The Game Plan

Review of 2014

2014-12-22T22:23:00.000+08:00

It's the time of the year again for a review of my portfolio. In terms of market performance, the local stock markets were unremarkable and mainly traded sideways in 2014. My own portfolio was up 15% to $145k from $126k last year. This included net new investments of about $18k. Overall portfolio profit remained fairly similar to last year at $22k. This was quite expected given the relatively flat performance of the STI.

Overall dividend for the year stands at about $8.2k. This is almost 82% higher than last year's dividend of $4.5k. This is largely due to one off special dividend from CSE Global, which accounted for $2.8k. Dividend yield currently stands at about 5.6% on current portfolio value and 6.6% on cost. Yield is somewhat inflated in view of the special dividend. I hope to maintain a yield of above 5% going forward.

I have initiated quite a few positions this year. This included Hour Glass, Super Group, Cache Logistics Trust and Keppel Corp. I've also added to my existing holdings in CSE Global. I've divested my holdings in CMA due to the buyout by Capitaland. Overall, companies in my holdings have performed fairly with no particular outperformance. Super Group did quite badly amidst the sell down during the year. I have since averaged down on the stock. I will continue to monitor the fundamentals of the stock to see if it improves in the coming year. OKP continues to be an underperformer.

Moving into 2015, I will likely adopt a wait and see approach in terms of my stock investments. This is partly due to my upcoming career switch, which I would need some time to settle down. While the market is not overvalued at this point when compared to historical norms, macro factors will likely come into play with the impending interest rate hikes and also global uncertainty with regard to oil prices.

Recent Stock Actions: Keppel Corp

2014-12-19T19:44:00.000+08:00

It's been a busy few months as I prepare for a career switch early next year. So there's been no new post from me the past few months. Just a short post to note down my recent stock actions on KeppelCorp. With the massive sell down in the O&G companies following the drop in oil prices, I've finally initiated a position in KeppelCorp.

I've always liked Keppel for its diversified and fundamentally strong business model. It has also been fairly consistent in growing its dividend payouts over the years. However, I've never felt its pricing was attractive enough to justify entering a position. I see the recent sell down as an opportunity to start a position in the company. At current prices, it has a pretty attractive dividend yield of around 5%. Of course, we cannot be sure if it can continue with its dividend payout, especially with the uncertain macro environment which will likely impact its earnings in time to come.

I'm not particularly concerned about the current oil situation as the O&G industry tends to operate in market cycles. Hence I do believe it's part and parcel of the market cycle in the industry. We can't predict how low oil prices will go or how long the current downtrend will last, but it will likely recover in time to come.

But I do think we shouldn't ignore other potential business risks in Keppel which has not been priced in currently. One area I would pay attention to would be Keppel's property business, particularly in China. I do think the China property market is due for a correction and if and when it does happen, would likely impact Keppel further as a large part of their property business is based in China.

Has Super lost its steam?

2014-08-16T18:14:00.002+08:00

Super Group reported a lacklustre half yearly results recently. Just how bad is bad? The headline figure does look pretty alarming. A whooping 43% drop ($25 mil) in the profits for the period. I take a look at its latest financial report to find out what happened.

Going deeper into the report, we can better understand how the drop came about. A large part of it was attributed to (or rather lack of) a one-time gain of $17mil from the disposal of a company interest that was recognised in 1H13. Another $2.4 mil was explained by forex gain in 1H13 and $1.6 mil for amortisation of deferred gain. Once we removed all the one time items, the drop in profits doesn't look as bad. Effectively, profits would drop from $39mil in 1H13 to $34mil in 1H14. This represents a drop of about 12%. Still bad, just not as bad. Purely looking at operating profits, the report records a drop of 22% from $47mil to $37mil.

Other than profits, we can also take a look at other stock fundamentals of the company. Dividends effectively remained the same after accounting for the 1-for-1 bonus issue. Debt to equity ratio increased from nil to 4.2%. Net profit margin based on operating profits fell from 17.7% to 14.6%. Price to earnings ratio is about 23 based on annualised 1H14 EPS of $0.0295.

All in all, the results are not good. But definitely not as bad as the headlines would suggest. Maybe the expectations for Super was just too high based on the past outstanding performance. That said, all companies go through ups and downs. And perhaps this could present an opportunity to accumulate more of the stock. The biggest question lingers if this is the start of a prolonged downturn, or just a temporary drop in an otherwise "super" track record.

