Real Estate Investment Trusts(REITs) - Information from the Pulses, August issue

While writing this article, I am also learning about the REITs which I would like to share with all of you.

REITs started in 2002 and went all the way up to 2007 when they saw the reversal during the crisis.

Whats makes REITs attractive?
1. Transparency
As compared to other stocks, it has less uncertainty and less ambiguity. For examply, when we talk about a manufacturing company, a lot of factors can affect the share price.. This includes the level of competition, sustainability of demand of the services and products.. NAV of the company may not be the same as the book value due to the real machine liquidation value. As technology improves, the prevailing machine may no longer be able to produce the new product. Obsoleted machines has less value.
2. Lack of real information
Do we really know what really goes inside the company? Is the picture really as rosy as what is printed in the reports?

REIT- a simple model
RAISE CAPITAL -> Buy and manage revenue generation property

BENEFITS:
Transparency
1. Cost of Caipital is known
2. Revenues generated from property is known as rental are locked for three years.
3. A trip to the mall will give you an idea of how the mall is performing
4. The management fees is fixed.

Real Estate Vs REITs/STOCKS
No doubt it is true that real estate offers high returns for little outlay when the market is hot. There is also a steady rent income unlike REITs and stocks where the dividend is paid semi anually or anually.

However, to invest in property, one has to come up with a large sum of capital outlay and it is less liquid taking some time to sell as compared to the stocks and REITs which is traded in the open market daily. Stocks and REITs are also more affordable as they are sold in smaller lots and hence, more affordable. Property transaction usually takes a longer time to complete... say about 2-3 months while stocks and REITs is about four days.

There are hefty transaction costs involve in buying a property like the agent commision, stamp duties, legal and administration fees, unlike brokerage which is only 0.275%.

Property is taxed but property stocks and REITs are not taxed.

You can diversify your portfolio if you own shares of bigger developers like Capitaland as they hold properties across the residential, commercial, retail and hospitality sectors...

STI cross 3000... August marks a new start...

Yesterday really marks a very bright and good start for the month of August with STI opening above its resistance at 3011.

As the saying goes, a rising tide raises all boats.

Yesterday, banks are also performing well with DBS leading the pack ... UOB cross $20.00 this morning. Keppel corp is going to trade XD on the 4th of August, dividend is at 0.16 per share. If you have no intention to hold this counter, let it go before the XD date.
After the rally yesterday, we can see profit taking this morning which has caused the market to pullback. STI touched 3003 but managed to come back from support. Currently STI is trading at 3013, still above the psychological level. STI resistance at 3037, 3050. ..
Price of Genting Singapore was driven down from the sell down by the fund manager and the houses this morning.. dropped from 1.30 to 1.24.. Big volume selldown does not look positive for this counter.
If you are holding capitaland, do take note.
Capitaland - Cautiously bullish. RSI indicator reading at overbought level.

KIM ENG Lunch Bites - FJ Benjamin Top volume featureFJ Benjamin (FJB SP, $0.365) – FJB stands to benefit from Singapore’s robust GDP growth and this may be reflected in its 4Q results on 23 August. Prices are above the uptrend line with rising RSI suggesting momentum is gaining strength. Volume is rising with candlesticks well above the moving averages. Tight support level holds at $0.35.

Lunch bites

KIM ENG
Lunch Bites - Cosco Corp Top volume featureCOSCO (COS SP, $1.63) – Cosco’s volume has picked up after it announced a groundbreaking drillship order worth more than US$500m. We have upgraded Cosco to a BUY. Technically, it is poised for more upside with the breakout of an ascending triangle. RSI is positive and support is at $1.56.

Top Idea

KIM ENG Top Idea

Overall volume traded is still thin... Highest volume Capitaland
Infrastructure
Midas Holdings (MIDAS SP) – Positive contract momentum
Midas announced two contracts yesterday worth a total of RMB130m. We estimate this brings the total contracts/letter of intent it secured in the last month to RMB290m. With improving market sentiment and positive contract momentum, we postulate that its Hong Kong dual-listing plans could be coming to fruition. We continue to peg our target price to 22x FY10F, in line with its peers in Hong Kong, and maintain our BUY recommendation with target price of $1.22.

Remisier Business: The game of how well you know your customers....

Hey guys, I'm so sorry that I haven't been blogging recently.... there were some changes in my work so I was busy doing the necessary paperwork.. but I am really glad that some of you are following up on the articles I wrote.
I have been meeting up with a lot of remisiers and dealers recently, just trying to understand how they succeed in their business when this industry is so competitive. I realise that it really takes a lot of perserverance, determination, EQ, foresight, passion and patience to walk through this long, tiring but rewarding career. The best sentence came from a remisier I have hardly know for two hours and he said that the remisier business is a game of how well you know your customers. His words keep ringing in my mind and I will definitely register all the kind teachings from the seniors... and my uncle who provided advices and took care of me in Kim Eng Securities....

There I go again.... rested enough and starting my engine again... Nothing fails if I'm determined and hardworking... Thank you for giving me the support and I hope to have your continual support.

The market has been really boring since the beginning or World cup. The volume traded in the market is quite low and the investors doesn't seem to be coming in... Counters breakout but did not hold. Market is clearly in a consolidating state and might unfortunately, last the entire year.

US market open negatively but closed positvely yesterday but did not have a significant effect on the Singapore market. If you search the news website like bloomberg or cnbc for information, you will realise that the overall market economy is not stabilized at the moment. Fortunately, the Q2 results for most of the companies is still acceptable or improving.

