Global Investments

[Boon]

Hi Boon,

I used the figures from FY 2010 till date since this represents the years which STAM took charge. Looking at the 4Q financial statements for each of these years, I extracted the gain on disposals from the P&L Statement:

FY 2010
Gain on Disposal: $0.100 million (Settlement of Cash-flow Finance Solution Ltd)

FY 2011
Gain on Disposal: $3.608 million (Divestment of Series Residual of Newgate Funding & RMBS Notes)

9M 2012
Gain on Disposal: $1.253 million (Sale of recently invested equities and partial sale of FLY Leasing shares)

Total: $4.961 million

Hi Nick,

To really gauge the performance and capability of the new management over the period from 2010 to now, for realized capital gains on divestment of investments, I would count only the following 2 disposals:

1) Gain on disposal of AHM 2005-4 1A3 RMBS in 2011 of SGD 1.105 million
2) Gain on disposal of recently invested listed equity in 3Q2012 of SGD 0.286 million

Strictly speaking, the other asset disposals were realized at a lost - these assets were bought at much higher costs by the previous management team B&B. Most of their values had been fully or partially impaired.

On gain of disposal of $1.253 million for 9M2012, of which $1.090 million was booked in 3Q2012.

From the cash flow statement of investing for 3Q2012: Proceeds from sale of financial assets = $7.104 million

From the 3Q2012 current-asset-review for recently invested listed equity, it is stated that: During the quarter, GIL purchased a total of S$30.65 million in listed shares, of which S$5.88 million was subsequently sold. The net profit on the sale of shares amounted to about S$286,000 Therefore, proceed from sale of listed shares inclusive of gain of $286,000 should be $6.166 million.

This will leave 7.104 – 6.166 =$ 0.938 million, being proceed from sale of OTHER financial asset, out of which 1.090 – 0.286 = $ 0.804 million is profit.

This does not make sense. Am I missing something?

[Nick]

Sorry for the late reply. My guess is that if they sold some of their assets on the last day, the funds (ie cash settlement) may not have been remitted quickly ?

I am fairly surprised by GIL share price appreciation in the recent week increasing from 0.148 on Friday to 0.156 currently with relatively decent volumes. Is this a classic case of yield compression or could there be some positive developments ahead - they have over $50 million cash to deploy ? I daresay this marks the end of 10% yielders in SGX (for now) haha !

(Vested)

[Boon]

I am fairly surprised by GIL share price appreciation in the recent week increasing from 0.148 on Friday to 0.156 currently with relatively decent volumes. Is this a classic case of yield compression or could there be some positive developments ahead - they have over $50 million cash to deploy ? I daresay this marks the end of 10% yielders in SGX (for now) haha !

(Vested)

Share price surged to 0.172 with over 3 million shares traded today. Further Yield Compression or something is brewing?

(Vested)

[goldmansion]

a rising tide raises all ships.

[Nick]

The Board of Directors of Global Investments Limited wishes to announce that the Company will be releasing its financial results for the fourth quarter and full year ended 31 December 2012 on Thursday, 7 February 2013.

http://info.sgx.com/webcoranncatth.nsf/V...4002FA37B/$file/01_20130131_DateOfReleaseOfFourthQuarterAndFullYear2012FinancialResults.pdf?openelement [SGX Announcement]

GIL closed at 17.6 cents giving rise to a dividend yield of 8.5%. It will be interesting to see whether have they deployed their sizable cash-hoard to new investments.

(Vested)

[l0nEr]

Looks like good job done...
Kinda expected given the strong market rally in Q4.

+ Unexpectedly sold the stake in Fly Lease for a 2 million profit.
+ Invested in Equities and Bonds. Most of the equities are in Hong Kong and in financials (sounds a lot like China Banks to me). Also invested in Japan, thus should be benefiting from the strong rally in China and Japan.
+ 0.0075 dividend as promised. Means about 9%+ dividend yield.
+ Script dividend plan. I havent had script dividends before, can anybody advise how to trade the odd lots if i receive the script dividend.