Update 23 Oct: I've added on to my holdings in Super Group with the recent slump in the share price.

Edit 18 Aug: Added projected earnings chart below for my own reference.

1H12*	2H12*	FY12*	Dividends
$0.03155	$0.03935	$0.0709	$0.01 + $0.0255 = $0.0355 (50%)
1H13*	2H13*	FY13*
$0.0526	$0.037	$0.0896	$0.01 + $0.035 = $0.045 (50%)
1H14	2H14 (projected)	FY14 (projected)
$0.0295	$0.030	$0.0595	$0.01 + $0.019 = $0.029 (50%)

*Re-stated based on bonus share issue

Dividends in Oct - Dec 2014

2014-08-14T20:52:00.001+08:00

Riverstone - $0.0092/share - $46 (9 Oct)
Cache Logistics Trust - $0.0214/share - $64 (26 Nov)
FCT - $0.02785/share - $56 (28 Nov)
AIT - $0.024/share - $480 (10 Dec)
SATS - $0.05/share - $50 (12 Dec)
Boustead - $0.02/share - $300 (27 Jan)

Total - $996

City in the North

2014-08-02T13:10:00.000+08:00

Northpoint City

Northpoint City. That's the name of the latest integrated development by Frasers. Being a northerner myself, I'm happy to see the latest slew of developments that will bring some excitement to the otherwise quiet north. Northpoint City is set to anchor the developments in the Yishun area when it's completed by 2018. Besides Yishun, we will also expect to see infrastructure as well as commercial space development that will gradually bring the north up to pace with the rest of Singapore.

North Coast Innovation Corridor

One of the broad overarching development is the North Coast Innovation Corridor. This will be spread out over Woodlands, Sembawang, Seletar and Punggol. In time to come, expect to see more business and commercial spaces that will yield greater job and business opportunities to the north over the next 5 to 10 years.

Infrastructure Developments

Set to complete by 2020, the North-South Expressway will cut travelling time to the city by up to 30%. The new Thomson MRT Line will also be completed by 2021 and travel time from Woodlands to Orchard will reduce to 35 min as compared to 50 min.

The newly announced Canberra MRT will be completed by 2019. This will serve the needs of residential development in the Canberra area. With a large cluster of private and public housing developments, the new station will bring added convenience and vibes to the area.

Woodlands Regional Centre

Perhaps the biggest potential in the north lies in the Woodlands Regional Centre. Compared to the Eastern and Western Regional Centres which has seen much progress over the last 10 years, Woodlands Regional Centre is still relatively quiet with just Causeway Point and Woodlands Civic Centre. This is set to change with the re-zoning and plans laid out in URA Masterplan 2014.

Indeed, it's exciting times ahead for northerners. Expect to see more developments as the plans are rolled out and infrastructure is completed to pave the way for growth in the north.

Recent Stock Actions: Cache Logistics Trust

2014-08-01T21:36:00.001+08:00

Recently added Cache Logistics Trust to my portfolio of reits. The stock is currently going at about 7% dividend yield.

It's a fairly simple trust that currently owns 14 warehousing properties (13 in SG and 1 in China). It was listed in 2010, and since then have been fairly consistent in growing its distribution income. In terms of balance sheet, it's gearing is moderate at about 30% currently.

One of the positives I see is that one of its Singapore properties (DHL Supply Chain Advanced Regional Centre) is still undergoing construction and due for completion in 2015. This will contribute to its income in due time.

The main risks I see going forward are the impending increase in interest rates which will affect all reits and the increase in supply of industrial properties over the next few years.

Review of My Portfolio

2014-07-29T22:18:00.000+08:00

In line with the recent naming of my portfolio as well as defining the portfolio composition, I have decided to do a quick review by classifying the counters in my portfolio into their respective categories as below. It will also help me to decide which are the ones that I should trim / remove from my portfolio eventually.

The presentation format will be based on (Profit Growth over 5 years - Y/N / Dividend Yield Over Purchase Price / Dividend Yield Over Current Price). Note that I've included special dividends for FY13 (except for CSE Global) into the calculations. For Reits, I looked at DPU instead of profit growth.

