Tuesday, March 31, 2020

Portfolio Summary for March 2020

As of 31 March 2020

CDP

Security# sharesPrice S$%
DBS40018.579.39
OCBC Bank9008.649.83
SATS2,0003.167.99
ST Engineering2,5003.129.86
CapitaLand1,7002.856.13
Singtel2,0002.546.42
ComfortDelGro4,6001.528.84
Genting Singapore11,7000.6910.21
Old Chang Kee5,0000.583.67
HC Surgical19,1000.43510.51
Nam Lee Metal28,2000.3010.70
Kimly27,0000.1896.45
Portfolio Value = $79,085

Trade Actions
- Added 1,700 shares of CapitaLand.
- Added 2,000 shares of Singtel.
- Added 27,000 shares of Kimly.

SRS

Security# sharesPrice S$%
OCBC Bank9008.6412.24
Singapore Exchange1,3009.1918.80
SATS2,2003.1610.94
ST Engineering1,7003.128.35
Singtel2,0002.547.99
CapitaCommercial Trust5,0001.5312.04
Sheng Siong8,7001.1916.29
HC Surgical19,5000.43513.35
Portfolio Value = $63,545

Trade Actions
- Added 1,700 shares of ST Engineering.

Friday, February 28, 2020

Portfolio Summary for February 2020

As of 28 February 2020

Cash Equity

Security# SharesPricePortfolio %
DBS400$24.1112.21%
OCBC Bank900$10.6012.07%
SATS2,000$4.0310.20%
ST Engineering2,500$4.1713.19%
ComfortDelGro4,600$1.9511.35%
Genting Sing11,700$0.81512.07%
Old Chang Kee5,000$0.724.56%
HC Surgical19,100$0.50512.21%
Nam Lee Metal28,200$0.3412.14%
Portfolio Market Value = $79,008

SRS Equity

Security# SharesPricePortfolio %
OCBC Bank900$10.6014.59%
SGX1,300$8.4916.88%
SATS2,200$4.0313.56%
SingTel2,000$3.009.18%
CapitaCommercial Trust5,000$1.8614.22%
Sheng Siong8,700$1.2416.50%
HC Surgical19,500$0.50515.06%
Portfolio Market Value = $65,379


The Wuhan coronavirus has a new name, Covid-19.  What started out as a China crisis is a global epidemic spanning 57 countries, afflicting more than 83,000 worldwide.  The death toll has hit above 2,800 and sees no sign of abating.  In Singapore, we have 96 infected, but with zero fatality so far.  Perhaps a consolation is that without any medical complication, the afflicted have a significant chance of recovery.  Kudos to our healthcare workers who are braving the risk to take care of our sick.  (They certainly deserve every bit of the one-month bonus [news].)  On the economic front, Prime Minister Lee had warned that Singapore faces severe impact in the coming quarters and a recession may be likely [news].

The travel and hospitality sectors are badly affected, as tourists stay away from our shores.  Major cruise lines are skipping Singapore as a port of call [news].  As more Singaporeans opt to stay indoors and eat at home, the transport, retail and F&B industries are facing tough times.  The big landlords are stepping up to offer rental rebates and support to their tenants [news].  As a show of solidarity, the Ministers, political office holders, senior management of Temasek Corp and some of its subsidiary companies are embarking on wage freeze and pay cuts [news].  Overall, it is a grim period ahead.


Trade Actions

As the prices spiralled down in February, I decided to add on two new positions.



Genting Singapore
I bought 11,700 shares of Genting Singapore ("GS") for my cash equity portfolio.  This is a company that needs no introduction.  (Surely, you have been to Resorts World Sentosa, which is owned by GS.)  The stock started getting pounded when the Singapore government widened the restriction to bar all overseas visitors who recently travelled to mainland China [news].  (A significant percentage of GS gambling clientele comes from China.)  In its recent FY2019 earnings release, GS management had warned that "it is generally pessimistic for the first half of 2020" [link].  Nonetheless, the management intends to make use of this down period to accelerate the depreciation of existing assets and speed up the plan to rejuvenate its attractions.  A positive surprise is that the board had declared a final dividend of 2.5 cents per share, up from 2.0 cents previously.  Together with the interim dividend of 1.5 cents, this forms 70 per cent of FY2019 EPS.  It is largely known that GS is gunning for a casino license in Japan.  As early as October last year, GS was reported to be one of three bidders shortlisted for an integrated resort in Osaka [news].  However, during mid February, it was publicized that a MGM-Orix consortium appeared to be the sole qualified applicant for the Osaka casino project [news].  Word on the street is that GS management had evaluated its chance of winning the Osaka license, and it is slim.  Hence, the management had chosen to focus on the Yokohama casino license instead.  It will be interesting to see how the result turns out.  (Stay tuned, folks.)



