Sunday, April 30, 2023

Portfolio Summary for April 2023

As of 30 April 2023


Security# sharesPrice S$%
OCBC Bank70012.582.29
CapitaLand Investment7,4003.727.16
ST Engineering6,9003.626.50
Powermatic Data8,5002.525.57
Sheng Siong13,0001.775.98
Genting Singapore11,7001.143.46
Credit Bureau Asia14,3000.983.64
China Sunsine41,8000.465.00
TalkMed Group14,5000.421.58
HC Surgical35,5000.3553.28
Silverlake Axis15,0000.3351.31
Portfolio Market Value = $384,539

- None


Security# sharesPrice S$%
OCBC Bank90012.587.91
CapitaLand Investment2,6003.726.76
ST Engineering3,0003.627.59
Powermatic Data3,4002.525.99
Sheng Siong8,7001.7710.76
Credit Bureau Asia5,7000.983.90
China Sunsine10,8000.463.47
TalkMed Group5,8000.421.70
HC Surgical19,5000.3554.84
Silverlake Axis6,0000.3351.40
Portfolio Market Value = $143,119

- None

Singapore Savings Bonds

SecurityAmount ($)Avg Yld %
Portfolio Market Value = $41,500

Another month passed in the blink of an eye. Market was directionless most of the time, and I stayed on the sidelines.

Economists are worried about a global recession, caused by record high interest rates not seen in the past decade. The Singapore labour market however, is holding up well [release]. While there is the occasional tech retrenchment, e.g. Amazon [news], packed shopping malls and higher Retail Reits' tenant sales are indicators that consumers are still confident to spend, eat out and travel. So B2C companies continue to thrive.

I read about NIM pressure on banks, but not seeing any impact yet. UOB just reported 1Q23 result [here]. Net profit was S$1.58b, up 74% YoY. This came after the bank completed its acquisition of Citi's businesses in Malaysia, Thailand and Vietnam. (Acquisition of Citi's business in Indonesia will complete by year end.) ROE rocketed to 14.9%, up 6.1% YoY. NIM moderated to 2.14% from 2.22% in 4Q22 while NPL ratio remained stable at 1.6%.

Overall, a positive report card. I expect similar good news for DBS reporting on May 2, and OCBC reporting on May 10.

I recently evaluated the companies held in my portfolio. The worst companies - according to my personal performance scorecard - are ComfortDelGro, SATS and iFast.

ComfortDelGro (CDG) has seen improved ridership, but its share price is stuck around the $1.20 range. Broker analysts are optimistic about the company, considering the number of buy calls, but the market isn't hopeful at all. There is sign of P/E contraction, and it begs me to think whether the heyday of Singapore's main public transport operator is over. Currently, CDG is vying to operate metro lines in Sweden from 2025 onwards [news].

SATS hasn't reinstated its dividend since the pandemic. Instead, it boosted staffing in anticipation of demand. It is unknown whether the recent surge in revenge travel from China will translate into tangible earnings for the company. The airport service operator will also need time to integrate WFS into its corporate structure and derive synergy savings. The loan taken to acquire WFS will weigh on the bottom line too.

iFast reported dismay 1Q23 result [here]. Revenue was S$48.9m, down 5.7% YoY. Net profit was S$4.62m, down 18.5% YoY. The company is still nursing a loss from its UK bank acquisition while experiencing reduced YoY AUA (Assets Under Administration). The delayed start of revenue contribution from its Hong Kong ePension Services in late 2023 is a ray of hope that the asset manager will reverse its beleaguered fortune.

Around the same time, I researched on new stock ideas. Ran my screener on local listed companies and it identified Riverstone Holdings, AEM Holdings and UMS Holdings.

Riverstone sells clean-room products (including gloves). Its business soared during the COVID19 period, but now that the pandemic is behind us, its share price has come back down to earth and its dividend yield will probably retrace to the historical 1.5-2.5% range, which is unsatisfactory in my opinion.

AEM manufactures test equipment for the semiconductor industry. The company has seen dramatic improvement in its top and bottom line over the last three years, and has won plaudits from broker analysts. I find fellow blogger TFI's coverage of AEM AGM 2023 [here] to be insightful.

UMS manufactures high precision semiconductor components and complex electromechanical assembly. The company has shown similar improvement in its top and bottom line over the last three years. The company has been consistent in doling out dividends through good times and bad. I have placed UMS on my watchlist.

Both AEM and UMS operate in the same industry as Micro-Mechanics Holdings (MMH) which I currently hold. Of the three, I favour MMH most because of its zero debt burden. But even the healthiest company cannot escape an industry cyclical downturn. MMH reported its 3Q23 result last Friday. Revenue was S$14.9m, down 24.2% YoY. Net profit was S$1.63m, down 63% YoY. Such poor showing was expected, coming off a high base in 2022. MMH share price has declined in recent months. Nonetheless, I'm confident the company will ride through unscathed.

