Monday 28 October 2013

Shares that I have bought since 2011

Was just doing a count of the counters that I bought over the last 2+ years, and came out with this long list of 47 counters. Some good some bad. More importantly, with each counter I buy, I come away with a lesson learnt.

Currently I have 10, which I think is a manageable number.

1. F & N

2. M1

3. Sp Land

4. GLOBAL LOGISTIC P

5. MAPLETREE COMMERC

6. ManOri US$

7. UOB-KayH

8. Cerebos Pacific

9. NOL

10. Keppel Land

11. Sri Trang

12. 2ndChance

13. Boustead Sp

14. First REIT

15. SGX

16. ECS

17. Ezra

18. SP Corp

19. IndoAgri

20. SunVic

21. Sakari

22. CDL HTrust

23. SembMar

24. Cambridge

25. Frasers Comm

26. SinoGrandnes

27. AusGroup

28. Noble Grp

29. MEWAH

30. StarHub

31. Biosensors

32. CHINA MINZHONG FOOD

33. STX OSV HLDGS LTD

34. Sabana REIT

35. LippoMalls

36. GP HOTELS

37. SingTel

38. Swiber

39. FoodEmpire

40. Marco Polo

41. KSH Hldg

42. VizBranz

43. SaizenREIT

44. Lum Chang

45. Tat Hong
46. SPH Reit
47. MGCCT

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Tat Hong Holdings

Established History
Tat Hong has history from the 70s, set up in Singapore as a supplier of cranes and heavy equipment.

Market Dominance
Today, it has become the largest crawler crane company in the world, with operations in Malaysia, Thailand, Indonesia, Hong Kong, China, Vietnam, Dubai and Australia.

Growth and Future Plans
Recently, it has set up two Joint Venture companies:

1. Tat Hong has on 28 August 2013 entered into a joint venture agreement with Intraco and Mr Aung Moe Kyaw, and that the parties have incorporated a joint venture company, Tat Hong Intraco Pte Ltd, in Singapore. The company will carry out the business of distribution of cranes and excavators in Myanmar.

2. Announced on 26 October 2013, Tat Hong Holdings, Boustead Singapore and CSC Holdings (three local firms) have set up a joint venture with AME Group (Johor based) to develop land in Iskandar Malaysia. The joint venture will jointly undertake mixed property development in Iskandar Malaysia.

Financial Ratios

Some financial ratios:

P/E ratio: 8.5

P/B ratio: 0.9

Dividend payout since 2006. Past year yield: 4.2%

Valuations seem reasonable now since price drop from 1Q performance disappointment. Factoring in potential growth from Myanmar and Iskandar, I have taken up a position with this company.

Book Review - Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor by Seth Klarman (Initial Thoughts)

Just started this book, which I found to have favorable reviews on the goodreads.com website.

One paragraph which resonated with me:


Investors must try to understand the institutional investment mentality for two reasons. First, institutions dominate financial market trading; investors who are ignorant of institutional behavior are likely to be periodically trampled. Second, ample investment opportunities may exist in the securities that are excluded from consideration by most institutional investors. Picking through the crumbs left by the investment elephants can be rewarding.



This is in line with what I understand from Peter Lynch's One Up on Wall Street, which says 

Look for opportunities that haven’t yet been discovered and certified by Wall Street—companies that are “off the radar scope."

Book review: One Up on Wall Street by Peter Lynch

Finished reading the book in two weeks. Here are some key lessons I haved gathered from the book:

1. An amateur investor can pick tomorrow’s big winners by paying attention to new developments at the workplace, the mall, the auto showrooms, the restaurants, or anywhere a promising new enterprise makes its debut.

2. When you sell in desperation, you always sell cheap.

3. Under the current system, a stock isn’t truly attractive until a number of large institutions have recognized its suitability and an equal number of respected Wall Street analysts (the researchers who track the various industries and companies) have put it on the recommended list.

4. If a stock is down but the fundamentals are positive, it’s best to hold on and even better to buy more.)

5. The true contrarian waits for things to cool down and buys stocks that nobody cares about, and especially those that make Wall Street yawn.

6. Pick the right stocks and the market will take care of itself. That’s not to say there isn’t such a thing as an overvalued market, but there’s no point worrying about it. The way you’ll know when the market is overvalued is when you can’t find a single company that’s reasonably priced or that meets your other criteria for investment.

7. Don’t overestimate the skill and wisdom of professionals.

8. Take advantage of what you already know. Look for opportunities that haven’t yet been discovered and certified by Wall Street—companies that are “off the radar scope.”

9. Invest in companies, not in the stock market.

10. If a company must acquire something, I’d prefer it to be a related business, but acquisitions in general make me nervous. There’s a strong tendency for companies that are flush with cash and feeling powerful to overpay for acquisitions, expect too much from them, and then mismanage them. I’d rather see a vigorous buyback of shares, which is the purest synergy of all.

11. Some people automatically sell the “winners”—stocks that go up—and hold on to their “losers”—stocks that go down—which is about as sensible as pulling out the flowers and watering the weeds. Others automatically sell their losers and hold on to their winners, which doesn’t work out much better. Both strategies fail because they’re tied to the current movement of the stock price as an indicator of the company’s fundamental value.

12. None of us is immune to the panic that we feel when a normal stock drops in price, but that panic is restrained somewhat by our understanding that the normal stock cannot go lower than zero. If you’ve shorted something that’s going up, you begin to realize that there’s nothing to stop it from going to infinity, because there’s no ceiling on a stock price. Infinity is where a shorted stock always appears to be heading.

