28 October 2010

Innotek - 28 Oct 2010

Innotek remains a low PTB stock and sitting on wads of cash. Article from NextInsight.com.

Stock: Raffles Education

28 Oct 2010 - A view on Raffles Education with the breakdown over Oriental Century and its associated delisting.  Can Raffles Education go any lower?  This growth stock has been going downhill for many months.

Stock: Hock Lian Seng

2 Nov 2010 - A technical analysis of Hock Lian Seng from ASSI.  Positive views on Hock Lian Seng- on NextInsight.Com in view of opportunities on Downtown Line projects.

21 October 2010

IPO - Mapletree Industrial Trust (MIT) & Global Logistics Properties (GLP)

Thus far, both IPOs have turned out to be winners on initial listing on SGX.  Glad to have managed to secure the minimum lots despite the oversubscription in both cases.  The backing of Temasek Holdings and GIC in respective cases probably lent a lot of weight.  It would seem to suggest that there is a lot of room for IPOs of such pedigree.  Perhaps there will be more?

Wonder how the American Depository Receipt (ADR) listing for the China shares are going to fare?  I would hazard a guess that it will create the next interesting stir on SGX.

Credit History

If you ever want to check your credit history, you could actually "buy" it online from Credit Bureau (Singapore)They charge $5 for a report.

See also:
"Know your credit history" - from Five-Cents-Ten-Cents blog

11 October 2010

Property - An Asset, Liability or Cashflow?

Conventional wisdom has it that we compute our Net Worth by deducting "Assets" from "Liabilities".  Robert Kiyosaki in his seminal "Rich Dad, Poor Dad", came up with the notion of "Cashflow" as being key.

Is a property therefore an asset or a liability?  Suppose the property cost $500,000, for which a loan of 80% was taken.  It would therefore be an Asset worth $500,000, and at the same time a Liability of $400,000; the Net Worth is therefore only $100,000.  What is the Cashflow then?  If you're living in the property (i.e. home), then the Cashflow is $0 since it earns no income. 

On the other hand, if it was rented out and generating a revenue of $20,000 a year (4% yield - i.e. 4% of $500,000 = $20,000), then it gives a Cashflow of $20,000.  If the monthly rental income is equal to the monthly loan instalment, then we could imagine that the rentee is paying for you to own the property!  How nice.

In truth, there are further costs involved that would have reduced Cashflow generated.  A property that is not the residence incurs a 10% property tax, rather than 4%.  There are also other fees due to maintenance, tax on the revenue, and other upkeeping/maintenance costs involved.  This would be offset by some deductibles against the taxable income of course; deductibles that are associated with rental properties.

In Singapore, rental yields are typically in the 3-6% range.  Given this, I am doubtful if a positive Cashflow could be achieved, unless the upfront payment for the property was very high in the first place.  Certainly 20% down isn't likely to cut it.

There is a counter argument about the property as a home.  That is, to consider the opportunity cost; which would have meant renting a property for a home.  I believe, that in the long run, paying for a home would always beat the notion of renting a property to live in.  At the end of paying all the instalments, one gets to own a property.  But a rental remains a rental - there is nothing owned at the end of the day.  Given this, the solution appears apparent - own a property.  The problem is of course the lengthy lock-in of a sizeable portion of one's wealth.

I recall somebody told me that wealth is generated in 3 ways:
- Work for your money;
- Make your money work for you; or
- Get other's money to work for you.

So, we could work to pay for a property.  Or, we could do so and rent it out, and get others to pay for your property!  The recourse therefore: buy a property, collect rent, stay with thy parents!  Be Cashflow positive!