Saturday, December 13, 2008

Scheming SGDividends Just Playing Around

Cambridge has sort of cleared some issues with their financing. So, what now, can buy, can short? The Article Written by Our Sexy VJC Girl seemed to have drawn an intense discussion Here.Maybe its cos of the word SEXY which after minusing the "Why" gives a pretty nifty,cool word. Anyway, the discussion was on the value to use as a discount factor, k, so that when we discount back to find the fair value of Cambridge, its appropriate. Probabilities, Scenarios, CAPM words were mentioned and its quite an intellectual read actually, which left us starry-eyed.

Ok so we used 6% ( preferential DBS share) as the discount factor(k) used previously to find the $1 value(Max) and it has drawn some different reasonable opinions and they got a point since DBS is less risky than Cambridge REIT. But SGDividends just don't know how to use Probabilities, CAPM, calculate the WACC ( especially the Cost of Equity) e.t.c to find the discount (K) appropraite to discount back to find the value of Cambridge. So can we be more simple?Can we use some scenarios based on comparing with industrial reits in Singapore by using their dividends yield? Is it logical? Hmm, if dividend yield is one of the factors which investors look at when deciding which Industrial reit to invest in , can we consider the dividend yield as an opportunity cost? For example, if we were to invest in Cambridge, we would be forgoing the dividend yield in MapleTree and vice versa. ( OK this is not from CFA textbook, we just play play test test only lah...give chance) We all know that dividends yield is constantly fluctuating too but anyhow lets take it with a pinch of salt and just try using it as the discount rate.

Let's experiment and try it out, shall we? Let's use the values from this fantastic blog .

REIT Dividend Yield
MI-REIT 40.870%
MapleTree 17.671%
A-REIT 13.367%
Average Dividend Yield above ( as at 12 Dec 2008) = 23.96%
Average Dividend Yield for Singapore REITS = 19.314%
( Let's assume their data is correct! Should be lah...randomly tested.)
Growth Rate ( G) = 0,

Discount Rate ( k,Required Rate of return) = Dividend Yield of Peers

Dividend (D) = $0.053 ( after cut of 0.9c).

Years of asset (n) = 65 years
(Pls see our article Titled : Sexy Vjc Girl Analyses Cambrigde REIT to understand the gibberish we are merlion-ing)

Lowest Value of Cambridge ( Using MI REIT yield) = S$0.13
Highest Value of Cambridge ( Using A-REIT yield) = S$0.40
Average Value of Cambridge ( Using Average Yield) = S$0.22
Value of Cambridge when compared with Yield of Singapore REITS = S$0.27
Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

3 comments:

  1. Dear Mr Tan WK, (emailed to us)

    The reason why you are unable to trust us on our values is because we don't want you to trust us.

    You mentioned that we confuse people by giving seemingly rational analysis and reasonable values but use pictures, cartoons, ridiculous words, that you don't know whether you believe in what we are saying or are we just joking.

    SGDividends interpret that you mean you are confused.

    Sorry if we made you confused. We don't want investors nor anyone to trust us nor we expect anyone to use our data. The purpose of this blog is just to make people think about their investments and not just to take things at face value cos we may be from a hedge fund company spreading rumours, from government increasing financial literacy, from some retrenched group who just want to blast companies which have retrenched us..e.t.c.

    So its your money, think for yourself.

    (reproduced here just to share)

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  2. i noticed that you use 1.43 -0.9 to get 0.053. This is incorrect as the -0.9 is for the whole year while 1.43 is the dividend for one quarter. Instead, u should use the full year dividend to minus the 0.9 to derive at the figure. Just my 2 cts.

    ReplyDelete
  3. Hi Anonymous,

    We took the dividends from
    http://www.cambridge-itrust.com/ir_financial.htm.

    This is before the cut of 0.9 cents.

    Dividends before cut a year = 6.26 cents
    Dividends after cut = 6.26 - 0.9 = 5.36 cents

    5.36 cents = $0.054 ( Ok we know we wrote $0.053...paiseh)

    ReplyDelete