Dividend Yield Stocks

Boustead (Y / 8.4% / 3.7%)
CSE Global (N / 6.1% / 6%)
Kingsmen Creative (Y / 6.7% / 4.3%)
Riverstone (Y / 5.8% / 2.8%)
SATS (N / 4.1% / 4.1%)
Sheng Siong (N / 4.3% / 3.7%)
ST Engineering (Y / 5.3% / 3.9%)

Real Estate Investment Trusts

Ascendas India Trust (N / 6% / 5.4%)
Ascott Reit (Y / 9.8% / 6.8%)
Cache Logistics Trust (Y / 7.1% / 7.1%)
Frasers Centrepoint Trust (Y / 6.2% / 5.7%)

Strong Growth Stocks

Hour Glass (Y / 3.7% / 3.2%)
Capitaland (N / 2.1% / 2.4%)
STI ETF (N / 3.4% / 2.5%)
Super Group (Y / 2.9% / 3%)

Others (Candidates for Divestments)

OKP (N / 0.5% / 1%)

The Green Tree Prosperity Fund

2014-07-27T11:07:00.000+08:00

The what fund..? Haha yes, I have decided to give my own portfolio a name. Just for fun. So henceforth, I will refer to my portfolio as the Green Tree Prosperity Fund (绿树基金). Reference to trees is because I like the fact that trees can grow indefinitely given the right conditions. This is my aspirations for my own portfolio as well, which is to continue growing it long term in a sustainable way. In addition to giving it a name, I will also lay down some objectives and strategies of the fund below.

Objectives of Fund

Invest and grow the fund for retirement needs
Long term plan to generate sufficient passive income to manage the fund full-time

Investment Strategy

Value Investing
Be greedy when others are fearful
Buy on market dips, sell when valuations no longer justified by fundamentals

In addition, I have identified 3 groups of equities that the fund will comprise to meet its long term objectives:

Portfolio Composition

Dividend Yield Stocks (Stable fundamentals with sustainable dividend yield of 5% or more) ~50%
Real Estate Investment Trusts (Gearing of 40% and below, Sustainable dividend yield of 6-8%) ~ 30%
Strong Growth Stocks (Growth in profitability over past 3 - 5 years, Dividend yield of 2-3%) ~20%

I am still very far from my long term investment goals. I am also only about 60% vested now with 40% of my portfolio still in cash. I hope to continue investing in a sustainable way to grow my passive income and work towards my long term investment objectives.

Edit: 13 Aug - Added % composition of stocks

Recent Stock Actions: Super Group

2014-07-26T11:28:00.000+08:00

I have been looking at Super Group for sometime. I think it's a fundamentally strong company with good growth prospects. Looking at the company's financials, you can see that it has been growing profitably over the last 5 years. It also doesn't have any long term debt in its balance sheet. It's no wonder that the stock price has been going up to stratospheric levels to reflect it's prospects.

While it's a good company, I have never found an opportune time to enter due to the high valuations placed on the stock. That is until recently, when the stock price has moderated somewhat. I took this window to start a small position in this counter. It's still not cheap by most measures, but I think valuations are more reasonable at this point.

This is a growth stock with some dividends given out. At the current price ($1.50+), dividends translate to a yield of about 2-3%. It's below my target of 5% yield. But I have discounted the acceptable yield somewhat to account for the growth.

I don't actually like the fact that the company issued a 1-for-1 bonus issue recently. This does nothing except to dilute the equity and make the per unit stock price cheaper and more accessible to retail investors.

I will monitor and see how the company fares over the next few years. If stock price does moderate further, I may consider increasing my stakes for a long term position in the company.

Getting inspired by design

2014-07-08T20:23:00.000+08:00

I have been pretty intrigued by design in the last two years. A large part of it has to do with influences by great designers like Jonathan Ive from Apple and Matias Duarte from Google. Design is beginning to play an increasing part of our lives. It is getting more pervasive, from our gadgets, to the architecture around us, to innovative solutions to everyday problems.

Design goes beyond aesthetics, but examines the fundamental essence of things around us. There is also a methodology of creative problem solving known as design thinking, which uses the way designers think to solve wicked problems (i.e. problems that are generally hard to solve by conventional means).

Now, what has this got to do with investment? As I explore and look at different aspects of design, I begin to see how we can apply design to our everyday lives. Just like how we can design a solution to a problem, we can also design the way we approach investing. There are a thousand and one approaches in investing. One can choose to trade frequently, or hold long term for the intrinsic value, or combine a mixture of either approaches, etc.

