Friday, November 28, 2008

The Sexy VJC Girl Analyses Cambridge Industrial Trust

The SEXY Victoria Junior College girl has been spending a lot of time with us. Out of the blue one day, she emerges with the maximum value that one should pay for Cambridge Industrial Trust. ( She is really quite interesting and surprising!And she like to determine the Value of anything. For example, she even determines the value of playing tennis vs spending time with us and she comes up with a figure.) Anyway, she told us that her teacher says females are better at investing and guys suck cos guys monitor the stock market too much and think too much and rationalise too much. She also told us her teacher says its the female species that will bring the world out of recession cos her species spend and spend and spend and spend. We got to admit she is right. Just go to a shopping center near you and see who are the ones spending? Its the girls......

Ok let's understand how our SEXY VJC student determined the maximum value of Cambridge. Any amount paid more for Cambrige, you are likely to lose money. ( based on Discounted Cash Flow analysis, excludes Market Irrationality).

Based on Colliers International data above, it is logical to assume that the rental income growth rate g of industrial properties is 0%, by looking from 2001 to 2006F. ( just a cursory glance, she did not do a regression line. Keep it simple. It looks negative actually but let's be nice.).

Based on the above from SGX, the average dividends, D, of Cambridge Industrial Trust for 2007 and 2008 is $0.0616.

Let's use DBS preferential shares of 6% as our required rate of return, K.

Now, let's look at the average number of years that the assets of Cambridge Industrial Trust have to their expiry as all of them are leasehold except for Lam Soon Industrial which is Freehold. (We will assign 999 years to this freehold property. This is just a judgement call.)

From above, the average number of years left to expiry is 65 years. Therefore, the formula we will use is :

Using Excel spreadsheet and plugging in the values, the Fair Value (V) for a Cambridge Industrial Trust share is $ 1.00341. Thats the maximum amount one should pay and it assumes that Cambridge is able to sustain the average occupancy of its premises currently. It also assumes that the rentals do not drop and stays constant. It also assumes no exceptional things like volcanic eruptions or earthquake or fire or Tsunami or Terrorist attack happens on any of its site. So the market price currently as of close 28 Nov 2008 is $0.205. Is it enough for you?

Analysis done by The SEXY VJC GIRL (Aspiring Future Venture Capitalist- who wants to hire her as an intern?)

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

List of SGX Stocks with their Intrinsic Values

Click Here for SGX list of stocks with Intrinsic Value based on Benjamin Graham's simple formula.

We will be continually adding counters and updating the intrinsic values when new data has been released from Reuters AND when time permits on our end

We urge you not to believe these figures as this is our own opinions.

Think Independently and Anchor on the Right Prices!

Thursday, November 27, 2008

How to compare companies from different sectors using the PEGividends Ratio!

When comparing among stocks of companies from different sectors, does a low P/E ratio mean the stock is a better investment? Financial literature such as CFA states that a high P/E ratio suggests a growth stock and a low P/E suggest a value stock. So what now? Growth sounds good. Value sounds good too? We are confused!

Actually, its simple. The answer lies in whether the company or sector is really growing when we deem it a growth stock that justifies a high P/E. Therefore a measure called PEG ratio emerges which takes into account the growth factor. ( [Price/earnings] divided by Estimated Growth per share). The lower the PEG ratio, the better.

Now, what if a company has a low PEG ratio and a low dividend yield, while another company has a high PEG ratio and a high dividend yield. Which is a better investment now? Confused? Enter the pegividend ratio which takes into account the dividend yield too.

([Price/earnings] divided by [Estimated Growth per share + dividend yield]).

The beauty of the pegividend ratio is that it can be used to compare companies from different industries/sectors unlike when using the P/E ratio which is commonly used to only compare companies from the same sector such as TADA..the telecoms industry:
Let's put this into practice, shall we? Let us compare Singapore Airlines with Keppel Corp. Here we go!
Data For Singapore Airlines ( A Great Way to Fly!)Above

Data for Keppel Corp ( Remember Christopher Lee as the iceman in the channel 8 show!) above

PEGividends ratio for SIA = 6.86 divided by (29.05 + 14.91) = 0.156

PEGividends ratio for Keppel = 6.10 divided by (29.73+6.88) = 0.167

SIA wins! ( marginally though. Also the dividends yield we use here is for the recent year, according to reuters. It may be more prudent to take the average dividend yield among several years, such as {( year 1 dividends + year 2 dividends + year 3 dividends) divided by 3 years} divided by the current price of the share so as to smooth out the lumpiness of the dividends.)

The PEGividend ratio method is from Ryan Barnes who has worked with Merrill Lynch, Charles Schwab, Morgan Stanley and many others as an institutional trader. You can check out his site at

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Wednesday, November 26, 2008

Mortgage Applications

In concept, getting a mortgage quote from 4 or 5 different mortgage companies is a wise decision to finding the lowest mortgage rate you qualify for. Mortgage companies and brokers alike can claim that they have hundreds of lenders and thousands of programs, and I am sure they do, but I have yet to see the one mortgage broker who has that magical lender that can get you a better mortgage then every other mortgage broker out there. The bottom line is, they all have access to the same lenders and same programs, it is just that some mortgage brokers know their programs better then others.

The problem today with submitting your information to an online mortgage lead company is that the demand for your information is at an all time high, and the supply is very low. In order for these companies to stay in business they need to be price competitive with other online mortgage lead companies. The way that they do this is by selling your information to numerous mortgage companies. Just recently I spoke to an individual who received over 40 phone calls from the one application he filled out online.

Sometimes it is not the online mortgage lead companies fault that your information gets oversold. There are other online mortgage lead companies that buy your information from the original lead company where you filled out the application and then they turn around and sell them to their client's base. After all, your information is not cheap and some mortgage companies will pay in excess of $35 for it.

The good news is, you can avoid these headaches by doing some research on your end. Over the years mortgage brokers have realized that the internet is a powerful tool that can generate mortgage applications. It is now easier to locate your local mortgage companies and fill out an application directly with them. It is very unlikely that your local mortgage company is going to sell your information to their competitors, as they are in the business of closing loans.

This is where the research on your end comes in. Using your favorite search engine, type in your city, state or even zip code followed by the word mortgage. This will generate a number of pages full of local mortgage companies that would be more then happy to compete for your business. When visiting these websites, look for quality content and educational information.
There are plenty of dull sites out there that only talk about themselves and the hundreds of lenders and thousand of loan programs with the lowest mortgage rates anywhere in the galaxy.

Tuesday, November 25, 2008

Singapore stocks are just cheaper but they are still not cheap. Here’s why..

