Wednesday, March 23, 2016

Aspial 5.30% bond (AGAIN) - Good buy or Goodbye?

Aspial is issuing out new bonds again. The last time that did it was back around Aug 2015, giving 5.25% pa with maturity period of 5 yrs, which I've blogged about it here. This time round, they are upping the stake, giving 5.30% pa with a maturity period of 4 yrs.

The expected issue date is 1st April 2016, and since this is a retail bond, you can bid for the allotment of the bonds through ATM as well. DBS is the sole lead manager and bookrunner, which is the same as last year.

I don't think much had changed in the fundamentals of Aspial over the course of less than 1 year. If anything, it should get worse or at best neutral. So fundamentally, Aspial is just about the same company as it was last year. It's a company that I won't invest in, to put it bluntly. But what about the bond? Will you lend money to them? Will they survive for 4 yrs for them to pay out the coupons of the bonds? Nobody knows.

Let's see how their bond 5 yrs, 5.25% bond performed last year. It went to a high of 1.020 to the most recent 0.984 after their most recent coupon payment this year around Feb. The price had went up to today's transacted price of 0.996. There are a total of 10 coupon payments each with $0.02625 (5.25% / 2), of which one is paid out, leaving 9 left. What's the total returns of that bond if you buy at today's transacted price of 0.996?

Total no of payments left: 9
Payout per payment: $0.02625
Total coupon payout: $0.23625 (9 x 0.02625)
Capital gain from buying below par: $0.004 (1-0.996)
Total gain excluding comms: $0.24025 (0.23625 + 0.004)

Total % returns: 24.12% (0.24025/0.996)
No of days till maturity in 28 Aug 2020: 1619 days or 4.436 years
Ave % returns pa : 5.438% (24.12/4.436)

5.438% if you buy their issued bond last year, as opposed to this new bond 5.3% and they roughly matured in the same year as well, just a difference over a few months. Of course you need to include the brokerage commission to buy the traded bonds at SGX, compared to just paying $2 to bid for the bond over at ATM, so it's going to be lower than 5.438% after brokerage. Since the traded 5.25% bond is giving a better return than this upcoming 5.3% one, I think it's not such a good deal. But as mentioned, you have to include brokerage. It might not work out to be of much difference I suspect.

The advantage of bond can be seen easily with the chart below:

Blue line is the Aspial 5.25% bond while the purple line represent the index STI.

The chart is generated using Investingnote. It's free and I can't recommend it enough. It's even better than the (also free) Chartnexus with real time and also more historical price data to choose from. Anyway, you can see that the price of the bond stays relatively the same despite the ups and downs of the market. This means you can 'switch' out of the bonds, as some sort of high yielding cash equivalent, when the market is not doing too well. Rebalance, so to speak.

Still, last August when they issued the bonds, STI was around 3300. Now is about 2880. Back then 5.25% pa might be hard to find everywhere, but I think even with the present market conditions, there are plenty of choices to get 5.30%. Starhub (6%)? STeng (5%)? SPH (4.9%)? I haven't even included reits and business trust.

I won't go for it. I'm gunning for blue chips with reit like yield, haha!

Friday, March 11, 2016

I closed off my Saizen arbritrage

I entered Saizen a few months ago, which I blogged about here. I just sold off today, so let's see if this arbitrage works out well.

Entry price: $1.09
Ordinary dividends declared: $0.0283
Extraordinary dividends declared: $1.056
Exit price: $0.077
Profits per share: (1.056 + 0.0283 + 0.077) - 1.09 =  $0.0713

After accounting for commission for both buy and sell, the profit percentage becomes 5.9% all in. That's not too bad for a few months of work, haha!

Whatever is left will be the escrow account, which is about $0.0895. The current price now is 0.080, so I'm leaving $0.0095 max on the table, which is about 80 dollars. I said max because they will still have some months to go in which the parties involved might claim from. I'll happy with leaving that money for others and taking mine right now.

I think more importantly, this is a very good learning experience. It's an element of luck that I got in at 1.09, which I queued immediately after the announcement of the take over. It's an element of bravery (some say a fool's courage) to hold on to your beliefs in the calculations and take action based on that. It's an element of contentment to know how much is enough and take money off the table now instead of waiting for better things to come. I have conviction and it's an intelligent bet.

