Sunday 24 February 2019

When investments go south: Painful lessons to learn

  Posted at  February 24, 2019 No comments
15 min read

Investors lose money all the time. It is not the first time and it won't ever be the last. Often, retail investors who couldn't afford to lose their hard-earned money fall victims to their own greed and are also done in by their utter lack of due diligence/incompetency in the investments they put their money in.

Many lost money through unregulated investment schemes and frauds hatched to swindle money. But, what about the "supposedly regulated" stocks or securities listed on the SGX, the bond market supposedly governed by regulations in Singapore? This certainly raises eyebrows.

Curious case of a retiree parading outside a local bank. Just what did he invest in?
Sounds like very poor due diligence.
As a frequent reader of 30 Year Old Investor, you would know by now that K.C. always advocates against putting our money with unregulated "alternative investments". As shared in a previous blog post, I suggested that we avoid MLMs or such investment schemes at all cost because they usually show these red flags:

  • High guaranteed returns (Too good to be true)
  • Short time frames of investment
  • Limited time offer (artificial scarcity)
  • Introduce more friends to get kickbacks
  • Not regulated by MAS/on alert list

And indeed from time to time, we see some of these unregulated alternative investments implode and make the news:

Case in point: Sunshine Empire
Sunshine Empire was an elaborate Ponzi Scheme set up in 2006 that cheated investors a total of almost $190 million. Only $21 million was recovered.

Victims of the scam told local newspapers at the time that they had been "naive" and "stupid".
"I was naive and foolish," one undergraduate told The New Paper. She had put in $66,000 into the scheme, using money borrowed from her parents. "I really thought it was easy money."

Case in point: Macro Realty Developments
This Australian based Ponzi scheme that raised approximately A$100 million (S$107 million) had 981 investors from Singapore, 651 from Malaysia, 58 from Britain, 17 from continental Europe and 31 from Australia. (2014- 2016)

Said a female corporate executive who had invested in the scheme for long-term gain: "I am distressed and devastated, and trusted too much in the system."

Case in point: Profitable Plots
Investors lost around $3.1 million in the Boron bonds scheme between November 2008 and August 2010. The two directors of land banking firm Profitable Plots promised 12.5 per cent in returns within six months.

Case in point: Ecohouse Group

London-based EcoHouse enticed many investors with its unique proposition of investing in social housing in Brazil. Investors were asked to shell out at least £23,000 ($47,150) in exchange for an impressive 20 per cent fixed rate of return for a 12-month contract. The scheme reportedly attracted over 2,000 investors globally, while at least 800 people in Singapore were said to have ploughed about $65 million into the scheme since 2011.

But, what about the "supposedly regulated" stocks or securities listed on the SGX, the bond market supposedly governed by regulations in Singapore?

Are you seeing a pattern here? It is always amazing how such plots and schemes repeatedly lure unsuspecting investors. However, if we think investing in regulated securities means we are much safer, we couldn't be more wrong. A combination of changing markets can just as easily sink companies that are not so prudent.

Most recent case in point: Hyflux
Lauded as the success story of Singapore, Olivia Lum founded Hyflux in 1989 with only a mere $20,000 and Hyflux has grown to become a leading player in water treatment responsible for 30% of Singapore's daily water needs. It was a much celebrated story.

Prime Minister Lee Hsien Loong at Hyflux's Tuaspring official opening. Source: ©Hyflux Website 
There was a huge endorsement by the government. Even the Prime minister gave his stamp of approval over the years and was there for the opening ceremony for the Tuaspring plant back in 2013. What can go wrong, when such a "successful" company issue preferential shares and perpetual securities offering high yields? Of course they were well sought after, to great devastation for some of the retail investors many of whom were retirees.

Seen as one of Singapore’s most successful business stories, water treatment specialist Hyflux’s recent woes had come as a shock for many and for Mrs Goh, it was something that she had not seen coming.

Lured by an attractive 6 per cent coupon, she had put in S$10,000 into the company’s preference shares issued in 2011 at S$100 apiece.
Both tranches saw strong demand when they were issued, attracting yield-hunting retail investors who subscribed through ATMs. Mr Nallakaruppan said he knew of investors who had put in S$200,000 or more, with retirees among them.