We had a heated argument with The sexy Victoria Junior College student today because she hurt our ego.She said that after looking at our portfolio of stocks, she thinks it sucks. We, erhem, naturally felt insulted. We explained we bought most of it during the month of October. She countered with saying :” I don’t give a fiddler’s fart when you buy it. Everything has a value.” We, to prevent a further bruised ego, retorted by saying: “ Hey, you little lim kum put of a little girl, who has been monitoring the stock market while you are studying for your A levels. Just look how much prices have corrected! You little prick.” She shouted:” You are just like a cow and anchoring yourself to last years prices!” . With that, she left in a huff! Our egos now badly bruised. We thought we felt a tear on our cheek. And then we realized, we are cows. She is right.

In behaviourial finance, one of the fallacies of investors is to suffer from an anchoring effect. The concept of anchoring draws on the tendency to attach or "anchor" our thoughts to a reference point - even though it may have no logical relevance to the decision at hand. For example, some investors invest in the stocks of companies that have fallen considerably in a very short amount of time. In this case, the investor is anchoring on a recent "high" that the stock has achieved and consequently believes that the drop in price provides an opportunity to buy the stock at a discount. See below of an experiment. Taken from a University Research paper:

In a 1974 paper entitled "Judgment Under Uncertainty: Heuristics And Biases", Kahneman and Tversky conducted a study in which a wheel containing the numbers 1 though 100 was spun. Then, subjects were asked whether the percentage of U.N. membership accounted for by African countries was higher or lower than the number on the wheel. Afterward, the subjects were asked to give an actual estimate. Tversky and Kahneman found that the seemingly random anchoring value of the number on which the wheel landed had a pronounced effect on the answer that the subjects gave. For example, when the wheel landed on 10, the average estimate given by the subjects was 25%, whereas when the wheel landed on 60, the average estimate was 45%. As you can see, the random number had an anchoring effect on the subjects' responses, pulling their estimates closer to the number they were just shown - even though the number had absolutely no correlation at all to the question. UnQuote

In order to best avoid the anchoring effect, one has to use a calculator and determine a value. We decided to use Benjamin Graham's formula to determine that value. This value will then serve as a benchmark from which we anchor our investing decisions. We apologised to The SEXY Victoria Junior College student and bought her a Macdonalds Happy Meal with a Madagascar Giraffe ( Moooov it). She also made us sing the Victorian Anthem and she said we have to put the Victorian badge on our site. ( Whats with her and Victoria???????!!!) She was so happy that she volunteered to help us crunch some numbers. This is shown below. So you see my friend, stocks are just cheaper. They are still not cheap! ( We are not saying the market has not seen the lowest yet. Don't mistake us cos we don't know. We are just saying cheapness based on Benjamin's valuation. See our post on How to Value Equities using Benjamin Graham's Simple Formula.)

(We want to add that above is not our portfolio. We have positions in some of them though. So pls pls use a calculator, go to reuters or bloomberg and deduce the value for yourself. A the VJC student said " Don't be a Cow". )

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Monday, November 24, 2008

How to Value Equities Using Benjamin Grahams Simple Formula! - Example SATS Singapore

We just finished reading "The Intelligent Investor" by Benjamin Graham and we will distill the important points for our dear readers. Actually, we didn't really agree on some of Benjamin's methodology because some of it was purely rule of thumb. BUT....given that he has "reproduced" some pretty fine students, see below table and compare their performance with our Dear Aberdeen Fund Managers and Dear Fidelity Fund Managers from Fundsupermart Singapore, we have becomed believers. Shameful.....still taking management fees somemore!
Read here on what Warren Buffet say about such people.

Benjamin Graham came up with a simple rule of thumb formula to find the intrinsic value of a stock. (Seriously, don't ask us how its derived...its baffling! )

Intrinsic Value per share= Current ( Normal) Earnings per share X (8.5 + twice the expected annual growth rate of earnings per share)

Take note that (Normal ) means one-off , extraordinary items that inflate or deflate the earning for that year are excluded. These extraordinary items refers to, for example, currency gains, sale of property ( non-property company), or anything that is earned/loss from activities not in the normal course of a company's business. The expected annual growth rate of earnings is the growth expected over the next 7 to 10 years.

Let's use it on Singapore Airport Terminal Services shall we!

We pulled the data out from Reuters ( let's assume reuters is correct) You can get the reuters data from ( thats if you believe in their data!) Look at Diluted EPS Excluding ExtraOrd Items. Note that we use Diluted EPS instead of Basic EPS as the former is a more accurate reflection on the ownership of a company. Read here for a better explanation.
This data has already excluded extra-ordinary items therefore it is "normal".

Expected Annual Growth rate of SATS earnings per share = 0! ( based on the above. It might be negative too.. but let's be good shall we! This is up to your assumptions. Garbage in Garbage out!)

Current (Normal) Earnings per share = 0.179

Intrinsic Value per share = 0.179 X ( 8.5 + 0) = $1.512

Current value now as of 24 Nov 2008 = $1.37

Wow...let's go chiong and buy! Wait. Benjamin Graham also mentioned about the Margin of Safety! So is $1.512 - $1.37 = $0.142 a good discount and sufficient as a Margin of Safety?? Use your own judgement!.

As Graham once wrote: " You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right."

(Updated 25 Nov 2008, on a commenter's comments on using the weighted average of earnings per share for 3 years instead of just the most recent year's earnings per share, we thought about it, and we think it actually makes sense to use a weighted average, as some industries are highly cyclical. A weighted average will smooth earnings out through the years. Hmm maybe a simple average will suffice to keep it simple.... )

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Saturday, November 22, 2008

How to See if a Bank might fail - Example: DBS Singapore

With all the gloom and doom about bank failures and with Citigroup going to $3+ dollars, what the heck is happening to the world! Let's look at a recently popularised ( its been around for sometime actually)ratio called the Texas ratio to see if a bank has a chance of failure. Before you read further, please take note that banks are one of the hardest entities to value or analyse. Admittedly, SGDividends are not experts at it. We can only try, using some logic and common sense.

The Texas ratio was developed as an early warning system to identify potential problem banks. It was originally applied to banks in Texas in the 1980s and proved useful for New England banks in the early 1990s. Below is a good video by CBS about this ratio. Apparently, its quite reliable.

Definition: The Texas ratio takes the amount of a bank's non-performing assets and loans and divides this number by the firm's tangible capital equity plus its loan loss reserve. A ratio of more than 100% (or 1:1) is considered a warning sign.

So what is a non-performing loan (NPL or as DBS calls it NPA)? A loan becomes non-performing after being in default for three months, but this can depend on the contract terms.

So let's look at our dear DBS ( yes the one embroiled in the High Notes case, the one who fired 900 employees without consulting the unions, the ones who "lost" clients safe deposit boxes).
From the most recent financial statements released in Nov 2008, DBS reported S$2,054 million non-performing loans. See below.
The non-performing loan amounts have to be divided by TANGIBLE capital equity PLUS loan loss reserve. The tangible capital equity is calculated as total equity ( S$24,333 million) minus Goodwill on consolidation ( S$5,847 million) which is equals S$18,486 million. See below.

