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Monday, 23 June 2014

My views on Fraser Hospitality Trust

I  was initially drawn to the IPO of Fraser Hospitality Trust for a few basic reasons (prior to prospectus coming out).

1. The other REITS are getting expensive and has not came down despite the rumoured May effect and the World Cup effect.

2. Quality name hotels and Serviced Residence in some exciting places like Japan (Abenomics 3 Arrow, 2020 Olympics), Singapore with the rising rich in S.E.A (Indonesia, Vietnam (Potentially)). Although London and Australia are stable markets that are not exciting (Australia experiencing slow-down due to China cooling, London region still reeling from Euro crisis. Although further confirmation about the NPI contribution compared to NTA contribution is a stark difference (See Pg 19, Sg properties are overvalued by a huge margin, I know it is not a direct co-relation as the property is in semi prime region like Bugis, but 14% difference is a lot?)

Looking at the prospectus (Pg 21,22,23,24) I have seen the Fraser Suites line of Serviced Residences and have faith in it. Especially the Singapore counterpart as the place is very popular with rich and affluent Japanese. Intercontinental is a good brand. The rest are placed within close distance to MRTs and other city hubs or are iconic buildings which the rich like to stay in (Class factor).

Looking at pg 29, the serviced residence aspect is quite scary as a huge majority of their tenants are only for less than 1 month (Dont know if that is the norm for serviced residence, adding on Entertainment and leisure makes up 23.3% of the clientèle, apart from the huge others being lumped in one segment) 1-6 months only 24.6%

Looking at pg 30 and 31, their hotel client segment looks normal to me although occupancy rates are not at high 90% for hotels (Understandable as they serve the high end market) and service residences (This part I cannot understand, can someone enlighten me?)

Pg 32 
Singapore has also staged many global events in recent years including the inaugural
Singapore 2010 Youth Olympic Games, Formula One SingTel Singapore Grand Prix and the
Volvo Ocean Race. In September 2012, Formula One announced that they will continue the
Grand Prix Night Race in Singapore for another five years. In April 2013, a new nature
tourism attraction, the River Safari, opened which will complement the city state’s current
offerings, including the Singapore Zoo, the Night Safari and Jurong Bird Park. Future tourist
attractions include the Singapore Sports Hub at Kallang (2014) and the National Art Gallery
Corporate demand in Singapore is likely to remain stable in the short to medium term as
Singapore remains one of the key economic hubs in Asia Pacific with its prudent economic
policies that continue to attract foreign firms and investors.
According to the latest global rankings by the International Congress and Convention
Association, Singapore has retained its position as Asia’s Top Convention City for the 12th
consecutive year in 2013, affirming the city’s position as a Meetings, Incentives, Conventions
and Exhibitions (MICE) destination. In the long term, Singapore is poised to continue its
stable growth as it is able to attract high profile events and delegates beyond Southeast Asia.
Sounds on the whole too optimistic, but general outlook for S.E.A should be fine, wealthy customers should be fine in S.E.A

Kobe also has a number of global and domestic companies which generate corporate
demand to the city. These include Procter & Gamble, Nestle, Kawasaki Heavy Industries,
Asahi Holdings and “K” Line Group which has established headquarters in Kobe.
In addition, MICE events held in Kobe are also key demand drivers. According to Japan
National Tourism Organization (JNTO), Kobe was the sixth largest host of events since 2010.
A total of 92 meetings were held in 2012, in which the majority were meetings related to
biomedical innovation. Well-established MICE infrastructure such as the Kobe Convention
Centre on Kobe Port Island, easy accessibility from major cities in Japan and the presence
of three airports which are within easy access has enabled the city to become a more
attractive business destination.
The Kobe Biomedical Innovation Cluster (KBIC) has been planned in Port Island (Bay area)
for 15 years. Kobe city promotes Port Island to become a centre of medical technology and
17 research and development facilities have already been constructed around Iryo Centre
station. A cancer medical centre is still in construction process. In cooperation with more than
200 companies, KBIC will be one of the major national projects that also contribute to higher
performance of hotels in the surroundings.
Sounds okay to me, only part is that Japanese companies are a bit stingy on providing their employees on serviced residences for their foreign counterparts when working on projects unless it is short durations, tourism is their key target as evident in their client profiling segment earlier.

London properties are not very attractive, with major events happening this year, income may not be paid as dividends for the following year

I like the ratio of the rentals

I just saw the Money Mind interview with the Fraser CEO, he said he prefers the stability of Hotels with long term staying customers than to take advantage of the huge spike of clients should an event happen.

Got no time to analyse the financial information, shall post an update again

I am going to be vested in this share, but I would like to hear counter arguments and stuff. THIS IS NOT AN POST TO ENCOURAGE YOU TO BUY. Please consult your own professional investment banker/consultant

Monday, 5 August 2013

South Korea Trip

Just ended my South Korea trip. It was a nice trip where I visited Jeju Island and Seoul.

The culture at Jeju-do island was rich and there were lots of stories behind many of the things that goes on there. Like the stone culture there, the beautiful nature. Although Jeju is a small island, the bus service is quite an hassle as they are mainly in korean, less the Airport Limo Service. Taking a taxi around the island would be the ideal choice as it would allow you to cover many of the attractions in a short period of time. I hired an taxi guide for the whole day at 150,000 won. 

