Saturday, March 28, 2015

TWRREIT - How long can it stay undervalued?

Tower Reit (TWRREIT) recently announced that it was disposing off 19 office parcels and 190 car park bays within Menara ING in Jalan Raja Chulan for RM132.34 million cash, which will result in a gain of RM40.4 million for the trust. Well, the proposed disposal has been completed as announced on 26 March 2015.

With net asset value backing of about RM1.91 per share, I wonder how long the share price can remain undervalued at the current price of RM1.29. The discount of 62 sen or 32% to its net asset value is just too large for a dividend-paying REIT, in my opinion.

What options or developments can arise from the deployment of the sale proceeds of around RM132 million? Whether the funds are used to repay bank borrowings in full or be used to purchase new yield-accretive properties, the dividend payout should increase accordingly. 

I continue to think that holding Tower REIT shares in my portfolio is a good idea. The waiting will be worth it, I reckon.

Wednesday, March 25, 2015

How robo-advisers will change investing

"They won’t take you golfing, but they won’t trade away all your profits either"
"They won’t ever tell you any funny anecdotes, won’t take you out for a round of golf, and will probably won’t even get you a drink. But robo-advisers — automated machines that give you financial advice and manage your portfolios — are about to go mainstream.
Charles Schwab, one of the largest brokers in the U.S., has just introduced them for its vast number of clients. In the U.S., the U.K., and in most of the main developed markets, dozens of fast-growing startups are jumping on the bandwagon of replacing old-fashioned flesh-and-blood advisers with the silicon and plastic kind.
There will be a long debate about whether automated advisers can be better at running portfolios than people are. But the fact is they are likely to grow in significance, and have more and more funds under management. In time, that is going to have a big impact on the market.
A robo-adviser programmed to build wealth over a decade or two is just going to buy a set amount of equities every year, and ignore short-term fluctuations. Humans find that very hard to do, because they are emotional. Robots will find it far easier.

Why? Because the robots will make subtly different investment decisions.
There are four likely changes. The markets will become less volatile, because robots will be less emotional. They will become more rigorously analytical. There will be less trading. And they will become more globalized as well" more

Tuesday, March 10, 2015

Stock Watch - YTL E-Solutions

YTL E-SOLUTIONS BERHAD's shares has been rather active these past 2 days with an upward bias.

I was attracted by its high dividend yield as well as its attractive business model. In the past, there were speculation of it being a privatisation candidate, going the way of YTL Cement. Who knows?

This is an extract from Insider Asia's article on 6 March 2015:

"For FYJune2014, the Communications Technology segment, which owns the WiMax spectrum, contributed RM75.1 million or 86.5% of YTLE’s total revenue and the bulk of earnings. The remaining 5.9% and 7.6% of sales were from the Content & Digital Media and Information Technology & E-commerce, respectively.

The spectrum sharing business is expected to remain the main earnings contributor for the foreseeable future. Under the agreement with YTL Communications, the company will receive a minimum RM75 million annually or 15% of the WiMAX services revenue, whichever is higher.

Thanks to the spectrum sharing agreement, YTLE’s turnover has been steady, ranging from RM74- 88 million between FY11 and FY14 while net profit hovered around RM30-36 million over the same period. Net margin was roughly 41%, on average.

Dividends were raised to 4 sen per share in FY14, up from 2 sen in FY11-FY13. We believe this new level is sustainable, at least, supported by steady cashflow and strong balance sheet. This translates into a higher-than-market average net yield of 7.48%. " more