Therefore, the Texas Ratio ( sounds like game Texas Hold'em!) = S$2054 / S$18,486 = 0.111=11%. ( we did not mention about the loss reserve as we can't find it and we suspect its been accounted for in the S$18,486 figure. )

Since the Texas Ratio of 11% is way lesser than 100%. DBS is considered safe. Can you sleep well tonight?

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Friday, November 21, 2008

How to Value Equities - The Discounted Cash Flow (Dividends) way! - Example:SingPost

A reader asked us to write about valuing equities using the Discounted Cash Flow method sometime back. It has been long overdued...sorry dude or duddette...we have been busy analysing some stuff of late. Before you read on, we would like to mention that this method entails a lot, a lot and we mean a lot of assumptions and it is highly theorectical. Garbage in- garbage out. Why do you think Research Reports target prices are nearly always way off target? Anyway, its the thought process that counts and not the final target price. Who knows, when thinking through the may actually gain insights on the stock you are researching. So its not useless..this model.

There are many forms of DCF analysis and we will be looking at discounting dividends. This is most appropriate for valuing stable companies (for example in a mature industry) and those that have a consistent payout of dividends . (Please note that there are other types such as discounting Operating Free Cash flow or discounting Free Cash flow ).We will be using SingPost as an example. See below for the yearly dividends they give out. We started from year 2006.

Based on the table above, it is logical to assume that they will be giving out at least S$0.0625 in dividends every year from 2009 and beyond. So here comes the DCF formula. Its looks ugly but its actually quite easy. SGDividends will walk you through.

Figure 1

The foundation of this formula is that the value of a asset ( stock in this case) is the present value of its expected future cash flows ( dividends in this case). In the above formula, it is taking all the dividends up to infinity years ahead and bringing it back to the present value, now. People then compare this present value now with the current stock price to see if its cheap or not. The dividends for a company could grow in time, therefore, the variable g takes into account the dividends growth.
As SGDividends is all about making complicated things even easier than easy. We are going to derive a formula which will be easier than easy to use. The derivation is below in figure 2, but you can skip this part amd jump to the final formula in Figure 3.

Figure 2

You can read up on the sum of infinity through thislink. From the above maths in figure 2, we derive the following formula in figure 3 from the equation in figure 1. Isn't it much easier to use now?
Figure 3

So let's put all this mumbo-jumbo in practice, shall we?

For Singpost:
Dividends for current period ( or most recent period) , Do= S$0.0625.
As it is in a mature industry, assuming dividends is growing slowly at a rate, g = 2%.

Let's assume your required rate of return, K = 6% ( We use 6% just to follow the rate from DBS preferential shares. It can be anything you wish because its YOUR required rate of return.Most people would then choose as high a rate of return as possible as more is better right?Then its wrong. You should consider your required rate of return as the rate of return of the next best investment which you think you can get. So if you thought DBS preference shares at 6% is one of the best around or it makes you happy, then use it as a benchmark to input the K.)

Value of stock = [0.0625(1+0.06)] / ( 0.06 - 0.02) = $1.65625

Price currently as of 21 Nov 2008 as listed on SGX = $0.76.

Don't go rushing to buy this stock yet as we have said before there are many assumptions. Firstly, there is no guarantee that Singpost will continue giving out dividends or dividends will grow. There is no guarantee that Singpost will last forever, it might go bankrupt like Ferrochina ( you think so?). If Singpost decides to be crazy and start giving out more dividends than is manageable to its survival as a company, then of cos using the model doesn't work as it will not last and the current value you calculate will be too big and wrong. It is theoretical and also you will realise that this is not appropriate for all companies, since some companies don't give out dividends.

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Wednesday, November 19, 2008

Home prices

More than twice as many Canadians as last year say they expect home prices across the country to fall, according to a new survey by a national mortgage industry association.

The Canadian Association of Accredited Mortgage Professionals (CAAMP) says that 35 per cent of Canadians now believe that home prices will drop, up from 17 per cent last fall.

Jim Murphy, the president and CEO of CAAMP, believes the survey results suggest recent news coverage of the economic crisis may be having an impact on attitudes about the housing sector.

"I think (the numbers are) reflective of the attitudes about the economy overall -- and the media reports that are out there and the statistics that are provided," he said from Toronto.

Here is what the CAAMP survey found:

  • Twice as many people as last fall, or 35 per cent, now believe home prices will drop.
  • The number of people who thought prices would go up fell from 40 per cent to 20 per cent.
  • Residents in the West are most negative. In B.C., 48 per cent said they expect prices to fall.
  • Thirty-eight per cent of Canadians believe now is a good time to purchase a house and 32 per cent say it's a bad time. These figures are similar to last year's results.

The survey also found that almost 85 per cent of home owners are satisfied with their mortgages.

"In historical terms mortgage rates are still very low, so when people are asked why they're happy about their mortgages, the number one reason is the rate," Murphy said.

CAAMP's chief economist Will Dunning said the mortgage crisis in the U.S. doesn't appear to have hurt consumer confidence in Canada's housing sector.

"Canada is a financially conservative country where consumers are able to meet the terms of their mortgages and buying decisions are based on affordability," said Dunning in a press release.

"This contributes to a solid real estate market that will not experience the same drop off we see south of the border."

The information for the CAAMP report was gathered by Maritz from an online survey of over 2,000 Canadians in mid-October. Last week, the Canadian Real Estate Associate reported that the multiple listing service (MLS) dropped 14 per cent in October. It was the biggest month-to-month decrease since mid-1994.

What should i invest now? Get real confused by following the Gurus!

See below for the current portfolios of investing GURUs. Warren buffet, Boone Pickens and George Soros. Each is regarded as having been successful in investing and experienced ( read: old) enough, having been through market ups and downs to be considered credible in their stock selection. But alas, just look at their porfolio allocations and at first glance, be terribly confused .Warren Buffet seems to be underweight in Oil & Gas, but Boone and Soros is overweight in these. Warren Buffet seems to be overweight in consumer goods ( staples) but Boone and Soros are underweight. Look at the finance allocation and you will again see the difference. So, who should we follow? (of cos follow SGDividends portfolio lah...we overweight in utilities but the GURUs underweight in it!Shiok.....just joking, don't follow us pls, use your own brain..)
George Soro's Portfolio