GIL RECORDED STRONG PROFIT GROWTH FOR THE FOURTH QUARTER AND FULL YEAR OF
2012
• Net profit after tax surged 127.5% to S$4.6 million for the fourth quarter and 56.1% to S$19.1
million for the full year of 2012
• Total comprehensive income attributable to shareholders jumped 62 times to S$5.6 million for 4Q
2012 and 53.9% to S$15.9 million for the full year
• Return on Equity (“ROE”) rose to 11.2% in FY2012 from 9.0% in FY2011
• Declares 2012 final dividend of 0.75 Singapore cents per share on its enlarged share capital
Global Investments Limited (the “Company”) has today released its financial results for the quarter and
year ended 31 December 2012.

[Nick]

GIL FY 2012 Result:

http://info.sgx.com/webcoranncatth.nsf/V...B00330254/$file/02b_20130207_CurrentAssetReview4Q2012.pdf?openelement [Current Asset Review]

http://info.sgx.com/webcoranncatth.nsf/V...B00330254/$file/02a_20130207_FY2012ResultsPresentation.pdf?openelement [Presentation Slide]

http://info.sgx.com/webcoranncatth.nsf/V...B00368187/$file/03b_20130207_4Q2012SGXQuarterlyReport.pdf?openelement [SGX Result]

http://info.sgx.com/webcoranncatth.nsf/V...B00378588/$file/04_20130207GILScripDividendScheme_FinalDividend.pdf?openelement [Scrip Dividend]

Operationally, the mutual fund performed better than expected due to one off gains from the sale of RMBS Notes and FLY shares. In FY 2012, it generated $11.2 million recurring PBT and $3.3 million gains from disposal of assets. Cash-flow wise, it generated $9.3 million free cash-flow after accounting for interest and debt repayment. At the moment, to maintain the 1.5 cents dividend, it needs to generate recurring PBT > $13 million. I think this can be achieved in FY 2013 with the slew of M&A in the previous quarter - acquiring i) A$4.95 million Australian RMBS with blended yield of 6.91% + BBSW, ii) US$10 million in Start VIII CLN with 3ml + 12.75% interest, iii) acquired S$13.0 million in listed Asian equities to increase its portfolio to S$39.96 million with blended dividend yield of 3.4% and iv) acquired S$13.50 million of USD and SGD corporate bonds with 5.64% coupon rate. It must be noted that the 2 aircraft will be sold on 30 April 2013 hence the recurring rental income will cease thereafter.

My Estimate for FY 2013 - I may be wrong !!!!!

FLY Leasing - 0.876 x 0.88 = US$0.77 mil (22 US cents quarterly div)
Ascendos - S$1.6 mil (same as 2012)
Aircraft - (4,765 - 1,297 - 1,325) / 3 = US$0.71 million (4 months lease)
Listed Equities - S$1.35 million (using the weighted yield)
Bonds - S$0.76 million (using the weighted yield)
US CLO - US$2.78 million (using the interest given and ignoring 3ml)
Australia RMBS (Seiza Class F & G and RBTS Class D & E) - A$3.0 million (using the interest given and ignoring BBSW rates)
Europe CLO - S$1.5 million (10% discount from 2012)
Total: Approx S$14.2 million - still shortfall though capital gains could cover it.

I suspect the current cash of $24 million and the cash proceeds from the sale of the aircraft will drive further acquisitions in 2013. I like that the Fund is now invested in more liquid assets like bonds and listed equities and that its past investment in the US RMBS, adding stake in Ascendos, Asian equities have started to generate capital gains. Its investment in Asian currency denominated assets will also serve as a form of diversification. Personally, I do feel a little apprehensive about holding on to equities in light of the bullish market so we have to see how nimble STAM is. Going forward, I wonder will GIL continue to focus on paper equities or begin to replenish its operating lease assets which it has started to divest ? The high yielding notes may suffer impairment in a credit crisis. Overall, I am glad the Management has finally used the rights proceeds issue to diversify its portfolio away from the legacy assets. I still think this is a high risk investment in terms of the Fund cash generating ability though the Market seems to like it in recent months and it is now trading at $0.180.

