Continue reading »]]> The different brokerage firms will produce their own in-house research reports on selected SGX-listed companies.

You can access the various research reports if you have a trading account with the respective brokerage firms.

Another way is to visit The Society of Remisiers website, which holds the research reports of all the brokerage firms.

However, it seems that they only store the reports for the last thirty days. Well, at least it is still quite useful to be able to find all the reports at one central location.

The website lists the research reports by the dates on which they are released, so it will be easier to find what you want using the search function.

In terms of usefulness, I will usually look at the data but ignore the target price and recommendation set by the analyst.

Continue reading »]]> Pertama is no more.

Ok, I’m exaggerating it a little.

Back in June 2011, Pertama had proposed a delisting of the shares (at $0.65 a share) as it saw no need to maintain a listing status. The cash flow of the business was good, and it had no plans for any capital raising.

The free float of the shares was also very small with Harvey Norman Singapore Pte. Ltd. (“HNS”) and HNS’s subsidiary, Harvey Norman Ossia (Asia) Pte Ltd (“HNO”) collectively holding approximately 83% of the total number of issued shares. FMR LLC and Edward C. Johnson 3rd hold approximately 9%  of the total number of issued shares.

The proposal was shot down by minority shareholders at the EGM, and the shares continued to trade at a price lower than $0.65 with low transaction volumes.

The free float of the shares was in fact less than 10%, which meant that the shares had to be suspended from trading unless the company could increase the percentage of free float in the market.

As the majority shareholder had no intention to sell his shares and the company had no mandate to do a share placement to issue more shares, the shares of Pertama would have to be suspended from trading (starting from today).

A lot of retail investors would worry about such a suspension as they would not be able to get out of their positions.

Not me.

After my previous sucking thumb exercise and failure to add to my original purchase back in 2001, I did not hesitate this time. I managed to accumulate more Pertama shares since the general offer failed (By the way, this is one advantage of being a retail investor because an institutional investor will not be able to find enough shares to buy to make the exercise worthwhile).

As the majority shareholder Harvey Norman had made a previous exit offer, they are not allowed to make another one within a 12-month time frame. They had tried asking for a waiver from Securities Industry Council (SIC) to waive this requirement for them to make a voluntary general offer for all shares that they do not own but was rejected by SIC.

What is likely to happen is that Harvey Norman will make another general offer after the 12-month moratorium was up. And then Pertama will finally be delisted.

Such a buy and hold strategy (without being able to sell) might bore a lot of investors to tears, but having seated on this position for ten years, I’m happy to wait for another year.

Continue reading »]]> SGX has recently launched an online portal called My Gateway providing investment education for investors.

My Gateway provides market updates, recorded webcasts, calculation tools and information about the various products on SGX.

You can view historical charts of traded securities on SGX and there is also information about upcoming events and courses.

For now, stand up to win one of 5 iPads if you sign up to be on SGX’s investment updates mailing list.

My Gateway can be accessed here.

Continue reading »]]> Many people like to track their stock holdings via the brokerage platform that they bought their shares with.

As each platform will only tabulates the holdings based on the transactions you have executed with them, this could lead to inaccurate results and erroneous trades (example selling shares you don’t own).

Even if a person uses only one platform for all his trades, you can still be given the wrong information as the platform will not track corporate actions like share consolidation, stock splits, bonus issues and rights issues.

The correct way would be to track your holdings via the The Central Depository, which will give a true indication of your current stock holdings. This can be done simply via the online platform of CDP.

SGX has announced a revamp of this existing system, which will take about three years to complete.

Under the new system, Singapore’s stock brokerage firms will have access to your CDP account and your broker will be able to tell how many shares you have.

You can also choose to receive electronic version of the CDP statements instead of the physical copies that you are currently receiving. Now, that would really cut down on a lot of wasteful paper!

Continue reading »]]> The iShares Asia Local Currency 1-3 Year Bond Index ETF was listed on SGX on 8th December 2011 last week.

The investment objective of iShares Barclays Capital Asia Local Currency 1-3 Year Bond Index ETF is to provide investment results that, before fees and expenses, closely correspond to the performance of the Barclays Capital Asia Local Currency Short Duration Bond Index in US dollar terms.

Being short duration bonds, the average yield to maturity is expected to be low, in the region of 2-4+%.

The ETF has a management fee of 0.35% p.a with a fund size of about US$9 million and uses sampling replication.

Even though the ETF is denominated in USD, the currency exposure of an investor of the ETF is really in the local currencies of the underlying Asian bonds. These include (as of 13th December 2011):

Thailand 25.15%
South Korea 24.93%
Malaysia 23.15%
Singapore 16.40%
Indonesia 4.98%
Philippines 4.02%
Hong Kong 1.38%

The returns of an investor would come from the bond returns as well as any gain or losses in the local currencies.

To give an example of why you are not exposed to the currency that an ETF is denominated in, say you have an ETF that invests into S$130 million worth of Singapore bonds. With 100 million shares, each share is worth US$1 (at an exchange rate of US$1 to S$1.30) and would have cost you S$1.30.

Assume that the value of the Singapore bonds remain unchanged but USD depreciates to US$1 to S$1. If the value of the ETF still remains at US$1, then yes, your shares would only be worth S$1.

However, the S$130 million worth of bonds should now be valued at US$130 million as the exchange rate is 1 is to 1. This means that each share would be worth US$1.30, a 30% appreciation in price. Valued in S$, your shares would still be worth S$1.30.

