Bought into Kepland at $3.49 less than a week when it went on a trading halt followed by the news that KepCorp offered to privatize it at a price of $4.38/share or $4.60/share if it is able to obtain at least 90% of acceptance. Out of a sudden, assuming the privatization will be successful (and in no way it will not be), the gain of my Kepland investment becomes +31.81% (with reference to $4.60) in the shortest ever time for my whole investment journey.
The reasons of buying into Kepland are :-
1. Strongly believe Government will start to ease property cooling measures this year and like any other property developers, Kepland will stand to gain and that is where the capital appreciation of the investment will come in.
2. Like Kepland's strategy of developing both commercial and resident property to provide diversification in the vertical domain.
3. Kepland is one of the few big name developers that have projects around the regions, Singapore, Vietnam, China, Indonesia, Malaysia, Thailand, Philipines, Myanmar and India. That is diversification in the horizontal domain.
4. It never fail to give out dividend annually since 2001 and on average giving out at least $0.10/share of dividend per annual. That will translates to at least 2.87% of dividend yield with reference to $3.49 and that is higher than what CPF Board could offer of 2.5% per annual.
However, the news of privatization has a mixed feeling for me.
On one hand you feel happy that the investment will get a return of +31.81% in less than a year and that translates to an annualized return of +31.81%. That figure is very impressive for any long term investment.
On the other hand, the privatization means I will lose to gain in the long-term. Property market has on a decline since the 7 round of cooling measures and no doubt property price might still have a little more to decline but the downside is pretty limited for now. Further decline will hit the threshold and resulting in property market crash, sending Singapore economy into recession and that is something the Government will not want. The onus of property market rebound is there and that is where I believe I have picked the bottom of the property stock and will get the reward when property market actually rebound.
As a result of the privatization, I have no choice but to shortlist another property stock to be in my portfolio.