“Interests rates at the banks were just far too low and because of that, a lot of the investors were hunting for yields,” he said. “They also see Hyflux as a growth company dealing with an important resource.”

Hyflux's profit/revenue and ROE from 2008.

Hyflux's Cashflow from 2008.

Hyflux's growing debts over the years.
Years of risky and aggressive expansion has seen Hyflux take on more debts than it can handle. In fact, Hyflux has seen certain red flags over the years largely on its dipping profit margins, ROE and negative cashflows since early 2010.

Mismanagement of debts?
Notwithstanding the struggle to turn profits, Hyflux's management also did a series of baffling decisions over the years. This included continuing to give out dividends especially including a relatively higher dividend yield of 4.82% in 2018 despite its financial situation. If it was mired in debt and had little cash flow from which to dish out dividends from, where do the dividends come from?
Hyflux's Dividends declared from 2010 (StocksCafe)
On 11 Feb 2019, Investor watchdog asked Hyflux to explain why huge dividends and executive salaries, benefits and bonuses were still paid. All this despite Hyflux being in debt and not being profitable.

Apart from the more than S$60 million in dividends, Mr Gerald noted that Ms Lum also received “significant salary, benefits and bonuses” and earned between S$750,000 and US$1 million in 2017. In Hyflux’s annual report, key executives were said to have had received a total remuneration of S$2,695,134.20 for that financial year. 
“(This was) a year which Hyflux reported losses of S$115.6 million and a period which was five months prior to Hyflux Group filing for court protection from creditors and when Hyflux has been losing huge amounts of cash and building projects,” noted Mr Gerald.

The Curious case of PERPS
Then, comes the curious case of Perpetual securities. In a commentary article, PERPS risks were highlighted as many companies started to issue PERPS and the total capital raised from a range of firms amount to $3.96 billion in 2017. But they still proved to be a viable option to raise capital for companies because there seemed to be a growing appetite for PERPS among retail investors even they though may not be nimble enough to pick out the potential risks.

PERPS function as bond-like instruments that allow a company to defer interest payment in specific situations without the worry of getting sued for bankruptcy. There is no maturity and issuer can redeem at their discretion and timeframe. It also allows them to raise capital without dilution of shares as they can count as equity not debt.  (this is a huge potential issue if investors are not careful)

This sparks a question whether a company mired in debt should be allowed to raise funds through PERPS as investors may not be able to recognise they are taking on huge risks for companies in financial trouble. But what exactly are these PERPS?

MoneySense website has a rather short and concise summary about what PERPS are:

  • Perpetual securities are often referred to as "perps", or perpetual bonds and perpetual notes.
  • Perpetual securities have no maturity date, but an issuer may choose to redeem the after a specified period of time.
  • You could end up holding the perpetual securities forever, without any reward.

Basically, one may still lose some or all of their money. The very same High Yields that attracts investors may turn out to be a double-edged sword as it also represents higher risks. It solely rests upon the issuer to make good of their promise to compensate investors while investors take on the risk of the company.

Kyith at InvestmentMoats blogged about Perpetual Securities – What you need to know as Stock Investors and considers PERPS to be a neutral tool for companies to raise funds. However, some companies might abuse the PERPS hybrid status as Rating agency Moody considers 50% of perpetual issues as equity. More astute investors would wisely categorise them rightfully as debt.

Investors should also consider why companies are raising funds and for what purpose/use do the funds go to.

PERPS infographic. ©MoneySense
All isn't well now for Hyflux investors due to the fact that CEO Olivia Lum promised to ensure fair treatment to shareholders but retail investors are likely to bear the brunt of the losses now. A combination of equity dilution for equity holders and high losses for bonds (almost close to a default) doesn't bode well for retail investors. I can't help but think that regulators could have done much more to protect the interests of investors who are at risk (older folks who cannot afford to lose their capital).
This means that for every $1,000 invested, a holder of Hyflux’s perpetual securities and preference shares will recover just $106.54, or an implied return rate of 10.7 per cent - from $30.15 in cash and $76.39 of implied value in Hyflux shares. 
For medium-term noteholders, who are of a higher priority on the creditors’ list, the implied return rate is 24.6 per cent, or $246.35 for every $1,000 invested. This is from a cash payout of $138.72 and $107.63 in Hyflux shares.

