Monday, December 30, 2019

Portfolio Summary for December 2019

As of 31 December 2019

Cash Equity

Security# SharesPricePortfolio %
DBS400$25.8822.46%
OCBC Bank900$10.9821.44%
SATS2,000$5.0621.96%
ST Engineering2,500$3.9421.38%
Old Chang Kee5,000$0.7458.08%
HC Surgical4,100$0.5254.67%
Portfolio Market Value = $46,081

SRS Equity

Security# SharesPricePortfolio %
OCBC900$10.9820.15%
SGX1,300$8.8623.48%
SingTel2,000$3.3713.74%
CapitaCommercial Trust3,000$1.9912.17%
Frasers Commercial Trust2,500$1.668.46%
Sheng Siong8,700$1.2421.99%
Portfolio Market Value = $49,048


December used to be my favourite month of the year.  For a start, there are the year-end celebrations and get-togethers.  As most clients go on holiday, it is supposed to be a quiet month with less work and more time to wrap up loose ends.  (Or so I thought.)  This year, my work actually became hectic as we received more client inquiries and needed to resolve them as soon as possible.  Moreover, as my colleagues start to clear their leave, I had to back them up and cover their responsibilities.

Looking at the equity market, the S&P 500 Index and Dow Jones Industrial Average hit new record highs as U.S. and China agreed to a 'Phase One' trade deal.  Santa rally kicked in and added to the joyous momentum [news].  Even though the Straits Times Index did not hit a new high, the stocks on my watchlist continued to loiter around the upper end of pricing.  Day by day, I had hoped for Mr. Market to offer me shares of solid companies at a reasonable price, but I was disappointed.  Oh well, patience is key.  The chance to pull the (investment) trigger will come.


Trade Actions

Amid the festive cheer, one stock did appear on my radar and I decided to take up a stake.


HC Surgical Specialists
I bought 4,100 shares of HC Surgical Specialists ("HCSS") at $0.515 apiece.  HCSS is a Singapore-based medical group, operating a network of 16 clinics throughout the island.  It is primarily engaged in the provision of endoscopic and colorectal procedures.  HCSS also has a stake in Singapore-listed Medinex, a provider of management and support services for the local medical clinics industry.  There are several similar listings on the local bourse.  What attracted me to this company is its high cash buffer relative to its debt.  The medical service provided is specialized, thereby establishing its niche and (hopefully) a resilient stream of revenue.

However, one concern is the significant goodwill that medical groups tend to pay when they acquire a clinic from its previous owner.  Goodwill is the excess of cash paid on top of the fair value of assets received from the acquisition.  Accounting rules dictate that goodwill must be evaluated every year and an impairment charge be booked if the value no longer holds. This in turn will affect the company results for the particular year.

HCSS recently received a S$5 million investment via a convertible bond issue from Heliconia Asset Management, a wholly-owned subsidiary of Temasek Holdings [announcement].  The bond can be converted to shares at a price of $0.5361 per share.   Heliconia also has a 3-year option to purchase up to S$5 million of HCSS shares at an exercise price of $0.62 per share.  The funds will allow HCSS to expand its operations both locally and overseas.   As stated in the press release, HCSS has an interest to tap into the fast-growing healthcare market in Vietnam.


Savings

I continued to do my CPF Retirement Sum Topping-Up this year.  It has been an annual ritual for me to stash away some money in my CPF accounts.  The compounding interest rate is attractive, and there is the added benefit of tax deduction.  My younger son's TM Asia KidStart endowment policy premium also came due.  With a heavy heart, I saw $19,000 'disappeared' instantly from my bank account.  Come January and it will be Round Two when my older son's NTUC Income Revosecure endowment policy premium is due.  Another $14,000 will 'fly away' in a jiffy.  This is our third payment year out of a scheduled five years.  Nonetheless, the huge cash outflows are justified in our view.  My wife and I want to have a peace of mind and be financially prepared for our sons' tertiary education in fourteen years' time.  At a projected return of 3+%, the final sum ought to be sufficient for their local university education.  (It will be a different matter if my kids decide to pursue their studies overseas.  They will have to source for additional funding on their own, either via a scholarship or a study loan.)