Boone Picken's Portfolio

Warren Buffet's Portfolio
Actually when we think further, it kinda makes sense to us. The reason for the seemingly stark difference especially between Warren and the other 2 could be due to the time horizon and investment philosophy. Warren Buffet did say before he goes for value companies which just happen to appear more often in bad times. Boone and Pickens could be those who times the market and they are making a bet that Oil & Gas, will make a comeback which we think so too...its just basic economics of limited supply and increasing demand. And think of it, do you think OPEC will let the price fall too much? Come on.....
SGDividend's portfolio ( Singapore and foreign shares)
Anyway, above is our humble portfolio currently. We overweight on Telecommunications and Utilities due to its near recession proof demand due to them being considered necessities. Also they give stable dividends during this time. We keep some in Oil & Gas and basic materials ( include agriculture) as we believe it will rebound, not in the near term though....maybe in at least 1 years time...We are also moderstely overweight on Industrials especially those whose business have some sort of recurring income and are exposed to Infrastructure spending. We slightly underweight healthcare cos we don't think it has much scope for future expansion ( as compared with the other sectors)chiefly because its labour intensive. Property is obvious not the time to move in yet...lah. Wait for much more retrenchments. We are waiting for some banks to follow DBS!And then once banks have taken the lead...............................................
Anyway the morale of the above story is......have your own view as everyone is different!And that's why there is a market!
Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Saturday, November 15, 2008

CitySpring Trust - Bushing, Bush or Is it George Bush?

We got pulled by our barber (not by the hair..)to attend the CitySpring Investor seminar held today 15 Nov 2008 at Marina Mandarine. He is excited cos he says he has 100,000 shares in it and would like us to go listen and ask the management some questions on his behalf as he was shy. The questions he had was :

1)How come in the lastest results, the net income is negative? And this is not the first time.
2)What's with the outages at Basslink and how does Cityspring mitigate operational risk of the subsea cables?
3) Are there any acquisitions in the pipeline?

Being the ever obliging people, we decided to follow him on his quest for "nirvanic" answers but told him we were not going to ask questions on his behalf. At most, we would just follow him to the microphone and stand beside him while he asked. (That's what we call see) .See below for some pics.

Susanna Cher, Au Yeung Fai, Tong Yew Heng ( Pretty honest management who answers the questions straight to the point. No hint of "smoke" screen)
An investor who bought at 79 cts and when it dropped to 59 cents bought somemore and when it dropped lower to 50cts he is still buying. He followed with a chant buy ah buy...yo ah yo cityspring...strange dude!
Au Yeung Fai ( Spending sometime after the briefing to answer investors queries)

Anyway, the barber was lucky as his questions were posed by other investors before he had the chance to do so.

For the question1: The management explained that given the capital intensive nature of the 3 underlying assets ( Basslink, CityGas and SingSpring), the negative or generally low net profit in large part is due to the depreciation of the underlying assets which is non-cash and just an accounting concept. It is better to look at the Cash from Operations for such businesses. They further explained that the lower cash earnings was due to outages at the Basslink, the upfront fee paid to DBS bank for the corporate loan and also the sharp increase in fuel cost for City Gas in 2Q which was not adjusted by an increase in CityGas's tariffs. Fuel cost has since dropped below the tariffs, therefore in layman's terms, whats lost before will now be gained back going forward.( SGDiividends: Hmm, so we should use Price to Cash Flow From Operations to compare with similar businesses then!)
For the question 2: Regarding the outages, the management mentioned that it was due to a fault in the bushing( what the heck is this? Is it a bush ?) and a circuit breaker which historically, the probability of failures is very low, so this was unexpected. But they have since remedied the situation with Siemens. Regarding the subsea cables, the management let in on a suite of comprehensive risk management processes in place:
1)Something to do with installing the location of the subsea cables in the GPS system of the fishing trawlers there so they wont "trawl" the cables
2) Swaping the anchors of the ships so that the anchors do not have to dig deep and thereby damage the cables
3) Insurance policies undertaken
4)contracting a ship with a consortium to patrol and detect any faults in the cables
5)Most of the undersea cables are entrenched below the seabed so as to reduce the probability of damage from ships or Singapore Zoo White Tigers.
For the question 3: The management did let in that on the trust level, they have about $25 million cash balance but on a whole, together with Citygas, Singspring and Basslink, they have $100 million cash balance and that they are currently on the negotiation tables.
Anyway, the general feeling of the whole briefing was pretty good and we think the management is frank. Our Barber went back relieved and we heard he slept well that night!
Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Thursday, November 13, 2008

Headwinds for SingTel's Expansionary Plans in the Region

In DBS Vickers securities' SingTel Report released recently in Nov 08, it wrote the following:

Quote: Regional associates below our expectations. Associate contribution was down 25.5% y-o-y compared to our estimate of single digit decline. Assuming no forex change from 2QFY08, associate contribution would have been flat. What surprised us was Bharti’s pre-tax earnings contribution, down 5.1% y-o-y, against our expectations of 10% growth. SingTel has attributed the decline to S$57m fair value loss on Bharti’s foreign borrowings. We did not see this item in Bharti’s results and need to check with management on the disparity. The other associates were more or less in line with our expectations.Unquote .

In addition, don't forget that SingTel is still facing some legal issues with its 35% stake in Indonesian Telkomsel. In our SingTel article sometime back, we also mentioned that Terria, a consortium led by Optus, which is bidding to build a part government-funded broadband network in Australia,has also recently lost a partner, Australian Capital Territory-based Internet provider, TransACT. And Ooops, it seems SingTel has a lower current asset base than its current liabilities.... It will be interesting to see how Group CEO Chua Sock Koong will navigate this company through these times
Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Wednesday, November 12, 2008

Wilmar - Taboo subject at Investor Briefing

At the Wilmar Investment Briefing today, a CLSA analyst asked Mr Kuok which banks were pulling the credit lines from Wilmar. Mr Kuok "Tai-Chi-ed" to his CFO who said that one bank had withdrawn its credit line because its top management had decided to stop commodities financing.So why did Mr Kuok mention first about some banks pulling the plug in his presentation?Isn't it taboo to mention it in such a briefing, like how the "retrenchment" word is taboo in the workplace now? A Straits Times Market Correspondence praised Mr Kuok for his candourness in nipping any suspicion in the bud and Mr Kuok being a role model for others to follow. Definitely, we agree this is admirable.( Just to side-track a bit, the above clearly shows how serious this credit mess is...)

But then again,we, being ones who are highly imaginative and bizarre in thought at times, thought of another possible reason for this candourness..... maybe he wanted to highlight about this so that people would scrutinise extra careful the debt profile of his competitors, and possibly punishing those companies who are weak.( low share price then acquire??) So we, being the curious type, decided to take a look at the current assets(CA) vs the current liabilities(CL) of their competitors. OK, all of them seem to have CA larger than CL. So maybe we really have a bizarre brain.We will leave it at that.

Anyway, the new kid on the block, Kencana Agri Ltd who just IPO-ed this year don't seem to have a good cash flow compared with its more established peers.Don't even mention about Free Cash Flow..just look at cash flow from operations which is already negative.