KIM ENG
PropertyKeppel Land (KPLD SP) – Tasting the fruit of its labour
Keppel Land (KepLand) reported a 1H10 PATMI of $134.7m. While this makes up 40% of our full-year estimate, it is largely in line with expectations as we anticipate even stronger contributions from its residential projects in 2H. Following good response to its recent launches in China, it has lined up more launches in 2H10.
The strong Singapore GDP forecast for 2010 should continue to underpin KepLand’s position as the leading prime Grade A landlord. New acquisitions from the Government Land Sale programme could also be on the horizon. Maintain BUY at a target price of $4.85.

Market Talk
Retail – Osim International (OSIM SP)banked cushy profits for its second quarter ended 30 June, with a 142% year-on-year surge from $5m to $12.1m. Revenue, fuelled by the launch of new products such as the uSoffa Petit, grew 12% from $117m to $131m. “Our product innovation and competitive positioning continued to drive consumer demand. We launched uMama Warm which exceeded sales expectations,” said Ron Sim, OSIM’s founder and chief executive. For the six months ended 30 June, net profit grew 146% to $20.1m, bolstered by strong margins. Revenue for the same period was up 22% year-on-year, from $213m to $259m.

Genting Singapore by Merrill Lynch

Haven't update this blog for a long time.... There are some changes to my job and have been pretty busy trying to make changes and updating all information. The world cup is coming to an end soon and it may be time for the market to improve. However, the world news are still causing jitters to the stock market.

Raise PO to S$1.40, implying 14x 2011E EV/EBITDA for RWSWe lift our earnings forecasts for Genting Singapore and thus raise our SOTPbased
PO to S$1.40, implying 23% upside. Short-term catalysts include the
completion of the UK asset sale as well as quarterly earnings, which we believe
will exceed consensus estimates. Despite the strong turnaround in share price
performance recently, we maintain our high conviction Buy on this stock.
Very little dilution from MBS opening and FIFA World Cup
A recent company visit reaffirmed that its casino operation at Resorts World
Sentosa (RWS) has not seen much dilution from the Marina Bay Sands (MBS)
grand opening and the on-going FIFA World Cup. Daily casino revenue remains
close to the levels the firm attained when it operated as a monopoly in early 2010.
Slot machines remain star performer; raising earnings
Despite the increased competition from MBS, slot machine performance at RWS
remains strong. We attribute this to the strong product offering – electronic table
games, progressive jackpots and a higher payout ratio – which enables it to gain
market share from slot clubs in Singapore.
As a result, we raise our 2010 and 2011 EBITDA assumptions by 13% and 12%,
respectively, to account for slots’ sustainable strong performance, which accounts
for over 20% of group forward earnings. With the upgrade, our 2010 and 2011
EBITDA forecasts are 41% and 26% above consensus.
UK disposal positive, enhancing focus and balance sheet
The proposed disposal of its UK casino business is a positive, in our view. It
enables management to concentrate on the ramp-up of RWS over the next 1.5
years, including junket introduction, the Universal Studio extension, new hotel
offerings and the Marine Life Park. More importantly, it will further enhance the
group’s balance sheet to prepare itself for the next leg of growth – possibly in
developed market jurisdictions – by 2012.

World Cup 2010

Market has been pretty quiet recently which is expected due to the world cup season. . low volume and low trading range. . Received a report today from J.P. Morgan sent to me by my team leader and guess wat... It was a 69 pages report on quantitative analysis of World cup 2010. Now wat, even the banks are diverting their attention to the world cup.. hmmm...... looks like I should join the crowd and share the information with my readers.


England won nine of their 10 matches in qualifying to progress to the 2010 FIFA World Cup South Africa™ in some style, with Wayne Rooney scoring nine goals in the process.

Fabio Capello picked up the pieces following Steve McClaren's ill-fated spell in charge that had seen England miss out on a place at UEFA EURO 2008. The Italian suffered no such problems, though, and England head into South Africa 2010 with confidence high following a successful qualification campaign which saw them top Group 6.

Their only defeat - a 1-0 loss against Ukraine - came in the penultimate group game. In total, England scored 34 goals in their 10 qualifiers and conceded just six.
http://www.fifa.com/worldcup/news/newsid=1222660/index.html#nine+days

The world cup will start on the 11th June and end on the 11th July...

J.P. Morgan has predicted the following outcome based on a few parameters.

Winner of world cup: England

Second: Spain

Third: Netherlands

Quant analysis is a practice often considered as “too complex” by a large part of the investment community.

In this document we explained that, on the contrary, Quant is far from complex as Quants merely try to remove human based opinions when they make investment decisions.
Instead they use information and data points they consider relevant to investment in a systematic and efficient manner. Once they have found data sets thought to exert influence over future returns, they backtest them and make sure they can be used on a day-to-day basis to generate alpha.
As Quants use only numerical/statistical data for their market analysis, it seemed that sound Quant/mathematical Models could be used in fields outside Finance to make
accurate predictions.
With the amount of statistical information now available for Football fans, we thought it would be a very fruitful ground for investigation. We therefore decided to “translate” our successful stock-picking Quant Model and adapt it to predict the outcome of the World Cup matches and ultimately provide the World Cup winner.
As explained in the document, we focused on very intuitive data (comprising recent team performance, FIFA ranking, probability to win etc). Ultimately, we used our mathematical Model and applied it on a match by match basis and predicted winners.
Whilst our Model points towards Brazil as being the strongest team to take part in the World Cup, our “World Cup Wall Chart” indicates that thanks to the actual fixtures determined by the schedule, we believe England will be the winner of the 2010 World Cup.

We also highlight that the 3 favourites according to both our model and market prices (Brazil, Spain and England) offer a combined probability of 52.5% of winning the World Cup (as per prices on 30 April).

-J.P. Morgan-