The Singapore Saving Bonds continue to languish around an average yield of 1.75%.  The reality this time is that the private market had begun to adjust their fixed deposit offerings.  When my mum's fixed deposit was up for renewal this month, I struggled to recommend a good choice.  There are some feasible promotions, such as Maybank's iSAVvy fixed deposit promo [here], but the transaction has to be done via online banking.  You can earn up to 1.90% interest if you can deposit above $50,000 for a period of two years.


Looking Ahead

A friend had recently warned me against writing the date in shortened DD/MM/YY format next year.  This is because the two digits "20" for the year can be easily amended to form "20XX", which results in backdating.  Not that I am worried about making this mistake.  Most legal agreements spell out the date in full English format, and I doubt I will be signing any document that will make me a slave.  Hee.

Do you have new resolution for the new year?  For me, it is the same as always - to stay focused and disciplined in building up my nest egg.  My stock portfolio is still in its infancy stage, not even a six-figure sum.  I am nowhere near retirement nirvana.  That said, I hope there will be opportunities to go beyond the $100,000 mark in year 2020, all the while sensibly acquiring stakes of companies with strong fundamentals and a stable dividend yield.

May the new year bring you joy, prosperity and good luck, my friends!

Friday, November 29, 2019

Portfolio Summary for November 2019

As of 30 November 2019

Cash Equity

Security# SharesPricePortfolio %
DBS Group400$25.2523.07%
OCBC900$10.7822.16%
SATS2,000$4.9822.75%
ST Engineering2,500$4.1323.58%
Old Chang Kee5,000$0.748.45%
Portfolio Market Value = $43,787

SRS Equity

Security# SharesPricePortfolio %
SGX1,300$8.8523.47%
OCBC900$10.7819.79%
Sheng Siong Group8,700$1.2522.19%
SingTel2,000$3.3813.79%
CapitaCommercial Trust3,000$2.0112.30%
Frasers Commercial Trust2,481$1.648.45%
Portfolio Market Value = $49,015


It was a mundane November.  I did not execute any trade, as the prices remained high.  Earnings reporting season has come to an end.  It was a mixed bag of results for the companies on my watchlist.  Those that reported better than expected earnings saw their stock prices spiked; those that reported worse than expected earnings saw their stock prices...do nothing.  (It was as if the market is simply waiting for a reason to buy in.)

I had written off the value of my Hyflux perpetual bond, but lately there was news that the company has struck a S$400 million rescue deal with Emirati utilities group Utico (news).  If the deal gets approved, I should be able to salvage S$1,500 (A 85% loss is better than a 100% loss, right?).  However, just a day after, there was rumour of Hyflux's creditors disagreeing on the incentive fee paid to the advisors (news).  (Sigh. The drama lives on.)

On the economic front, the U.S.-China trade tango continues.  There was indication that the two superpowers are coming to terms for a "Phase One" deal (news), although it may not be in time for Christmas.  I am reminded of the scene in the family car where the children (read: the market) ask the father (President Trump) for the umpteenth time, "Are we there yet?" and the father replies, "Almost, but not quite."

School holiday has started.  My family and I hopped on a short getaway to Taiwan.  We visited Taipei, Taichung and the scenic Taroko Gorge.  Fresh air certainly helps to relieve the stress of living in a cosmopolitan city.


Trade Actions

None.  Prices were unfavorable in my opinion.


Savings

Next month's Singapore Savings Bond (SSB) will have an average yield around 1.76%.  Slightly better than last month, and comparable to current fixed deposit promotions in the market now (link).