For me, designing an investment approach involves thinking about our own philosophies and approach to life. Do we seek a more thrilling and exciting life? Or a more stable and conservative approach. Do we prefer once off capital gains? Or dividends that are recurrent but usually in smaller amounts. As we answer some of these questions about our own preferences, we can design an investment approach or a portfolio that would suit our temperament. This would allow us to have a coherent investment approach that is in sync with our beliefs and lifestyle.

Design is interesting because it allows us to start from a clean slate to design an outcome. And from there develop solutions around the outcome we have in mind. I'm inspired by design, are you?

Tech Focus: The Jaybird Bluebud X

2014-06-22T20:08:00.001+08:00

As a recent evolution of my blog, I have decided to also cover technology that are of interest to me in addition to investment related stuff. My first post on this topic would be to look at a pair of earbuds that I have recently bought. The Jaybird Bluebud X, as seen in the picture on the left.

Development in wireless technology has really gained pace over the past few years. In the past, bluetooth headsets were limited to those single-sided earpiece purely for functional call-taking purposes. The compression and audio quality over bluetooth is just not good enough for any decent music listening.

Fast forward to today, I believe wireless is where the future is. In time to come, other than hardcore audiophiles, I believe most people would not see the need for wired headphones or earphones. As a bit of a geeky and gadget guy, I bought the Bluebud X to see how far wireless technology has come. The earbuds are quite costly (about $170 over Qoo10), but I guess that is the premium to pay for wireless, at least for now.

Wireless is a big boon as it allows me to move around without being tethered to my phone. Being a casual listener, the audio quality is certainly good enough for my ears. The build quality is decent but not something I would be comfortable to abuse to test out its ruggedness. While it's supposed to be waterproof, I use it mainly in the office for easy listening. Battery life is good and rated at about 6-8hrs. I have not exactly tested it out for duration of use, but at least I don't feel I have to keep charging it.

My only qualms with the earbuds is that they do not really fit snugly in the ears. This could be due to the size or fit of the silicon buds. I read from online reviews that getting comply foam buds would help, although those are quite expensive for what they are. I may consider down the road.

All in all, I think the earbuds are great for non-critical listening. Wireless is where we are heading, and I am sure the technology would mature with prices coming down with improved audio quality over time. Do consider the Bluebud X if you are considering a pair of wireless earbuds. The waterproof earbuds would also come in useful if you intend to use them for running, though not something I have tested out myself.

The Art and Science of Investing

2014-06-20T19:48:00.000+08:00

There are many approaches to investing. Some may prefer the speculative or trading approach, which involves looking more at technical indicators to determine the short term movements of stock prices. There are also the long term or value investors, which tend to look more at the fundamentals of a company before deciding which stock to buy and hold for the long term. There have been countless debates on the merits of each approach.

To me, the investment approach or investment philosophy is one of the key determinants of whether an investor will be successful over the long haul. Either approaches can work, but the most important thing is to know your own temperament and which approach is more suitable for you. This is where I will elaborate on what I think is the art and science of investing. Like many other things in life, things are seldom simply black or white. There are many grey areas where I believe taking both the art and science approach would allow a more holistic look at the issue.

In terms of investing, the science aspect is relatively clear cut. By studying the figures in financial reports, the technical indicators in charts, it allows one to make informed decisions about the investment value of a certain stock or company. One would also need to understand the science of interpreting the numbers in order to make sense of what is being presented, whether is it financial ratios or information on the financial health of the company.

However, I believe to look at investing only from the scientific perspective would be only looking at one side of the coin. There are many aspects of investing which can be subjective and depend on the individual's experience to make a judgment call on the appropriate action to take given the circumstances surrounding a stock. This is also where different individuals may have different preferences on the approach to take for investing, be it long term, short term, dividend, value or growth investing.

I invest not just for financial returns or financial well-being. I enjoy the process of investing, which is both an art as well as a science of putting information together to make informed choices. I believe that by looking at both aspects of investing, I am better able to appreciate the nuances of investing as well as the differences in approach between various camps of investors. Hopefully as I continue this investment journey, I would be able to hone my art of investing as well as better understand the science behind the numbers I gather from financial reports.

