When you can hear

Today a new admin staff came to my office. When I wanted to speak to her, she passed me a black colour remote control like device and asked me frantically to speak into the device. I was quite taken aback as I didn’t know how to use it until she demonstrated it to me. That was when I realised that she was having a hearing aid on her ear. Every time we want to communicate to her, we have to speak to her listening device and it will amplify our conversation to her ear piece.

I was actually quite overwhelmed by her disability. Even though it was not as serious as not being able to see, smell, taste or feel, yet I feel so much for this young lady.

Over the past few years, I spent a large part of my time pursuing wealth, work and academic studies. Even on a Saturday night, I am clearing my work from home now, hopefully I can have my Sunday free. Yet as I listen to the wonderful music playing from my laptop, I taught of this (near) deaf girl.

What she wants in life is so simple. To hear us clearly. To answer the telephone. To use an ipod. To drive.

Sometimes when I look at the misfortune of others, I gloat at myself. Every day I struggle to juggle between societal expectations of a 30 year old graduate, yet within me, all I wanted was a simple, low paying, brainless job to get by the day happily.

So what if I manage to reach $500,000 assets by December 2010? So what if I get the Masters in Applied Finance? Will that warrant a passport to happiness?

I guess it is time to take life slowly now. As I listen to beautiful music, I feel blessed to be even able to hear them. Something that Beethoven couldn’t even enjoy.

I will tender my resignation by the end of this year and enjoy being unemployed. Perhaps I would just be the clerk next door.

Stay tuned. J

Analysis of Macquarie International Infrastructure Fund (MIIF)

Macquarie International Infrastructure Fund Ltd (MIIF) is a mutual fund company that has been formed to own, operate and invest in a diversified group of infrastructure businesses around the world.

It offers investors an opportunity to invest in the Macquarie Bank Group’s first listed infrastructure fund in the Asian region and to participate in the public ownership of infrastructure assets.

MIIF's investments include direct investments in airport infrastructure in Belgium and communications infrastructure and renewable energy assets in the United Kingdom. In addition, it will own interests in one unlisted and four listed infrastructure investment funds that have ownership interests in, amongst other things, airports, communications infrastructure, utility and energy assets, water and gas distribution assets and transport infrastructure assets located across the globe.

MIIF was listed on May 2005 at $1 per share. Its first day IPO price was $1.14. It currently trades at $0.525 (14/03/10). No rights shares were issued from its IPO till date.

Below figure A is a screen shot from MIIF 2H 2009 interim report. It shows the portfolio of MIIF:

Figure B shows the corporate structure and investment of MIIF

Figure B

Regular dividend payouts were given since it was listed on SGX

Dividends are paid semi annually, at 3 cents per annum payout, representing a yield of 5.7%. There is a drop in dividend yield over the years due to a larger conservation of cash to lower its corporate level debt (Source: Business Times Singapore May 2009). Arqiva which is the largest revenue contributor of MIIF contributed 62% lesser investment income on 2H 09 (based on 2H 09 interim report). Also, patronages for its China and Europe assets weaken possibly due to financial crisis across the globe.

It’s gearing ratio from 2H 2009 report stands at 63%, considered normal for an infrastructure fund. (Source: Lecture readings: AMP capital Newsletter)

MIIF has a diversified base of infrastructure, which is profitable and commands a high profit margin (before tax) of about 90% based on 2H 09 revenue and net income report.

At current share price of $0.525, book value of $0.80 and yield of 5.7% (before brokerage charges) MIIF presents a good investment opportunity to investors. The global market is set to recover, ease of borrow to resume, thus MIIF is poised to ride the uptrend.

Moreover, management fees of MIIF is a mere 1.5%, compared to many infrastructure unit trusts charging 2% and above for its management fees. As investors can purchase the MIIF on SGX, there is liquidity and transparent pricing of its funds. The brokerage charge is a mere 0.275%, compared to 2%-5% for other non listed unit trust infrastructure funds. All these will add up to a higher return for investors’ portfolio in the long run.

Analysis of SP Ausnet Part 2

It is observed from the 2h 2009/2010 interim report that Sp Ausnet has the following strong stable characteristics:

· 86% of revenues are regulated

· 100% of regulated revenues locked in until 2011; 62% locked in until 2013

· Prudent gearing & 99% of debt hedged against movements in interest rates

· ‘A’range credit rating enables access to competitive finance

· Distributions & maintenance capexpaid from operating cashflows

Performances over several quarters are also encouraging:

SP Ausnet has delivered steady dividends since listing. Table D below depicts the dividend payouts since listing

Table D

There was a drop in the dividend issued for 2010 (interim dividend) due to a dilution of equity. In June 2009, SP AusNet successfully completed an accelerated non-renounceable entitlement offer (1 for 4 offer@$0.86) raising a total of $408.4 million. Moreover, due to dividend reinvestment plan, more dilution will occur as the number of outstanding shares increase. Investors have a choice of cash or script dividends.