Looking Ahead

We have come to the last month of the year.  Typically, I will take this time to reflect on my accomplishments and disappointments during the year, so that I will learn the lessons and become a little wiser.

Happy holidays, my friends.

May the festive spirit fill your home and bring cheer to your family!

Thursday, October 31, 2019

Portfolio Summary for October 2019

As of 31 October 2019

Cash Equity

Security# SharesPricePortfolio %
DBS Group400$26.0023.58%
OCBC900$10.9622.36%
SATS2,000$5.0522.90%
ST Engineering2,500$3.9922.61%
Old Chang Kee5,000$0.7558.56%
Portfolio Market Value = $44,114

SRS Equity

Security# SharesPricePortfolio %
SGX1,300$8.9424.00%
OCBC900$10.9620.37%
Sheng Siong Group8,700$1.1721.02%
SingTel2,000$3.3013.63%
CapitaCommercial Trust3,000$2.0512.70%
Frasers Commercial Trust2,446$1.648.28%
Portfolio Market Value = $48,426


Perhaps the most exciting news in the local market this month is the partial acquisition offer of Keppel Corporation by Temasek Holdings (announcement).  Keppel is a well-known conglomerate with its subsidiaries spread across many diverse industries.  Sadly, its Return on Equity (ROE) has been struggling around the low 7%, which means Keppel's management hasn't been doing a fantastic job creating value from shareholders' capital.  That said, the management has signaled their intention to boost the ROE to mid-teens (news).  Hopefully, with Temasek becoming a significant shareholder and providing strategic direction, Keppel will be able to accomplish the feat.

The earnings reporting season is in full swing.  Many blue chips will report their results in early November.  Supermarket operator Sheng Siong Group has turned in another beautiful set of numbers, derived mainly from new store sales.  On the other hand, same store sales has dropped slightly.  Hope that the decline is just a temporary blip.

On the economic front, the United States and China have come to a preliminary trade agreement (news).  But no one is popping champagne yet, as the final outcome is far from certain.  Meanwhile, the Federal Reserve has given the market another booster shot - the third interest rate cut this year (news).


Trade Actions

None.  I did not spot any suitable opportunity.


Savings

Next month's Singapore Savings Bonds (SSB) will likely have an average yield of 1.70%.  Consider SSB only if you are absolutely risk-averse.  The private market have fixed deposit products that give a better return.  Check out SINGPromo's website for details (link).


Looking Ahead

We have come to the last two months of the year.  This means I will need to set aside cash for my sons' endowment policies, as well as do a voluntary CPF Retirement Sum Topping-up (link).  I had max-ed out my SRS contribution earlier this year.  If you have not done so, this is a good time to consider topping up your SRS retirement account and take advantage of the tax savings.  You can check out IRAS website for more details (link).

Portfolio Summary for October 2019

As of 31 October 2019

Cash Equity

DBS Group400$26.0023.58%
OCBC900$10.9622.36%
SATS2,000$5.0522.90%
ST Engineering2,500$3.9922.61%
Old Chang Kee5,000$0.7558.56%
Portfolio Market Value = $44,114

SRS Equity

Security# SharesPricePortfolio %
SGX1,300$8.9424.00%
OCBC900$10.9620.37%
Sheng Siong Group8,700$1.1721.02%
SingTel2,000$3.3013.63%
CapitaCommercial Trust3,000$2.0512.70%
Frasers Commercial Trust2,446$1.648.28%
Portfolio Market Value = $48,426


Perhaps the most exciting news in the local market this month is the partial acquisition offer of Keppel Corporation by Temasek Holdings (announcement).  Keppel is a well-known conglomerate with its subsidiaries spread across many diverse industries.  Sadly, its Return on Equity (ROE) has been struggling around the low 7%, which means Keppel's management hasn't been doing a fantastic job creating value from shareholders' capital.  That said, the management has signaled their intention to boost the ROE to mid-teens (news).  Hopefully, with Temasek becoming a significant shareholder and providing strategic direction, Keppel will be able to accomplish the feat.