The main disadvantage of having a US$ denominated ETF is the spread you incur (through your bank or brokerage firm) every time you buy or sell the ETF.

You can find out more product information about this bond ETF here:

iShares Barclays Capital Asia Local Currency 1-3 Year Bond Index ETF

Continue reading »]]> After Teh Hooi Ling wrote her article on the  The REIT Myth Busted, there was a lot of debate on online forums both supporting and criticizing her views.

So she came out with another article The Pros and Cons of REITs that calculates the internal rate of return of the various REITs. My guess is that she might have gotten a fair share of hate mail from her original article which was very negative on REITs.

Separately, regular columnist Goh Eng Yeow wrote an article this week warning about credit crunch facing REITs.

Back in 2008, many REITs had to do emergency fund raising from their unit holders as they were unable to refinance their short-term debt. It is a dangerous game that many REITs were playing back then. Having a large proportion of short-term debt and using it to finance a long-term investment.

The Business Times carried an article asking questions about corporate governance of REITs.

This was also something that was bought up in a research paper done by CFA institute which talked about poor governance in Asia-Pacific REITs. You can read about their findings and recommendations in the link below:

Asia-Pacific REITs – Building Trust through Better REIT Governance

Section four of the report provides some interesting case studies.

Continue reading »]]> REITs has always been a popular topic of discussion among Singapore investors who want to invest into an instrument that can give them good dividend yields.

I wrote this article Are Singapore REITs a Good Investment? last year to take a closer look at why REITs had failed to deliver on its promise of steady dividend income.

Teh Hooi Ling, Senior Correspondent at SPH, had recently done some analysis on the same topic:

The REIT Myth Busted

In the article, she wrote about how most of the REITs had taken back all the dividends they had paid out by doing rights issues.

The actual article that was published in last Saturday’s Business Times comes with a table that gave the breakdown of all the dividends that were paid out by Singapore REITs, as well as the capital that they “clawed” back from unit-holders by doing rights issue.

However, it is not an doom and gloom story for Singapore REITs investors.

While the dividend income had indeed failed for most of them, investors who had invested into more than half of the Singapore REITs from IPO and dutifully deployed capital into them to take up their rights entitlement would still have made money.

And for those who are clueless about rights issue, they would have lost a lot of money.

Continue reading »]]> As part of SGX’s ongoing efforts to improve the overall quality of listed companies in Singapore, SGX had introduced a SGX Watch-list a few years ago to highlight persistent loss making companies.

The admission criteria to get into this Watch-list includes:

• Having pre-tax losses for the three consecutive most recently completed financial years; and
• Having an average daily market capitalization of less than $40 million over the last 120 market days on which trading was not halted or suspended.

There will be a quarterly review to identify companies that meets these criteria.

Once admitted into this Watch-list, the company will need to submit an application (upon meeting the criteria of Rule 1314) within 24 months after it was placed onto the Watch-list, failing which it might be forced to delist or trading of its shares might be suspended.

Such a forced delisting is often an unhappy affair for minority shareholders as the company will usually not have the money to make a decent delisting offer.

Under Rule 1314, the company will need to show :

• pre-tax profit for the latest financial year with a market capitalization of at least S40 million or more over the last 120 market days; or
• cumulative pre-tax profit of at least $7.5 million for the last three years, and a minimum pre-tax profit of $1 million for each of those three years; or
• cumulative consolidated pre-tax profit of at least $10 million for the last one or two years.

The Watch-list rules do not apply to investment funds, real-estate investment trusts, business trusts, global depository receipts (GDRs) and secondary-listed companies listed on the Mainboard.

Continue reading »]]> The past week has seen more S-Chip companies make the headlines for the wrong reasons.

First, SGX ordered China Sky Chemical Fibre to appoint a special auditor to investigate some of the company’s financial dealings.

This was over some repair and maintenance costs of around S$15 million incurred in 2009 as well as some interested parties transactions with its independent director.

And then, special auditors KPMG reported that they were unable to complete their investigations of Sino Techfibre after the company’s employees in China refused to co-operate with them. They were refused access to certain computers as they contained records of transactions with government entities and thus were deemed to contain state secrets.

Even the Local Tax Bureau did not want to help KPMG.

But the story of the week that me and my friend were discussing had to be about the dead abalones at Oceanus.

Oceanus Group had announced a writedown of 642.6 million yuan on biological assets due to the death of 42 million abalones. Now, that is a lot of abalones (out of their stock of about 200 million abalones).

This was reported earlier in the month but there were further news on developments this week.

A Singapore team of seven to eight people have been sent to China to do a stock take of the remaining number of abalones. I wonder how long they will take to count the remaining abalones.

Continue reading »]]> It was reported that MAS was considering more regulatory guidance to REITs in order to enhance corporate governance.

I hope MAS and SGX can do more to ensure a better alignment of the interests of unit holders with the manager of the REITs and also protect the interests of minority shareholders. If you had read my other article, Are Singapore REITs a Good Investment?, you will know my reasons on why I thought some of them have been detrimental to the unit holders. There have also been some interesting comments left by the other readers.

Whatever MAS and SGX decides to do, I will continue to rely on a common sense approach to investing in REITs. At the end of the day, there is a limit to what corporate governance rules can do.

Judge the manager by not what they say, but by what they do. If they buy or sell properties excessively, I will say thanks but no thanks.

And if a particular REIT manager proves to be very good at enhancing their own earnings from a REIT, I might consider investing in them instead.