Key question - will buddies accept scrip or cash ?

(Vested)

[Boon]

GIL announced a good set of FY2012 results yesterday, which looks impressive from an accounting perspective.
Net Profit after Tax = SGD 19.1 million (Up 56.1%)
EPS = SGD 2.53 cents (Up 10.5%)
Dividend declared for 2H2012 = SGD 0.75 cents per share.

Let’s look at - if current semi-annually dividend payout of SGD 0.75 cents per share could be covered with recurring cash-flow alone.

1H2012
Ops Cash-Flow = SGD 5.169 million
Interest Expense = SGD 0.601million
Debt Repayment= SGD 0.978 million
Recurring Cash-Flow = SGD 3.590 million
Dividend Paid = SGD 6.190 million
Recurring Cash-Flow less Dividend = - SGD 2.6 million (without taking into consideration of using cash-flow from gain on sale of investments)

2H2012
Ops Cash-Flow = SGD 7.333 million
Interest Expense = SGD0.554 million
Debt Repayment= SGD 0.995 million
Recurring Cash-Flow = SGD 5.784 million
Dividend declared = SGD 6.190 million
Recurring Cash-Flow less Dividend = - SGD 0.406 million (without taking into consideration of using cash-flow from gain on sale of investments)

FY2012
Ops Cash-Flow = SGD 12.502 million
Interest Expense = SGD 1.155 million
Debt Repayment= SGD 1.973 million
Recurring Cash-Flow = SGD 9.374 million
Dividend Paid/declared = SGD 12.38 million
Recurring Cash-Flow less Dividend = - SGD 3.006 million (without taking into consideration of using cash-flow from gain on sale of investments)

Gain on sale of investments reported for FY2012 = SGD 3.307 million, comprising:
1) Gain on sale of Listed Equities = SGD 0.410 million
2) Gain on sale of 174,749 shares of FLY Leasing = SGD 2.03 million (Highly Questionable on this figure !!!!!)
3) Gain on disposal of remaining US RMBS = SGD 0.868 million ( deduced figure )

A: Comments:
1) Recurring Cash-Flow for 1H2012 was insufficient to cover dividend payout (SGD 2.6 million in deficit). However, in 2H2012, it improved significantly - with the deficit gap being reduced to just SGD 0.406 million. This is a positive and encouraging sign of probable sustainable dividend payout of SGD 0.75 cent paid semi-annually from recurring cash-flow, without taking into consideration of using cash-flow from gain on divestment of investments.
2) If recurring cash-flow could sustain current level of dividend payout, then any gain on sale of investments would be a bonus – if there were “real and genuine gains”
3) I am glad that all remaining portfolio of US RMBS had been sold off for a capital gain as it was a capital gain play and not a yield play – the yield was simply too low..
4) Gain on sale of Listed Equities of SGD 0.410 million had been reported.
5) GIL sold off 174,749 shares in FLY Leasing and reported a net gain of SGD 2.03 million. This works out to be a GAIN of SGD 11.6 per share or around USD 9.3 per share. During 2012, share price of FLY fluctuated between USD 11.50 (lowest) to USD 13.88 (highest) – within this range of USD 2.38. Over the years, the portfolio of FLY shares had been marked to market at the end of every reporting quarter. The whole portfolio of 1,051,010 shares was marked to market the end of 2011 (Dec 30) at USD 12.50 per share. Therefore, gain per share at most, assuming there were disposed of at the highest price in 2012, would be USD (13.88 – 12.50) = USD 1.38 per share. It is absolute illogical and make no sense to arrive at a gain of around USD 9.30 per share ????????? To me this is certainly not a “real and genuine gain” - some sort of “creative accounting”????????????????