At current price of SGD$1.14, SP Ausnet provides a decent yield of 8.8% (A$1 to SGD$1.25) before taxes. It is also below its NAV of SGD$1.28, hence investors can purchase SP Ausnet below its IPO (offer adjusted) and NAV price.

Investors can also opt for script dividend which will enable him to accumulate more of SP Ausnet at a 2.5% discount.

Analysis of SP Ausnet Part 1

Background of SP Ausnet (Source: http://www.sp-ausnet.com.au and http://www.singaporepower.com.sg/)

SP Ausnet is a subsidiary of Singapore Power (with a 51% controlling stake) and its operations are managed by staff of Singapore Power in Australia. Singapore Power is a leading energy utility company in the Asia Pacific.

With assets of S$26.3 billion at end March 2009, it is one of the largest corporations in Singapore. It owns and operates electricity and gas transmission and distribution businesses.

SP Ausnet owns and operates electricity transmission and distribution networks and gas distribution assets in Victoria, Australia. It delivers a full range of energy related products and services to more than a million industrial and domestic customers. It was listed on SGX at $1.75 per share in Dec 2005. It current trades at $1.14 a share (03/02/10).

Electricity transmission network – carrying electricity from power stations to electricity distributors across all of Victoria via 12,800 high voltage towers and approximately 6,500 kilometres of transmission lines.

Electricity distribution network – carrying electricity from the high voltage transmission grid to over 600,000 customers across eastern Victoria. This network spans approximately 46,000 kilometres across an area of 80,000 square kilometres.

Gas distribution network – transporting gas to approximately 537,000 customers across central and western Victoria. This network spans approximately 9,400 kilometres across an area of 60,000 square kilometres.

In a nutshell, SP Ausnet derives its income from the follow sources (Figure 1):

SP Ausnet has achieved commendable revenue and EBITDA growth over the last 2 quarters. Below is a screen shot (Figure 2) of its latest 1H 2009/2010 financial highlights:

Part 2 will be devoted on the revenue characteristics of SP Ausnet

Portfolio Updates

My portfolio of invested amount went up slightly to breach the $400k mark last week when I took the opportunity to invest as STI fell. If you have read my post here, you would have realised that I need to invest $66k annually from 2010 and acheive return of 7.1% compounded yield before I can reach $1M in 2015.

This means that I need to invest another $10k more to reach my target this year.

Is that possible? I am not sure. Markets are volatile and the economic cycle seems shorter and shorter. My masters programme seems painfully slow to complete and I am literally struggling with my 14 hour job daily (including weekends).

I have switched to a new role (downgraded actually) in my company which means I have to be monitored closely. I hate that kind of feeling of being watched and assessed by goondos. This means that I am likely to tender my resignation and go into full time studies at the end of this year.

Where can I get $66k to invest if I have to be out of job for 6 months? Classmates will shun me too!! haha.. especially the girls!!

The only consolation I have is that my dividends of at least 5% per year will provide me with $20k of pocket money (annually) if I am out of job. (actually slightly more lah!)

That said, I think with prudent money management, having $400,000 of investment funds right now is a nice moment to savour. Although I hope I can breach the $0.5M mark soon, but I do hope the trade offs that comes along are not high...

Thanks for reading this blog and saving it at your favourites. Many people have followed my investment journey... MW, LP, WJ, JW, Marvin, Drizzit, Panzer, ghchua and many more.. I hope you guys will be around, young and fit when I write my $1M post!! :)

8% return on your deposits!

No, this is not a gimmick! For those who are residing in Australia, you can place your deposits at Westpac (2nd largest bank in Aus) and earn a 8% on your fixed deposit. The only catch is you have to place it for a 5 year term.

Wow, only $5,000 minimum sum and you can do it online! Reits in Singapore are not even yielding that kind of return. Forget SPH, Singpost and Starhub! Come over to Australia and enjoy risk free of 8%! Btw, what's the yield of our CPF? Temasek and GIC?

Imagine you put $1M, get the 8% and reside in China.

Beautiful!

Exchange Programme @ UOA

Dear readers:

Sorry for the lack of updates! Sgbluechip has taken a step to go overseas for studies (exchange programme) and currently resides in University of Adelaide. It is a scary yet refreshing experience. Internet connection took days before it was set up. Some photos will tell a little of my story...

Taking portfolio theory (CAPM) and Alternative Investments modules

Streets of Adelaide

More buildings

The place is just so big! Traffic is fine, people are friendly, air is fresh and climate is wonderful!

I can't blog much, due to limited and slow connectivity. Photos were taken from my trusty 2 MP iphone. SBC apologise for the poor resolutions! More updates will be given when I settle down! Wishing a belated happy new year and a huat year for all my readers!!!