Nam Lee Pressed Metals Industries
I added 28,200 shares of Nam Lee Pressed Metals Industries ("NLPM") to my cash equity portfolio.  NLPM is a Singapore-based company, focusing on the design, fabrication, supply and installation of steel and aluminium products for the building and infrastructure industries.  (Think gates, door frames, staircase nosing, hand-railings, laundry racks, sliding windows, etc.)  This is one of those small caps on my watchlist that has a 'boring' business model, but with sound fundamentals.  One key risk of investing in small caps is illiquidity.  This was evident after I had bought the stock, when the share price hardly budged, even as the market gyrated between fear and euphoria through the month.  Another key risk is the lack of analyst coverage, which means you are on your own to detect anything amiss in the company's financial situation.  I intend to keep this stock for a long time, unless there is any significant change in its business.  In the meantime, to borrow wise words from a seasoned blogger, a 4.35 per cent dividend yield is good Panadol for turbulent times.


Looking Ahead

Global markets witnessed bloody carnage during end February, as the rest of the world saw a spike in Covid-19 infections.  Of particular worry is the rocketing number of cases in South Korea, Iran and Italy.  Stock prices are falling across the board, with SIA, SATS and ComfortDelgro bearing the brunt of the onslaught.  For some well prepared investors, it was a bonanza and the plunging prices represented buying opportunities.  Sadly, I have limited firepower in my cache, so I will need to be selective.  Self note to be patient and wait for stability first before dipping in.

Friday, January 31, 2020

Portfolio Summary for January 2020

As of 31 January 2020

Cash Equity

Security# SharesPricePortfolio %
DBS400$25.3716.13%
OCBC Bank900$10.8315.50%
SATS2,000$4.5614.50%
ST Engineering2,500$4.1116.33%
ComfortDelGro4,600$2.1715.87%
Old Chang Kee5,000$0.745.88%
HC Surgical19,100$0.5215.79%
Portfolio Market Value = $62,904

SRS Equity

Security# SharesPricePortfolio %
OCBC Bank900$10.8314.16%
SGX1,300$8.7016.43%
SATS2,200$4.5614.58%
SingTel2,000$3.309.59%
CapitaCommercial Trust5,000$2.0614.96%
Sheng Siong8,700$1.2315.55%
HC Surgical19,500$0.5214.73%
Portfolio Market Value = $68,830


We had a smooth start to the year, but the peace did not last long.  News of the Wuhan coronavirus raised alarms throughout the world.  It is no wonder - memories of the 2003 SARS virus, which killed 33 people in Singapore, still linger. At time of writing, there have been 9,929 people infected and 213 deaths [link].  Thankfully, there are only 16 confirmed cases in Singapore so far.

Global fears started to take hold in the last week of January, causing the stock markets to roil in red.  I took opportunity of the sudden downturn to load up on a few stocks.


Trade Actions

HC Surgical Specialists
Last month, I had blogged about my initial purchase of HC Surgical Specialists ("HCSS"). (You can read it here.)  In January, I continue to accumulate the position.  I added 15,000 shares to my cash equity portfolio and 19,500 shares to my SRS equity portfolio.  On 9 Jan, HCSS reported its half yearly result, which was broadly in line with expectations [link].  The happy news is that the board had declared an interim dividend of 1.3 cents per share, up from 1.0 cent previously.  However, on analysis, this amount is 90 per cent of the mid-year EPS, which means there is little left in the company coffers for growth.  On 13 Jan, the company announced its first foray into Cambodia, inking an exclusive collaboration with The Prestige Hospital [link].  HCSS will provide consultancy services on the setup and operation of the hospital's endoscopy centre for a duration of three years.  While creating an additional revenue stream, the experience should be invaluable to the management as they steer towards a regional ASEAN expansion.