Case in point: Noble
Noble Group was another company that saw many investors losing their money. It was once Asia's largest commodity trader but have found itself deep in debt, having to default on US$3.4 billion of debt. Investors similarly saw share dilution and default on bonds as its value plunged since 2015. Institutional investors and buyers of bonds have made losses but again the likely biggest losers are retail investors. Similarly, Noble also issued perpetual bonds as well. (Which added to more debts. Are we seeing a pattern here?)

Francis Tay feels cheated.
The former Singapore civil servant said he lost almost S$50,000 ($36,600) in the implosion of Noble Group Ltd., the commodity trading giant. He also said shareholders like him have been let down by regulators whose job it is to protect them from the sort of crisis that’s brought the company to the brink.
"I was cheated of my hard-earned savings," said Mr Tay, who still owns a small amount of shares. "How can a giant company collapse?" he said in an interview earlier this month in the run-up to the shareholder vote, adding: "What message does that send to the world about Singapore's reputation?"

After its steep losses, allegations that it has deceived its investors through its accounting have emerged to which they have denied.

Lisa Ng, an administrative manager in the finance sector, said she lost about 90 percent of her investment in Noble, or at least S$5,000. She said she wouldn’t attend the SGM because she considers her shares a write-off. Selling them would cost her more in fees than what she’d now recover, she said.
“I do wish that I had gotten out when Iceberg had come out with its critique of Noble’s accounting,” the 61-year-old said. “I thought that Noble, being a blue-chip share, wouldn’t be like what they claimed.”

Noble Group over the years.

Poor financial accounting or irregularities?
Noble Group found itself under scrutiny for allegedly providing financial accounting figures to mislead investors about its financial performance. This allowed Noble to supposedly record profits on long-term deals to source and supply commodities even before the company receives cash payments.

Again, we see a company raking up huge amount of debts with dropping revenues and profit margins.
Dwindling revenues from 2014 (In millions SGD, from SGX website)
Net income and gross profit from 2014  (In millions SGD, from SGX website) 

Noble's Debts over the years since 1994

Noble group's free cash flow in trailing 12 months compared to Olam.

Falling numbers despite borrowings a deadly mix
I still remember when I first started investing, Noble Group was one of those stocks that some "Guru" recommended a screaming BUY online back in 2017 given its glorious history despite its red flags. The argument was that the Oil and gas sector was due a rebound from a bottom and a rising tide would lift all boats (that never really materialized). Meanwhile, Noble continued to bleed.

To resolve Noble's outstanding debts, a "do-or-die" deal was forced upon investors who had not much other options than to bend over that would see a proposed debt for equity deal being cut. This meant a dilution of shares while Noble's debt is cut.

Existing shareholders equity would be reduced to 20 per cent of the restructured business.

On 6 December 2018, Singapore authorities said they would block the re-listing of shares in what was once Asia’s top commodity trader. Recently in February 2019, Noble Group Limited announced it was in liquidation process.

Application for winding-up of Noble Group Limited to be heard on 8 February 2019, liquidation process is a procedural step and as anticipated in the circular to shareholders dated 10 August 2018. The liquidation process will have no impact on the business or financial position of Noble Group Holdings Limited. The winding-up application and liquidation process will have no impact on the rights of shareholders of Old Noble to receive shares in New Noble.

Noble Group shares are currently suspended since November 2018.

Case in point: Swiber
Swiber Holdings, an oilfield services firm rocked the investing community in 2016 when it suddenly announced its application to wind up the company as debts mounted. Swiber shares started declining in 2014 and again potential red flags were beginning to appear in 2015.

Swiber's liabilities stood at US$1.43 billion as of March 31 2016 while its total assets amounted to US$1.99 billion. Coupled with a low free cashflow and slump in the industry, it could no longer turn profits to cope with the high amount of debts.

Similarly, Swiber also issued perpetual securities. It had proceeded to redeem S$130 million of notes on June 6 and S$75 million of debentures on July 6, according to company filings, and made an early repayment of its perpetual bonds, a hybrid security with no preset maturity, in September 2015.