13. Asset value, by itself, has no power to produce rising stock prices. What does cause stocks to rise in value are two things that are rather closely interrelated. One is an increase in a stock’s earning power. The other, and usually the more important, is the consensus of investment opinion as to the future course of that earning power. The reason these are so closely related is the strong tendency of the financial community to conclude that because a particular company has been increasing per-share earnings at a brilliant rate year after year, this trend will continue for a long time in the future. Plus or minus the temporary influence of the business cycle, this line of reasoning is often quite correct, although occasionally it can be quite wrong.

Saturday 19 October 2013

Book review: One Up on Wall Street by Peter Lynch (P/E ratio)

I have been reading Peter Lynch's One Up on Wall Street. It is a very interesting and down to earth book on investment.

Today I read that price to earning ratio (p/e) can be thought of as the number of years it will take the company to earn back the amount of your initial investment, assuming that the company's earnings stay constant. Eg, if P/E is 10, this means the original investment will be earned back in ten years.

Since different industries and companies with different growth rates have different p/e ratio ranges, it is not meaningful to compare across the board, let alone to buy any and all stocks on the basis of low p/e ratios alone. Instead, it is more meaningful to compare the P/E ratio of the company with its peers to see if it is high, low or average compared to the industry. Also, it is more meaningful to compare the P/E ratio of the company with its historical values to get a sense of its normal values, to see if it is in line with what others have paid for the earnings in the past.

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Tuesday 23 July 2013

SPH Reit IPO - successful!

I tried for SPH Reit IPO lots and got some successfully :) Should be holding it long term for dividend, like the rest of my REITs :)

List of my REITS:
1. Mapletree Commercial Trust (IPO + open market)
2. Sabana (open market)
3. Saizen (open market)
4. MGCCT (IPO)
5. SPH Reit (IPO)

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Sunday 7 July 2013

Jump in oil prices - encourage biodiesel demand hence increase Crude Palm Oil (CPO) prices?

Due to my holdings in Indoagri, I have been keeping a look out on the Crude Palm Oil (CPO) prices and associated news that may affect it. Oil prices have been showing an increase due to improvement in economy. Coupled with tension in the Middle East, this triggered fears of supply crunch in oil. As an oil alternative for fuel, this may mean good news for CPO producers since this may encourage biodiesel demand.

On the flip side, I have holdings in Food Empire as well, which is a direct user of CPO. However, I have read that coffee and sugar prices continued to be depressed, so I will monitor this for now.

=============================

Excerpt of article from Reuters on Friday 5 July 2013

UPDATE 9-Oil jumps $2 on Egypt, US data, biggest weekly gain in a year

NEW YORK, July 5 (Reuters) - Oil prices jumped nearly $2 a barrel on Friday to notch their biggest weekly gain in a year, boosted by concerns over rising tensions in Egypt and better-than-expected U.S. economic data.

Prompt U.S. oil prices initially lagged gains but rallied later in the day, extending this week's abrupt gains in spreads on speculation that U.S. Midwest oil supplies are poised to tighten. The September versus October U.S. West Texas Intermediate spread <CLU3-V3> rose 26 cents to close at a contract high of $1.31 a barrel.

......

U.S. crude oil prices extended their string of 14-month highs. Front-month U.S. crude oil futures settled $1.98 per barrel higher, or 1.96 percent, at $103.22, after touching a high of $103.32. Trading volume was thin due to the Independence Day holiday on July 4.

U.S. oil gained 6.7 percent for the week, the largest weekly percentage gain since October 2011.

Brent crude oil for August delivery traded at a three-month high and ended $2.18 per barrel higher, or up 2.07 percent, at $107.72 after hitting a high of $107.88.

Brent gained more than 5 percent on the week and showed its highest weekly percentage rise since last June.

Oil prices vacillated earlier in the day after data showed that U.S. employers added 195,000 new jobs to their payrolls last month, more than expected.

......

But for oil markets, the potential upside from increased economic activity outweighed risks from the rising dollar and possible policy tightening, said Matt Smith, commodity analyst at Schneider Electric in Louisville, Kentucky.

SUPPLY TIGHTENS, MIDEAST TENSIONS WEIGH

Crude oil extended gains late afternoon after the leader of Egypt's Muslim Brotherhood, Mohamed Badie, told a protest rally that ousted president Mohamed Mursi must be reinstated following his removal by the army - "otherwise its our lives".

......

Other factors are also tightening European oil supplies. Maintenance on the North Sea Forties crude oil field in August will reduce the amount of benchmark oil that underpins the Brent contract.

Libya's largest export terminal was shut late on Thursday. Port guards locked the gate over salary complaints, preventing workers from continuing operations.

The closely watched spread between global benchmark Brent crude oil and U.S. West Texas Intermediate had widened to $5.17 per barrel and settled at $4.50.

......

If you are reading this, you may be interested in:-

Partial divestment in Second Chance - Hello Indoagri!

Thursday 4 July 2013

Higher margins due to lower coffee price for Food Empire?

Report from Bloomberg today...

Coffee Crushed as Slumping Real Spurs Brazil Sales

The weakest Brazilian real in four years is accelerating coffee shipments from the biggest growing nation, adding to a glut that is cutting costs for Starbucks Corp. (SBUX) and Kraft Foods Group Inc.