(just added)And, DBS Vickers just released a report and it shows Wilmar having a higher Net Gearing compared with her peers. (Wonder why they didn't include Golden Agri, like, huh....don't they know Golden Agri is an important competitor??).

Tuesday, November 11, 2008

Citigroup - Should we follow Abu Dhabi Investment Authority and GIC?

Our barber told us today that he recently bought 16 shares of Citigroup. He just said he felt inspired to buy Citigroup after watching their advertisements and that he just hope that this bank will not fail or else that chio eurasian girl he has been bioing would be out of job. We just love this barber for his cute way of thinking. Anyway, we decided to check it out. Let's use the GIC and Abu Dhabi Investment Authority (ADIA)'s investment as the basis of analysis, and not ratios, balance sheet, tier one ratio and stuff.

From Citigroups 2007 statements (Above)
From GIC's press release (Above)

Comparison (Above)

From the comparison table above, both ADIA and GIC would have the option to convert the Citigroup ( Citibank) share to a common stock at the price of around $31.83 - $37.24 ( around 2010 - 2011) and $31.2 respectively, given the assumptions and assuming no adjustments.

Therefore from the above, an inference can be made that GIC or ADIA could be expecting Citigroup's share price to be roughly at least $31-$37 by late 2010. The price of Citigroup share now is hovering around $11-$12. So, is this a good buy now since GIC and ADIA has already invested in it?

Well, having seen the saga of ABC Learning, it might be wise not to follow these entities blindly since who knows what their real motives are. "Transformers, more than meets the eye...doh da di da da...autobots..." Furthermore, ADIA and GIC made these investments in Jan 08 and Dec 07, where the full seriousness of the crisis was still not widely known. So do you think its a good buy? Sharing is caring!
Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Monday, November 10, 2008

New FHA Loan Limits - Complete guide

I have posted the new 2009 FHA Loan Limits on our primary website here:
2009 FHA Loan Limits. Please let me know if I can help you with any questions.

Is There A Possible Reason For Golden Agri to be trading Cheaper than their peers?

3 articles back, we mentioned that Golden Agri was on our radar for its darn cheap valuations as compared with their peers. On 9 October 2008, Money Mind on Channel News Asia featured an analyst from Royal Bank of Scotland who commented on a SELL on Palm Oil counters (think he also said palm oil prices have bottomed....then why sell?????Damn Bazaar!) but he mentioned that Golden Agri was a BUY due to its relative valuation. Today, our hot sexy "oracle" gave us the latest issue of THEEDGE magazine to read. In it, there was an article write-up on Indo Agri and a short little comparison on the players in the Agri field.( Reproduced here for your benefit) So what is the reason for this stock to be so undervalued relative to its peers. We decided to investigate and could only think of a possible reason, that investors were pricing in a cheaper stock due to the not so favourable history of its management. Read here here to find out more.

Anyway, based on some simplistic technical analysis, this stock has been trading very heavily and their bolliger bands are narrowing, which could mean a possible larger price movement in the coming days.

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Sunday, November 9, 2008

Buyer’s paradise

While blue skies and picturesque lakes certainly drew people to this valley, its postcard-perfection hasn’t been enough to stave off the effects of worldwide economic trouble.

The first signs came when water-cooler talk changed from estimating real estate gains to lamenting losses in retirement plans and higher costs for just about everything.

Legitimate concerns about the state of the economy made consumers nervous and more thrifty, despite assurances of “strong economic fundamentals” from Canada’s mortgage economists and political leaders.

And then came the more literal signs. For Sale boards started to pop up in front of houses and never left.

Home owners and speculators who once bragged it only took a week or so to sell their houses or condos are now just boasting “reduced” or “new price” on their sale signs.

While economists were slow to acknowledge what most could surmise by a walk through their neighbourhoods, there are now significant rumblings of a slump in prices for houses this side of the border.

Some are going so far as to call it a housing recession, as realtors and sellers are already well into contingency plans that will allow them to ride out the storm.

Where the market is going

A report last month from Central 1 Credit Union said the province’s housing market in a recession, and it’s not expected to be a quick dip.

According to Helmut Pastrick, the bank’s chief economist, housing sales across B.C. will decline by 30 per cent this year, 17 per cent next year and five per cent the year after that. And prices will be in tow.

Prices will continue falling from their March 2008 high into next year, bringing the provincial median sales price down 13 per cent to $310,000 in 2009 and by a further five per cent in 2010—in total nearly an 18 per cent drop.

Things are supposed to look up later that year following a sales turnaround and relaxing credit conditions. “Recession in any industry—housing, auto or lumber—is a period where the industry experienced sustained declines in output and in prices, and that fits what’s happening in B.C.,” said Pastrick.

He noted that the Okanagan won’t be exempt from any downward trend.

“All regions are participating in this to largely the same degree and the trends and conditions are very similar throughout the province, which is usually the case when we have major economic event or factor coming into play.”

That major economic effect is, of course, the financial crisis in the United States, which has put a crimp on the many industries that are finding it difficult to access credit and move operations forward.

In turn, its stagnated economic growth across the U.S., and to some degree, in Canada hypotheque as well.

“As the general economy suffers and slows down, it has feedback into housing sector.”

Over at the B.C. Real Estate Board, chief economist Cameron Muir is on the same page, although his group’s fall forecast projects declines in the area of 10 per cent, as opposed to 18.

According to him, Okanagan home prices should be down to 2006 levels by the end of the year and remain flat throughout 2009.

“Throughout the province there’s quite an imbalance between supply and demand. There are more homes for sale, while home buyers have dropped off considerably from a year ago, and the combination of those two factors has put downward pressure on prices,” he said.

Muir said real estate markets most conducive to recreation and investment buyers— such as the Okanagan—will be a little bit worse off than major markets, like Victoria and Vancouver, simply because of the fact that there are fewer investment and recreation home buyers around now.

Kelowna, he said, is well diversified but part of the responsibility of the downward trend can be placed upon the same group who helped drive up prices.

Just as fast as oil money flowed into the Okanagan, it’s started to dry up in relation to the Albertan housing market flattening.

Calgary, for example, saw their housing prices start to tumble months before B.C. felt any pangs of contraction, said Muir.

Basically, that’s meant those who were leveraging gains in home equity for new home purchases are out of luck and, as a result, no longer looking to buy.

But, that’s not what Kelowna residents will have to worry about.

The real test of how this region will fare is the level to which residents are able to comfortably live and work here, Muir said.

“What we really need to look at is what are the financial conditions and the confidence of people who live work and raise their families there because they are the ones who drive positive demand,” he said.

“Unlike the U.S., the financial condition of households in this province, and in Kelowna, are on relatively strong footing.”

