My Sweet Retirement Donates to Hair For Hope 2019

Half of the year 2019 has gone by. One of the goals I have set for myself for 2019 is to contribute back to the society and this is something I have not forgotten. I was inspired by The Fifth Person when I attended their Alpha Summit earlier this year.

I have made a donation of S$200 to the Children’s Cancer Foundation. The amount may not seem a lot but I hope it does make a difference. In fact, the contribution comes from my Adsense earnings from My Sweet Retirement website. The purpose of starting this website is not to earn extra pocket money from it but to improve my stock analysis and picking skills, learn from other financial bloggers through sharing and hopefully to achieve My Sweet Retirement.

In the pursue of financial freedom, we must also not forget how lucky we are as compared to some who are unfortunate!

The Hour Glass Increases Dividend For The First Time

The Hour Glass Store

The Hour Glass is one deep value stock that has been paying investors consistent dividends over the past decades. Currently, The Hour Glass makes up 3% of my stock portfolio. Despite the company holding lots of cash, The Hour Glass has been paying investors a consistent pay out of 2 cents over the past few years. With the recent runup in stock price from S$0.65 to S$0.82, I thought I share some updates that I read about on The Hour Glass.

The Hour Glass which deals with luxury watches has been suffering from the economy downturn over the past few years (2015 to 2018). Recently, The Hour Glass has announced a decent set of latest financial results and for the first time, proposed to increase its first and final dividend pay out from the usual 2 cents to 3 cents.

The group’s revenue climbed 4% to $720.9 million in FY2019 and profit after taxation rose 41% to $71.4 million. As you can see below, the financial results for FY2019 is excellent with debt being its lowest level at $15.0 million and a free cash flow of $47.0 million.

After experiencing sluggish demand for some years, the trend for luxury watches in Asia picked up and stabilised during the course of FY2019.

Financial Results FY2019 ($’000) FY2018 ($’000) FY2017 ($’000) FY2016 ($’000) FY2015 ($’000)
Revenue 720,925 691,645 696,056 707,525 734,938
Net Asset Value 560,244 507,140 478,477 439,872 408,730
Cash and cash equivalents 180,971 180,496 124,849 93,898 98,332
Loans and Borrowings 14,972 49,655 51,160 63,422 61,187
Free Cash Flow 46,931 74,181 57,113 10,453 (13,026)

The Hour Glass is currently trading at S$0.82 which is 3.8% above premium to the Net Asset Value of S$0.79 per share.

Financial Ratios FY2019 FY2018 FY2017 FY2016 FY2015
Gross margin (%) 27.0 24.2 22.7 23.7 22.6
Inventory turnover ratio 1.8 1.9 1.8 1.7 1.9
Debt/Equity Ratio (%) 2.7 9.8 10.7 14.4 15.0
Earnings per share (cents) 9.99 7.07 6.91 7.42 8.22
Net asset value per ordinary share ($) 0.79 0.72 0.68 0.62 0.58

I like the following quote from Henry Tay in the FY19 Annual Report.

“Trying to understand is like straining through muddy water. Have the patient to wait. Be still and allow the mud to settle. – Lao Tzu”

What Henry Tay meant was the with the rise of e-Commerce, The Hour Glass  thought they will be threatened by it. However, as time goes by, they realise e-Commerce only cater to the general crowd. What The Hour Glass stands out is that they cater to premium customers.

SPH REIT 3QFY19 DPU is 1.39 Cents

I have recently added SPH REIT into my stock portfolio. SPH REIT has announced their 3QFY19 financial results on 11th July 2019 which kind of surprised me as their 3QFY19 financial results were pretty good and better as compared to the same quarter in FY18. Distribution Per Unit (DPU) increased  by 1.5%. Gross Revenue increased by 12.7% and Net Property Income increased by 14.2%.

Below are the 3QFY19 financial results.

3QFY19 Financial Results

3QFY19
(S$’000)
3QFY18
(S$’000)
Change
Gross Revenue 58,333 51,769 12.7%
Net Property Income 46,328 40,559 14.2%
Distributable Income 35,953 35,205 2.1%
Distribution Per Unit (“DPU”) (cents) 1.39 1.37 1.5%

YTD 3QFY19 Financial Results

YTD3QFY19
(S$’000)
YTD3QFY18
(S$’000)
Change
Gross Revenue 170,261 158,840 7.2%
Net Property Income 133,969 125,017 7.2%
Distributable Income 106,995 105,532 1.4%
Distribution Per Unit (“DPU”) (cents) 4.14 4.11 0.7%

Occupancy

Occupancy stood at a high of 99%.

We all know that rental reversions show whether new leases signed in the quarter have higher rental rates or lower rental rates. Investors should look out for positive rental reversion.

The Clementi Mall and The Rail Mall recorded positive rental reversion of 5.8% and 9.1% respectively for YTD FY19. This means that the new leases signed in the quarter for The Clementi Mall and The Rail Mall were 5.8% and 9.1% higher respectively in terms of rental rates as compared to previous tenants on average.

The overall portfolio registered a positive rental reversion of 8.4%.

Gearing Ratio

Currently, gearing stood at 30.1% and thus there is still a lot of room for further debt to fund future acquisitions.

The Weight Average Debt Maturity is 1.8 years. I consider this as short and this is something investors should monitor and keep a watch out for in an unfavourable economy. However, if you look at the below Debt Maturity Profile, S$280 million of debt in 2020 have fixed interest rate which means the interest expense is pretty much stable which means no surprises till then.

Summary

The current dividend yield for SPH REIT is 5.04% based on 5.54 cents paid out in FY18 and the current share price of S$1.10.

In the presentation slides, it mentioned about Right of First Refusal (ROFR) about The Seletar Mall which has maintained high occupancy since its opening in November 2014. This has been a hot speculation topic for decades among investors of SPH REIT. We shall see whether if there are acquisition plans by SPH REIT in FY19 which will further add value to this gem.