First-half shipments were 20 percent higher than a year earlier at 13.385 million bags, or 803,000 metric tons, the Brazilian Trade Ministry said July 1. The real’s 9.4 percent retreat in the second quarter, the most among 24 major emerging-market currencies, increased revenue from dollar-denominated coffee sales and encouraged exporters to tap stockpiles that are the biggest since 2007.

Brazil is increasing competition among coffee sellers as farmers unload beans to clear storage space for the next harvest, judging that losses will be limited by translating dollar revenues into weaker reals. With global output exceeding demand for a fourth year, accelerating sales will drive prices down 11 percent to $1.08 a pound by Dec. 31, according to the median of 18 analyst estimates compiled by Bloomberg.

“The lower real will most certainly help exports, making Brazil a much more aggressive seller,” said Rasmus Wolthers, a trader at Wolthers & Associates, a brokerage in Santos, Brazil. “There’s a lot of coffee in Brazil, and there isn’t enough space to store it all, so producers will have to sell. I expect to see much more aggressive sales offers.”

Profit Margins
Colombia, the second-biggest grower of arabica beans, increased exports by 32 percent in the first five months of the year after the peso weakened 7.1 percent against the dollar, according to the nation’s Federation of Coffee Growers. Sales from Peru, the third-largest producer in South America, fell 31 percent in the period as buyers turn to supplies from Brazil.

Arabica, the most-consumed coffee, tumbled 61 percent on ICE Futures U.S. in New York since reaching a 14-year high in May 2011. Cheaper beans prompted J.M. Smucker Co. (SJM) to cut prices in February for Folgers, the top-selling U.S. brand, and widened second-quarter profit margins at Starbucks coffee houses.

This year’s 16 percent drop in futures to $1.214 compares with a 2.7 percent retreat in the Standard & Poor’s GSCI gauge of 24 commodities. The MSCI All-Country World Index of equities rose 5.4 percent, and the U.S. Dollar Index advanced 5.1 percent against a basket of six currencies. Treasuries lost 2.5 percent, a Bank of America Corp. (BAC) index shows.

Starbucks, the largest coffee-shop chain, will report a 21 percent gain in profit for its fiscal third-quarter that ended June 30, according to the mean of 13 analyst estimates compiled by Bloomberg. Shares of the Seattle-based company rose 25 percent in New York trading this year.

Biennial Cycle
Brazilian exports of green, or unroasted, coffee will expand 5.8 percent to 29 million bags in the 2013-2014 crop year that started July 1, the second-highest total on record, according to Cecafe, the exporters’ council in Sao Paulo. Each bag weighs 60 kilograms (132 pounds)

While production will decline this crop year as trees enter the lower-yielding phase of a biennial cycle, shipments will keep rising as exporters tap inventories from last year’s record crop of 56.1 million bags, the U.S. Department of Agriculture estimates. This season’s projected harvest of 53.7 million bags will be the third-largest ever and expand stockpiles 22 percent to 8.23 million bags, the USDA predicts.
The real will weaken to an average of 2.3 per dollar in the fourth quarter, compared with 2.25 today, according to Barclays Plc, the most-accurate forecaster of Latin American currencies tracked by Bloomberg in the four quarters ended March 31.

Subsidy Boost
Government intervention may curb the surge in exports and halt the slump in coffee prices, said Jack Scoville, a vice president at Price Futures Group Inc., a broker in Chicago. The government approved a record 3.16 billion reais ($1.4 billion) of subsidies last month to expand storage, buy beans and invest in plantations. It is also considering a proposal to compensate growers when prices drop below a certain level.

Heavier-than-average rainfall may reduce the quality of beans and limit the appeal of Brazilian exports, said Francisco Ourique, a manager at Cooparaiso, a growers’ cooperative in Sao Sebastiao do Paraiso in Minas Gerais, the largest arabica-producing state. Storms can knock cherries off trees and diminish the taste of beans dried outdoors.

Minas Gerais
Parts of the coffee-growing states of Parana, Sao Paulo and Minas Gerais got rainfall that was as much as three times the 30-year average from May 1 to June 25, according to Randy Karst, a meteorologist at World Weather Inc. in Overland Park, Kansas.

Lower coffee prices and a weaker real may mean a financial squeeze on Brazilian growers, forcing some to cut spending on products such as fertilizers that they buy in dollars, according to Ourique, whose cooperative produces about 3.2 million bags a year. That would curb output from the 2014-15 season.

Exporting coffee rather than stockpiling may be the best option for growers, according to Kona Haque, a London-based analyst at Macquarie Group Ltd. The average cost of production dropped to $1.15 a pound from $1.35 at the start of the year as the real weakened, the bank estimates.

The real may weaken a further 20 percent as Latin America’s largest economy slows and the government budget deficit widens, Themistoklis Fiotakis, an analyst at Goldman Sachs Group Inc. in London, wrote in a June 20 report. More than a million people took to the streets in the past month to demonstrate against inflation, government corruption and public services.

During the last major devaluation of the real, a 30 percent drop in 2008, green-coffee exports rose 5 percent to a then-record 26.033 million bags even as the harvest declined 16 percent, Cecafe and USDA data show. Brazil also exports robusta, the second-most-consumed coffee variety.

Million Bags
Global coffee production, including robusta that accounts for 41 percent of supply, will exceed demand by 4.46 million bags in 2013-2014, from a 10 million-bag surplus a year earlier, according to the USDA. Inventories will reach a five-year high of 30.53 million bags, the USDA predicts.

