The Game Plan

Dividends in Aug / Sept 2013

2013-05-23T22:38:00.000+08:00

Dividends to be collected in Sept 2013

Boustead - $750 (23 Sept)

Total - $750

Refined Rules in Investing: Rules for Selling

2013-04-15T15:51:00.001+08:00

When I first started out in my investment journey, I looked at companies and made investments in those that I felt were undervalued. Some turned out ok, others did not fare as well. After a couple of hits and misses, I figured that I should place greater emphasis on dividend yields for more consistent and predictable returns. That was when I started to define rules on how I should go about selecting companies for inclusion in my portfolio. You can read more about the article here.

Since then, I have been following the rules set in 2011 and have been quite satisfied with my portfolio performance and returns so far. It also gives me a more structured and systematic approach towards analysing and selecting stocks.

Back then, I was thinking about setting some rules for divestments as well. These rules would help me to identify overvalued stocks that I should probably sell to switch to better valued stocks. 2 years on, I finally decided to set some of these rules. The rules are again tied to dividend yields to allow more predictable returns on my portfolio.

Stocks

Dividend yield of less than 2%

Reits

Dividend yield of less than 4%
Gearing ratio of >50%

Again, I expect a higher yield from reits as their payout ratio is usually much higher than stocks. Using the benchmark yields above, I also hope to avoid a situation of frequent buying and selling as that is not the intent of my portfolio. I will only sell if a particular stock or reit has appreciated substantially beyond what I view as acceptable dividend yield. The gearing ratio for reits is taken into consideration as the gearing generally determines the potential for yield accretive acquisitions without issuing more equity. I will use these rules as guidelines and refine them as I go along.

Recent Stock Actions: CSE Global

2013-04-15T12:03:00.001+08:00

I recently just started a position in CSE Global. The group is an integrated solutions provider in the area of automation, telecommunications, healthcare and environmental sectors. The group was hit by a rather major operational setback in their telecommunications division in 2011, resulting in earnings almost halved in that year. But since then, the group seems to have gotten back on track and earnings are returning to 2010 levels. The profile of the group reminds me of ST Engineering, where they tend to make acquisitions to grow in their key areas of focus. In fact, the company is a spin-off from ST Engineering in the mid 80s. Some of the key points regarding the investment is detailed below.

Positives

Strong fundamentals with order book at close to $400 million
Decent dividend yield of about 5% at current price with payout ratio of about 40%
Good profit margins at over 30%

Negatives

Quite high gearing at about 19.2%. Although management has given guidance that they will try to lower gearing to about 10% in the longer term

Dividends in May / June 2013

2013-02-18T16:23:00.002+08:00

Dividends to be collected in May 2013

ST Engineering - $414 (17 May)
Capitaland - $210 (17 May)
Capitamalls Asia - $81 (20 May)
CSE Global - $$82 (20 May)
OKP - $225 (27 May)
Riverstone - $76 (28 May)
AIT - $322 (28 May)
Kingsmen - $375 (12 June)

Total - $1785

Dividends in Feb/Mar 2013

2013-01-23T20:19:00.002+08:00

Dividends to be collected in Feb/Mar 2013

STI ETF - $200 (19 Feb)
Ascott Reit - $127 (28 Feb)

Total - $327

Recent stock actions: Riverstone Holdings

2013-01-07T21:48:00.000+08:00

Recently just initiated a position in Riverstone Holdings. This is a relatively unknown Malaysian company introduced to me by a friend. The company deals with production of cleanroom gloves, fingercots and packing bags. The company was listed in 2006 and has a simple business model that is easy to understand. Some of the key points regarding the company are detailed below.

Positives

5 consecutive years of revenue growth (Net profit is largely on uptrend for the past 5 years)
Excellent balance sheet with no debt
Dividend yield of about 5% at current price (Dividends declared are largely on uptrend for past 5 years)
Large cash reserves of 40+mil RM
Very decent net profit margin of about 14%

Negatives

Dividends are declared in RM, which is subjected to forex risks
Relatively low liquidity of stock

All in all, I think this is an undervalued gem. I will be looking to increase my holdings if the price were to correct.