The earnings reporting season is in full swing.  Many blue chips will report their results in early November.  Supermarket operator Sheng Siong Group has turned in another beautiful set of numbers, derived mainly from new store sales.  On the other hand, same store sales has dropped slightly.  Hope that the decline is just a temporary blip.

On the economic front, the United States and China have come to a preliminary trade agreement (news).  But no one is popping champagne yet, as the final outcome is far from certain.  Meanwhile, the Federal Reserve has given the market another booster shot - the third interest rate cut this year (news).


Trade Actions

None.  I did not spot any suitable opportunity.


Savings

Next month's Singapore Savings Bonds (SSB) will likely have an average yield of 1.70%.  Consider SSB only if you are absolutely risk-averse.  The private market have fixed deposit products that give a better return.  Check out SINGPromo's website for details (link).


Looking Ahead

We have come to the last two months of the year.  This means I will need to set aside cash for my sons' endowment policies, as well as do a voluntary CPF Retirement Sum Topping-up (link).  I had max-ed out my SRS contribution earlier this year.  If you have not done so, this is a good time to consider topping up your SRS retirement account and take advantage of the tax savings.  You can check out IRAS website for more details (link).

Monday, September 30, 2019

Portfolio Summary for September 2019

As of 30 September 2019

Cash Equity

DBS Group400$25.0023.38%
OCBC900$10.8622.85%
SATS2,000$4.8422.63%
ST Engineering2,500$3.8422.44%
Old Chang Kee5,000$0.7458.71%
Portfolio Market Value = $42,779

SRS Equity

Security# SharesPricePortfolio %
SGX1,300$8.4723.53%
OCBC900$10.8620.89%
Sheng Siong Group8,700$1.1120.64%
SingTel2,000$3.1013.25%
CapitaCommercial Trust3,000$2.0713.27%
Frasers Commercial Trust2,446$1.618.42%
Portfolio Market Value = $46,790


It was a quiet September month.  The STI had gone on a roller-coaster ride, and is nearly back to where it started the month.  Doomsayer calls for a recession next year have gotten louder, with nervous folks predicting terrible times ahead (see news and news).  The U.S. and China will resume their trade negotiations on Oct 10 (news), though it is anyone's guess whether there will be light at the end of the (tariff) tunnel.  Our leaders are certainly worried.  PM Lee had just reminded Singaporeans to 'be prepared for rough weather ahead' (news).  DPM Heng Swee Keat also noted that 'the Government is closely monitoring how the economy will pan out by the end of the year, and is prepared to take action when necessary' (news).

Amidst the gloomy atmosphere, I had managed to execute one trade.


Trade Actions

ST Engineering
I initiated a position of 2,500 shares in ST Engineering at $3.84 apiece.  I have been optimistic about the prospects of this company.  What began as a defence contractor for the fledgling Singapore Armed Forces in the 1960s has blossomed into a global technology and engineering group, with specialty in aerospace, electronics, land systems and marine.  The company has a healthy order book of S$15.6 billion, which includes a S$1.0 billion contract to build a heavy polar icebreaker for the U.S. Coast Guard (announcement).  ST Engineering has been generating positive free cash flow consistently over the years.  The stock price had taken a dip at month end, which I thought was an opportune time to acquire a stake.


Savings

In all honesty, I feel it is not worth talking about Singapore Savings Bonds (SSB) at this moment.  The low yield is comparable or worse than some of the fixed deposit (FD) products in the market.  We will be middling around 1.73% for next month's SSB.  If you have S$20,000 and one year time horizon, ICBC has a FD promotion that is better (link).  You may want to check out their website.