Dividends in July - Sept 2014

2014-05-27T21:09:00.003+08:00

FCT - $0.02288/share - $46 (17 July)
SATS - $0.08/share - $80 (13 Aug)
Hourglass - $0.06/share - $60 (14 Aug)
Boustead - $0.05/share - $750 (19 Aug)
STI ETF - $0.045/ share - $225 (19 Aug)
ART - $0.03937/share - $118 (25 Aug)
CSE Global - $0.0125/share - $250 (27 Aug)
Sheng Siong - $0.015/share - $75 (29 Aug)
FCT - $0.00626/share - $13 (29 Aug)
ST Engineering - $0.04/share - $120 (4 Sept)
Super Group - $0.01/share - $20 (5 Sept)
Kingsmen - $0.015/share - $225 (17 Sept)

Total - $1982

Recent Stock Actions: CMA and CSE Global

2014-04-29T20:03:00.003+08:00

I have made a couple of moves lately in my portfolio. The first of which was the divestment of CMA through the Capitaland buyback. I actually owned both CMA and Capitaland. I see the buyback of CMA by Capitaland as a strategic move to simplify its structure and have better control over its asset allocation. CMA is the jewel in Capitaland's holdings and privatising CMA will allow Capitaland to enjoy the full growth of its China Retail assets.

Personally, I welcome the move as I have been wanting to reduce my holdings in Capitaland / CMA in view of the imminent slowdown in the property market. So this recent deal gave a good opportunity for me to divest some holdings at a decent gain. I will continue to hold on to my existing holdings in Capitaland, and perhaps add on to it if a good opportunity presents itself.

With the funds freed from the divestment of CMA, I have added on to my existing holdings in CSE Global. I continue to see CSE as a fundamentally strong company. With its recent sale of Servelec, it is now net cash and giving out a respectable 5+% dividend based on 2013 yields. I hope to see CSE sharpening its focus and building on its existing businesses.

In terms of the overall market, I think we are at a crossroads now where the market cannot decide if it wants to move up or down. I suppose alot will hinge on how the US intends to play out its quantitative easing and interest rate policies. I will stick to my strategy of buying on dips and continue looking out for fundamentally sound companies with around 5% dividend yield.

A look at OKP

2014-04-14T22:36:00.000+08:00

OKP is one of the worst performers in my portfolio currently. Just what exactly happened to the stock over the past year? I took a look at its recent annual report to find out.

In terms of top line performance, things doesn't look that bad. Revenue had in fact grown by about 20% to $128m. But as we look closer at its profit, we realise that its profit margin has shrunk close to 250% from 17.4% to 6.9%. Gross profit is but $12.5m, down from $23m a year ago. EPS is down to 1.6c from 4c previously. DPS is down to 0.3c from 1.5c.

In terms of overall balance sheet, I think the company is still fundamentally sound with a debt to equity ratio of about 2.8%. It's still net cash if we look at its cash holdings. Hence on the whole I'm not too bothered by its overall financial status.

I think the doldrums that OKP is currently in is mainly due to the rising manpower costs eroding a large part of their margins. This is further worsened by the large order books that the company has previously committed. Moving forward, it would hopefully get better as they are able to factor in the increased cost into their new contracts.

Will I buy more to average down? Maybe. Since the stock is currently trading at close to its NAV of 30c per share. I'm not totally satisfied by its meagre dividend yield of about 1% currently. I will likely monitor for awhile before deciding on whether to add more to my existing holdings.

Dividends in April - June 2014

2014-02-24T20:30:00.003+08:00

Capitaland - $0.08/share - $240 (16 May)
CSE Global - $0.03/share - $450 (20 May)
ST Engineering - $0.12/share - $360 (20 May)
Sheng Siong - $0.014/share - $70 (23 May)
OKP - $0.003/share - $45 (27 May)
AIT - $0.0232/share - $464 (27 May)
Riverstone - $0.174/share - $87 (29 May)
Kingsmen - $0.025/share - $375 (30 May)
FCT - $0.0288/share - $58 (30 May)

Total - $2149

Recent Stock Actions: Hour Glass

2014-02-24T20:26:00.001+08:00

Recently just initiated a small position in Hour Glass. I have been looking at Hour Glass for a long time but could never find the right time to enter. Hour Glass has good management that knows what they are doing. Some points regarding the stock below.