Value Investors: Watch this

2013-01-02T22:46:00.003+08:00

For value investors...take some time to watch this. Well worth 47 mins of your time. :)

Review of 2012 and Strategy for 2013

2013-01-01T16:45:00.000+08:00

It is the first day of the new year and timely for me to do a review of 2012. I must say that 2012 has been an eventful year for me. In terms of finances, there have been a couple of major changes this year. Firstly, my wife changed her job to a part/full time tutor. This will mean that her income will be less stable and I will have to ensure that the family expenses are taken care of. Secondly, we committed to buying an EC towards the end of the year. The house will be ready by 2015, so I will need to get our finances in order in preparation for that.

In terms of my investments, I have finally sold off all my unit trust holdings purchased with cash. This is in line with my long term plan to shift my unit trusts holdings bought with cash into my stocks portfolio. In terms of my stock holdings, I have added on to dividend yielding counters AIT, Boustead and OKP, in accordance with the review of my investment strategy back in 2011. There were no sell trades done other than Teck Wah which was due to some miscalculation.

For my overall holdings, I have missed my target of reaching 200k in investments that I set for myself back in 2011 by quite a margin. I am currently at about 97k in stocks, with about 80k in my warchest for deployment. My dividends received for 2012 was about 3.6k.

I believe 2013 will be a year of uncertainty, with the ongoing issues with US and Europe as well as the bubblish property sector in Asia. Going into 2013, my strategy will be to deploy my cash funds into dividend yielding counters during any dips or downturns. I hope to double my dividend income in 2013. After settling the payments for the house, I will also be looking at deploying remaining funds from my CPF into a few unit trusts for long term investing.

Updates to my Financial Status

2012-12-22T11:01:00.002+08:00

The last major update to my financial status was in Dec 2010 when I just bought a 2nd hand car. 2 years later, I have another major update. This time is the purchase of a property.

I sold my resale EC more than two years ago to stay with my in-laws. This arrangement was mainly to facilitate the caring for my newborn then. On hindsight, I would have been better off financially if I had chosen to rent out the house instead.

The property market is indeed unpredictable. When I sold my house, I thought the prices then were pretty high. Never did I expect that the property market would have boomed for the following 2-3 years. While I understand that the property market operate in cycles, no one knows for sure when the next boom or bust will come. Although the current supply certainly looks high with many new launches due to be completed within the next 2 years.

As current property prices climbed, it became uncertain whether there would be an opportunity for me to buy back a house. Well, this opportunity came recently when I finally completed the 30 month wait out period for selling a house. Basically, it allows my wife and I to purchase a new EC. We visited quite a number of showrooms, and finally decided on One Canberra. An EC nestled in a quiet corner of Yishun amongst other private establishments.

The EC will mainly serve as a place of residence for my family. It will hopefully also be near to my child's future primary school. I do see some investment potential as well. Firstly, ECs do have some pricing advantage over private condos. For the development that we have chosen, it is the only EC within a cluster of private condos, so it will hopefully help to increase the value in the future. It also has some unique factors such as facing a small canal and a cluster of landed housing.

The development will be ready in 2015. For now, my priority is to get our finances in order in preparation for the house. And of course, we are definitely looking forward to getting our own house all over again. :)

One Canberra EC in Yishun

Recent Stock Actions; AIT and OKP

2012-11-25T18:44:00.000+08:00

Recently just added on to my holdings in Ascendas India Trust and OKP.

For AIT, it's still badly affected by the exchange rate movement. Current yields are around 6+%. I think it will take sometime for the exchange rate movements to reverse. Nevertheless, I will be holding on to my units in AIT as I believe long term potential for the India market is still intact.