Buffett's "20 slots" punch card rule keeps nagging at the back of my mind. At the moment, I have 23 stocks in my portfolio. If I add UMS, that will be #24. My limited capital is being spread out on too many bets. Ownership bias has afflicted me far too long, especially when the reason I first bought the stock no longer holds. Time to get rid of the laggards and free up capital to focus on my higher conviction ideas. Watch this space.

By the way, James Clear, author of the New York Times bestseller Atomic Habits, explains [here] how you can apply Buffett's "20 slots" rule not just to investments, but to life too.

On the savings side, the latest SSB average yield is 3.07%, worse than prevailing FD rates in the market. I'm sitting out to conserve dry powder. That said, I'm not discouraging anyone from investing in SSB. There is mounting evidence the U.S. has hit peak inflation [article], even though the ECB still struggles to keep inflation in check [news]. The MAS Core Inflation fell to 5.0% YoY in March compared to 5.5% in February [release]. Investing in short-term FDs means one faces reinvestment risk when interest rates start to head south.

Per my February blog post, I have been reflecting on my financial freedom journey. I have doubts on and off whether I will be able to retire comfortably and pursue other interests in life. I am in a stable financial position now, but there is a big hairy audacious retirement goal that I aspire to achieve. (Embarrassing to say it out loud, but you will know when I hit it!)

I'm saddended by the demise of fellow blogger Createwealth8888. I had been a regular reader of his posts. I first learnt about the term "multi-bagger" from his writing. My deepest condolences to his family. (Reminder to self: Life is short. Cherish it. Nothing is worth sacrificing in the pursuit of a big hairy audacious retirement goal.)

Signing off for now. Thank you for reading. Until next time, take care.

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Saturday, April 1, 2023

Portfolio Summary for March 2023

As of 31 March 2023


Security# sharesPrice S$%
OCBC Bank70012.372.23
ST Engineering6,9003.666.49
CapitaLand Investment7,4003.687.00
Powermatic Data8,5002.435.31
Sheng Siong13,0001.695.65
Credit Bureau Asia14,3000.9753.59
Genting Singapore11,7001.123.37
HC Surgical35,5000.353.19
China Sunsine41,8000.475.05
TalkMed Group14,5000.411.53
Silverlake Axis15,0000.331.27
Portfolio Market Value = $388,901

- Subscribed 4,300 new shares of SATS.


Security# sharesPrice S$%
OCBC Bank90012.377.76
ST Engineering3,0003.667.65
CapitaLand Investment2,6003.686.67
Powermatic Data3,4002.435.76
Sheng Siong8,7001.6910.24
Credit Bureau Asia5,7000.9753.87
HC Surgical19,5000.354.76
China Sunsine10,8000.473.54
TalkMed Group5,8000.411.66
Silverlake Axis6,0000.331.38
Portfolio Market Value = $143,527

- Subscribed 1,600 new shares of SATS.

Singapore Savings Bonds

SecurityAmount ($)
Portfolio Market Value = $41,500

It is an understatement to say that March was turbulent. The financial world was shell-shocked. Two U.S. banks (Signature and SVB) and one Swiss bank (Credit Suisse) went under. SVB suffered from the classic bank run, while Credit Suisse had to be bailed out by rival UBS and the Swiss regulator.

The situation surrounding Credit Suisse raised many eyebrows. Holders of the bank's AT1 (Additional Tier One) bonds were completely wiped out, but shareholders got a respite through an exchange of 1 UBS share for every 22.48 Credit Suisse shares.

For the first time in my life, equity holders actually survived ahead of bondholders. Clearly, this is an exception, not a precedence. The Monetary Authority of Singapore had to step out and make a statement that "shareholders will absorb losses before bondholders, according to the hierarchy of claims in the event of a liquidation." [news]

As the market gyrated between fear and hope - fear that a Fed-induced recession is imminent; and hope that the Fed will cut interest rates later this year, I stayed on the sidelines and buried myself in work.

I applied for my portion of SATS right shares. I also applied for additional right shares but did not get my full amount. According to the company, the rights issue was 173% oversubscribed, which was a pleasant surprise. I thought investors were pessimistic about the airport services operator, given the low share price. What was even more perturbing was that on the day of the new share issuance (March 29), the share price did not drop to the TERP. Rather, it SOARED, ending the day 21 cents higher at $2.76. Many short sellers must have been caught off guard and badly burnt.

The average yield for the latest tranche of SSB is 3.15%, but I did not apply. I took up the offer by Great Eastern instead. I invested S$20,000 into the recent GREAT SP Series 10, an one-year endowment policy with a guaranteed return of 4%. A little income before I use the money to pay down my mortgage.

The Fed had decided to notch up the interest rate by 25 bps. Heading into Q2, it is possible we will see cracks appear in certain segments of the economy. Companies without strong cashflows that have binged on cheap debt during the previous decade will be in trouble. As Buffett quipped, "Only when the tide goes out do you discover who's been swimming naked."

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