B.C. isn’t seeing a sharp increase in foreclosure activity, the unemployment rate is staying quite low from a historical perspective as are interest rates, Muir said.

“Without a collapse in household financial positions, homeowners are not in a position where they have to sell at any price like they are in the U.S.”

According to Muir, the biggest stumbling block is consumer confidence, which is at the lowest it’s been in 26 years.


A lack of consumer confidence is something local realtors are far too familiar with.

Ian Share, of the Century 21 office in Glenmore, has seen a sharp decline in sales, although he said he remains busy. The problem, as he sees it, is that sellers are having a hard time adjusting to the market. A house that may have flown off the market a year ago for a cool $500,000 isn’t going to have the same appeal today as buyers have far more to choose from and are taking their time.

While his focus is on North Glenmore, Lake Country and Phoenix, Arizona, he says only the latter market is seeing eager buyers.

Share tapped into the Phoenix market successfully to pursue an opportunity he saw resulting from the U.S. financial crisis.

“The conclusion you can start to draw is that the real estate market is adjusting and correcting massively and that the buyers that are willing to step up to the plate are few and far between,” he said.

“Generally they consist of investors picking up rental properties and other clients who are relocating here for work.”

Drawing upon some of his office stats, Share also pointed to a much sharper decline than the 10 or 20 per cent the economists are forecasting—and it’s happening now.

Share was the listing agent on one of only two homes that sold in Lake Country (excluding Carrs Landing) last month—118 were listed.

While the lack of sales may be disturbing, Share pointed out it’s actually the pricetag changes that are the most dramatic, citing the two Lake Country listing sales examples.

“One was originally listed for $549,000 and sold for $400,00—that’s a difference of $149,000,” he said.

“The other was originally listed for $449,000 and sold for $351,500—that’s a difference of $97,500.”

In the months leading to the dry spell, Share added only nine single family homes sold and the average price difference from the original list price to the sold price was $37,966, whereas this last month the average price difference was $123,250.

“Even though we’re been reassured that our banking system is solid and that our economy is ticking along nicely…in my opinion we’re crazy to think that Canada is impervious to some sort of significant adjustment in our economy and in the real estate market,” he said.

That said, this is the time for buyers to gather their resources and plunge into the market and time for sellers to start listening to their agents, Share believes.

“Sellers that are in this current market generally dump realtors if they haven’t sold their homes during the listing period, and they probably most likely figure they’ll just get someone else that will get the job done,” he said.

“The majority of time it may not be the fault of the realtor if he or she priced it correctly and aggressively to start with…If it isn’t priced right in this market then both the realtor and the seller get frustrated as they’re simply just spinning their wheels.”

Over at Coldwell Banker, Horizon Realty, Paul Pofpnikoff is also feeling the pinch.

Like Share, he’s finding a way to leverage the conditions of the current market so they work to his benefit and opened a sideline project.

Focusing on developers who have a property they need to market, he’s created a website——that lures potential buyers from markets as far flung as Europe.

He has to go there “to create opportunities” because he admits things have dried up locally.

“I know realtors have to have this rosy picture, but currently there aren’t many buyers and I am finding many people that could are resorting to renting their place rather than selling it,” he said.

“I have had vendors calling about listing, and quickly changing their mind, saying, ‘The price we’d be getting wouldn’t be good enough—we’ll rent for a year or two until the market gets better.’”

It’s something “everyone” is seeing and he too blames it on the problems in the U.S., the “troubling effect it’s had on the psychology of the buyer.”

Reduce the price, or rent?

For contractor Robert Tissington, building, buying and selling homes has been a way of life for as long as he can remember.

It’s what his dad and grandfather did, and he followed their lead into the local market a few years ago.

His first house—among several properties he owns and can’t currently sell—was purchased in Kelowna’s North End a few years ago for about $200,000.

He added a carriage house to it for about $130,000 and got ready to move into another place.

When he listed his property with a real estate agent, he was told to list somewhere in the area of $700,000, which he thought to be quite high, but competitive. It didn’t move. His price dropped by nearly 10 per cent and it still didn’t move.

With that, he decided to take it off the market.

“A year ago I thought selling it for about $550,000 would have been brilliant, but it’s the type of property you hang onto,” he said.

His property is a good rental—a market that’s not shrinking—and will continue to earn as the real estate market fluctuates.

In the meantime, he didn’t see the point of putting his life on hold waiting for the property to sell.

“The amount of tire kickers you have to go through—the people who want to see all the houses, but aren’t prepared to buy, even if they think they are—just aren’t worth it.”

He’s comfortable with the idea of riding out the changes in the meantime, and as a contractor thinks he sees a lot of opportunity in the current market—if not to sell, to buy.

“You just sort of acquiesce, give it a reasonable chance, and go off in another direction,” he said.

“Now I feel great about the decision, but you have to be moving forward or backward.”

Tissington said that the current market should have been expected, as Kelowna functions on a six-year cycle.

“Prices peak and everybody lists when they sense it’s the end of cycle and then there’s a glut of houses on the market,” he said. “The last one was in 2001, and before that in 1993-94.”

When he bought his house for $212,000, that seemed like an incredible amount of money for an old house, but he pointed out it was worth the investment.

“This whole economic situation is running alongside what may have been a natural price adjustment anyway,” he said.

The good news

Property owners may be in a pinch, but this region has suffered the pains of rising costs for years.

Reports earlier in the year boasted that young buyers were still entering the housing market with “reduced expectations,” while many complained prices became too restrictive for many to enter the market at all.

Now prices are becoming more competitive. Developers trying to unload units are offering bonuses, rent to own incentives and coming out with a product that’s more attainable.

All in all, it’s something Brenda Moshansky, a director with the Okanagan Mainline Real Estate Board, believes will create some opportunities for first-time home buyers looking to get into the market.

“Properties that are marketed competitively will continue to sell, and with the interest rates where they are, it’s a wonderful time for buyers to get into the market,” she said, adding realtors are working a lot harder to draw interest in their listings.

Moshansky said that the Okanagan and its natural allure will ensure that the prices don’t dip too drastically.

“One thing that’s very unique about this region is that it’s a little bit immune to some of the problems because it’s a destination market,” she said.

“Ski hills are expanding, popular resorts as well as accommodations are coming here and we accommodate a lot of recreational consumers for second homes as well as being a retirement market.”

Although Moshansky knows the economic predictions for the next year, she believes that the market is already correcting itself as fewer listings are starting to come out. “Real estate is traditionally very cyclical,” she said.

“Some people say it’s a six year cycle, others say it’s seven…it will turn around. Real estate is not as volatile as the money market.”

When it will end?

Housing is a high reach industry. Realtors, retailers, builders and architects are just a few who will feel the pinch if the bottom falls out of the market.

Construction has become a major economic driver of this region, and job growth has been substantial, with some estimates being in the area of 94 per cent.