Positives

Consistent earnings growth over last 5 years with a slight slowdown in 2013
Dividend yield of about 3.5% at payout ratio of about 25%
Capable management with long track record

Negatives

Increase in debt / equity ratio to 12.5% in FY13
Uncertain global economy may hit luxury segment

Recent Stock Actions: Frasers Centrepoint Trust

2013-12-27T16:20:00.000+08:00

I just initiated a position in FCT. The reit has been a stable performer over the past few years since it was listed. I like it for its suburban retail malls that should be relatively resilient should the economy decline. The reit is currently valued at close to its NAV of $1.77. Just a quick summary of some of the key points regarding the purchase below.

Key Points

Valued at its NAV of $1.77.
Dividend yield of approximately 6%.
Potential growth of the North region in the coming years (Northpoint and Causeway Point as beneficiaries).
Gearing of 27.6% with some debt headroom for growth.
High occupancy across malls in portfolio.

Update: In line with my strategy to buy on dips, I have added on to my holdings in FCT on 3 Feb.

Review of 2013

2013-12-23T17:24:00.001+08:00

It is the time of the year again to do a review of the past year. I would think that this is a year of consolidation for me. My wife and I bought an EC in end 2012, and many of the financial transactions in 2013 have to do with initiating payments for the house. With most of the initial payments settled, 2013 has mainly been about consolidating my investment portfolio and finances.

I did not actually add to my investment portfolio as much as I would have liked in 2013. Simply because I did not see as many good buying opportunities as I hoped for. I added on to a couple of my dividend yielding counters, as well as initiated positions in CSE Global, SATS and Sheng Siong. Portfolio worth was up about 28% at $125k from $97k last year. Dividend was up about 24% to $4k+ from $3k+. I am currently about 60% invested. Dividend yield on cost is about 4.3% and yield on worth is about 3.6%. No sales transactions were done in the year.

In terms of company performance, with the glaring exception of OKP, most of my counters did reasonably well. Unfortunately, OKP has been badly hit by the recent manpower measures with increasing costs hurting profit margins. OKP remains fundamentally sound, with a strong balance sheet. I will monitor the counter to see if it is worthwhile to average down in the coming year.

Moving into 2014, the global economic landscape remains uncertain with the bubblish property sector something to watch out for. My overall investment strategy remains largely the same. I will continue building my portfolio with a focus on improving dividend yields. Barring any drastic changes to the investment landscape, I will continue to slowly buy on dips to deploy my war chest. I may also deploy CPF funds to build up my unit trusts portfolio if we see a substantial correction in the financial markets. Here's to a good 2014 ahead!

Dividends in Jan - Mar 2014

2013-12-12T22:11:00.004+08:00

CSE Global - $2800 (13 Jan) - $0.28/share - Special
STI ETF - $215 (20 Feb) - $0.043/share
Ascott Reit - $110 (27 Feb) - $0.3698/share
Frasers Centrepoint Trust - $25 (28 Feb) - $0.025/share

Total - $3150

Recent Stock Actions: SATS

2013-12-11T20:17:00.000+08:00

Hot on the heels after my recent purchase of Sheng Siong, I've also just initiated a small position in SATS. I've been keen on SATS for sometime, and the recent price correction presented an opportunity for me to load up on the counter.

SATS has a fairly stable business model, with the two key components being gateway services and food solutions. I do see opportunities ahead for SATS. With the recently announced expansion plans for Changi Airport, this bodes well for SATS in the mid term. With greater air traffic to the airport, there will also be greater demand for gateway services. However, such expansion plans will take time to bear fruit.

Beyond in flight food solutions, SATS is also looking to grow its food solutions business in the traditional catering industry. While relatively competitive, I think there is room for SATS to expand their outreach in this area. The company is also riding on joint ventures to extend its investment overseas, somewhat similar to the model adopted by SIAEC.

At the current purchase price, SATS is offering about 4+% dividend yield again at a 90% payout ratio (somewhat similar to Sheng Siong). I believe we're currently at a mid cycle of the stock market, where stocks are neither cheap nor excessively priced. I'm looking at holding the counter for the long term and will add to my holdings should opportunities present themselves.

Recent Stock Actions: Sheng Siong Group

2013-12-10T20:24:00.000+08:00

It has been sometime since my last post. Almost 3 months to be exact. Since then, I have been relatively quiet on the investment front. Partly because I had been very busy with work, but also due to the fact that there hasn't been much developments in the stock market with most counters mainly trending sideways. With the December holidays upon us, I finally have some time to go through some of the counters that I have been interested in.