Once again, it seemed that companies who borrow excessively land themselves in debts they could not repay as they are not prudent.

The sudden fall from grace of the firm, which supports construction projects on oil rig platforms, shocked the market yesterday. But for Maybank Kim Eng analyst Yeak Chee Keong, it did not come as a complete surprise.
"Its high gearing and poor profitability have been a red flag for quite some time," he said.
The warning lights have been flashing for some time, particularly as the global offshore and marine industry continues to be hit hard by a protracted slump in oil prices.

What can we do to prevent ourselves falling victims?

1. Do Due Diligence (DYODD)
Never buy securities based on banks' recommendations alone and never buy what you do not understand (think perpetual securities). Never ask the barber if we need a haircut. If we go to banks and they recommend certain securities, we ought to be careful to research if the securities' risk to reward is worth it. We might just get more than what we bargain for if it goes south.

Never under-estimate companies with poor financials, they are simply not worth the heartpain. Take note of potential warning signs (Poor management, increasing debts/falling profit margins/lack of free cashflow). Base your investments on facts and not emotions. Don't just assume it is safe if big funds/many retailers are also investing in what you are going to invest in. This might be a false sense of security.

2. Diversify/Size our holdings:
By diversifying our holdings across different sectors, we are minimising over exposure to any one sector. It could dilute our earnings but it could also mean our portfolios can float better if certain investments go south. If we cannot find sufficient relevant information to build a case for investment about certain stocks, we should size and position accordingly if we still decide to invest so that it remains a small proportion of our portfolio as it is likely to be more risky.

Set up a trading/investment plan with strict stop losses and clear risk-reward ratio so that you can minimise losses.

3. Improve your financial literacy:
Let's be honest, financial statements can be daunting for the beginner investor as there can be lots of data to go over. However, data is worthless to the investor who doesn't know how to decipher them. Many pitfalls and red flags can be missed if we are not able to read the balance sheet well.

Then again, some companies can have "creative accounting" or fraudulent financial statements. It would be up to the experience of the investor to detect any thing that simply does not add up.

If You Think Education Is Expensive, Try Ignorance.

This is a famous quote attributed to Robert Orben, who was a comedy writer. The premise of this quote is in the context of that while getting a college education is expensive, the longer term cost of not having a college education is much worse. In terms of investment, getting a "proper" financial education is key to an investor's success in today's market.

Educating ourselves is an INVESTMENT in itself. In the past, the odds were stacked against the end-consumer and retail investor. However, with the age of the Internet, there are now many ways in which we can improve our financial literacy.

Education is NOT FREE. By this, I don't mean that we should therefore sign up those 3-5 day expensive investing courses that offer to teach us "secrets to investing" (try finishing the free courses online first). If these trainers are so successful, they wouldn't spend their time sharing that secret with you. What the price to pay here is often time, and effort spent to study the subject of investing in great detail. There are often no shortcuts. Just by attending a 3-5 day course do we really think we can become experts? Get real! 

Lack of Education will surely result in loss down the road. We will either pay the price studying at the early stages or make mistakes at later stages resulting from not making effort to learn. This would be in making bad financial decisions to bad investment decisions. I'm sure the latter price is bigger to pay.

Lazy hands make for poverty, but diligent hands bring wealth. - Proverbs 10:4

Tips to improve our Financial Literacy:

1. Online Free courses to get basics:
Udemy and Coursera offer many FREE financial literacy courses online and they go from personal finance to planning and making sense of basics to finances.
13 Free Classes to Help You Manage Your Personal Finances (Like an Adult)

2. Singapore government websites:
These sites put Financial literacy in context for Singaporeans. The Singapore government also has very useful websites in helping us understand financial literacy: MoneySense , SIAS - Securities Investors Association (Singapore) and Life Insurance association Singapore (LIA)

3. Follow news/ engage in investing social media platforms:

Like Investing Note, StocksCafe, Hardwarezone (money mind). There are many "noise" in some of these posts but also nuggets of truth to be learnt when we learn from others successes/mistakes and also exchange ideas. Iron sharpens iron, and so does minds when pit together. Ask questions, ask, ask ask. A great teacher I knew often said there were no such thing as "stupid questions". People may make us look stupid for 5 minutes, but hey that's better than keeping quiet and being stupid for 50 years.