For OKP, earnings have fallen due to lower revenue recognition. I don't see this as much of an issue as OKP still has a large backlog of projects. With the major road infrastructure projects announced for the next 8-10 years, I believe OKP should be able to leverage on their strong foothold in public infrastructure projects to grow their earnings.

Stock News: a-iTrust maintains steady earnings growth

2012-10-27T08:09:00.003+08:00

Decent set of results from AIT. Nothing spectacular, with earnings largely eroded by exchange rate movements and tax expenses. On the flip side, a stronger SGD does mean that AIT would be able to make better use of it's recent private placement to make further acquisitions to take advantage of the weak INR currency. At the current dividend payout, I'm expecting slightly above 6% dividend yield per annum. While not outstanding, I think it is still acceptable.

a-iTrust achieved total property income of INR 1,406 million in 2Q FY12/13, an increase of 18% over the same period last year. The increase was driven by higher income contribution from Park Square, Zenith and Voyager (collectively the “recently completed buildings”) and the aVance Business Hub (“aVance”) buildings which were acquired in February this year. 2Q
FY12/13 net property income grew 19% year-on-year to INR 839 million. The 2Q FY12/13 income available for distribution rose by a lower 2% rate to INR 458 million, dampened by higher finance costs and tax expenses. With 10% of the income available for distribution retained in this quarter, 2Q FY12/13 income to be distributed at INR 412 million was 8% lower than that of the same quarter last year. The income retained will be used to support investments to grow the trust.

In Singapore Dollar terms, a-iTrust’s 2Q FY12/13 financial performance was moderated by the strong Singapore Dollar, which appreciated by 16% against the Indian Rupee during the course of the year. a-iTrust registered total property income and net property income growth of 2% in 2Q FY12/13 over last year in Singapore dollar terms. Compared to the same quarter last year, 2Q FY12/13 income available for distribution and income to be distributed was 12% and 21% lower respectively as a result of unfavourable currency translations and higher tax expenses.

Source: AIT

Dividends in Nov/Dec 2012

2012-10-06T13:00:00.002+08:00

Dividends to be collected in Nov/Dec 2012

Ascendas India Trust - $325 (2 Nov)
Boustead - $300 (12 Dec)

Total $625

Total for 2012 -$396 + $1361 +$1281 +$625 = $3663

Investment Strategy Review: Portfolio Construction

2012-09-16T08:23:00.000+08:00

I believe that in managing our portfolio, we should treat it like running a business. Like any properly run business, there should be clear strategic plans to define the business and set the direction for growth. This also helps us make sense of what we are doing with the business and make better informed decisions with regard to management of the portfolio. I have already defined certain rules for my portfolio construction in a previous post. In this post, I shall look at the overarching strategy in my portfolio construction to better structure my portfolio and facilitate decision making.

Improvising from a concept I learnt from investing in unit trusts, I will divide my portfolio into core and non-core assets. Core assets refer to companies which I see potential long term growth and returns. These are companies which I have no intention to sell and will hold on to them as long as their fundamentals remain sound. Non-core assets refer to those that I purchase based on their short to medium term outlook, where the stock seems to be value for money and there are near term catalysts to be exploited. I will further elaborate on these 2 asset classes below.

Core Assets
Under the core assets, I have set aside 3 main themes for driving long term growth for my portfolio. The first is a dividend with growth strategy. These are typically assets that yield 3-5% dividend yield with some growth potential. They are generally more stable and have regular and predictable dividend payouts. The next 2 themes are based on Asia's growth story in the next 2 decades. The 2 key growth drivers are of course China and India. For China and India, I mainly focus on broad retail consumption and property themes. These themes are broad based and will generally grow with the economies of the 2 countries as compared to niche sectors which I may not be familiar with. The breakdown of my core assets based on the 3 themes are listed below.