J.M. Smucker, which sells Folgers and Dunkin’ Donuts brand coffees, announced price cuts averaging 6 percent in February. The Orrville, Ohio-based company reported a 25 percent gain in fourth-quarter net income to $130.3 million. Kraft (KRFT), based in Northfield, Illinois, said May 3 it would cut the price of 12-ounce cans of Gevalia coffee by 6 percent.

Starbucks said April 25 that its operating profit margin in the quarter ended March 31 widened to 15.3 percent from 13.5 percent a year earlier, partly because of cheaper beans. The company cut its packaged-coffee prices by 10 percent that month.

Hedge funds and other large speculators are almost the most bearish they’ve ever been, with a net-short position of 27,560 futures and options, according to U.S. Commodity Futures Trading Commission data that begins in 2006.

“Continued bearish fundamentals and the weaker real could take coffee down to $1,” said Ashmead Pringle, the president of Atlanta-based GreenHaven Commodity Services, whose $460 million GreenHaven Continuous Commodity Index Fund tracks a basket of commodities. “I wouldn’t buy it right now.”

To contact the reporters on this story: Marvin G. Perez in New York at mperez71@bloomberg.net; Isis Almeida in London at ialmeida3@bloomberg.net
To contact the editors responsible for this story: Steve Stroth at sstroth@bloomberg.net; Claudia Carpenter at ccarpenter2@bloomberg.net

Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/

Tuesday 2 July 2013

Partial divestment in Second Chance... Hello Indoagri!

Today was a good day for shares in the Singapore stock market. I made use of this chance to partially divest a small portion of my Second Chance Properties, which closed at 0.445 today.

I took up a small position in Indoagri today. Of the commodities stocks, I like Indoagri because of its discount to NAV. Indoagri opened at 0.975 and closed at 0.985, which is at a premium to its book value of $1.242(PB ratio 0.79). Outlook wise, I like that it has a diversified exposure in oil palm, rubber and sugar. Furthermore, it has recently announced an acquisition of 50% shares in CMAA, a sugar refinery in Brazil.

I believe that with world economy recovering, the long term view for commodities looks bright and it is a good time to buy when prices are still low.

If you are reading this, you may be interested in:-
Jump in oil prices - encourage biodiesel demand hence increase Crude Palm Oil (CPO) prices?

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Saturday 15 June 2013

Some thoughts on the recent REITs sell-down

I came across the following quote today and kind of resonated with it in light of the recent REITs sell-down.

Warren Buffett says: For some reason, people take their cues from price action rather than from values. Price is what you pay. Value is what you get.

S-REITs share prices have taken a beating in the past two weeks in light of Fed talks about easing up on QE. Even though this may imply increase in interest rates, thereby somewhat affecting DPUs of S-REITs due to their borrowings, I feel that the sharp drop in price is overdone, and may be due to shortists affecting the market. The sharp drop in price may also be partly due to the rally S-REITs have sustained in the past year.

If you have decided at some point in time to load up on S-REITs because of their dividend paying policy and yield %, then, the drop in price should be deemed as a good time to accumulate more, rather than to sell them away. Afterall, the drop in price should not change the value of the company and the reasons for buying it, does it?

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Thursday 23 May 2013

Picked up some Sabana REIT today in the sea of red

The eve before Vesak Day was not peaceful at all. Well, I was expecting some kind of flat or slight negative market as it so often happens before a long weekend. However, today was kind of "bloody" in the sense that there was a sea of red in the stock market...

I was mindful of a possible correction due to the "up up and away" stock market the past few weeks. Therefore, I had taken profit on a few occasions, like selling off my Global Premium Hotel and Marco Polo after their results release recently. Therefore, I had a small war chest ready for deployment when needed.

I bought some lots of Sabana REIT today when it dipped >5% from yesterday's closing price. The price was hovering at about 1.25 - 1.285. Yield at this price range was > 7%, which still rank one of the highest amongst the REITS and a decent number at that.

I feel that Sabana's performance has been good the past few quarters. Even though there is an overhanging cloud regarding some of the master leases expiring this year, talks are underway to renew these leases. Should that happen, the stock price is very likely to increase further from the 20+ % it has increased the past year.

With this potential upside, the above yield % and REITs being a defensive stock in mind, I took the chance to get a few more lots today. I also took profit on Lum Chang, thereby filling up my war chest again ready for another deployment if so required.

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Wednesday 22 May 2013

Analyst Report on Food Empire - 21 May 2013

Share price of Food Empire increased from S$0.685 to S$0.725 today, a rise of almost 6 % in a day. Volume is high too, at about 10 x higher volume than average. Naturally, I was happy since I feel that the stock has good prospects and I am vested.

I tried to search online to see if there are any news, and came across an analyst coverage in the NextInsight that came out today. Coincidentally, I wrote about Food Empire a few days ago.

Link here: The NextInsight

Excerpt of the report below:

OSK-DMG maintains 'BUY" with 84 cents target for Food Empire.

Food Empire reported an 11% growth in 1Q13 earnings of USD5.6m. Results are in-line with expectations, accounting for 25% of our full year estimates.

Sales in Russia grew at a stronger pace of 18% y-o-y vs our forecast of 15% due to a change in business model.

...

Sales for the quarter were also boosted by a raising of average selling prices (ASPs) for products last year. We also note an expansion in gross margins by 5ppt for the quarter.

We maintain our estimates and BUY call with TP of SGD0.84, pegged to 16x FY13F P/E.

