Sunday, 25 April 2021

Life is So Vulnerable!

Recently, my best friend's nephew who was only two years old just passed away. The poor little baby boy was just fine and the next moment he lost his consciousness and after arriving to the hospital, his heartbeat stopped! 

Prior to the tragedy, there was no big sickness or symptoms that worries. It is an unnatural death. Autopsy was performed, but doctor can only conclude that it was heart failure without any other reasons found. The family was desolated! 

My friend who is always being cautious about his financial, suddenly confided in me that after this incident, he started thinking that life is so vulnerable and short, and maybe we should also just enjoy the current moment a bit more than what we do now. 

One lament includes the saying that maybe we should just buy a big house with a nice sea view and enjoy the living with our loved ones, before it will suddenly become too late? 

This episode also brings me back to seven years ago when I blogged on my second post “Life is unpredictable”,  after my then broker just collapsed and died of brain stroke. 

In that post, I also refer to Dennis Ng, a local Singaporean financial adviser who passed away at the age of 42 in 2012. Dennis is very frugal and always live within or below his means. Even though he is multimillionaire and founded several businesses, he continue to stay in HDB, and take "BMW" from home to work. BMW = Bus, MRT or Walk.

It left me wonder that if life is really that vulnerable?  

Should we really be so calculative in planning our finance, being extremely frugal, saving every cents, and being worrisome about the extra dollars we are going to spend more? When perhaps one day, all these numbers does not matter anymore? 

Yes, we are happy if we see the growing numbers on our portfolio or in our bank accounts! 

That said, if I don’t spend it, it will only be a mere number that perhaps guard my continuous hidden pride within myself without doing anyone else good? Of course, we need to keep a part of it for rainy days, and unexpected events! This is common sense! 

What I am saying is that sometimes from our over emphasis on money, there are too many times when we can make our own life, or the lives of our closed ones really miserable. 

Perhaps we should spend and do treat the people around us good with our financial prowess? 

Perhaps we should help those who is really in need? Our small donation can mean a lot to those who is in need of money for survival. 

Perhaps we can have a treat for our family members and loved ones with some money spend?  

After all, we come to this world naked and we will also leave naked. 


Saturday, 17 April 2021

Will Mapletree Industrial Trust & Keppel DC REIT Benefit from Facebook’s Transpacific Data Connection (Bifrost and Echo)?

Recently, Facebook announced plans to build two new data submarine cables between Asia-Pacific and North America. They are dubbed Bifrost and Echo. The transpacific cables will connect Singapore, Indonesia, and North America, and are expected to increase overall transpacific capacity by 70%.

Source: Facebook. 

For Bifrost, Facebook will partner Keppel T&T of Singapore and Telin (aka PT Telekomuniskasi Indonesia International) and XL Axiata of Indonesia and is due to be completed by 2024. 

For Echo, Facebook will partner Google and XL Axiata, and is due to be completed by 2023. 

Will this increase in transpacific capacity benefits the Mapletree Industrial Trust and Keppel DC Reit? 

Mapletree Industrial Trust “MIT” (SGX: ME8U) 

MIT has just completed acquisition of US data centre located in Richmond, Virgina in March this year for US$208m with 100% occupancy, freehold status, and an initial NPI yield of 6%. 

The company has a medium term vision of allocating two-third of its S$6.8B AUM to data centres, meaning acquiring of S$1B worth of data centres per year in the next 5 years. The current data centre AUM is 40.8% after the recent acquisition. 

Out of MIT’s  data centres, 34.5% are located in North America and only 6.3% is in Singapore. 

MIT’s FY20/21 DPU of 9.25 cents based on current price of S$2.79 gives a yield of 3.3%. 

However 3Q FY20/21 DPU is 3.28 cents. If MIT can maintain this result, then average DPU per annum will be 13.12 cents translating to a yield of 4.7%

NAV per unit as of end 2020 is S$1.70. 


Keppel DC REIT “KDC” (SGX: AJBU) 

KDC acquired Amsterdam DC on 24 Dec 2020 for S$48.1m with 99.1% occupancy and an initial NPI yield of 5.1%. 

KDC’s core market is in Singapore accounting for 56% of its AUM of S$3B as of end of last 2020. 

FY2020 adjusted DPU of 9.17 cents based on current price of S$2.69 gives a yield of 3.4%. 

NAV per unit as of end 2020 is S$1.19. 


CONCLUSION

Typically, the identities of the tenants for Data Centres cannot be disclosed due to the strict confidentiality obligations under the lease agreements. 

Hence we are not really sure how Facebook and Google’s Bifrost and Echo projects will benefit MIT and KDC in the years to come. 

Nonetheless, I am very certain that there will be a strong and resilient Data Centre demand in the years ahead. 

Below are some of the positive numbers on DC spending coming from research companies. 

Source: Keppel DC REIT. 


Therefore it is in my opinion that MIT and KDC will continue to grow in their top and bottom line. 