I have just initiated a small position in Sheng Siong Group. Sheng Siong is a familiar household name that operates in the supermarket arena. Its key competitors being NTUC and the dairy farm group (Giant, Cold Storage). Sheng Siong tends to differentiate itself from its competitors by targeting the low end segment, providing no frills but daily necessities at cheaper prices. Comparatively, competitors like NTUC are going upmarket with NTUC Finest and their hypermarts. I see Sheng Siong as the mama shop of today, being conveniently located and providing daily necessities at economical prices.

At the current price, Sheng Siong offers about 4+% dividend with their 90% payout ratio. It also has a strong balance sheet with no debt. It's not exactly cheap at the current price, but I do see opportunities for Sheng Siong. Their economies of scale will help to push margins up somewhat and their business model is scalable by adding more retail outlets. Sheng Siong is also trying to pilot their e-grocery shopping site. While I think it will be sometime before e-grocery picks up in Singapore, this may potentially pay off in the long run with the gradual change in shopping trends.

Moving forward, we will have to see if Sheng Siong can keep up with its expansion plans while improving profit margins through economies of scale.

Proposed IPO of CSE UK Business

2013-09-15T18:41:00.000+08:00

CSE has proposed to divest part of its UK assets in an IPO. The market has responded positively to this. While the divestment does mean that the earnings will fall rather substantially in the near term (about 30%), it gives the group an opportunity to diversify geographically and extend their growth in potential markets. This is a long term strategic move and we will likely only see the potential benefits a few years down the line. In the meantime, we will have to make do with the lower earnings after receiving the one time proceeds.

The Board of Directors of CSE Global Limited (“CSE””) wishes to announce that its 100% owned subsidiary, CSE Global UK Limited (“CSE UK”), is currently pursuing a separate listing on the London Stock Exchange (“Listing”).
There is no guarantee that the Listing will proceed as it will be subject to market conditions, valuation and amongst other things, the relevant regulatory and other approvals being obtained, execution of definitive agreements by the relevant parties and the approval of CSE’s shareholders.
The separation of CSE UK will provide financial independence to both CSE and CSE UK to facilitate future access into capital markets for debt and equity funding to pursue future growth opportunities.
CSE intends to divest 100% of its ownership in CSE UK and will continue to operate and enhance the remaining elements of the CSE business based in Asia-Pacific and the USA. The Listing allows CSE to realise the value in its UK business and redeploy its capital to other business opportunities. It will also allow CSE UK to grow its Healthcare and Automation businesses.
CSE will return part of the net proceeds raised from the divestment to shareholders after considering, amongst other things, the net proceeds raised, the Group’s capital structure, bank borrowing/gearing, operational and future acquisition needs.
In the first six months of 2013, CSE UK contributed 20% to CSE’s revenue and 33% to CSE’s profit after tax. Thus, if the Listing proceeds, CSE’s shareholders approval will be required in accordance with Chapter 10 of the Listing Manual.

The Listing is expected to be completed in the 2013 financial year.

Source: CSE Global

India's slowdown and its impact on AIT

2013-09-08T18:23:00.001+08:00

The recent slowdown in the India's economy has adverse impact on the currency. In fact, the IDR has been on the downtrend for the past few years against the SGD. This also has negative repercussions for firms operating in India.

Notably, one of my counters Ascendas India Trust (AIT) suffered from the unfavourable forex movements. AIT's half yearly distribution fell from a high of 4.07 cents in 2009 to 2.15 cents in 2013. That is a good 47% drop. The drop also factors in the management reducing the payout ratio to 90% from FY12/13. AIT's stock price has also corrected substantially recently given the negative headwinds.

Despite the challenging macro environment, I would say AIT has performed admirably well, with portfolio occupancy remaining at over 90%. The gearing currently is at 24%, which gives it headroom for organic growth. I hope to see the India government getting its act together to stabilize the country's economy. I personally see the recent price drop in AIT as opportunity to increase stakes in AIT. Although I am also cautious the macro environment may worsen before it gets better.

Update: I added on to my holdings in AIT in late Sept in view of the recent fall in stock price.

Dividends in Oct - Dec 2013

2013-08-14T21:12:00.002+08:00

Riverstone - $27 (8 Oct) - $0.0089/share
AIT - $448 (28 Nov) - $0.0224/share
Boustead - $300 (12 Dec) - $0.02/share

Total $775

Total for 2013 - $327 + $1785 + $1649 + $775 = $4536