Food Empire trades at a sharply lower valuation than Super Group (PE ratio of 13.9 for Food Empire vs 32 for Super Group).

If you are reading this, you may also be interested in this:-

Food Empire posts 11.3% rise in net profit to $7mil in Q1-FY2013

Sunday 19 May 2013

Food Empire Holdings - 11.3% rise in net profit to $7mil in Q1-FY2013

Having bought and sold Food Empire a few times since October 2012 when it was still S$0.45, to take profit (amidst uncertainty in the global economy), I have again taken a position on Food Empire in April this year. After its XD date, it was trading at about 0.655-0.67 range. As of last Friday 17 May 2013, it was trading at S$0.685.

Since my last post in January 2013, prices of commodities such as sugar, crude palm oil (where it is used to make non-dairy creamer of 3-in-1 beverages) and coffee, are in a downward trend or are depressed. Being a direct user of these commodities to make the 3-in-1 beverages, this surely means good news for Food Empire since raw material costs are lower.

Sugar Prices (source: http://www.indexmundi.com/)

Crude palm oil prices (Source: palmoilhq.com)

Coffee prices (source: nasdaq.com)

Furthermore, group revenue grew by 13.5% from last year due to strong revenue growth in Russia, Eastern Europe and Central Asia (Russia and Eastern Europe being their largest market).

This is definitely one stock that I will continue to keep in my portfolio.

If you are reading this, you may be interested in:-

My holdings - as of 19 May 2013

Here's a snap shot of my current portfolio. My portfolio is rather REIT heavy, with almost 50% of my holdings in REITs.

No.	Name	Purchase Date	Purchase Px	Current Px	Gain/Loss
1	MCT	Apr 27, 2011	0.890	1.465	64.61%
2	Biosensors	Mar 16, 2012	1.450	1.215	-16.21%
3	Sabana REIT	Jul 26, 2012	1.000	1.355	35.50%
4	2nd Chance	Nov 22, 2012	0.417	0.435	4.27%
5	MGCCT	Mar 7, 2013	0.93	1.13	21.51%
6	Lum Chang	Tue, Mar 26, 13	0.34	0.350	2.94%
7	Food Empire	Tue, Apr 9, 13	0.68	0.685	0.74%
8	Saizen	Tue, Apr 23, 13	0.198	0.190	-4.15%

Analyst report on Saizen REIT

While doing research on Saizen REIT, I came across the following company research report by nra capital which was published on 15 May 2013 (post 3Q 2013 results release).

The link to the report is here:- NRA Capital

In summary,

NAV of the REIT has depreciated to S$0.25 from S$0.27 due to depreciation in yen (Note: this is still higher than its current price of S$0.19).
Japanese economy is showing signs of a pick-up (Note: as I have mentioned in my previous post, the Japan PM is taking bold and concrete steps (i.e. not just talk only) to improve the country's economy.)
Management is committed to re-gear to expand portfolio (Note: as shown by the increases in DPU over the past years.)
Forward looking yield of 6.4% (FY14F) and 6.5% (FY15F).
Fair value deemed as S$0.20 and rated long term BUY.

An earlier report posted in The Edge Singapore may be found here:- The Edge Singapore on Saizen REIT posted on 22 April 2013

If you are reading this, you may also be interested in:-

I bought some more Saizen REIT when its price fell after its 3Q13 results

Monday 13 May 2013

Bought more Saizen REIT today after its 3Q2013 results release

Saizen REIT must be the one of the least favored REITS listed on SGX. And it is hard to blame anyone for not favoring this REIT, given its rather turbulent history:-

Listed in Nov 2007 @ IPO price of $1 (discount to its NAV of $1.05)
Seems like the REIT has trouble servicing its loans (which are all commercial mortgage backed securities (CMBS) loans (read What is a CMBS loan and More on CMBS financing), and the market for such loans have more or less died during financial crisis in 2008) + Japan recession = no income distribution to unit holders in 2009-2010. And Saizen is allowed to do that, reason being it is not mandated by Singapore law to pay out dividends as all of its properties are in Japan.
To add salt to this, there was the March 2011 massive earthquake. It has 22 of its 146 properties in Sendai, the hardest hit area.
Things for this REIT started to take a turn in end 2012, after it made a series of attempts to repay its loan and made some good property buys.
Current price is at $0.20 vs its NAV of $0.2716.
Yield is about 5.1 % based on current price. Income distribution for this REIT resumed in 2H2010. It has been in an increasing trend since, as shown below:-

There were some sell down activities these few days following its 3Q2013 results. Seems like there was a 70.5% decline in quarterly net income from operations - which was largely due to one off expenses as a result of early termination of loans and refinancing activities. Furthermore, due to recent depreciation in yen, there is worry that DPU will be affected.

Well, for me, I think that based on past performance, Saizen has taken positive steps to get itself out of the woods. And this shows a lot for the tenacity of the management. The fact that income distribution has resumed in 2010 and shows an increasing trend over the years gives me confidence that the REIT is in good hands.

Even though there was a decline in quarterly income for 3Q2013, this is due to a one off payment for refinancing of loans. The more favorable refinanced loan terms at lower interests means that benefits will be felt in later quarters. Furthermore, the REIT is now given more time to repay its loan, and in the meantime, is able to secure more loans to fund its future acquisitions.

