SPH Reit

[Sugar]

what % dividend is then considered good?

[Civic101]

Yield for OUE Hospitality Trust is 7.46% - more than 1.5% higher than SPH Reit!

Edited July 19, 2013 by Civic101

[Freestylers09]

sabana and cityspring always in my target list

 

and some pennies one like PM Data and Datapulse

Edited July 19, 2013 by Freestylers09

[Duckduck]

Looking at most of high yiels reits, all r leasehold properties that's y price to book r discounted. OuE reit asset have only 40+yrs left on lease

[Icebrush79]

the current sph is like the smrt under saw of yester years.

 

veering away from their core competency. (although 154 or thereabout is far from competent)

 

errrh, i am a bit unsure if someone ask me sph is serving who?

 

One thing should be clear though, their old man must be proud.

 

On hindsight, I am not sure why those bosses can smile so heartily in the photo session as if they are groomed for real estate and make it big rather than to provide food for the soul or mind.

 

shutty times is a long way from Le figaro, le monde or le parisian.

Regional Bangkok post or SCMP are way better. Aren't they ashamed?

 

Try looking at another point of view instead of slamming the company's decisions as a bystander.

 

Diversification of business portfolios is a must in an ever-changing business landscape and news consumption trends. Look at the latest trends, readers are slowing migrating from print alone to print and online. Due to this change in business environment, would you as a company sit and wait or think of ways to diversify?

 

Take Fairfax Media for example, almost overnight, 2000 staff were asked to leave and the entire Photo dept for The Sydney Morning Herald was reduced to skeleton staff strength. The Age wasn't spared too. Does SPH want to go down that path?

 

Just to clarify, SPH upholds their core business model of providing news and information to the public. It isn't easy to stay as the most profitable media company in the world (in terms of capital asset vs revenue).

[Lala81]

i only have ascott reit and starhill global.

 

[Vooth]

Try looking at another point of view instead of slamming the company's decisions as a bystander.

 

Diversification of business portfolios is a must in an ever-changing business landscape and news consumption trends. Look at the latest trends, readers are slowing migrating from print alone to print and online. Due to this change in business environment, would you as a company sit and wait or think of ways to diversify?

 

Take Fairfax Media for example, almost overnight, 2000 staff were asked to leave and the entire Photo dept for The Sydney Morning Herald was reduced to skeleton staff strength. The Age wasn't spared too. Does SPH want to go down that path?

 

Just to clarify, SPH upholds their core business model of providing news and information to the public. It isn't easy to stay as the most profitable media company in the world (in terms of capital asset vs revenue).

 

You were doing very well till your last sentence...

 

[Icebrush79]

You were doing very well till your last sentence...

 

Don't understand your statement dude

[Duckduck]

ayah if want max yield, then just buy HPH trust lah. 9+% div yield now!

 

U worry if sustainable? then same questions shld b asked y sabana etc have such low P/B. Asset values dodgy? Short lease terms?

 

Want to know really can anot? Then do ure own DCF assumptions if not just p-- ---g suey lah no need to think so much.

[Sabian]

I am not that savvy. Still navigating the world of self directed investments and trying to avoid the pitfalls.

 

I *like* this. I buy Sg stocks purely for dividend income. I don't even really scrutinise the paper value very regularly, nor do I lament the fluctuation of the total stock holdings when the SGX statement comes in the mail. What I do care about is the regular cash injections into my bank account via GIRO. The fact that REITs are basically forced to redistribute their rental returns to people like me is a plus point as far as I'm concerned.

There are stocks that have a similar track record when it comes to dividends payout without being compelled to do so by SGX listing rules. I prefer the companies that exercise prudent flexibility in managing the cash on their balance sheet.

 

If you are going to lock your holdings in cold storage, choosing a prudent company that believes in prudent growth instead of fast profits, might serve you well in the long run.

