Mapletree Commercial Trust - VivoCity remains the Star

Positive rent reversions from previously negotiated leases at VivoCity kicked in in 3Q, which together with stronger GTO rentals, drove a 10% qoq jump in VivoCity revenue in 3Q. We remain positive on VivoCity, MCT’s largest asset, underpinned by its healthy operating stats. 3QFY13/9M13 met our expectations but was above street, forming 26/75% of our FY13 forecast. We tweak FY13 DPU but retain FY14-15 DPUs. We maintain Outperform with an unchanged DDM-based target price (discount rate: 6.9%). We see catalysts from stronger-than-expected rental reversions.

SGX Posts Higher Quarterly Profit on Securities, Derivatives Growth

The Singapore Exchange posted a 16.7 per cent increase in net profit for the quarter ended December, thanks to higher securities and derivatives trading.

Net profit for 2QFY2013 went up to S$76.3 million from S$65.4 million the previous year. Revenue rose 9.2 per cent to S$161.8 million from S$148.1 million.

“Our Securities market continued to hold up from the first quarter and daily traded value increased 8 per cent year-on-year. Our Derivatives market achieved a record quarter with daily average traded volume of 358,532 contracts, following record volumes in our China A50 futures and Japan Nikkei 225 options. Open Interest on our Derivatives market hit a new high, reflecting SGX’s attractiveness as a centre for risk management,” said Magnus Bocker, SGX CEO.

The market operator’s securities daily average traded value (SDAV) for the quarter was S$1.2 billion, up 8 per cent year-on-year from S$1.1 billion. Derivatives daily average volume (DDAV) for the quarter was a record 358,532 contracts, up 30 per cent from a year ago’s 274,757 contracts.

Also, during the quarter, there were eight new IPOs in SGX, raising S$798.9 million; while secondary fund raising totalled S$1.3 billion.

As at December 31, total stock market capitalisation increased 20 per cent to S$934.5 billion.

Going forward, SGX expects improved sentiments across capital markets globally which can lead to increased volumes.

“We are well positioned to benefit if these sentiments continue. Our IPO and bond listings pipelines remain healthy. We will continue to invest our resources in developing new products and services, and strengthening our regulatory and risk management capabilities,” the company said.

SGX said it has deployed adequate capital in its two clearing houses, namely Central Depository (CDP) and Singapore Exchange Derivatives Clearing (SGX-DC) to meet all obligations as Central Counterparties (CCP).

And to maintain continuity in its global Derivatives activities, SGX added that it is seeking recognition from organisations in US and Europe.

“We are seeking formal recognition from the US Commodity Futures Trading Commission (CFTC) for both our derivatives exchange (SGX-DT) and clearing house (SGX-DC). We will similarly be seeking recognition from the European Securities and Markets Authority (ESMA) in the second half of FY2013,” it noted.

For FY2013, SGX said it allotted between S$30 million and S$35 million as capital expenditure.

Portfolio Management

When you start investing in stocks, you will soon have a portfolio of them. And managing your portfolio is just as important as picking the right stocks in the first place. Because if you mismanage your portfolio you could be minimizing your potential returns or end up losing money! 

So always take note of your stock portfolio and here are some guidelines to help you along:

1. This one is straightforward but some beginners neglect to do this - Keep records of all your investment decisions. If you don't keep track, you won't know how much you're making or losing!
2. A portfolio of 5-8 stocks is optimum for the typical investor . Keep within a certain number so your portfolio remains manageable. Too many stocks could result in a lack of proper management and cause losses in your portfolio
3. Monitor a company's' quarterly reports and keep track of their fundamental performance
4. On top of monitoring your stock through financial reports, you should attend the Annual General Meetings (AGMs) to meet a company's management team face-to-face
5. Stay current with world and economic affairs and monitor any news on your stocks and the industry they're in

In a nutshell, managing your portfolio can be summed up in one simple sentence: sell your losers, keep your winners. Sell bad, under-performing investments and cut your losses. Stay invested in good companies and hold on to them, especially if they have good growth potential. 

Because let me ask you...

Would you be happy with a 22% dividend yield year after year? That means for every $100 you invested, you're getting $22 back in passive income every year. You don't even have to do anything to make that money; you just sit and wait!

Well, that's what value investing can do for you when you hold on to a winner long enough.

CapitaMalls Asia Limited: Building critical mass in Wuhan, Price Target: S$ 2.30

•    Acquires 4th site in Wuhan
•    Strong catchment, good connectivity and established network to yield
good initial returns
•    Maintain BUY, TP revised to S$2.30

Adds 4th site in Wuhan. CMA announced it had been awarded a shopping mall
site in Wuhan. It secured the 70,400sm site with potential for 240,000sm of
GFA (excl. car park) for RMB660m (RMB2,700psm GFA). The site is
strategically located at the junction of Jiefang Ave and Gutian Second Rd
in Hanyang, about 8km from the city centre, and has a direct connection to
the Gutian 2nd Rd metro station on Line 1. There is an estimated 80k
population catchment within 1km of the site and 0.5m within a 5km radius,
with potential reach 3m population when the 6th Jianghan Bridge is
completed by 2015.

