Saturday, June 27, 2020

Capital Allocation Jun 20



Share 17% 
US portfolio consistently outperform SG portfolio. This reaffirms my direction - focus capital gain from US stocks, cash flow from SG stocks.

- Added Uber 100 @ $30, Pfizer 100 @ $33.30 
- Sold Gilead 50 @ $76, small capital gain. 

Dividend
Q1'20 - $2k
Q2'20 - $2.6k

Warchest 29%
Warchest to Shares ratio - 63:37. Share ratio sightly increases by 3 point.

Plan to increase my US share investment and further increase share ratio to 40.

SRS 4% 
50% invested in Singapore saving bond with min interest earned (1-2%). 

- Added OCBC 1000 @ $8.90

CPF 23% 
OA balance can cover 21 months loan installment.

Emergency fund 13%
Earning interest  ~2%.
Can cover > 2 years living costs if something go wrong. This should be furthered reduced to 1 year.











Monday, June 22, 2020

Cost Saving from HDB Resales

I would like to list down some savings as well as mistakes I made from my sales of HDB.

1. Agent commission

The agent I engaged charge a fixed commission which is less than 1% of selling price. I manage to save ~$5k compared to standard agent commission (2% of selling price).

Please note low agent commission might came with a price in term of services. refer to point 2 in:

2. Legal Fee

I manage to find a law firm which charge $1,200 legal fee (net, inclusive GST) for HDB resales, instead of $1,600 quoted by other firms. I save $400.

I forget to check if HDB ca act as seller lawyer and how much it will cost. I'm assuming it will be lower than $1,200, probably I will save additional $200- $300.

3. Bank Loan Interest 

My bank loan requires 3 months full redemption notice, which I forget to request my lawyer to expedite in issuing redemption letter as soon as HDB has confirmed HDB resales appointment date.

There was also delay in issuance of redemption letter to bank from my lawyer due to staff turnover & Covid situation, I end up need to pay $1.2k extra loan interest to cover 3 months full redemption notice.

I should have instructed my lawyer to issue redemption letter based on estimated HDB resales appointment date.  Bank charges  for change of redemption date (<$200 as per my lawyer) much lower than $1.2k loan interest.

Sunday, June 21, 2020

Sold My 1st HDB At Loss & Lessons Learned

I bought my HDB at $500k, sold it at $438k, $60k+ loss after 6 years. 

Few lessons learned:

1. Potential loss from resales HDB transaction if you buy at wrong timing

I bought my first HDB through resales market 6 years ago, when property market was hot and before government announces last cooling measure. At that time, the HDB I bought was valued at $480k and I paid $20k COV for it.

After 6 years, HDB valuation dropped from $480k to $420k (info from buyer) and I sold it at $438k.

It makes me feel liking buying stocks. If you buy at high price (Peak), you might potentially making loss when you want to sell it. 

2. Do your own research

The agent I engaged charge a fixed commission fee which less than 1% of selling price. This is much lower than usual agent commission 2% of selling price. However, it came with a price in term of services.

A lot of noises from my agent to influence me accept an offer price so that he can close the deal instead of going back to buyers to negotiate for higher price.  I manage to reduce my loss by $10k+ by not 100% listen to what agent said.

You shall do your analysis in term demand & supply of resales HDB in your area instead of 100% rely on agent. Otherwise, you might at risk to sell your unit at your agent expected price, not yours.

3. Get a BTO if possible

I manage to get my 2nd HDB through sales of balance flats. However, I do not qualify for any government grant due to income level & HDB located ar mature area.

I have applied for bank loan after move in my new BTO. Guess what, bank valuation for my new unit is $100k higher than my purchase value.

If someone tell you buy a HDB will make profits. This is probably true if you get a BTO, not resales HDB.

Thursday, June 18, 2020

2020 Mid Year Portfolio Update

Portfolio has increased from $447k as of Dec 19 to $617k, mainly from capital injection.

Cash ratio is high, my expected ratio will be 50:50 at this stage. Currently I'm getting 1 - 2% interest from various bank accounts. I need to find better place to park my cash since banks have reduced interest rate. 

Top 9 category remained 90%, within range of 75% - 95% as planned. 


AbbVie remained as my largest investment. I managed to grab 100 shares @ $68 in March. I was trying to be greedy when others are fearful. But guess what, I was not greedy enough.

I intend to buy DBS, OCBC and Pfizer during first week of Jun, however these investments were not get through and subsequently price rises. So I miss out 3 shares to fill my top 9 category. 

I will continue to tick the box - keep 18 shares max and slowly add more US Pharma & SG banks shares under Top 9 category.

US market is shooting higher and SG market is recovering, I remind myself to be fearful.

For now, I will stay relax and collect dividends...