 

I was thinking if you indeed are that mechanical (in a good way), you can play to your strength by reviewing your portfolio every year and balancing it. Meaning you set out with a pre-determined weight assigned to each stock/ asset class.

 

Every year, you review your portfolio and sell those that have exceed the preset % of your portfolio that you have initially assigned and buy those who % have fallen below your preset limit. Assumption is the fundamentals behind holding those stocks are still valid. This way, you sell overvalued stuff and buy undervalued stuff. Rinse repeat a few times mechanically.

 

This is a little bit worrisome, and I hadn't actually considered this before. You mean the typical REIT manager's variable bonus is determined solely by the current market (sale) value of the real estate that's under ownership? If that's the case, I agree that his interests are not quite aligned with the shareholders, but isn't it also true that rentals generally go up and down in tandem with property prices? That should mean there's a strong correlation (at least) between the two, if not a direct causation, which will still lead to market forces acting in such a way as to increase everyone's returns. The only issue I can perceive is if a REIT manager acquires overvalued properties simply to inflate his AUM, and then fails to secure a proper rental yield (reducing shareholder returns). But I guess the parent company would step in and fire that sort of manager, wouldn't they?

Given that no lawsuits have been filed, my assumption is all is well.

 

Even if the Reit mgr fails to secure the expected rental yield, they will chalk it down to an economic downturn and that the less that expected yield is similar to every other reit in the area. I can actually live with that kind of an excuse if that reduced yield impacts the reit mgr's compensation.

 

Some people made some noise when K-Reit acquired some office space from its momma KepLand some time back. They felt that office space then was near its peak (I don't hold K Reit so I have not drilled in to the numbers). Both Kep units went on the media to shed light on the issue. It was K-Reit that initiated the purchase and not KepLand forcing it down K-Reit's throat and the deal was done at arm's length.

 

This is the dilemma with REITs. There are advantages to having a parent because it means a conveyor belt of properties will come your way. Then there is the other issue where the parent company has a duty to its shareholders to maximise its sale price and the REIT has a duty to its unitholders to acquire a property at the lowest price. It's a zero sum game and I guess all is fine as long as everyone makes money along the way.

 

I don't actually have a problem with this, as long as their management is sound. Do you have any specific reasons/past examples to show why this would be a bad idea? I don't consider myself to have the first clue about business management - I don't even attend shareholder AGMs/EGMs. So I take it on faith that other, more qualified, smart people are doing the managing.

It's the principle of it. Somewhat like some people having 81 out of 87 board seats when you only have 60.14% of the shares. But who cares, as long as you get lifts that stop at every floor, right? True that.

 

But you can argue this about any stock that "regularly" continues to pay high dividends. A certain type of investor goes in for this kind of stock - the relatively risk-averse type that wants to see regular "income" from the investments rather than feeling good about paper capital gains in the short term. In other words, my type. If a company (like those you mentioned) has had a habit of regularly (like clockwork) declaring good dividends to its shareholders, then it wouldn't want to risk that track record, the absence of the 90% rule notwithstanding. I guess extenuating circumstances would force them to do so, but that would also mean they're in precarious shape, and would still be an unreasonably risky investment.

Yes, you can say that. What I was trying to say is there are companies that are run with the owners and shareholders interests aligned. ie: The controlling shareholders looks forward to dividends as compensation. Anything that hurts the company and impacts its dividends hurts the main shareholders more than the minority shareholders.

 

A negative example: Hong Fok came under some flak after it was highlighted the controlling family were paying themselves much more than other similar sized company (by asset or revenue). To add insult to injury, the company doesn't have a consistent (almost zilch compared to its peers) dividend policy. And the company has been doing well in line with peers in similar industries. But the company has responded with a dividend declaration recently but still a no-go in my books although it may tick some other investors' boxes.