4. Search the Internet (READ WIDELY):
There are a wealth of investment bloggers who share their experience freely and usually many of them have no conflict of interest in selling you courses etc. It is your choice to believe them or not and to see if their experiences and ideas are useful for our own investing journey. Financial news websites also keep us up to date with the latest developments in the financial markets. Access to data and information is key in this new age of investing.

P.S. There seems to be something brewing about being the "Best in the World". Lets hope investors won't get burnt this time round.

Until Next Time, 

If you like this post, you might like our facebook page as well. I'm also on Investing Note.

Related topics:
1. About K.C. What is my story?
2. My 3Cs to money/investing
3. Why you need to set aside money for savings first
4. My 2018 Year end review


Disclaimer: The above information are for personal discussion purposes only and do not constitute financial advice. Do conduct your due diligence before making any financial decision. "30 Year Old Investor" shall not be liable for any loss or damage of any kind arising from the result of your reliance of the information contained on this site. 

Sunday 3 February 2019

Jan 2019 look-back: Defensive stocks and short term trading strategies

  Posted at  February 03, 2019 3 comments
First of all, wishing everyone a Huat Huat Chinese New Year 2019!

Musings of a relatively new investor:
As a relatively new investor at about a year in the market, the purpose of my blog is to provide a feedback loop mechanism to my trail of thought. Hopefully, in future I can look back and laugh at my silly thoughts and also hopefully refine them as I go along. 

The Pig came in at the last of the 12 zodiac animals because it overslept... lol.
January 2019 had been a blast for many traders and investors. Many attribute it to the continuation of the Christmas rally, some said it was the January "bonus effect" where investors dumped their year end bonus into the market. There are quite a few investors from Investing Note whom I know made a killing because they bought into the market at a "low" where there was some panic if Mr Market was headed for a downturn. In fact, it was one of the worst Christmas Eve plunge in December as major indices dropped from an all-time high back in September. I wish I was as equally adept at trading.

Ugly December Christmas Eve 2018. Trump probably needs to shut up lol.

So, what did K.C. do in the first half of January? 🤦‍♂️

Nothing, except watch as the market rebound without adding any positions due to fear for a prolonged downturn. Of course, hindsight is always 20/20 but by mid January, it was obvious that the market wasn't going to crash (yet).

Relook - January Statistics:
According to Stocks Cafe
(Vested positions only, this does not include cash):

(December to Mid Jan)
=  -10.94% (All)  Xirr-17.98% (All)
(End Jan, 2nd Feb)
-7.94% (All) Xirr-9.47% (All)

According to my own portfolio tracker in absolute numbers:
(December to Mid Jan):
I was sitting on 
-$1,300+ (-8.99%) Portfolio value: $16,584.97
(End Jan, 2nd Feb):
I am now sitting on 
-$617.32 (-3.31%) Portfolio value: $18,410.95

Thoughts and comments:
I was still reeling from my losses in short term trading positions throughout December and early January. This paralysed me into inactivity as I studied and watched the market and didn't add on any positions until mid-January. Many seem to be able to time the market and reported winnings while my portfolio stagnated with the realised losses back in December.

It is time spent in the market (invested), not timing the market.

The ability to hold positions and ride through volatility seems to be a key component of a successful investor's setup. My REITs positions generally recovered and are in the green from the December losses and again I collected some dividends. We cannot predict where Mr Market would head but we can certainly decide if Mr Market is offering up good deals. But cheap and undervalued are often different to different investors who have a varying trading/investment time frame. I began to re-consider what positions I would add to my portfolio that is suitable for my investment goals, possibly one longer term defensive counter and a short term trading position for January after sitting on the fence for some time.