As for the depreciation in yen affecting DPU, this is something that probably comes off as a tradeoff to reviving the Japanese economy. From my impressions, the current Japan PM and his cabinet are taking big steps to shake Japan out of its decades of recession slumber. With a better economy comes a more vibrant real estate market in Japan, as more people work or invest in Japan, resulting in increase in demand for houses, and hopefully that means prices of Saizen assets appreciate in time. I'm sure this formed some of the considerations by investors when they participated in the recent Croesus Retail IPO.

Therefore, it was based on the above analysis that, instead of selling off my Saizen REIT when prices went down to S$0.189 on bad news, I loaded more on Saizen REIT today.

If you are reading this, you may also be interested in:-

Analyst report on Saizen REIT

Sunday 12 May 2013

Lum Chang won a BCA award on May 16, 2013

Excerpt from Straits Times

Loud noises are usually unavoidable during construction projects and often disturb residents living in the area. However, some construction firms have come up with innovative ways to manage the level of noise pollution and they will receive the Green and Gracious Builder Awards on May 16.

The awards from the Building and Construction Authority recognise builders who have made an effort to address environmental and public concerns arising from construction works.

...

Lum Chang Building Contractors, another award winner, customised inflatable noise barriers to reduce the noise generated from construction works.

Lum Chang won the case on April 24, 2013...

While doing research on Lum Chang, I came across the following piece of information on Singapore Law Watch listed 24 April 2013. Apparently, Lum Chang was involved in a law suit. Based on my understanding, Lum Chang (1st Defendant) won the case.

Case details and judgement here:- Singapore Law Watch

Excerpt from the judgement -

Ryobi-Kiso (S) Pte Ltd v Lum Chang Building Contractors Pte Ltd and another
[2013] SGHC 86

The case before me concerned an application by way of originating summons for an injunction against a call on a performance bond under a construction contract. After the hearing on 1 October 2012, I dismissed the application with the usual consequential costs orders. As the plaintiff applicant has appealed against my decision, I set out the grounds for my decision.

......

Having regard to the overall tenor and context of the entire conduct of the parties, I am unable to conclude that the 1 st Defendant’s conduct was “so lacking in bona fides” (see BS Mount Sophia at [45]). I therefore dismissed the Plaintiff’s application with costs.

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Book review - The Intelligent Investor by Benjamin Graham (Part I)

I started my stock investing journey on April 2011, and one of the first books I read on the topic is "The Intelligent Investor" by Benjamin Graham. At that time, I felt the need to learn from the best and Warren Buffett being an obvious choice, I read up on his investing philosophy (value investing) and got to know about Benjamin Graham.

After two years into my investing journey, I decided to re-read the book. And I find that I have a greater appreciation of the book after having real life, hands on experience in studying companies, choosing stocks, and buying/selling. Nothing beats trading with your hard earned $.

"The Intelligent Investor" is a classic investment book and I am sure that many people will agree with me that it is a must read for people who are intending to or who are already into stocks as an investment medium.

I have re-read about a quarter of the book and so far I have highlighted the following five points for sharing:-

1. To invest successfully over a lifetime does not require a high IQ, unusual business insights or inside information - what is needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. By developing your discipline and courage, you can refuse to let other people's mood swings govern your financial destiny. It means being patient, disciplined and eager to learn, you must also be able to harness your emotions and think for yourself.

- Agree. Emotions are a no-no in investment. You must develop your own investment philosophy which is unique and tailored according to your risk appetite, your commitments and your temperament.

2. A stock is not just a ticker symbol - it is an ownership interest in an actual business, with an underlying value that does not depend on its share price. The market swings between unsustainable optimism (making stocks too expensive) and unjustified pessimism (making stocks too cheap). An intelligent investor is one who sells to optimists and buys from pessimists.

- Agree. Always look for value or bargains in businesses, while considering the broad economic climate, before buying a stock. You must be happy to be part of the business, and do not mind holding on to it (in case market trends downwards).

3. Future value of every investment is a function of its present price - higher the price, lower the returns. Benjamin Graham emphasizes on Margin of Safety - never overpaying, no matter how exciting an investment seems to be. This is because the chance of being wrong is always there (never know how Mr. Market behaves the next minute).

- Somewhat agree. It's a cross between buying at a bargain and riding the wave. I do agree on the margin of safety - it is important to avoid overpaying for a stock, as I know from my early stock buys in 2011 (such as ECS, Keppel Land, NOL...). Always know what you are buying.

4. The intelligent investor realizes that stocks become more risky as their prices rise, and less risky as their prices fall. He dreads a bulls market which makes stocks more costly to buy, and welcomes a bear market since it puts stocks back on sale. Even though investors know they are supposed to buy low and sell high, in practice they often end up getting it backwards.

- Agree. The best moment to buy is when market starts to turn around. Prices of stocks look high now.

5. The art of successful investment lies first in the choice of those industries that are most likely to grow in the future and then in identifying the most promising companies in these industries. The search for a stock to buy is not worth the investor's efforts unless he could hope to add 5% before tax to the average annual return from the stock portion of his portfolio. It is important to measure your investing success by how much you keep after inflation and not just by what you make.

- In theory yes, but difficult to put into practice. I need to work on the 5% increase to portfolio stocks, and not spend too much time on those 1-2% ones.