“Usually there is a time delay to response in new construction and housing market conditions after sales decline,” said economist Helmut Pastrick, adding that housing starts are likely to drop off by 30 to 40 per cent next year.

But, things will get better.

“It’s not a downward endless spiral,” said Pastrick.

“There will be forces at play to reverse the downturn and some of them are already beginning to materialize.”

It’s still early in the decline of sales and prices, but by 2009, and 2010, things will get better.

“Lower interest rates, lower mortgage rates and lower prices can stimulate demand so that will set the stage for some improvement in housing sales,” he said.

“It’s open to debate how strong that recovery will be—at this time it doesn’t look that strong, but as long as the decline ends…that’s positive.”

How to Benefit from a Fixed-Rate Home Mortgage

(Home Mortgage)

The most prevalent of the various home mortgages is the fixed-rate mortgage which is the simplest to deal with. Since mortgage rates have been surprisingly low in recent years, home mortgages that offer the fixed rate have become more common.

There are two distinct features associated with fixed rate home mortgages. The first is that the payments and interest rate must remain the same during the life of the loan or mortgage. (Home Mortgage)The second is that at the end of the term of the mortgage, the loan must be completely paid up.

Loan Amortization
When an home loan is completely amortized it is a mortgage that has been completely paid for by the end of its term. Amortization means that the balance of the loan is being reduced through a monthly payment of interest and principal. It is calculated so that during a fixed time period the loan is completely paid off or amortized.(Home Mortgage)

Home Mortgage

When you have any home mortgage you can attain a amortization schedule which determines payments for the life of the loan. You can of the online to many web sites that will provide you with an amortization schedule.

You can find the monthly interest rate in this case by dividing the annual rate by a factor of twelve which comes to 0.583%. These numbers therefore a set since it is a fixed rate loan. They will not change during the term of the home mortgage.(Home Mortgage)

In order to determine the first month’s amortization calculation for an home fixed rate line you take the full amount of the loan and multiply it by the interest rate for the month. So the full amount of the loan is $100,000 multiplied by the monthly interest rate of 0.583%, gives us a monthly payment of $583.33, which is directed toward payment of the interest.(Home Mortgage)

To determine how much is actually going toward the payment of the principal it is necessary to subtract this amount from the total payment of $665.30, which gives us $81.97. To determine how much of the loan amount is due after payment of the first month’s payment, you simply subtract the $81.97 from the total loan amount of $100,00 and you get $99,918.03.

Home Mortgage

How to Find the Best Mortgage

(Home Mortgage)

If you are in the process of applying for a home mortgage refinance loan, comparison shopping for the best mortgage company will save you money. Finding the best mortgage company means comparing all aspects of the loan packages and not focusing only on mortgage rates. Here are several tips to help you comparison shop for the best mortgage lender when taking out a home mortgage refinance loan.(Home Mortgage)

Home Mortgage

Before you begin shopping for a lender you need to determine what type of home mortgage refinance loan you are shopping for. (Home Mortgage)Do you need fixed mortgage rates or adjustable interest rates? Do you need the smallest payment possible or are you trying to pay off the loan as quickly as possible? Your answers to these questions will determine not only the type of interest rate for your mortgage but the duration or term length of the loan. (Home Mortgage)Once you know exactly what you’re looking for in a home mortgage refinance loan you’re ready to begin comparison shopping.(Home Mortgage)

The Internet is an excellent tool for comparing home mortgage refinance loans. You can easily compare mortgage rates from a variety of mortgage companies. When you compare home mortgage refinance loan offers, request a copy of the Good Faith Estimate from each lender you are considering.(Home Mortgage) The Good Faith Estimate will allow you to make a line-by-line comparison of home mortgage refinance loan fees, interest rates, and closing costs. The Annual Percentage Rate published by mortgage lenders is not enough to make an informed decision so always request the Good Faith Estimate before applying.(Home Mortgage)

Home Mortgage

5 Key Points For Home Mortgage Tips

(Home Mortgage)

Normally the mortgage is provided by the banks and other financial companies and institutions for the home and other property loan. Some mortgage companies are also working in USA to give mortgage facilities where you can get the proper information and advice as per your need. There are various types of condition apply while you are purchasing the home through mortgage.(Home Mortgage)

Here are some key points to be considered before proceed for the mortgage loan:

1. Monthly payment against the mortgage facilities are based on many factors, considering all the factors and general rules the average of the monthly payment is around 25 to 33 percent of the gross income of loan holder.

Home Mortgage

2. The repayment period of the mortgage of the home loan would be 5, 10, 15, 20 and maximum 25 years. While the repayment period for the commercial property would be normally of 20 years for new property and 15 years for old property.

3. The mortgage company gives flexible option for the repayment of loan as well as in the time period that are suitable to the customers. (Home Mortgage)You can select the repayment period depending on your ability after discussing with mortgage consultant.

4. The mortgage application is properly scrutinized by the mortgage company with related documentation. After proper analysis, based on present income the mortgage company decide the repayment terms and the amount of repayment.(Home Mortgage)

5. The mortgage company check your credibility before sanction of mortgage loan. Normally the mortgage company take the home documents as security against the mortgage loan. Once you repay your loan, the mortgage company give back all the documents of home.

Home Mortgage

What You Need to Know For Applying Your First Home Mortgage?

The following home mortgage tips will help you figure out how to best go about the home mortgage loan process for your situation.

Home Mortgage tip #1 Interest Rates

Before applying for your first home mortgage loan you will want to shop around and see what average home mortgage loan rates are. Shopping for home mortgage rates online is a timesaver and frequently have lower rates as well. Your home mortgage rate will affect how much money you have to pay back over the term of the loan, so the lower the better.

Home Mortgage Tip #2 Fixed or Variable Interest Rate

When it comes to your home mortgage loan there are more options than just a loan you pay back over a set amount of years. You can choose different home mortgage interest rates that work best for your current and future situations. So, before you apply for a home mortgage loan do some research on variable and fixed interest rates to find what will work best for you.

Home Mortgage Tip #3 Down Payment

When applying for a home mortgage loan for the first time you might not be aware of the general down payment you will be required to make. Many times a home mortgage loan requires between 10 and 20% of the price of the home, but if you have good credit sometimes you can make a lower down payment and still get a good deal on your home mortgage. This depends on the home mortgage lender, so shop around.

Friday, November 7, 2008

New Loan Limits for 2009 released

Fannie Mae & Freddie Mac have new loan limits for 2009, as released today. The standard conventional loan limit remains at $417K accross the USA. High Cost Areas have new limits based on the new formula in the 2008 housing bill passed in July.

We expect to see some updates to the current Fannie Mae & Freddie Mac guidelines for loans that exceed the standard limit of $417K which will keep these larger sized loans affordable & attainable. We will keep you posted as we hear updates.