What are your views? 


Sunday, 11 April 2021

Be Wiser When You First Start Your Career - In Dire Industry, it is More Difficult to Find Success!

It was decades back, and I needed to decide on which university courses to enroll. My parents are uneducated and my elder siblings are diploma grads back then. They cannot help much in my decision. 

MY CHILDHOOD AMBITION

My childhood ambition is to be lawyer. Unfortunately, coming from poverty-stricken family and living in a less than desirable estate with hokkien or mandarin speaking environment, my “England is not powderful” enough for me to be a lawyer. This is despite my photographic memory and good analytical and debating abilities. 
I then look to my second choice as an architect. I did my research and find out that I probably need 8-10 years in university and apprenticeship, before I can earn enough. “My mum will be so old by then”, I thought! 

GOVERNMENT’S ADVICE 

It was in the nineties and Singapore had so many developments ahead and engineers were highly sought after.  The newspapers headlined on the good prospects of being an Engineer by our government. 
Wow… I exclaimed! 

Being a teenager with limited experience in life, I heeded our government’s advice! Looking back, I think it was not a very a good piece of advice! 

Just go and ask all those who are still working as Engineer today? How many Engineering Head can you have, heading in a pool of engineers?

Government’s objective is always with respect to the country. It is impossible for them to cater to your individual career future. Back in 90s to mid 2000s, they probably need many Electronic, Mechanical and Civil Engineers, but after that… hmmm…. 

Ok, things do change…. 

IN A DIRE INDUSTRY, IT IS MORE DIFFICULT TO FIND SUCCESS! 

Consider if most of my university friends who graduated in Engineering, who are still working as Engineers in electronics, mechanical and manufacturing (marine, aerospace, industrial) or civil and construction industry; 

Do you think majority of them will have an edge in their career? Or will they somewhat stuck if in their mid-career stage? 

Do you think they will have better salaries and benefits, compared to those in banking and finance and real estate or digital sectors? 

Even if you are very capable and hardworking, if you are in a dire industry that render your companies in losses or little profits for many years, your career will see less success and populated by more frustrations comparatively. And even if you find success, the remuneration will be considerably lesser than the better earning industries. 

For example, manufacturing, F&B and also hotels are sectors that highly competitive with lower margin. Hence, it will be very difficult for companies in these sectors to pay you too well. 

You can be a CEO or COO in your less profitable sector with never-ending workload and stresses, but your pay can be much than the Tom, Dick and Harry mid-level executives in better paying and highly profitable sectors. 

I know of many examples that even if your result during school days is below average and certainly not as smart or hardworking than some of your friends in Engineering, you will still find yourself doing much better than your peers who are in the Engineering or Manufacturing sectors. 

If you amassed a lot of technical skills over the years in Manufacturing sectors such as Construction, Aerospace, Marine & Offshore, your expertise will in fact limit you only to within the industries.  Or else, it is likely that you will see pay cut moving to other sectors. 

On the contrary, if you are working in banking, real estates, or big software companies, then you can see vast opportunities and it is easier to transit across sectors. Or at least within the sectors, companies will be profitable with better packages. 

Of course, there will be exceptions. I am generally making reference to the majority of cases! 
Otherwise, you can also be in mainly supporting functions such as in Finance, HR, Legal and IT etc, then you can easily move across industries. 

FINAL THOUGHTS

Singapore is a finance hub. Without doubt and by looking at STI components alone, you can see that we are in a country mainly driven by finance and banking and/or real estates. These sectors during good and bad times are still profitable. 

However, take a look at the manufacturing sectors, especially those cyclical ones, how many are already out of businesses. 

Singapore is inviting all the tech companies into Singapore. There will be bright future. 
Hmmm… but maybe in two to three decades time, it will not be so good anymore. Who knows? 

Therefore, make sure you can anticipate earlier than your peers if your industry is going sunset all the way. And even in these good industries now, try not to be over-technical and over niche in your job. 

This is because later on, it can be more difficult to transit to other industries, when your industries becoming overly dire without much hope ahead. 

Don’t always think our Government is right and just obey their advice! Their interests may not be aligned with yours. 

It will be wise to seek advice from people you respect who has more experience in life and career, and can see further. 

And, that someone must really have genuine interest for your future, or at least someone who is less selfish. And, if you received something good, try to also be grateful and give back. 

While I was taught to be a cheerful giver, I have experienced countless people who only remember me when they are in trouble. They are normally only thankful when I help them to solve their problems. 
When their troubles are tide over and life is good again, they will never catch up with you or even say “hi”. They will only catch up when they need something from you, and when you are in need of help, they will bestow you with one sentence “take care” and fullstop! 

Please don’t be that kind of person who only ask and ask and take and take, and without giving at your end. 

Asking people for help is so easy. But when we ourselves need to help others… how many will go through the trouble of doing that? 

Therefore, let us help one another and learn to be mutual and win-win!