Getting Some APTT

*Apologies as this post is supposed to be out some time ago, but due to my busy schedule, I'm not able to complete the post till today*

Asian Pay TV Trust is one of the companies I'm looking on SGX in the very beginning of my investing journey and one of those I actually started doing a homework for... or rather... an analysis. 

A simple one.

I was pretty much attracted by the yield back then and I started to source out some in our local market.

I remember going through Mapletree GCC Trust at about 1.00 range (something that I pretty much regret till date), APTT at around 38-39 cents, AA REIT at 1.35 range and HPH Trust at 48 cents USD.

Just as I'm doing some homework on APTT back then, the prices started to pick up even before I've completed analyzing it to 45 cents and I decided to drop the idea of having it as I'm not intending to chase any "boats".

And yes, you're right. I've bought myself some dustbins in International Business Park at Jurong for my Valentine's day present to myself.
I got a little more curious when APTT prices scaled even higher up to 50s and 60s range in late 2017 and decided to pay a little more attention to it. To be honest, I'm pretty much disgusted by the level of debt APTT got itself in and I did punch myself a little for not acting back then.

The high level of CAPEX and FCF back then also serves as a warning for me to not enter a position with them. I felt that the risk taken for entering at that range could not be compensated by the dividends.
 
APTT had announced a dividend cut and will only be paying only 1.20 cents annually, at least for the next 2 financial year ahead when the 3rd quarter financial results are released. 

From: APTT 3Q Financial Presentation

The market reacted very strongly and punished the shareholder severely by crashing half it's valued of the next market day to 16 cents. 

How about now when it had fallen by 16-17 cents to 16-17 cents??

Is the compensation fair now? I'm not certain. But definitely, it looks much better than it is at 30, 40 and certainly 50 cents.  

For those that had paid a higher entry price to APTT, this will translates to a big pay cut and probably even a big unrealized loss we're looking at. 

How is it then to non-APTT shareholders?

With this move to cut their distribution, APTT will now have a much more sustainable payout ratio and in fact with some additional room, which could be used for repayment and certainly further development in the future.

Aside from this, with the completion of digital cable TV upgrade, CAPEX should start to taper off and this should bring in more positivity along with the dividend cut for its future cash flow, something which is extremely important. Hence, I would like to believe that the management is being prudent in doing so.

The position initiated with APTT is a relatively adventurous one, or rather like what some would call it, a risky one as compared to the other counters due to the high level of debt they are in and the business they're engaged with. However, if we look at things from a different angle, we might get to see some light. 




APTT will continue to face headwinds and challenges in their business, but I believe at the new move should allow them to do more things than they originally could. 

We must be reminded that as investors, we are paid for the level of risk we take. The risk to take today seem a little more delicious and tempting for me which resulted in my itchy fingers pulling the trigger.

With today's price hovering around 16 cents, we're looking at somewhere between 7.5% yield for this investment, which is somewhere what one would typically demand for APTT, probably even higher. 

I'll certainly be happy to increase my exposure with APTT should the price continues to fall. I will soon write a little more about my thoughts on APTT.




*Coincidentally, right after my purchase, I happen to see many bigger hands scooping some of APTT shares!*

Read: APTT Q3 Financial Presentation 

Personal Wealth Building: Money Management

Money management is the greatest key to unlocking all the treasures on your road to wealth. This post is somewhat inspired by STE once again on his latest post (Is Winning the Lottery Cursed?)

I strongly believe that it is never about how good of an investor you are or how high your income is neither about how great your windfall will be. If one is not prudent and does not manages his/her monies well, I believe that no one should be blamed for your mishap. 

I personally know many of such people around my life. Those high flyers with a household income of $250-300k annually, having debts and live from paychecks to paychecks with insufficient funds to tie them through when a misfortune happen. And surprisingly, I’m even more shock to know that they’re blaming everyone aside themselves for the bad luck that is shown on them! 

The significance of money is presented differently to every individual and it is very subjective to be making any comment about it. It would not be expensive for a watch enthusiast to spend $100k on a Richard Milles but it would be a crazy to majority out here who doesn’t know how to appreciate them. 

Most commonly, I refrained myself from making any comments or talk about finances to anyone I know personally as much as possible as I’m not in any position to do so. I also don’t enjoy the stereotype that is given from people about the fact that I’m only 20 years old and it’s never wise to act smart. 

The topic about finances is a very sensitive one and it’s very subjective to each person’s profile. 

To regular readers, I believe most would know that I will keep my explanation to the simplest term possible for easier understanding and to avoid further complication. Ha! Please pardon me for that terrible excuse here to cover on the fact that I’m actually not that smart. 

Back to where the topic started - Money Management. 

As shared in my previous post on Cashflow, this post will be a small supplement to the topic and to keep things simple, we’re back down to the 2 points again to improve on your financial situation. 

1. Increase your income

2. Decrease your expenses

Yes, it’s that simple to type it out. And I’m placing a relatively big bet that majority of the population knows about this. But the question is how?! 

As an investors, most are screwed towards buying a company that is consistantly poses an ever-increasing revenue. While that is not wrong, but can you imagine that the expenditure and cost is also increasing as well? The whole key to looking at the picture is to identify if the company’s profit is growing steadily. 