Dividend with growth

Boustead SP
ST Engineering
Kingsmen Creative
STI ETF

China Growth

CapitamallsAsia
Capitaland

India Growth

Ascendas India Trust

Non - Core Assets
Non-core assets are investments that I purchase based on certain near term catalysts or attractive pricing of the stock. I am prepared to sell off these assets more readily if the stocks have appreciated substantially or if I see better value elsewhere. These are also stocks I will consider selling if I need to raise funds to top up my war chest.

Non-core Assets

Ascott Reit
OKP

And that basically outlines my investment strategy for portfolio construction and management. I will continue to build up my portfolio based on these broad classifications and review the strategy from time to time. I am also looking to inject property into my assets in the mid-term over the next 2 to 3 years.

Recent Stock Actions: Teckwah Industrial

2012-08-17T15:51:00.001+08:00

Took up a small stake in Teckwah Industrial based on recommendation from a friend. Teckwah is a relatively low profile company with core business in print and logistics. The business fundamentals are fair and it's currently attractively priced. Teckwah is in the news recently for the print media hub at Paya Lebar. The print business of the company is fairly constant. The non-print or logistics segment is growing and gradually taking up a larger segment of the overall business. Some key points regarding the purchase is detailed below.

Positives

Strong balance sheet with low gearing of 2.78% and healthy cash position of $41.7 mil
Dividend yield of approximately 4.8%
Management is forward looking and investing in infrastructure to enhance its capabilities (eg. print media hub and investments in Iskandar Malaysia)

Negatives

Print media business is price sensitive with increasing operating costs eroding the profits
Would want to see greater clarity on how management intends to grow the non-print business

Update: I have sold off my holdings in Teck Wah due to some initial miscalculations in the gearing ratio.

ST Engineering Net Profit Grew 15% in 1H2012

2012-08-17T13:41:00.002+08:00

Good set of results by ST Engineering.

Singapore Technologies Engineering Ltd (ST Engineering) reported higher revenue and profits in 2Q2012 compared to the same period last year. Group revenue increased 6% to $1.57b while profit before tax (PBT) rose 13% to $187.8m and profit after tax (Net Profit) grew 10% to $143.1m. For the first half of 2012, both PBT and Net Profit for the Group grew strongly at 15% on a modest revenue increase of 2% over the same period in 2011.

Breakdown by Divisions

The Aerospace sector posted revenue of $493m, which is comparable to 2Q2011.
Revenue from the Electronics sector grew 9% to $348m, mainly contributed by milestone completion of a commuter rail project, higher sales of Satellite Communications (Satcom) products and Electro-Optics equipment as well as milestone completions of a VSAT network project.
Higher project deliveries in the Automotive business group contributed to higher revenue of $389m for Land Systems sector, an increase of 11%.
The Marine sector’s revenue increased 7% to $277m as a result of higher Shipbuilding revenue.

Source: ST Engineering

Stock News: Kingsmen's 1H 2012 Net Profit Jumps 23.5%

2012-08-12T07:17:00.000+08:00

Great set of results for Kingsmen. Strong performance across all divisions, with the star performer being the Exhibitions and Museums division. Despite being in a relatively competitive industry, Kingsmen has continued to see consistent growth over the years. I think this is largely due to their strong branding and efforts to distinguish themselves from the pack.

Key Points
- Strong performance despite weak global economy
- Revenue jumps 26.9% to S$117.8 million
- Growth driven by all business divisions
- Proposes interim dividend of 1.5 cents per share

Results
Turnover (2011/2010/change) S$117.8m / S$92.8m /+ 26.9%
Gross profit (2011/2010/change) S$32.3m / S$27.0m /+ 19.6%
Net profit (2011/2010/change) S$7.2m / S$5.9m / + 23.5%
Diluted EPS (2011/2010/change) 3.79cents / 3.08cents / + 23.1%

Source: Kingsmen

Recent Stock Actions: Ascendas India Trust

2012-06-19T22:04:00.001+08:00

Just added on to my existing holdings in AIT today. Some of the key points regarding the trust include:

Positives
- About 8% dividend yield at current price of $0.75
- Current gearing of 29% allows some head room for further acquisitions
- Pipeline of projects that will likely boost organic growth over the next few years

Negatives
- Unfavourable exchange rate is eroding the profits considerably
- Uncertain economic outlook and little information regarding India's prospect over the next few years

Dividends in August/September 2012

2012-06-10T12:35:00.004+08:00

Keeping track of dividends declared for Aug/Sept 2012.