Looking Ahead

September marks the end of another calendar quarter.  Companies will be releasing their results between end October and mid November.  We will know which local companies are affected by the vicissitudes of the ongoing U.S.-China trade spat.  Earning releases tend to make stock prices volatile, as institutional funds buy or dump shares depending whether it is a 'beat (estimates)' or a 'miss'.  I will be wary to take on a position until the earnings reporting season is over, and the market has absorbed the full information bonanza.

That said, there may be special situations which cause a stock price to plunge without any major change in fundamentals (such as an analyst downgrade).  I'm keeping my powder dry and ready for such opportunities.

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“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”

― Mark Twain, Pudd'nhead Wilson

Friday, August 30, 2019

Portfolio Summary for August 2019

As of 31 August 2019

Cash Equity

Security# SharesPricePortfolio %
DBS Group400$24.5330.03%
OCBC900$10.6529.34%
SATS2,000$4.829.38%
Old Chang Kee5,000$0.73511.25%
Portfolio Market Value = $32,672

SRS Equity

Security# SharesPricePortfolio %
SGX1,300$8.2022.56%
OCBC900$10.6520.28%
Sheng Siong Group8,700$1.1821.73
SingTel2,000$3.1713.42%
CapitaCommercial Trust3,000$2.1313.52%
Frasers Commercial Trust2,446$1.648.49%
Portfolio Market Value = $47,252


Time flies in a hurry.  I celebrated my older son's, my wife's as well as my own birthday this month.  I was amused and touched, when my five-year-old son tried to buy a birthday cake for me with his sole $1 coin.  It is little acts like this that make me feel grateful to be a father.

On the US-China trade war, there seems to be no light at the end of the tunnel.  The protest situation in Hong Kong had worsened, with violence being a common scene.  An economist had predicted that Hong Kong will precipitate a global recession (news).  I feel it is a bit premature for such a call, but I have been monitoring the market for an opportunity to buy shares of companies on my watchlist at a good price.

Trade Actions

LHT Holdings
I sold my position in LHT Holdings at $0.51 apiece.  I couldn't explain the peculiarly consistent 10,000+ shares that changed hands everyday as the price declines.  It is as if a substantial shareholder is selling his/her stake, bit by bit daily.  It started on April 13, even though there wasn't any drastic change in the company's fundamentals.  As this downward price creep is not observable in the other micro caps on my watchlist, it made me very uncomfortable.  I tried writing to Investor Relations for an explanation, but to no avail.  Since the price hit my stop-loss, I steeled myself and had to let go of the position.  I may revisit this company when the selling pressure has ceased.

Old Chang Kee
I added 4,900 shares of Old Chang Kee (OCK) at $0.725 apiece.  I feel OCK occupies a sweet spot in the F&B industry, providing more than a nibble and less than a full meal.  The profit margin is relatively stable and inflation-proof - I have seen how the price of an OCK curry puff rose over the years from $0.90 to $1.50 today.  The only concern is their UK joint venture, which is still bleeding money every quarter.  Hope OCK management can either scrap the idea, or properly evaluate a route to profitability.

Savings

The average yield on Singapore Savings Bond (SSB) has fallen below 2%.  Based on current outlook, it is unlikely the rate will rise in the near term.  Next month's SSB yield is expected to sink even lower to 1.75-1.76%.

Looking Ahead

Honestly, if even Warren Buffett is hoarding cash (news), it says much about the stock market at the moment.  It is tough to know what the unpredictable President Trump may do to incur China's retaliation and bring about a full-blown trade war.

Should the current trade hostility escalates, and the global economy plummets into a recession, it can be assured that the stock market will not be spared either.  As the cliché goes, the best time to buy stocks is when there is blood on the street.  I am standing by a small 'warchest' in case this scenario come to fruition.

Thursday, August 1, 2019

Happy News from OCBC

Came to office today, only to find positive news released from OCBC.

Not only has the company defied The Street's expectations of a drop in profit, it also INCREASED its interim dividend to 25 cents per share - the highest amount ever!

My Friday morning is starting to look brighter already.