TM's Surging Profit and My Surging Happiness

My trust in TM stock is paying off. I am very happy to read that its profit for financial period ending Dec 2010 is substantially increased and a dividend of 13.1 sen per share has been proposed.And not only that TM is going for an capital distribution for its investors 29 sen to a unit or is it to a ringgit invested? I have yet to get the clarification on this distribution if it is the latter then it would be a windfall for me... let me dream about this before being shot down!

I am relieved that I did not sell the stock to apply for PChem IPO last year  as this turns out to be my Golden Goose. I will not let go this goose due to its regular high-dividend yield ( it is better than MAXIS in term of yield). In fact after the capital distribution exercise, it is expected that the stock price will fall just like in 2009 when TM gave a capital repayment of 98 sen per share, I am going to acquire some more units to make it 100K. So I can say goodbye to my non-performing stocks which I am tired of mentioning here. Yes, we need to buy blue chips as they will not disappoint in good and bad times. Forget about small caps as they will "torture" you with no end and test your patience and your fun. And do a lot of readings on companies you want to invest in and the industry they are involved in so that you would not regret like me and my JCY investment!

I am glad to know that many of our companies are doing well, for example Maybank,CIMB, KL Kepong, Axiata and they are rewarding their respective investors with good dividends. I hope that you all also have surging happiness in this present volatile period with Middle East turmoil and rising oil prices.

The feel good factor currently is fodder for talk on new mandate for present government leadership so be on the alert for those construction stocks! I am monitoring Gamuda.

BSDReit and CMMT- REITs Investment for Portfolio diversification and liquidity

When I was first exposed to the concept of passive real estate investment as opposed to direct real estate investment, I was rather hesitant to participate because I was looking at quick gains. I am not talking about purchasing properties, renting them and sell them later at a higher price but rather on capital appreciation of investments in REITs listed on Bursa Malaysia  ( stock exchange).

For people who are impatient and want to create wealth in a hurry, I supposed it is better for them to invest in well established companies' stocks, that is buying on the low and selling high. You are sure to improve your financial position on that premise. But it is not always easy to multiply your investment in that way for various reasons, one of which is when you find that the market is pretty saturated and desirable  stocks' prices are already high.

So where do you put your available investing fund? Well in Malaysia many people would point to high performance unit trust fund such as those managed by PNB ( National Capital Ltd). These funds have consistently given annual dividends higher than interest rates offered by banks. It is not surprising that they are likely to be fully subscribed. Fixed deposits are another alternative for conservative investors even though the interest rate is not that attractive unless you do not know what to do with your millions.

 

Coming back to investing in REIT (Real Estate Investment Trust), if you study the dividend yield, you would notice that it is higher than FD and  most stocks on the market. In fact the gross dividend yield in the FTSE Bursa Malaysia index is about 2.9%, while the average yield for a REIT in Malaysia is about 8%. REITs yield higher returns because commercial real estate generate a huge amount of cash flow from rentals.

Thus begin my foray into REIT investment. I applied successfully for IPOs of Starreit, Arreit and Twrreit and kept them for almost three years but found that except for Twrreit, the first two were not giving me my expected returns ( post financial crisis of 2008) so I cleared them off. Twrreit was affected by the global financial crisis just like the others but later staged a remarkable recovery and despite a relatively good dividend yield I sold it on its 15% capital appreciation. Then I bought BSDReit which manages plantation properties and CMMT, newly listed last year and manages "pure shopping" malls properties in Gurney Plaza, Penang, Sungai Wang Plaza, Bukit Bintang and the Mines near Kuala Lumpur. I have been to those malls and seen for myself their positive potentials.

BSDReit has promised an annual dividend of more than 8% and CMMT had estimated theirs at 7.6%. So far the former has not disappointed me. In 2009 it was 11.3% and  in 2010 the annual dividend was 9.3% and this year the first dividend has been declared at 6.2 sen so I am expecting the annual dividend to be slightly higher for 2011. As for CMMT, it  has recently declared an initial dividend of 3.6 sen and its positive reported earning through high capacity rentals  will ensure that it achieves its promised dividend, in fact according to the CEO, would be higher than first estimated at its listing.