Mid-teens project IRR. The development will comprise a mix of retail
(c.70%) and office space. In the preliminary plans, the office space to be
housed in two separate blocks can be built for enbloc sale and based on
demand, which will improve the returns of the project in the longer run.
Using a total development cost of RMB2.8b (RMB12kpsm GFA) and stable rents
of RMB150-200psm/mth, the development is expected to give an initial net
yield of 4-5% when completed in 2015, and rise to 8-9% when stable. This is
in line with returns for newer malls in its portfolio. Furthermore,
building a critical mass of malls in this area would enable the group to
leverage on its existing network and experience in Central China. After
this acquisition, balance sheet remains healthy, with see-through gearing
expected to remain at about 40%, including the current land purchase and
expected drawdown for construction over the next year. With yield
compressed for its listed REITs, which have rendered them more effective
currency platforms, the group will have even greater flexibility in its
capital management exercises going forward.

Maintain BUY. We raised RNAV and TP by 1ct to S$2.70 and S$2.30 after
adjusting for the latest transaction. We believe targeting the mass and
mid-market consumers amid rising urbanisation in Tier 2 cities should yield
positive returns in the medium term. We continue to like CMA for its lead
in the Asian retail real estate sector. Earnings and NAV growth should be
sustainable with the gradual ramp up if its ongoing operations

SGX Broadens Clearing Services for OTC Customers

Singapore Exchange (SGX) is providing international customers from 25 February 2013, the choice of clearing OTC (over the counter) transactions as swaps or futures contracts, the bourse operator said Wednesday, broadening access to Asian OTC commodity and financial derivatives markets.

The company said SGX AsiaClear will offer a suite of futures contracts called AsiaClear Futures, starting with Iron Ore, Freight and Oil, which is fully fungible with bilateral swaps currently cleared by the exchange. International customers, including US customers, will be able to meet their risk management needs with swaps and/or futures in SGX AsiaClear.

With an open and robust clearing infrastructure for fully fungible products, the convergence of liquidity in a single clearing venue is expected to avert price fragmentation and will promote secure and efficient risk transfer.

“We are committed to helping our customers throughout Asia, Europe and the US navigate the complexity of rapidly evolving risk management and regulatory requirements. Customers using our unique SGX AsiaClear service are free to choose transaction modes which best fit their needs while clearing through a single venue,” said Michael Syn, Head of Derivatives at SGX.

As Asia’s leading multi-asset OTC clearing house, SGX AsiaClear volume has exceeded US$300 billion since its launch.

In 2012, a record 108.9 million tonnes of iron ore swaps were cleared in SGX AsiaClear, 2.5 times that of the previous year. Over 90 per cent of the world’s cleared iron ore swaps are cleared through SGX AsiaClear.

SGX AsiaClear said it intends to expand its clearing services from the current commodity and financial products to Asian OTC equity derivatives as customer needs develop.

John Banaszkiewicz, Managing Director of Freight Investor Services (FIS), a leading broker in global commodities, said “FIS has always been a passionate advocate of bringing new products and trading opportunities to the market. We welcome SGX’s move to facilitate customers from different jurisdictions to continue to trade and tap on its fast growing liquidity pool in Iron Ore swaps and other products.”

The RIGHT Management

After you evaluated a company's business model, growth prospects and the industry challenges it faces, the next thing you need to do is evaluate the people managing the business itself!

If the people who manage a company are incompetent or dishonest, they will eventually run a company into the ground. But if they have amazing talent, skills and integrity, then you know that company is in great hands and is going to be a huge success.

With that in mind, invest in a company with management that...

• Has an excellent track record achieving business goals and targets
• Has the proper credentials and relevant skill sets to manage the company successfully
• Has future growth plans that continue building long-term value for shareholders
• Is honest and transparent with its shareholders and be willing to admit to any mistakes made
• Is compensated based on performance and results. A management that continues to pay itself high salaries while under-performing is not aligned with shareholder interests

The Annual General Meeting (AGM) is a great way to meet with management. Interacting face-to-face, asking hard questions, considering their answers and how they answer is a great way to assess a company's management team.

SGX Well -Positioned to Meet Latest International Regulatory and Risk Management Standards

Singapore Exchange (SGX) stated that it is well-positioned to meet the latest international regulatory and risk management standards set by the International Organisation of Securities Commissions (IOSCO) and Committee on Payment and Settlement Systems (CPSS).

“This has been achieved after an extensive review and sharpening of its risk management and operational processes, and the addition of new rules and procedures to enhance the safety and efficiency of its subsidiaries,” said the exchange

SGX will observe all the new CPSS-IOSCO PFMI Principles by January 13.

Further, SGX has injected sufficient capital into its two clearing houses, namely, Singapore Exchange Derivatives Clearing Limited (SGX-DC) that clears derivatives transactions and the Central Depository Pte Limited (CDP) that clears securities transactions.

SGX-DC has net equity capital of S$246 million, of which S$150 million is contributed to its Clearing Fund. At the same time, CDP, which clears securities transactions, has net equity capital of S$179 million of which S$60 million is contributed to its Clearing Fund.