Defensive stocks
Defensive stocks are stocks that are likely to be mature stocks. This means that generally, there is not much growth in them. However, on the bright side of things, they can generally withstand a market crash better as they are likely to have a high free cash flow, decent growth/very stable and consistent dividends. These stocks tend to be inert to market cycles and provides products/services that would still prove strong and in demand in a market downturn. Barriers of entry into the market, if any, are also a plus for these counters. Usual suspects would be telcos, utilities, transport, healthcare. As telcos are currently facing increased changes in the industry and I am already vested in Singtel, I decided to exclude them.

Thus, I narrowed down to looking at SBS, ComfortDelgro, Vicom,  Parkwaylife Reit, (I will look to add some of these counters to my portfolio to form the "base" of stable stocks. As of 16th Jan, I added Vicom at 6.01.)

How did some of these fare in 2008 crisis?

SBS Transit:

SBS is a familiar name as a bus services operator to many Singaporeans as we take them very often on a daily basis. SBS also has been operating MRT services since 2003 (North East Line) and 2013 (Downtown Line). It also operates the LRT lines in Sengkang and Ponggol.

In 2016, the government pumped $7 billion to move SBS transit and SMRT buses operations over to the new government bus contracting model (BCM) for better service against disruptions. 
On April 1 2018, LTA took over the assets when the government will take over ownership of the trains, signalling systems and other operating assets of the North-East Line (NEL) and the Sengkang and Punggol Light Rail Transit (LRT) systems from transport operator SBS Transit. A profit sharing between the government who will maintain the assets while bearing risks gives SBS protection from revenue hits.

On Nov 9 2018, SBS transit announced strong surge in net earnings for Q3 2018.

Historically, SBS doesn't look to be able to sustain very well looking at its chart history as generally the prices take a long time to recover in the past and it did not recover to its heights before 2008.  It looks to be able to rebound better since 2014 oil crisis. I'm not a TA expert, but is that a Head and shoulders forming? However, new industry changes are likely to give SBS transit some room for growth while having some protection from the costs of maintenance due to the new asset light model.

ComfortDelgro is also a familiar name to Singaporeans as it is the largest Taxi operator in Singapore. Besides its Taxi business, it also owns business segments in bus, taxi, rail, car rental and leasing, automotive engineering services, inspection and testing services, driving centres, non-emergency patient transport services, insurance broking services and outdoor advertising. These are also geographically spread in the UK and Ireland to Australia, Vietnam, Malaysia, as well as across 11 cities in China, including Beijing, Shanghai, Guangzhou, Shenyang and Chengdu.

In an old post from 2017, CDG's Free cash flow also is very much been sustainable throughout the years. Recent price competition for its Taxi business segment by Private Hire Grab and Uber have beaten its earnings and share price but have stabilised since Uber's exit and a new normal has been achieved. I was actually looking to pick up CDG if it dropped close to $2 again but it has since rallied.

In Jan 2019, the government announced new regulations towards Private Hire companies  in a bid to streamline the taxi and private hire business. 


Vicom is another Subsidiary of CDG, whose main business segment are in services related to vehicle inspection and also Setsco (non-vehicular inspection and testing arm).

There is a huge plus in Vicom as vehicular checks are mandated by law and Vicom owns the biggest market segment as the largest provider. As such there is a huge barrier to entry. According to a previous comprehensive report done in 2015 by the fifth perspective, overall vehicles in Singapore have shrunk. Cars being de-registered are on the rise coupled with lesser new cars being uptaken due to COE prices. However in 2016, there was a rise in the number of rental cars in the market. This is also coupled with a corresponding shrinking population of taxis. Trends are likely to remain and the vehicle population is expected to stabilise.

Setsco, on the other hand provides a wide range of testing, calibration, inspection, consultancy and training services to the aerospace, marine and offshore, biotechnology, oil and petrochemical, building construction and electronics manufacturing industries.

According to Vicom's annual report, Setsco's performance depends on the general economic condition. Although Setsco does not publish separate annual report figures anymore, it has been keen to expand its testing capabilities over the years.

