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!

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