entire exercise delivered a positive rental uplift and approximately 40% of annual return on investment

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