 

Aberdeen is a fund house that I feel doesn't invest as per what the index dictates. They understand Asian family-run businesses and those that are well managed are worthy investment targets. Eg: among the 3 banks, I'd go with the family managed one if you forced me to pick one to stash all my money on. Among the 3 banks, the head honcho who gets paid most from dividends is well known.

 

Nothing like putting your money where it may hurt you most to align interests and there are companies that already adhere to a consistent dividend policy without an SGX ruling prodding them to . But that's just me.

 

Isn't this true about almost *any* publicly listed share? laugh.gif Why would any company want to dilute its ownership amongst a bunch of riff raff if their product was really that great and profitable? Short answer: they need the money (euphemistically called "capital investment") - hopefully, so that they can make more money so everyone benefits. But we take the second part on faith, that's euphemistically called "investor confidence". But this applies to both REITs and other stocks.

True to a certain extent. Doesn't apply to S chips. S chips are literally frauds save for a rare few.

 

Actually, I would almost always go with the parent than the REIT, at an acceptable price point, of course. There are some global leaders (Keppel - like, CMA - like, SIA - dont like) listed on SGX, if the market do crash again (they will), I'd pick up Kep (Oil) and CMA (China domestic consumption).

 

Fair enough. But when the economy goes into the crapper, everyone suffers. But rental incomes will still remain, albeit be lower. REIT-holders will at least get their dividends as long as there is a functioning economy, even if the share value is in the toilet (and hopefully, that's a temporary thing).

This is the part that I am not too comfortable with when it comes to REIT.

 

In a normal economic cycle, when national output tanks, generally prices come off. But Ben and Europe couldn't prescribe the same medicine their predecessors administered to Asia in '97.

 

They and their Wall Street cronies decided to suppress interest rate and pursue a weak USD (and the muthafckers accuse China of currency manipulation). Well, generally cheap money has flooded its way to Asia.

 

Globally, a mad scramble to find new wealth receptacles ensued. Think of USD as a leaky water container and you want to trasfer your wealth into less leaky water bottles. Hence, SGD denominated and other Asian currency assets. SGD is used as a tool against imported inflation but it can't guard against local inflation. But that is not MAS' fault.

 

Property prices and rents are at an all time high, give or take. If the US and Europe recover eventually, are we expecting prices and rents to "rebound" strongly from here on as well, given that we never had crash or will it stagnate?

 

Because when interest normalize to 3%-5% (low end), the banking system will suck some money back the same way liquidity flowed out in search of yield because of pathetic interest paid on those deposits.

 

So, whatever instruments that had a good run (bonds and instruments with bond-like behaviour ) when interest rates went south will be under-performing with interest rates on the way up. You can't have you cake and eat it.

 

I'm just rambling a little incoherently so buyer beware.

 

 

 

[Sabian]

http://app.hedgeye.com/media/592-podcast-b...a-trade-is-over

 

One of many fund mgrs i follow. Yields, gold, japan, US mkts.

Thanks Duckduck. I like gold and US...

[Vooth]

Don't understand your statement dude

 

In the environment they operate in, if SPH cannot generate supernormal profits (and thus be the most profitable media company in the world according to you), the board ought to be sacked

[Icebrush79]

In the environment they operate in, if SPH cannot generate supernormal profits (and thus be the most profitable media company in the world according to you), the board ought to be sacked

 

Look at it this way, any listed company has to be answerable to their shareholders. Which is why the board and senior management is under constant accountability to deliver good profits year on year, despite a landscape that is increasingly unfavourable towards print media consumption.

 

Comparing SPH to the other media company who's key print product is the direct competitor to SPH's flagship print mothership. Mediacorp has it better accountability wise. Why? simply because it has govt funding and is not a listed company.

 

With such challenges, it doesn't require rocket science for the company to have to start exploring other revenue streams while maintaining its core business, which is still newsprint content producing and publishing.

[Maseratigood]

Look at it this way, any listed company has to be answerable to their shareholders. Which is why the board and senior management is under constant accountability to deliver good profits year on year, despite a landscape that is increasingly unfavourable towards print media consumption.