The seafood is fresh there and very nice. Attractions mainly require a nominal fee for entrance fee. Convenience shops are dominated by GS25 and CVS 4 you. 

As for Seoul city, shopping was good as it was the Korea summer sales. I brought a shirt for 5,000 won (Actual Retail price: 35,000 won) Food wasn't cheap as it goes around for 12,000 won  for a normal set lunch. The interesting thing about shopping in a departmental store in Korea is that Plastic bags are not given. Hence we have to wrap our purchases using discarded cardboard boxes that were provided.

Sunday, 28 April 2013

DBS supports social enterprises with start of sailing event

DBS kicked off the first session of the DBS Marina Bay Sailing Programme today by taking close to 100 beneficiaries and their families from five social enterprises to sail in the Marina Bay Waterfront Promenade.
These social enterprises included A-changin, Bakery Hearts, Bizlink Singapore, BlisSE and Circus in Motion, and their beneficiaries and families were treated to an afternoon of fun and sun as they enjoyed this unique sailing experience.
Over 200 members of the public also had the chance to sail in the Bay today. DBS is the first corporate in Singapore to offer complimentary sailing to the public at the Bay on a regular basis. The programme received strong public interest and tickets for April and May were snapped up within hours when it first launched. Since then, more sessions have been added and more than 3,000 people are expected to participate in this programme from April to November this year. Tickets are available two months prior to the sail date and booking for the 29 June session will open at 10am on 29 April. 
The sailing programme is part of a bigger initiative by DBS Bank to engage the community, enliven the Bay, and to share the vibrancy and dynamism of Singapore’s new financial downtown with the wider population since moving to its new headquarters at the Marina Bay Financial Centre last year. In early April, DBS announced its plans to invest SGD10 million over the next three years to enable people from all walks of life to enjoy the Bay and make it a ‘People’s Bay’ 
Other key activities lined up this year include the DBS Marina Regatta - Singapore's largest water festival - in May, the POSB PAssion Run for Kids in September and a DBS Social Enterprise Special at the end of the year.

Tuesday, 16 April 2013

Opinion article on Interest Rate Swaps

In partnership with various websites, we would be carrying opinion articles on financial news and products from various websites. This is kindly contributed by 

Light at the end of the tunnel after interest rate swaps
The Financial Services Authority has ordered banks to compensate victims of interest rate mis-selling. It’s said that the banks employed underhand tactics when encouraging small businesses to sign up for financial services such as interest rate swaps, which have led to some of their customers being forced to pay out thousands to the banks as a result of falling interest rates.  Some of the products that the banks are accused of mis-selling involved extremely complex terms that the FSA says it wouldn’t expect most customers to be able to grasp easily.

Unfair and immoral?
The banks targeted many small to medium enterprises when selling interest rate swap loans to their customers. Many businesses have been expected to continue to fund the hedges even after the loans have been repaid, often on the basis that the banks expected customers to take out further loans after initial funds were repaid. Many businesses have been hit hard by these complex arrangements and have found that cancellation fees have been marked at around 50% of the original loan, making it not realistic to exit the contracts. Loans and swaps are usually two different products in reality, which is forcing customers to continue to fund the swaps after loans are paid off.

Businesses hit hard
Customers can take on the banks on their own when applying for compensation but there are many firms in existence that can negotiate on their behalf. It’s said that customers may be liable to seriously underestimate the amount of money that is owed to them. Outsourcing negotiations to an expert outside firm may well enable customers to recoup a higher sum. There are a wide range of products that fall under the umbrella term of ‘interest rate swaps’. Some of these are known as ‘caps’ or ‘collars’. An interest rate collar is usually put in place to limit the range in which an interest rate can fluctuate but many customers have been caught out nonetheless by these products.

Left in the dark
The banks sold the products to their customers on the basis that no matter how high interest rates rose to, they would be protected from them by being paid funds that would offset the extra money generated by them. However, the historic fall in interest rates was unforeseen and led to customers having to pay out vast sums of cash back to the banks in order to offset the money that the banks would lose due to falling interest rates. It’s said that the banks did not do enough to explain the risks involved to many of their customers.

A fresh start
It’s said that it’s important that small to medium enterprises affected by interest rate mis-selling are permitted to be freed from the terms and conditions that have been forced on to them as it is these businesses that are being relied upon to get the economic climate back on track. Companies like Lamport Bassitt solicitors have specialist teams for dealing with swap mis-selling claims. The situation is comparable to the scandal of Payment Protection Insurance, yet it’s said that the effects of interest rate swaps are much more cataclysmic than those of PPI.

Monday, 30 January 2012

The end of the January effect?

Do today mark the end of the January effect whereby fund managers have rebuild the stock portfolio that they have sold in the previous year to take losses so that they can claim income tax deduction for this year?

As what one of Bloomberg's reporter have noted, it has been 2 years and we are still talking about the Greece debt issue now. Itlay Spain and the rest of the European nations are looking to get worse in the upcoming months ahead.

Fundamentals have not caught up with the reality as of just yet. US GDP numbers although did come better then expected, but underlying it is a strong inventory restocking that is not sustainable.

China despite it's strong growth is a big question mark after this year's leadership transition, as they might make it smooth for the markets and the population which is getting discontended with the rising income inequality.

In the Middle East, Iran is set to create more chaos as they would not sit back and let Hyperinflation set in. They might even create a war, causing instability in the region.

Given the magnitude of problems that are going by, I am staying at the sidelines with my cash