Monday, June 15, 2020

Incomplete Financial Highlights - Pharmaceutical Co. AbbVie




Revenue grows year over year since Abbott/ AbbVie split in 2013, mainly due to blockbuster med - Immunology Humira, Oncology Imbruvica and Virology HCV sales.

In 2019 & Q1 2020, OUS Humira sales decreases due to biosimilar competition, mainly in Europe. HCV sales decreases due to price competition and declining market patients. These decreased sales were offset with strong performance in US Humira and Imbruvica sales.

AbbVie paid $4.28/ share dividend in 2019 ($1.07 per quarter) and $1.18/ share in Q1'20. AbbVie has good historical dividend payout record. Dividend payout has increased > 150% since 2013 ($0.40 in Q1'13 to $1.18 in Q1'20).

AbbVie has completed $63billion Botox-maker Allergan acquisition in May 2020. It will be interesting to see what is the consolidated Q2'20 performance, as well as full year revenue forecast and how it impacts AbbVie share price.

AbbVie note in a statement:
Allergan provides new growth opportunities in neuroscience, with Botox therapeutics, Vraylar (cariprazine) and Ubrelvy (ubrogepant) and a global aesthetics business, with leading brands including Botox (botulinum toxin type A) and Juvederm.

This diversified on-market portfolio will drive the existing AbbVie growth platform (ex-Humira) to approximately $30 billion in revenues in full year 2020, with combined revenues of approximately $50 billion

This combined revenues will probably make AbbVie becomes No.4 Pharma Company in term of revenue in 2020.

Current share price $92.46.

If I take Q1'20 EPS x 4 quarters, 2020 PE will be about 11, which is reasonable if we compare with other Big Pharma companies. Note: This PE is excluding Allergan's contribution. 

Is AbbVie a good buy at this price? Few considerations:

Revenue
OUS Humira sales are decreasing. US Humira sales will drop once biosimilars able to enter US market in 2023. Will revenue from new asset launches (e.g. Skyrizi, Rinvoq) and Allergan on-market revenue grows able to cover US Humira declines from 2023 onward? 

Note: Humira is the world best selling drug with nearly $20billion revenue in 2019.

Operating Earning
Will AbbVie able to deliver its expected SG&A savings $2b in 2-3 years from Allergan integration? Any potential integration disruption to commercial execution? Will AbbVie/ Allergan product mix improves new AbbVie operating earning?

Capital allocation
With $63b Allergan acquisition and high debt level, will this impact dividend payout ratio? AbbVie is projecting $24 billion in free cash flow in 2020 and estimated $24 billion in 2021 which allow the company to reduce debts and keep its dividend payout.

Q1'20 Performance
Revenue $8.6b +10.1% 

Immunology:
    Humira sales $4.7b +5.8%.
        - US $3.7b +13.7%
        - OUS $1b -14.9% due to bios competition

    Skyrizi $300m
    Rinvoq $86m

Hematologic oncology $1.5b +32.1%
        - Imbruvica $1.2b +20.6%
        - Venclexta $317m 

Gross margin 77.5% (GAAP), adjusted 82.7%
SG&A19.7% (GAAP), adjusted 18.6%
R&D 16% (GAAP), adjusted 14.3%
Tax rate 2.8% (GAAP), adjusted 9.7%
EPS $2.02 (GAAP), adjusted $2.42




Monday, June 1, 2020

21 Years FIRE Projection - Achievements, Goals and Financial Freedom (Magic need time)




Year 1 - 13: Work to date achievements

Year 14: Current year goal (May month to date progress in line with full year goal)

Year 15-16: Mid term goal (basic retirement need)

Year 17 - 21: Long term goal (comfort retirement need)


时间能让表面上不可能的事情变成可能。时间可创造奇迹。

How I maximise cash flow from BTO purchase - HDB loan & bank loan

For BTO buyer who want to pay lower downpayment (10%) while enjoy lower bank interest rate vs HDB loan (2.6%).

This is what you can do:
1. Take HDB loan - pay 10% downpayment
2. Convert to bank loan after few months - get lower interest rate.

I refinance my HDB loan with DSB 5-Year Fixed Rate package which allow me to have 1.8% fixed rate for 5 years (stability) while still lower interest charges as compared to HDB loan. 

With this - I manage to save:
1. ~ $100k downpayment (CPF/ cash) as my cash flow to be used for future loan installment (vs bank loan)
2. ~$300+ monthly interest charges for first few years.

Refer to scenario 3:
Benefits
- Lower downpayment $68k vs $170k if take bank loan directly.
- Lower interest 1.8% (after refinancing) as compared to HDB loan.

Condition: 
- Bank revaluation with higher value vs BTO price.