Perhaps a small simple example below in a few words could explain this:

FY2015 Revenue = $100M, Cost = $50M, Profit = $50M

FY2016 Revenue = $150M, Cost = $100M, Profit = $50M

FY2017 Revenue = $250M, Cost = $220M, Profit = $30M

FY2018 Revenue = $400M, Cost = $380M, Profit = $20M

This company we see above has it’s revenue increasing steadily from $100M-400M in 4 years! Which is nearly 100% growth a year we’re looking at! How impressive is that! But taking a look at the cost, it’s increasing much more steadily as well. 

But if we take a look at the profit, the company actually doesn’t earn as much as it used to in 2015. They’re infact earning less than half of what they used to earn! 

In fact, as an investor, we might even see our dividends get thinned out if they’re paying it from their free cash flow!

But it is always the case that it is more glamorous for a company to pose that they’re getting a greater revenue than it is to tell you it is reducing on it’s cost. Most commonly, when cost reduction comes into play, it represents that the company might be trying save themselves from something. 

It is also widely used that if a company has it’s cost increased due to the start of a new project, it is fine. But the only question will comes when the CAPEX could not taper off after sometime. 

It’s important to have FCF, and it’s even more important when we invest, we invest in a company that manages their monies well. Which is why I always believe that, it is important for a company to have an excellent management. 

A little too much here.. let’s relate this back to us, personally on the money management front. 

Person A is earning $2,200 when he first step into the society and slowly after years, the salary 

increases. But here’s one thing that is still common, which is that he will still have to live on his paychecks with no significant progression in savings because as his income increases, so does his expenses. 

Person A will pamper himself a little more than indulge in some form of luxury that depletes his wealth. Unknowingly, restricting himself from further savings despite having a growth in income.

It is important for one to have a higher income to accelerate the speed of savings to build more wealth. But it’s more important for one to have discipline and some form of money management in order for them to be able to accumulate wealth faster. 

So simply, the very first step is MONEY MANAGEMENT. 

I shall end this small idea about money management here before I progress into the next topic. 

Portfolio - October 2018

Current Portfolio (31/10/2018)

No.	Counters	No. of Shares	Market Price (SGD)	Total Value (SGD) based on market price	Allocation %
1.	SingTel	1,400	3.18	4,452.00	33.12%
2.	Wilmar Intl	500	3.16	1,580.00	11.75%
3.	Starhill Global REIT	1,700	0.675	1,147.00	8.54%
4.	Far East Orchard	800	1.26	1,008.00	7.50%
5.	AIMS AMP Cap REIT	400	1.32	528.00	3.93%
6.	ComfortDelGro	100	2.28	228.00	1.70%
7.	Singapore Saving Bonds	1	1,500.00	1,500.00	11.16%
8.	Warchest	1	3,000.00	3,000.00	22.32%
	Total SGD:			13,443.50	100.00%

This month had been a really really bloody month for most people and I'm definitely not excluded. STI had fallen through it's 3000 support level days ago and had regained itselves briefly before closing today at 3060. At the closing price today it translates to a fall of 16% since its high of 3641 earlier this year. 



Aside from the bloody month in the market, I'm also experiencing a terrible month and I believe there's a little more to go before anything will change. 

My portfolio is not spared from this bloodshed this month too. And I'm thinking that I might be a little bit too stupid to not act this month. As mentioned earlier, I'm looking to optimize my portfolio a little and I might certainly revise a little on the format of my portfolio updates soon too.

Having that said, I'm looking to concentrate my portfolio and leave out exact details for the portfolio upon optimization. Having an extremely small capital here, it is difficult for anything significant to happen. 

I'm also looking to do some trading on SGX which I will soon be doing an update about. Hopefully, with these practical lessons, I will be able to learn more. 

With that in mind, I will sum up this month's portfolio update here. In the next few posts, I move on slowly to touch more on the different thing that I'll be doing in the upcoming days.
 




Overall Portfolio Performance (as of 31/10/18):
Total (Capital Injection) in 2017 = S$ 6,566.79
Total (Capital Injection) in 2018 = S$ 5,337.30
Total Capital Injection 2017 & 2018 = S$ 11,904.09

Realized P/L = 13.31% or S$ 1,583.95 (Based on total injection)
Unrealized P/L = -4.37% or -S$ 477.49 (Based on total cost for each counter)
Cum. Dividends + Interest = S$ 465.41
Realized + Unrealized P/L + Dividends = $ 1,571.87 (13.20% base on cost)


Current Portfolio Value: S$13,443.50 (+1.95% m.o.m due to capital injection, dividends and portfolio performance)

CAGR = 7.36% (Based on start date at 14/02/17) - Days Count: 625
XIRR = 14.07% (This high % you see here is due to the wild card from Crypto in 2017 and relatively short duration)

Do take note that both XIRR and CAGR % is on a relatively high side due to the short duration that I'm in the market. As a reminder, a simple bear market should be sufficient to wipe out all the positivity you see up there.


As the time goes on, the % will be significantly reduced and adjusted based on time.

Current Cash Position (based on Opportunity Funds + SSB) = 33.47%

 

Dividends/Interests received in October: $0
Total dividends received in 2018: $370.11
Average dividends/month: $30.84




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