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Boustead Building Up Net Cash Position to Ride through the Storm

A year ago, I mentioned in my post that Boustead has a net cash position of S$165.6 million. At the end of 1Q FY2018, Boustead has a net cash position of S$212.2 million. This was an increase of 28.1%. Thus, I consider Boustead is still in a healthy net cash position. Net cash position is very important to companies in a cylindrical industry such as oil and gas. Only with sufficient net cash position, it will be able to ride through the storm.

Although Boustead’s 1Q FY2018 financial results do not look so promising, I noted that in its latest press release, it has mentioned that Boustead’s revenue is largely derived from project-oriented businesses and as such, quarterly results would not accurately reflect the full-year’s performance. Read More

Soilbuild Business Space REIT High Yield but Declining DPU

Soilbuild REIT Logo

For 2 consecutive quarters, the distribution per unit has declined for Soilbuild Business Space REIT. Based on the closing price of $0.72 on 30th June 2017, the annualised distribution yield is 8.2%. I have previously wrote about the investment risks of Soilbuild Business Space REIT here, thus I shall be repeating it again in this post.

I am writing this post just to re-validate my decision to sell Soilbuild Business Space REIT when opportunity arises. The REIT currently makes up 5% of my stock portfolio.

The following are my observations based on its current financials

Declining Distribution Per Unit quarter on quarter (q-o-q)

Distribution Per Unit has been declining. It has proven that we should not solely purchase a REIT based on its high dividend yield.

2nd Quarter 1st Quarter
Distribution Per Unit (“DPU”) (cents) FY2016 1.565 1.557
Distribution Per Unit (“DPU”) (cents) FY2017 1.514 1.539
Variance (6.3%) (1.2%)

Flat Net Asset Value

Flat or stagnant Net Asset Value at $0.72 for the last two quarters. By right after acquisition of Bukit Batok Connection, distribution or property yield should increase but it didn’t.

The Cursed 72 Loyang Way

72 Loyang Way still plagues Soilbuild Business Space REIT. The challenge remains to lease the entire space at 72 Loyang Way due to the subdued marine offshore and oil and gas sector.

Occupancy

Occupancy still at 92.6% which is slightly above the industrial average of 89.4%.

 

Singapore Savings Bond versus Savings Account versus Fixed Deposits

The latest Singapore Savings Bond (“SBSep17“) is offering 2.12% effective interest rate over a ten years period. Many people have been lamenting about the low interest rates and I also think the Singapore Savings Bond interest rate is not attractive. I decided to do some research by comparing it with similar low risk products out such as a popular high yield Savings account and Fixed Deposit account. I am excluding REITs and Stocks in the comparison as the intention is to park the money somewhere as a form of war chest or savings.

I picked CIMB StarSaver Account, CIMB 12 month fixed deposit and MayBank 12 month fixed deposit. Read More

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