I see my investment in REITs as another form of diversification and for passive/conservative income generation. I am not looking at rapid capital appreciation  as even though I bought BSDReit and CMMT at 1.40 and 1.04 respectively, I must admit the individual unit price hardly moves. Lately BSDReit has moved to 1.50 and CMMT has ever reached 1.13. As the unit prices are sustained by the yield factor, you can take it that their volatility will not be an issue. And as by its nature it is not attractive to foreign investors, you can sleep easy when the foreigners take out their investment in the stock market like the recent pre- and post- CNY flight of capital.

I am quite happy with my current REITs as I see them as an investment that bridges the gap between a fixed deposit (FD) and the stock market. It is low risk and more liquid than say owning a real property. Low risk means low reward but at the rate these two REITs are doing, I am contented especially whenever I think of some of my existing nightmarish stocks such as PICORP and JCY. In diversifying into REITs I am now having a balanced portfolio to counter my recent purchase of  a couple of volatile oil and gas stocks...Ahah..

My new year resolution of being more low risk in 2011 went out of the window in the third week!

Contented Caterpillar (courtesy photo)

 

 

CIMB Dynamic Market Rider NID-i ..... Am really taken for a ride!

I received the final statement on the performance of the investment product yesterday morning and in the afternoon the bank relationship manager texted me that my capital had been credited into my account (purposely opened for this product) and that he was sorry that there was NO DIVIDEND! Definitely worse than the normal FD but luckily my capital is "PROTECTED". I SMS the staff that I would come to the bank this morning and take out all the money and close my account.

No amount of persuasion would make me participate in any of their products. Once beaten twice shy.Anyway I also do not fancy when the chief of the Islamic Bank division of CIMB addressing me as "Dear valued investor" there is a certain coldness in the tone. Perhaps GLC Bank is like this, taking customers for granted. He should not have bothered to sign his name.

Actually I had a bad vibe about this investment the moment I chose it in early 2008(after being persuaded for its "expected high returns" and capital protection) and put my signature on the form and given my personal cheque. I regretted it almost instantly. I bought it without much thought as the closing date for the product was around the corner. After the financial meltdown in October 2008 I started to receive statement that the certificate value was lower than the capital and that made me upset especially when I read in the Singapore Law journal 2009 report that Capital Protection is not the same as Capital Guarantee.It doesn't matter now.

True, I should read the fine prints over and over again before putting my signature next time. And,yes, CIMB Dynamic Market Rider NID-i is good only for capital-protection, the touted high returns is garbage and to think that my 3-year investment is fruitless can be quite distressing even though I have had losses on the stock market which is supposed to be riskier and therefore tolerable. A real lesson learnt indeed.

Had I put my money in a PNB unit trust at a regular dividend of 6% per annum for three years I would have made 20% out of my capital, a real big amount. For this overrated investment, I made air. So people my delayed gratification for this product was really an exercise in futility. Never again will I be adventurous with this organisation and with salespersons with glib tongue. Serve me right as well for not doing more research on this kind of investment products. And indeed diversification at times could be bad for some of us who are not really financially savvy. My only consolation is I did not maximise the investment neither did I agree to leave it for five years as suggested by the female staff who by the way has resigned from the bank ( I noticed the staff turnover is high in this bank).

I am taking out all my money plus an additional amount and tt it in USD to a private fund based in Hong Kong and recover my "opportunity loss" for the last three years in three years to 2015. No risk no gain as the saying goes, but this fund I am going into has a proven track record as my better half has been with it for the last 10 years and he is extremely happy with the consistent high performance even during the global financial crisis.

So here I go again for the fun ride and thank goodness, the fund is not named "MARKET RIDER". Come to think of it I now wonder how come the CIMB product did not ride on the vast global and local market improvement in 2009 and 2010? Was it riding on worthless investment products itself? I thought a structured product is exposed to multi equities/investments designed for optimum returns for investors. It looks to me that the product was a gimmick managed by foreign fund managers paid by the bank. I am now convinced that I was really taken for a ride!