We also expect to see updates soon from HUD regarding the 2009 FHA loan limits, extension of the FHA Secure loan program, and updated guidelines on Hope for Homeowners.

Here are some highlights of the new loan limits:
Alpine County, CA $463,450
Bellevue, WA $506,000
Carlsbad, CA $546,250
Chula Vista, CA $546,250
Escondido, CA $546,250
Everett, WA $506,000
Greene County, GA $515,200
Key West, FL $529,000
Kirkland, WA $506,000
Long Beach, CA $625,500
Los Angeles, CA $625,500
Lynnwood, WA $506,000
Mono County, CA $529,000
Napa, CA $592,250
Naples, FL $448,500
Oakland, CA $625,500
Oceanside, CA $546,250
Orange County, CA $625,500
Petaluma, CA $520,950
Pierce County, WA $506,000
Riverside, CA $417,000
Sacramento, CA $474,950
Salinas, CA $483,000
San Diego, CA $546,250
San Francisco, CA $625,500
San Jose, CA $625,500
San Juan County, WA $483,000
San Luis Obispo, CA $561,200
San Marcos, CA $546,250
Santa Barbara, CA $603,750
Santa Cruz, CA $625,500
Santa Rosa, CA $520,950
Seattle, WA $506,000
Snohomish County, WA $506,000
Tacoma, WA $506,000
Truckee, CA $477,250
Ventura, CA $598,000

Access the 2009 High cost area loan limits here PDF: 2009 Loan Limits

We believe that these loan limits are ample enough to help out millions of Americans Purchase new homes and Refinance their homes into safe affordable fixed rate loans.

VanDyk Mortgage is a Nationwide Direct Lender. Visit us on the web at

Fortune REIT - Another Temasek Holdings Investment

Fortune REIT is an interesting stock. In the realm of REITS listed in Singapore, it is one of the few ( maybe its the only one, we are not sure as we did not check every single REIT) which has current assets approximately equals to its current liabilities. If you have read our previous articles on REITS and about Fortune REIT, most of the REITS in Singapore have current assets very very very substantially lower than their current liabilities, which actually is quite normal given the well known fact that these entities borrow heavily to finance their operations. So let us relook at Fortune REIT , given that they just released their financial statements. Lets use some primary school maths on percentages, shall we?


Firstly, at first glance, it looks impressive, doesn't it?Solid Operations, No Refinancing Needs, blah, blah,blah..all the marketing talk which actually makes us more determined to research the company actually. Circled in RED, it states that currently their portfolio of property has an occupancy of 94.4%, but let's look at their porfolio expiry profile below.


It states that in the fourth quarter of 2008, 7.7 % of their occupied space is expiring. Let us assume that the 7.7% do not renew. That will leave us with (100%-7.7%) times stated current occupancy level of 94.4%, which gives us an occupancy level of 87.1% at end of this year. Let's look at 2009. As stated above, 33.4% of their occupied space is expiring in 2009. Assuming that the 33.4% do not renew, this will give us an occupancy level of (100%-33.4%) times 87.1%, which turns out to be 58%! Imagine going to a shopping centre, say Suntec City where around 4-5 shops out of 10 shops are closed!

This is the worst case scenario of course. There might be new tenants coming in to take up the slack, some or even all of the tenants might actually renew, and we might even be wrong in our interpretation of "% of occupied space expiring" in their slides. But well, no definition from Fortune breeds speculation.....(Just added: We are not experts in shopping malls leasing, maybe its the industry practice, not perculiar to Fortune. But from a layman's perspective, given these times, its some food for thought!)

Anyway, we are pretty disappointed with the investor relations department of this company as they did not reply on our query on how they are going to mitigate this risky outflow of tenants. Why the following sentence if you are not going to reply ?

"For general enquiries, please email us at and we will respond promptly."

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Thursday, November 6, 2008

Benjamin Graham - I spanked Warren Buffet!

We found this article from which wrote about one of Benjamin Graham's investment criteria and we thought it was a great idea to incorporate it into our investment strategy. This is a bloody stringent criteria to follow that would dramatically reduce the list of stocks we are looking at at the moment, but hey, if not now..then never, right?

Quote:One of Graham's investment fund strategies, as explained in his best-selling book The Intelligent Investor, was to buy stocks that are valued at a discount to their net current asset value. Graham called such stocks "bargain issues." In other words, Graham would look for stocks whose current assets less total liabilities was worth more than what the stock was trading at. This meant that any plant, property and equipment, goodwill and long-term investments were free.
Graham believed this approach lowers risk because if a company defaults, shareholders still stand to recoup their losses and possibly profit as the company is liquidated.
Since many companies that trade below their net current asset value have weak prospects, Graham would often have a portfolio of 100 such stocks to limit the impact of one company defaulting. Graham said that 90% of the bargain issues returned a satisfactory profit over 35 years.
Graham's investment fund, Graham-Newman Corp., returned 14.7% annually from 1936 to his retirement in 1956, versus the 12.2% return of the stock market, according to The Intelligent Investor (revised 2003 version). After 20 years, a $100 initial investment would have been worth $1,533.35 in Graham's fund, compared to $999.67 in the overall stock market.Unquote

SGDividends will now start combing the sphere of SGX shares to see whether there are any such stocks available trading below their net current assets per share. Stay tuned.

Wednesday, November 5, 2008

Golden Agri - An Interesting Play

"No Fear, No Greed, High Emotion equals low IQ"..."No Fear, No Greed, High Emotion equals low IQ"...we have been chanting this in unison for the past 3 years. This has been a daily routine for us . 100 times before we sleep. 100 times after we wake up.But we digress usual..So whats been in our radar lately?Golden Agri!

Golden Agri has been hogging the top spot in volume trade lately. According to Reuters, it's director, Raphael B. Concepcion, recently mentioned that they are looking at acquisitions now. What an interesting it a good investment? Let us take a look at some hard facts, shall we?

Based on Thomson Reuters, the net tangible value of Golden Agri is way higher , more than twice, its closing price. Compared to its competitors, it does seem cheap! Yes, it does look damn cheap. But let's not jump to conclusions, shall we? Let's look at one of the most important data (in our opinion). Its Free Cash Flow.

Indo Agri (Below)

Golden Agri(Below)


As we can see, Golden Agri has been enjoying a rather consistent history of free cash flow since 2003 except for that blip in 2006. Indofood Agri does not have a long history of data and Wilmar..oh my...seem to have a rather consistent history of negative free cash flow.

Hmm...Golden Agri just sounds too good to be true!It seems there can only be 2 outcomes, for Wilmar and Indo Agri to go down in price or for Golden Agri to go up in price..which do you think? We just can't wait for 12 November 2008 for the financial statement!

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team