You can read the reviews from others and/or get the book from Amazon here:-
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Monday 6 May 2013

Sold my Global Premium Hotels, for Croesus Retail Trust IPO

The stock market has been in a nice run the last few months. I made use of the chance to take profit on some of my stocks. Notably, I have sold my Global Premium Hotel, as its last quarter results were not very good + no dividend + high gearing ratio (increased borrowing costs). Price movement was hovering about 0.255-0.26. Hence, instead of tying up my funds in the counter, I decided to take profit, and divest my $ into another counter - Croesus Retail Trust.

Croesus Retail Trust IPO is now open for subscription, and will be closed on 8 May 2013 at noon. Results of the balloting will be known on 9 May 2013, and the stock will be listed on 10 May 2013. Basically, I am attracted to this IPO because of its potentially high dividend yield (8% for 2014), and the 100% occupancy rates for the 4 shopping malls in its portfolio + long term leases of > 10 years. I also believe that the current PM and government are taking concrete steps to lift the Japanese economy i.e. the worst should be over, and things can only improve from now onwards. Even though there is risk that the yen will continue to depreciate (in order to boost JP economy by making it more competitive), thereby affecting DPU, on the flip side, an improving JP economy means that people have more money, and therefore increased spending power.

Even though it is a business trust i.e. not mandated by law to provide dividends, I think that in the first few quarters at least, there management will provide attractive dividends at least for maintaining or even boosting its share price. At this low bank interest rate and high inflation times, investment in business trusts with promise of dividends, a high one at that, does not sound bad at all.

Now, the problem is just, how many lots I can get.

Update 12 May 2013: Wow, I didn't expect demand for the IPO to be so hot. I bid for 12 lots, and got nil. SIGH!

Disclaimer: The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

Wednesday 1 May 2013

Lum Chang coverage in The Edge on 29 April 2013

Excerpts from coverage in The Edge on 29 April 2013:-
(source: The Edge Singapore)

Family-controlled Lum Chang Holdings does not attract much attention in the market. Yet, the decades-old contractor is an interesting play on Singapore’s property and infrastructure boom. And, its dividend of two cents per share provides investors with a steady dividend yield of about 6%. Its market value of just $123.8 million is currently a 28% discount to its book value of $173.2 million. The company also has a liquid balance sheet, with a net cash position of $33 million as at end-2012.

Much like other contractors, Lum Chang has taken stakes in property development projects. For instance, it has a 30% stake in Twin Fountains, an executive condominium (EC) development in Woodlands. The remaining stake is held by Frasers Centrepoint. The project was sold out swiftly earlier this month. The company also has a 20% stake in another joint venture with Frasers Centrepoint to develop Esparina Residences, an EC located in Sengkang that is due to receive its temporary occupation permit (TOP) at end-2013.

..... Lum Chang’s construction order book stood at about $600 million as at Dec 31. Its ongoing property development-related construction work comprises six projects. Two of these projects are for Ascendas: Nucleos in Biopolis Road and a business park development in Science Park Drive. Lum Chang is also building The Metropolis for Ho Bee Investment at Biopolis, Ripple Bay Condominium forMCL Land in Pasir Ris, and Esparina Residences.

...

Lum Chang also has a foothold in Malaysia, where it develops property.

... In February, it said it had bought property located at 42-60 Kensington High Street, London for £40.19 million ($76.8 million). “Our income will be mainly from the ground floor, achieving rental income from shops such as Zara, Topshop and Miss Sixty. The leases there are very long, 10-year leases and these will provide a good steady income,” Fong says.

The yield of the London property works out to 4.5%, giving an annual income of $3.4 million, according to a report by UOB Kay Hian. That is about 15% of the company’s earnings for FY2012.

Lum Chang has paid a dividend of two cents per share for the last three financial years ...

Lum Chang does not have much of a following among analysts, though. However, UOB Kay Hian notes that the stock appears to be inexpensive. “Trading at 0.8 times price to book looks reasonable when compared with peers’ average of one time,” the brokerage states in a report. “Since FY2010, Lum Chang has maintained a net cash position. Its stock price is underpinned by cash reserves of $77 million as at Dec 31, which accounts for 62% of its market cap.”

Amid the hunt for yield, Lum Chang seems a good alternative to real estate investment trusts and consumer-oriented stocks that have run up sharply over the last couple of years.

If you are reading this, you may also be interested in:-

Wednesday 3 April 2013

Lum Chang - Analyst Coverage

After I blogged about Lum Chang a few days ago, there is analyst coverage of the same by UOB KH. Great minds think alike??

Here is an excerpt from their analyst report:-

Lum Chang Holdings (LCH) is trading at 4.9x FY12 PE and 0.8x P/B.

Potential share price catalysts include new contract wins and an attractive forecast dividend yield of 6% in FY13.

Investment Highlights
Good track record.
As a  BCA grade ranked A1 contractor,  Lum Chang Holdings has an impressive portfolio of past projects, which included Changi Water Reclamation Plant, UOB Plaza I and National University of Singapore. LCH’s established record in civil engineering projects is also evident, being the only local contractor to clinch a MRT Downtown Line project (contract 912 worth over S$450m) on its own. LCH’s recognised construction quality and established track record make it a serious contender for upcoming public construction projects, such as the MRT Thomson Line.

Consistently attractive dividend yield.
LCH has been paying a consistent dividend of 2 cents for the past three years, which translates to an attractive dividend yield of 6.0%. The dividend of 2 cents equates to a payout of 35.6% in FY12. In FY12, LCH generated a free cash flow (FCF)/share of 2.4 cents and a FCF yield of 7.3%.

