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:-

• Food Empire Holdings Ltd
• Analyst report on Food Empire on 21 May 2013

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.

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%

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.

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

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.

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

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.

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.

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:-

• Lum Chang - Analyst Coverage in April 2013
• Lum Chang - A hidden gem?

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.

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:-

• Lum Chang coverage in The Edge Singapore on 29 April 2013
• Lum Chang - A Hidden Gem?

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.

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:-

• Lum Chang - Analyst coverage April 2013
• Lum Chang coverage in The Edge Singapore on 29 April 2013

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.

KSH Holdings - my reasons for buying this stock

KSH Holdings first caught my attention after I read that it had obtained a Letter of Acceptance (LOA) for Qbay. Its order book now stands at more than $460 million, so there is visibility on its performance for the next 1-2 years. It has also been constantly paying dividends over the years to shareholders, with yield of 3.4% at closing price of S$0.44. PE ratio is relatively low at 8.5, which means that the stock is not overpriced. I also noted that its earnings over the years have been pretty consistent.

Initially, I was a little skeptical of construction stocks, as I feared that construction activities in Singapore is getting rather saturated due to boom in construction activities in recent years, and I had the impression that population growth in Singapore was going to be carefully controlled/curbed due to public sentiments post-General Elections. However, that changed after the White Paper came out, which projected that Singapore would have a population of 6.9 million in 2030. My feelings on this aside, I saw this information as an indicator that construction in Singapore is going to flourish for some years.

My entry price was S$0.38, which was still below its NAV of S$0.39. It's last closing price is S$0.44, which means a gain of 15% in less than a month.

There's a buy call from OCBC, revising its TP from S$0.50 to S$0.62.

Excerpt here (from http://sgx.i3investor.com/servlets/ptres/3848.jsp):

KSH Holdings: Another quarter of strong growth

KSH reported 3Q FY13 PATMI of S$8.1m, which surged 179% YoY mostly due to contributions from its property development segment as the group recognized earnings from The Boutiq, Cityscape@Farrer Park and Rezi 26. 9M FY13 earnings now cumulate to S$22.3m, up 108.3% YoY and forming 73% of our FY13 forecast. The group has sold a significant portion of launched projects, and we expect progress billings from already sold projects to underpin earnings growth ahead. Maintain BUYwith an increased fair value estimate of S$0.62, versus S$0.50 previously, as we lower the RNAV discount for its property segment from 50% to 40% to reflect a lower risk profile given a larger percentage of projects sold, and raise our PE multiple for its construction segment from 3.0x to 4.0x - a level closer in line with that of its peers. (Eli Lee)

The full report can be obtained from here: http://kshholdings.listedcompany.com/misc/KSH-130208-OIR.pdf

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.

KSH Holdings - EARNINGS SURGE OVER 179.0%

KSH HOLDINGS’ EARNINGS SURGE OVER 179.0% TO HIT S$8.1 MILLION IN 3QFY2013 AND 108.3% TO HIT S$22.3 MILLION IN 9MFY2013

- Property Development division continues to achieve third consecutive quarter of strong growth, boosting bottomline 

- Strong construction order book of approximately S$461.0 million as at January 31, 2013

- Low gearing of 0.23x and healthy fixed deposits, cash and cash equivalents of S$66.7 million

Good set of results. Stocks may fly off the shelf tomorrow :) 

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.

My holdings - January 2013

January 2013 has been a good month for the stock market. Stocks have been rallying, after fears of US and Europe crisis are quelled by cheery reports from the two economies.

For my holdings, on the REITs side, MCT has gone up by 12% during January from S$1.22 to reach a high of S$1.37 today. Sabana has also performed well, and increased 7% from S$1.14 to reach S$1.22 today. After doing some research, I noted that Saizen Reit is trading at S$0.19 which is a significant discount to its NAV value of S$0.30. Making use of the correction today, I bought some lots at its day low of S$0.188.

I sold my Singtel lots during this time for a profit of about 6%. Even though on hindsight, I should have hold onto the shares, however, as it is rather expensive at $3+, this gives it a lot of room to fall in price + tying up my limited $ resources, therefore I decided to sell it. If Temasek goes on a selling frenzy again, I can always buy it then :)

I still have my Second Chance. In fact, I bought a few more lots when it went XD recently and price dropped to S$0.40. Price movements are rather flat for this counter, but with a yield of 8.9%, I treat this stock like a fixed deposit. I am also holding on to my  Global Premium Hotel lots. Prices have gone up 8% during January from S$0.25 to S$0.27.

Other stocks that I hold include Food Empire (good prospects with expansion of business in China and India), KSH Holdings (booming construction in Singapore, good order outlook, and company is performing well), Vizbranz (bought on impulse recently on the basis that Lam Soon may privatise the company), and Biosensors (which I have been holding for close to a year, very low PE ratio of 5x). Of these, I am most inclined to sell Vizbranz to release the funds I have tied up in this counter.

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.