In addition to capital adequacy, the exchange will introduce securities margining in the CDP effective 21 January 2013.

At the same time, increased transparency on matters relating to its risk management processes and systems will be disclosed in line with the new standards, said the exchange.

From March 2013, the exchange will publish daily reports on the total value and volume of short sales for each counter. The tagging of short sell orders and disclosure of short selling information will enable investors to make better-informed investment decisions.

Separately, SGX is seeking formal recognition from the US Commodity Futures Trading Commission (CFTC) for both its derivatives exchange (SGX-DT) and clearing house (SGX-DC) to maintain continuity in its global derivatives activities. It will also be seeking recognition from the European Securities and Markets Authority (ESMA) in due course.

“Recognising our robust regulatory framework and financial strength, customers have increased the use of SGX’s clearing services to manage their market exposures. In meeting the latest global regulatory requirements, we assure our customers that they can continue to efficiently expand their businesses and confidently manage their risks via SGX. Our standing as the clearing house and exchange of choice in Asia is further validated and made more secure,” said Mr Magnus Bocker, CEO of SGX.

Over the past two years, IOSCO, the standard setting body of securities regulators, has issued new standards on trading and clearing with the objectives of protecting investors, ensuring that markets are fair, efficient and transparent, and reducing systemic risk. Together, CPSS and IOSCO also published the Principles for Financial Market Infrastructures (PFMI) in April 2012, which established the global regulatory standards for clearing, payment and settlement.

The RIGHT Business

So how do you first pick the right stock to invest in?

You see, a lot of people treat the stock market as some sort of glorified casino - making bets on whether stock prices will rise or fall (with often disastrous results). You have to remember that when you purchase stock, you are actually purchasing a piece of a very REAL business.

If that business is profitable and grows in value over time, so will your shares. If the business is going down the drain, so will the value of your shares.

So instead of treating stocks as something you aim to buy and sell for profit, start to see stocks as a way to OWN valuable and profitable companies . Because in all manner and sense, whenever you buy a company's stock, you essentially become a part-owner of that company.

So the first thing you need to do whenever you're thinking of purchasing any stock is to LOOK at the business behind it and find out if it's going to be a good, successful business.

Here are 4 things to look out for:

1. Invest in companies with a strong and sustainable competitive advantage. A company with poor or no competitive advantage can easily be run out of business by its competition.
2. Invest in companies in a resilient or growing industry. A company in a sunset or competitive industry face eroding profit margins and eventual extinction.
3. Invest in companies with strong growth potential and a clear strategy for achieving that growth. A company with sustainable, long-term growth will grow in value over time.
4. Invest in companies you understand and within your circle of competence. If you don't understand a company's business model, how it runs its operations or earns its income, then you can't value it accurately and safely invest in it.

Remember, if the business behind your stock is steady, profitable and has good growth prospects, then the value of your stocks can only rise over time.

S’pore’s REITs Delivers Double Digit Growth in 2012

SINGAPORE’S real estate investment trusts (REITs) returned the highest dividend yield coupled with the lowest volatility among comparative REIT indices in 2012.

“The FTSE ST REIT Index gained 46.05 per cent while maintaining the lowest volatility of the year to comparative regional and global REIT Indices,” stated SGX.

The FTSE ST REIT Index is represented by 24 of the 29 securities comprising the REIT sector.

Volatility is a standard measure for risk.

The index maintained a volatility of 8.5 per cent – the lowest volatility of all the regional and global REIT indices included in the FTSE Asia monthly index performance report.

Coming in a second place in terms of lowest volatility is the FTSE SET REIT Index, which chalked up gains of 60.25 per cent.

Low volatility indicates the returns for an index have stayed quite close to the average whereas a high volatility would indicate a larger fluctuation over the year.

Why You Should Delay Instant Gratification

Today is the 4th day of 2013. 

Time to clear the past and start afresh. Many people would take this month to set resolutions. Resolutions such as to lose weight, make more money, or spend more time with family. I would like to suggest to add one interesting resolution: delay instant gratification.

Why?

Because I discovered this is one of the secrets of financial success...

Why Value Investing ROCKS!

1. It's cheaper to be a value investor. Because you're always looking to guy great stock at discount prices, you always pay less for what an asset is worth
2. Stock market price swings do not affect you. Unlike stock speculators who bet on whether a stock's price will rise or fall (with usually disastrous consequences), value investors on the other hand remain calm and simply pick more stock of great companies when prices fall :)
3. You have lower risk and HIGHER returns. The lower the price you pay for for a stock, the lower your risk because the most you will lose is the price you pay for a stock.
   At the same time, the lower the price you pay for for a stock, the higher the potential returns because there is more upside for a stock's price to rise. Value investing is probably the only form of investing that gives you this advantage!
4. These people are all BILLIONAIRES because of value investing:
   Warren Buffett - US$44 billion
   Richard Chandler - US$4.6 billion
   Howard Marks - US$1.5 billion
   Charles Brandes - US$1.5 billion
   Michael F. Price - US$1.4 billion
   Kenneth Fisher - US$1.4 billion
   Charlie Munger - US$1 billion
   Mario Gabelli - US$1 billion