Steady rental income.
LCH’s recent acquisition of a  freehold mixed-use property at 42-60 Kensington High Street in London provides a steady recurring income for the group. Kensington High Street is identified in the London Plan as one of the 35 major centres in London. The prime location of the property allows it to enjoy a 100% occupancy rate and an annual rental income of £1.8m (S$3.4m), that translates to a rental yield of 4.5%. The S$3.4m rental income is about 15% of its FY12 net profit.

Strong balance sheet.
Trading at  0.8x P/B, valuation looks reasonable when compared with peers’ average of 1x P/B. Since FY10, LCH has maintained a net cash position. Its stock price is underpinned by cash reserves of S$77m (as at 31 Dec 12) that represents 62% of its market cap.

Future plans.
With a  strong construction orderbook of S$600m and its new executive condominium project at Woodlands (a JV with Fraser Centrepoint) to be launched in Apr 13, LCH’s construction arm is likely to be kept busy till 2016. For its property development business, LCH is looking forward to continue developing its two residential projects in Malaysia where only 50% has been launched todate. LCH is also on the lookout for promising property investment in Asia and London to create additional steady recurring income. Associate LC Development’s hotel operation in London is likely to help LCH in optimising its selection of property investment in the London market.

If you are reading this, you may also be interested in:-

Tuesday 26 March 2013

Lum Chang - a hidden gem?

Vested with a few lots of Lum Chang today.... after discovering it yesterday night.

Lum Chang's construction portfolio dates back to the 70s, and include buildings like National Library, Circle Line Stage 1, AMK Hub, Causeway Point, Paragon, Audi Terminal etc etc. It has branched into property development and investment, and holds buildings in Singapore and Malaysia for rents.

Tried to do some research on the stock, but apparently it is like a submarine stock.. hardly any news may be found for it. Which is a good thing for me, cos this means that I get to buy it at a good price without all the hype!

Here are the things I found...

1. At its last closing price of $0.34, it is trading at about 22% discount to its NAV of $0.4368.

2. It has been consistently giving dividends for the past years (my records date back to 2006).

3. Yield for last 3 years about 6% (based on $0.34).

4. Compared to its peers, Swee Hong (PB ratio 1.87 and PE ratio 18.7) and Yongnam (PB ratio 1.15 and PE ratio 8.7), its ratios of PB ratio 0.78 and PE ratio 6.0 seem much more attractive.

Hence the reason I bought today.

If you are reading this, you may also be interested in:-

Wednesday 13 February 2013

Book Review: How to Make Money in Stocks by William J. O'Neil

William O'Neil's philosophy revolves around the following

C Current Quarterly Earnings per Share: The Higher, the Better

A Annual Earnings Increases: Look for Significant Growth

N New Products, New Management, New Highs: Buying at the Right Time

S Supply and Demand: Shares Outstanding Plus Big Volume Demand

L Leader or Laggard: Which Is Your Stock?

I Institutional Sponsorship: Follow the Leaders

M Market Direction: How to Determine It

The goal of the strategy is to discover leading stocks before they make major price advances. The system matches fundamental and technical analysis, and identifies companies with strong fundamentals, . It encourages buying their stock when they emerge from price consolidation periods and before they advance dramatically in price.

What To Do:-
1) You should buy stocks when they’re on the way up in price, not on the way down. And when you buy more, you do it only after the stock has risen from your purchase price, not after it has fallen below it.
(I agree. Even though a stock may look cheap, the fall may not have ended. Don't catch a falling knife!)

2) You buy stocks when they’re nearer to their highs for the year, not when they’ve sunk so low that they look cheap. You buy higher-priced stocks rather than the lowest-priced stocks.
(This bit would be the technical analysis portion, where volume and price action comes into play.)

3) You pay far less attention to a company’s book value, dividends, or PE ratio—which for the last 100 years have had little predictive value in spotting America’s most successful companies—and focus instead on more important proven factors such as profit growth, price and volume action, and whether the company is the number one profit leader in its field with a superior product.
(Same as Point 2) above. It's relevant if you are trading based on price and volume action.)

4) You learn to always sell stocks quickly when you have a small loss rather than waiting and hoping they’ll come back.
(True for all cases. Ok, maybe not for the hard core value investor. Learn the 8% cut loss rule, especially when you are on CFD.)

5) You also have to acquaint yourself with charts—an invaluable tool most professionals wouldn’t do without but amateurs tend to dismiss as complicated or irrelevant.

(This (TA) I've got to learn. It seems so so hard.)

6) Today it’s not enough for you to just work and earn a salary. To do the things you want to do, go the places you want to go, and have the things you want to have in your life, you absolutely must save and invest intelligently.
(I agree. Start early!)

7) It is the unique combination of your finding stocks with big increases in sales, earnings and return on equity plus strong chart patterns revealing institutional buying that together will materially improve your stock selection and timing.
(Very true.)

8) A stock’s chart must always be checked to determine whether the stock is in a proper position to buy, or whether it is the stock of a sound, leading company but is too far extended in price above a solid basing area and thus should temporarily be avoided.

What NOT To Do:
1) You don’t subscribe to a bunch of market newsletters or advisory services, and you don’t let yourself be influenced by recommendations from analysts, who, after all, are just expressing personal opinions that can frequently be wrong.
(I agree. Always do your known research. Analysts may have their own hidden agenda!)

This book has 4 stars based on 228 reviews on Amazon.

You can read the reviews from others and/or get the book from Amazon here:-

How to Make Money in Stocks by William J. O'Neil