But it's like that lah, I made profit, so I can talk cock and say I beat the rest of the market to invest based on what I think is right...I'm a contrarian...I'm an investor... If I didn't make profits, then I'll be blamed for chasing after a stock (which I did, considering I bought after the run up to the announcement). I'll be blamed for not having a margin of safety in my purchase, or gambling in the stock market. The signs are all there but it's the herd that pushes me to buy etc etc.

Stock market rationality...pfft

Tuesday, March 08, 2016

Investment that gives you 3k per month?

This is a rare stock tip from bullythebears. I don't normally give tips, because it's too much responsibilities to bear, but this such a sure win that I can't help but share. This company gives about $1k to $10k per month as dividends. Sometimes more, sometimes less, but it had a track record of giving increasing amounts every year. Can't believe it? Well, it's your job!

Let's take the average salary of $3k per month. If you want to have a dividend giving that amount per month, or an equivalent of $36k per year, you'll need a capital of $720k invested @ 5% pa! Do you have 720k? I certainly don't have that yet, but I can still have that dividend credited to my bank account every month, as long as I show up for work.

So for all the people out there keen on investment, you should try investing in yourself and in your work and see if you can squeeze more out of it. Income from work, though active, is going to have a lot more effect in your financial health than investing ever could be. The reason is because we have a smaller base capital when we're younger and so work provides that stable, consistent income that if we're diligent and disciplined enough to save up, will form a solid foundation in which we can deploy later.

The problem comes when we try to put the cart before the horse - focusing to earn a passive income stream when we should be focusing on earning a good active income stream. To be an investor is to be efficient in capital deployment. Investing our time and energy on building a passive income stream when our human asset is the strongest seems to be out of sync. It's like choosing to eat canned tomatoes when there are fresh seasonal tomatoes plucked directly from the vine. Hey, got fresh tomatoes, eat it first lah! When it's ripe and you can't store it anymore, then you go and can it and make it last a little longer so that you can eat it in the future.

Do the right thing at the right time!

Monday, March 07, 2016

I'm a different person now

On Sunday I bought a new printer. It had automated duplex function (able to print 2 sides of the page without manually flipping the paper around), a scan function with OCR capabilities and able to copy and fax. The last time I bought a printer with somewhat similar capabilities was in 2011. The printer then cost me $299 and I remembered it's the costliest printer I had ever bought. I had to think twice and thrice, did days of research before I went down to IT fair to beat the crowd and get it.

This time round, I had about 15 mins of research a few days ago when my printer started showing symptoms of breaking down. The printer had difficulties feeding paper and I had to stand around for about 5 minutes during my work to feed it again and again. It's a frustrating exercise all in all. Today, I just went down to sim lim square and got it straight for $270. There's a lot more functions that I can only dream of in my last printer and it even cost lower than my previous one. Fantastic buy!

A few things comes to mind:

1. Firstly, I did not spend a lot of time researching and comparing the specifications of the printer. I just needed a quick fix to my problem - which is I'm spending a lot of time trying to force feed paper into my 5 yr old printer. I was surprised at the speed in which I arrived at my decision into which model I'll be buying. I thought this is a step in the right direction because I'm not sweating the small stuff. Things that cost $300 to me 5 yrs ago is a big decision involving spreadsheets of specifications in order to compare, plus going to different places to ask for quotes to get the cheapest price and so on. Now, it's just a split second decision.

Success is to be continually challenged by bigger and bigger failures. I think I'm growing bigger than my problem, and that itself is a cause for celebration.

2. Cost aside, I think I'm really trying to use money to save time. There comes a time in your life where you are willing to spend more in order to save time, because your time cost more than the amount saved. By going straight to the store, I can skip the long queues and crowd at this coming weekend's IT fair. By deciding quickly to replace my aging printer, I can spend more time doing my work properly and less time troubleshooting the printer. By deciding on a printer based on certain key stats instead of comparing the whole entire spectrum of printers, I can spend less time and live more! I am probably also given the IT fair's pricing according to the salesman, which is about $30 discount plus some $50 shopping vouchers. But I'll have to check and confirm if it's true.

Increasingly my time is getting more and more expensive.

3. The new printer had so many new features, like wireless capabilities and automated duplex, plus longer warranty duration and it actually cost lesser than my previous one. Unbelievable! I certainly don't want to be in such a job sector where I have to do more and more things but earning the same amount of pay, or even lesser! It's such a sucky situation to be in.

Makes me think about the kind of sector we're working in. We definitely need to work less and earn more, not work more and earn lesser as time goes by.

For those interested to know which printer I bought, I got this:

MFC L2700 DW from Brother