B: Comments on new investments made in 4Q2012 :
1) GIL invested AUD 5 million in Australian RMBS (Resimac Bastille Trust) – with yield of about 8.75% (Class D) and 11.0% (Class E) – assuming BBSW (Australian equivalent of LIBOR) of 3.00%. >> Estimated additional yearly interest income of about AUD 0.49 million.
2) GIL invested USD 10.1 million in START VIII CLO Limited, a newly issued synthetic Credit Linked Note, with yield of 12.75% (assuming 3mL = 0%). >> Estimated additional yearly interest income of about USD 1.28 million.
3) GIL invested in various SGD and USD bonds with a carrying value of SGD 13.50 million. 65.0% of the portfolio was in SGD, with the balance in USD. The approximate weighted average annual coupon was 5.64%. >> Estimated additional yearly interest income of about SGD 0.76 million
4) GIL purchased an additional S$13.07 million in listed shares, bringing the total portfolio value to about SGD 40 million at end of 2012. The weighted annual dividend yield of the portfolio was about 3.4%. >> Estimated yearly dividend income of about SGD 1.36 million
5) The above 4 items will contribute to a total yearly recurring income of over SGD 4 million which is significant.

Conclusion:
Going forward, with the deployment of most of the excess cash in acquisition of new investments in 4Q2012, it seems like the semi-annually dividend payout of SGD 0.75 cents is sustainable – funded with recurring cash-flow alone. Any gain on disposal of investments would be a bonus if there were “real and genuine”.

Ignoring the reported gain made on partial divestment of shares in FLY Leasing, overall, it was still a good set of results.

(Vested)

[Retired@52]

I invested quite a bit in Global Investment so I would like to share a bit of its history.

This stock was formerly called Babcock & Brown.

It was listed on SGX on 20.12.2006 @ $1.06 per share.

At the height it was traded @ $1.161 on 07.06.2007 (adjusted price).

At the trough it was traded @ $0.046 on 31.03.2009 (adjusted price).

I bought this stock since 2008 on 7 occasions ranging from $0.70 all the way down to $0.06

In Nov 2009 it was taken over by ST Asset Management Ltd (STAM) to manage the funds.

I’ve since collected the dividends of more than $20,000.

The average dividend for the last 3 years is $0.0133 PA.

Stock Price on 08.02.13 is $0.18

The Current Yield is about 7.4% PA ($0.0133/$0.18).

If they continue to pay $0.0075 twice a year then the current yield will be 8.33% PA

I’ll keep this stock for dividends as the yield is still quite attractive at current price.

[Boon]

GIL sold off 174,749 shares in FLY Leasing and reported a net gain of SGD 2.03 million. This works out to be a GAIN of SGD 11.6 per share or around USD 9.3 per share. During 2012, share price of FLY fluctuated between USD 11.50 (lowest) to USD 13.88 (highest) – within this range of USD 2.38. Over the years, the portfolio of FLY shares had been marked to market at the end of every reporting quarter. The whole portfolio of 1,051,010 shares was marked to market the end of 2011 (Dec 30) at USD 12.50 per share. Therefore, gain per share at most, assuming there were disposed of at the highest price in 2012, would be USD (13.88 – 12.50) = USD 1.38 per share. It is absolute illogical and make no sense to arrive at a gain of around USD 9.30 per share ????????? To me this is certainly not a “real and genuine gain” - some sort of “creative accounting”????????????????

I have been searching for a possible answer on this issue.

Let’s look at the RANGE of FLY Leasing share price on quarterly basis in 2012:

1Q2012
Low = USD 12.12
High = USD 13.67
Range = USD 1.55

2Q2012
Low = USD 11.50
High = USD 13.15
Range = USD 1.65

3Q2012
Low = USD 12.55
High = USD 13.57
Range = USD 1.02

4Q2012
Low = USD 11.53
High = USD 13.88
Range = USD 2.35

Gain of SGD 2.03 million = about USD 1.637 million. This worked out to be about USD 1.56 per share owned at beginning of 2012 of 1,051,000 shares. Looking at the historical share price range, opportunities did exist for GIL to make such a GAIN by selling the whole portfolio of share at HIGH end of the price range and buy back at the LOW end.

Did GIL do that - i.e "Trade" ? Only the Management could tell.
After all, GIL did “Trade” on the newly acquired Asia Listed Equities in 3Q and 4Q2012, and reported a total gain of SGD 0.41 million.