STI ETF - $200 (14 Aug)
Boustead SP - $450 (21 Aug)
Ascott Reit - $135 (29 Aug)
Teckwah - $100 (10 Sept)
Capitamalls Asia - $81 (13 Sept)
ST Engineering - $90 (13 Sept)
Kingsmen - $225 (24 Sept)

Total - $1281

Recent Stock Actions: OKP

2012-05-18T21:19:00.000+08:00

With the recent decline in the market, I've just initiated a position in OKP holdings. Just to note down some of the key factors for the move.

- Leading road infrastructure business with bulk of projects coming from the govt
- Strong balance sheet with minimal debt
- Undemanding valuations with roughly 5.7% dividend yield

Recent Stock Actions: Boustead SP

2012-03-17T01:39:00.000+08:00

I've recently just added on to my existing holdings in Boustead. Boustead has been a fairly consistent performer for me and the dividend yield at current prices is about 7.9%. I'm inclined to believe that they will continue to do well moving forward, barring any sharp downturn in the macro economic conditions.

Dividends in May 2012

2012-03-12T23:38:00.001+08:00

Keeping track of the dividends in May 2012.

ST Eng - $375 (17 May)
Kingsmen - $375 (25 May)
Capitamalls Asia - $75 (9 May)
Capitaland - $240 (22 May)
Ascendas India Trust - $296 (25 May)

Total - $1361

Kingsmen FY2011 Net Profit Increases 8.4% to $16.3mil

2012-03-03T23:22:00.000+08:00

Commendable results by Kingsmen for FY11.

- Revenue increases 11.7% to S$261.0 million
- Net Profit increases 8.4% to S$16.3 million
- Growth driven by strong demand for the Group’s services
- Expects growth to continue
- Proposes final dividend of 2.5 cents per share

FY11 Results Highlights: FY11 / FY10 / Change
Turnover S$261.0m / S$233.6m / +11.7%
Gross profit S$66.7m / S$63.9m / +4.4%
Net profit S$16.3m / S$15.1m / +8.4%
Diluted EPS 8.56 cents / 7.93 cents / +7.9%

Source: Kingsmen

Update: I recently added on to my existing holdings of Kingsmen Creative. I think its a relatively undervalued stock with good dividend yield of 6+% at current price.

ST Engineering's Net Profit Grew 7% in FY2011

2012-02-26T13:05:00.002+08:00

Good set of results by ST Engineering.

4Q2011 net profit grew 14% compared to 3Q2011

Singapore, 23 February 2012 - Singapore Technologies Engineering Ltd (ST Engineering) today reported revenue for financial year ended 2011 (FY2011) of $5.99b, compared with $5.98b a year ago. Profit before tax (PBT) registered a 4% growth to $655.2m, while net profit grew steadily by 7% to $527.5m.

In the fourth quarter, Group's revenue of $1.54b was higher than that achieved in 3Q2011 by 11% or $150m. Except for Marine sector, all sectors recorded higher revenue compared to 3Q2011. Marine sector's revenue of $91m was 64% or $164m lower, largely due to the reversal of Shipbuilding revenue in 4Q2011 following the Ropax contract termination. Group's PBT of $184.3m for 4Q2011 was 11% or $18.4m higher than that achieved in 3Q2011. Land Systems and Marine sectors reported higher PBT, while Aerospace and Electronics sectors recorded lower PBT.