 

Comparing SPH to the other media company who's key print product is the direct competitor to SPH's flagship print mothership. Mediacorp has it better accountability wise. Why? simply because it has govt funding and is not a listed company.

 

With such challenges, it doesn't require rocket science for the company to have to start exploring other revenue streams while maintaining its core business, which is still newsprint content producing and publishing.

when newsprint and publishing become irrelevant, overtaken by digital media, maybe SPH will become a property player? Now its putting one foot in first. Its treasury team has to constantly look for better yeilds.

[1fast1]

I'm just rambling a little incoherently so buyer beware.

 

Not at all - it's a very long but interesting post, and it's given me a lot of food for thought. Thanks.

[Duckduck]

So, whatever instruments that had a good run (bonds and instruments with bond-like behaviour ) when interest rates went south will be under-performing with interest rates on the way up. You can't have you cake and eat it.

 

I'm just rambling a little incoherently so buyer beware.

 

 

tio lah thats y gold crashed like a bomb -30% recently coz ben's printing press is shrinking liao, or at least thats wat hes saying n wat d mkt is doin to high yield assets.

 

Im in d boat that global economy cannot recover without interest rates rising. D fact that ben is considering tapering of POMO shows that US Fed feels d US is on way 2 recovery.

 

If u look at SG prop 2009-2013 compared to 2003-2007, back then we didnt have such low interest rates but GDP growth was solid thats y many other things were being bought such as growth stocks n assets. This time rd past 4yrs key driver was low rates instead of strong growth(our GDP growth past 4yrs has been falling or flat), couple that w political headwinds such as FT n inflation issues, SG isnt likely to lead d way in GDP growth next few yrs, n china is in similar situation due to current garmen's credit squeeze policy.

 

So get into watever asset which is growth story instead of defensive coz ben is slowing his printing so all defensive plays gona get hit

 

In other words, I expect US$ to outperform S$ for years to come, but it wont b superfast coz M@S "controls" d pair.

Edited July 19, 2013 by Duckduck

[Tedlhw]

I am not that savvy. Still navigating the world of self directed investments and trying to avoid the pitfalls.

 

 

There are stocks that have a similar track record when it comes to dividends payout without being compelled to do so by SGX listing rules. I prefer the companies that exercise prudent flexibility in managing the cash on their balance sheet.

 

Because when interest normalize to 3%-5% (low end), the banking system will suck some money back the same way liquidity flowed out in search of yield because of pathetic interest paid on those deposits.

 

So, whatever instruments that had a good run (bonds and instruments with bond-like behaviour ) when interest rates went south will be under-performing with interest rates on the way up. You can't have you cake and eat it.

 

I'm just rambling a little incoherently so buyer beware.

 

Excellent post! You are very clued in.

 

Edited July 19, 2013 by Tedlhw

[Icebrush79]

when newsprint and publishing become irrelevant, overtaken by digital media, maybe SPH will become a property player? Now its putting one foot in first. Its treasury team has to constantly look for better yeilds.

 

Let's say 20 years from now, digital media overtakes print media. By then ad rates will be adjusted such that digital ads commands a higher rate compared to its present rates. Revenue will still pour in.

Its the transitional period that is the most ambiguous because nobody knows to what extend advertisement revenue can be "migrated" from print to digital.

 

FYI, ABC rules have changed since last year, circulation now takes into account subscribed digital copies. Circulation wise, the Print to Digital transition has been very smooth, thus boosting readership and subscription sales. Circulation sales are derived via both subscription sales and single copy sales. While the advertisement rates are pegged from readership, which is circulation PLUS pass on rate. ie readership is always higher compared to circulation figures.

 

SPH will never become a property player, this Reit diversification is just an added portfolio for potential revenue, just like their foray into MICE since 2008 via sphere.