Setsco Services Pte Ltd (SETSCO), completed several notable projects – both locally and internationally – during the year 2017. SETS Services DMCC, a wholly-owned subsidiary company, was set up by SETSCO in Dubai, United Arab Emirates to provide building glass inspection services. It won a contract to undertake glass inspection work on the external facades of Gold Tower and Silver Tower, Cluster l, in Dubai. Additionally, SETSCO secured contracts for the testing of sand and granite from the Building and Construction Authority and also various testing services for the Changi Terminal 5 project in Singapore. During the year, SETSCO also completed a shutdown project at a chemical plant in Jurong Island. To broaden our scope of services, SETSCO launched two new services in the year – certification services to companies which seek compliances to the requirements of different systems such as ISO 9001, ISO 14001 and ISO 18001 and consultancy services to provide investigation, evaluation, analysis and advisory to the clients that we serve.

Vicom recently released its Q3 results in Nov 2018 and was up 5% in net profit and will announce its full year results on 11 Feb. This illiquid stock has a good cash flow and profit after paying out dividends each year and has no debts.

ParkwayLife Reit:
ParkwayLife REIT has been one of the most consistent counters with sustainable dividends and growth over the years. 
Parkway Life REIT ("PLife REIT") is Asia's largest listed healthcare REIT. It invests in income-producing real estate and real estate-related assets, used primarily for healthcare and/or healthcare-related purposes. As at 31 December 2018, PLife REIT's total portfolio size stands at 50 properties totaling approximately S$1.86 billion.

PLife owns 3 major hospitals in Singapore namely Mount Elizabeth Hospital , Gleneagles Hospital and Parkway East Hospital. It also owns Gleneagles Intan Medical Centre in Kuala Lumpur. It also owns a host nursing homes in Japan.

PLife also has a some features in place that gives it some buffer in trying times, namely the Triple Net Lease and also CPI + 1% rent review formula that guarantees 1% growth in rent if theres a deflation. For its Japan nursing homes, it also has a long term favourable lease structure with 100% committed occupancy.

Unsurprisingly, PLife's revenue and DPU have generally been on the rise over the years.

Short term trading strategies
Example of short volume analysis done on the week of 28th Jan

I have a half-baked hypothesis that I'm trying out at the moment: SGX has daily and weekly short sell volumes and recently I started to look at how these short sell volumes translate into chart movements daily, if they are absorbed well by buyers.

From what I think these should give me an indication of:
  • Short term bullishness/bearishness
  • Relative changes in traded short volumes
  • Expose me to various counters on the SGX I have never analysed before as a new investor
A recent analysis done on 30th Jan 2019

These are some of the counters that popped up from the daily analysis that took place last week. Corroboration of data with daily charts, TA and trending would help me to study some of these counters more in depth. Either way, this is still a work in progress as I can see that its giving a bit of mixed results and I cannot be sure if this is a case of "the rising tide lifts all boats".

Either way, it exposed me to a counter which I entered with a small position on 28th Jan (based on previous week). The counter entered was Citic Envirotech at $0.39.

Citic Envirotech is an S-chip (China companies listed on the Singapore stock exchange and many would siam far far away)  and is a leading membrane-based integrated environmental solutions provider specializing in water and wastewater treatment, water supply and recycling. It is also engaged in sludge and hazardous waste treatment as well as river restoration. CEL undertakes both turnkey and investment projects as well as provides plant operation and maintenance services in water and environmental projects.

Layers on Investing note did a rather comprehensive writeup on Citic even though he decided against being vested. I would have to admit that my research into this company would be paltry compared to what Layers has done. Anyway, recent news of it securing contracts are likely to boost confidence, to which I will look to sell on news.

As this is a highly speculative position for me, I am only vested in a small position.

Daily Chart

Weekly Chart

Portfolio as of 3rd February 2019

Until Next Time, 

If you like this post, you might like our facebook page as well. I'm also on Investing Note.

Related topics:
1. About K.C. What is my story?
2. My 3Cs to money/investing
3. Why you need to set aside money for savings first
4. My 2018 Year end review


Disclaimer: The above information are for personal discussion purposes only and do not constitute financial advice. Do conduct your due diligence before making any financial decision. "30 Year Old Investor" shall not be liable for any loss or damage of any kind arising from the result of your reliance of the information contained on this site. 
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You don't need to pay anyone/company to have a plan of your own and work towards achieving Financial Independence. Only we alone have no conflict of interest with our own money. "30 Year Old Investor" is a personal blog about a Singaporean's savings and investing journey.

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