ComfortDelGro
I bought 4,600 shares of ComfortDelGro ("CD") for my cash equity portfolio.  CD is the majority owner of SBS Transit, ComfortCab, CityCab and VICOM.  The stock price had gone on a roller-coaster ride to a 52-week high of $2.90 before coming back to earth again.    Analysts have been skeptical of its performance due to lack of growth drivers, intense competition from Grab and high maintenance cost.  However, the operating expenses seem to have stabilized around 88-89 per cent of revenue over the past eight quarters.  Competition from Grab is yesterday's news and has definitely been priced in.  Given that Grab can't go on burning cash without making a profit forever, any further decline in the taxi division should be limited.  Lastly, the most recent 7 per cent increase in public transport fare adjustment should help to offset the bump in maintenance cost.

Frasers Commercial Trust
I sold off the shares of Frasers Commercial Trust ("FCOT") in my SRS equity portfolio.  This is in line with my shift in investment strategy from REITs to companies with healthy fundamentals.  FCOT is pending acquisition by its sister fund, Frasers Logistics & Industrial Trust.  I hate to be left holding an odd lot position, hence the decision to exit this investment.

Capitaland Commercial Trust
The REITs seem to be following the bigger-is-better trend these days, with the latest announcement being the acquisition of Capitaland Commercial Trust ("CCT") by its sister fund, Capitaland Mall Trust ("CMT") [link].  For every share, CCT owners will get $0.259 cash and 0.72 share of CMT.  Based on CMT price of $2.59, this works out to a fair consideration of $2.1238.  Does this mean we should buy CCT everytime it falls below $2.12?  Not exactly, but it does mean that CCT and CMT share price will be locked in tandem.  If you are a professional arbitrageur, there may be a chance to make profit if the share prices deviate.  During end January, I bought another 2,000 shares for my SRS equity portfolio.  The rationale is to have a total of 5,000 shares, which after the merger (if successful) will result in 3,600 CMT shares - a nice round lot number.  The merger is expected to undergo shareholder approval in May 2020, and be completed in June 2020.  That said, if CCT price climbs to an attractive level prior the merger, I will consider to offload my shares than stick around.

SATS
I bought 2,200 shares of SATS for my SRS equity portfolio when the stock price plummeted in the last week of January.  Investors were spooked by the implications of the Wuhan coronavirus.  DBS Group Research put out a report, noting that during the SARS period, SATS net profit fell 15 per cent from S$183.7m to S$155.9m on the back of 9.3 per cent year-on-year decline in revenue to S$868.7m.  However, it must be kept in mind that SATS performance bounced back immediately after the crisis.  Any impact is likely to be temporary in nature.


Savings

The CPF MediSave Basic Healthcare Sum (BHS) was increased from $57,200 to $60,000 with effect from 1 January 2020.  I took the chance to top up $2,800 to my MediSave account, and earn some tax relief at the same time.

Next month's Singapore Savings Bond (SSB) is likely to have an average yield of 1.71 per cent.  Sadly, the fixed deposit offerings in the private market are not that attractive either [link].  My wife's fixed deposit is coming due, and she is looking at endowment plans offered by insurance companies instead.  Besides a higher projected return, there is the safety provided by Singapore Deposit Insurance Corporation (SDIC).  The downside would be a longer lockup period.  The local stock market has retreated from its high a few months ago.  There are a few blue chip counters you can consider if you are a little more adventurous, with solid fundamentals and a dividend yield between 3.5 and 4.5 per cent.


Looking Ahead

It is said that the full blown impact of the Wuhan coronavirus will be known by yuanxiaojie (元宵节) or Lantern Festival, which is the 15th day of the lunar month (8 February 2020).  Talk is that the travel and hospitality sector will be badly hit this quarter (think hotels and airlines).  Nonetheless, it must be kept in mind that such crises are rare and few between.  Most companies recover from the loss of revenue soon after.  Yet it is precisely at the height of fear and panic that stock prices get attractive enough for investment.  I hope there will be more opportunities in February to build up my portfolio.

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).