Compared to 4Q2010, 4Q2011 revenue and PBT were comparable while net profit was higher by 6%.

Higher EPS and Higher Dividend
Earnings per share (EPS) grew by 7% to 17.28 cents and economic value added increased by 10% to $405m. Return on equity remained high at 29.9%. Cash and cash equivalents and short term investments totalled $1.77b and advance payments from customers stood at $1.27b.

The ST Engineering Board of Directors is proposing a final dividend of 12.50 cents per share, consisting of an Ordinary Dividend of 4 cents per share and a Special Dividend of 8.50 cents per share. Total dividend amounts to 15.50 cents per share, including the Interim Dividend of 3 cents per share paid out in September 2011. This translates to a dividend yield of 5.07%, computed using the average closing share price of the last trading day of 2011 and 2010.

"The Group registered steady performance in FY2011 over FY2010. While Revenue was flat at $6b, PBT increased by 4% and Net Profit grew by 7% to $527.5m. The performance reflects the Group's resilience and its ability to navigate the highly uncertain and volatile economic environment. The Group succeeded in securing more contracts and ended the year with a record high order book of $12.3b.

Barring unforeseen circumstances, the Group expects to achieve higher Revenue and PBT in FY2012 compared to FY2011." ~ TAN Pheng Hock, President & CEO, ST Engineering

Full Year Business Highlights
For the full year, commercial sales accounted for 59% or $3.5b of revenue. The Group grew its order backlog to a record high of $12.3b, an increase of 7% over FY2010 order backlog of $11.5b. $3.9b of the $12.3b order backlog is expected to be delivered in 2012.

With revenue of $1.9b, the Aerospace sector accounted for 32% of Group's revenue. The Electronics sector contributed 25% to the Group based on its revenue of $1.48b, which grew 7% year-on-year. Land Systems sector contributed $1.48b or 25% of Group's revenue, while the Marine sector's revenue of $876m accounted for 14%.

All business sectors achieved significant milestones over the last year.

Aerospace sector was ranked the world's largest maintenance, repair and overhaul provider for the 5th consecutive time by leading trade publication, Overhaul & Maintenance.

Electronics sector entered the high-tech satellite industry offering comprehensive suite of satellite earth observation solutions and services. Its US subsidiary, iDirect Government Technologies, received the US government's approved Proxy Agreement to pursue classified Government and military contracts.

Land Systems sector, through LeeBoy India, stamped its mark on the Indian road construction sector with the launch of its 785i Motor Grader that was engineered and manufactured in India to international standards based on its access to technologies of its US subsidiary, VT LeeBoy.

Marine sector gained a stronger foothold in the Offshore Support Vessels market securing contracts for 12 vessels.

In 4Q2011, the Group announced new contracts worth over $1.26b for its Aerospace, Electronics and Marine sectors. This included the shipbuilding contract to build eight Offshore Supply Vessels for Hornbeck Offshore Services; several naval contracts, and commercial shiprepair and conversion contracts; as well as a LRT communications contract in Taiwan. It also included the five-year contract that ST Synthesis, its facilities management arm secured to provide facilities maintenance services to the Singapore Ministry of Defence. In addition, its US subsidiary, VT Miltope announced that it has the potential to earn up to US$250m (about S$323.7m)* over five years on its teaming with General Dynamics C4 Systems on the Common Hardware Systems-4 programme.

Source: ST Engineering

Dividends in Feb 2012

2012-01-28T22:30:00.000+08:00

Keeping track of the dividends to be collected in Feb 2012.

ART - $121 (27 Feb)
STI ETF - $275 (14 Feb)

Total - $396

Recent Stock Actions: Ascendas India Trust

2012-01-07T00:54:00.003+08:00

Added on to my existing holdings in AIT today. I think it largely remains a sound business trust with relatively attractive yield of around 8%. I will continue to slowly pick up stocks where I think there is value.