Portfolio Summary for September 2020

As of 30 September 2020

CDP

Security	# shares	Price S$	%
DBS	700	19.91	7.84
OCBC Bank	1,500	8.42	7.11
SGX	1,200	9.15	6.18
SATS	3,900	2.83	6.21
ST Engineering	4,100	3.46	7.98
CapitaLand	5,400	2.71	8.23
Singtel	6,100	2.12	7.28
Powermatic Data	2,800	2.65	4.17
Micro-Mechanics	1,300	2.28	1.67
ComfortDelGro	7,900	1.41	6.27
Genting Singapore	11,700	0.67	4.41
TheHourGlass	15,400	0.67	5.80
HRnetGroup	21,900	0.45	5.54
China Sunsine	31,000	0.34	5.93
HC Surgical	19,100	0.32	3.44
Nam Lee Metal	28,200	0.295	4.68
Silverlake Axis	20,800	0.29	3.39
Kimly	27,000	0.255	3.87

Portfolio Value = $177,759

Trade Actions
- Sold 4,700 shares of Old Chang Kee.
- Bought 300 shares of DBS.
- Bought 1,900 shares of CapitaLand.

SRS

Security	# shares	Price S$	%
OCBC Bank	900	8.42	11.79
SGX	1,300	9.15	18.51
SATS	2,200	2.83	9.69
ST Engineering	1,700	3.46	9.15
Singtel	2,000	2.12	6.60
CapitaComm Trust	5,000	1.64	12.76
Sheng Siong	8,700	1.61	21.79
HC Surgical	19,500	0.32	9.71

Portfolio Value = $64,268

Trade Actions
- None

Commentary:

Summer has come and passed
The innocent can never last
Wake me up when September ends
- Green Day

It has come to the end of summer season, though technically there are only two seasons in Singapore - sunny and rainy. If you had hibernated since the start of the year and only woken up now, you would have avoided the most turmultous period in the stock market since the 2009 GFC. Naturally, you would have also missed one of the best opportunities to build equity positions.

It feels like the worst is behind us, with the government hinting on Phase 3 re-opening. The market is trending sideways, with no clear path ahead. I have stopped monitoring the market throughout the day and focused on my work instead. Under the grim atmosphere of retrenchment and business closures, I am glad I still have a job and no pay cut so far.

In September, I have added small stakes in DBS and CapitaLand when their prices dipped during mid-month. It was also fortuitous that I got out of Old Chang Kee at a favorable price.

My war chest has dwindled as I went on a buying spree over the past three months. I will need to save up again. Moreover, my boys' endowment premiums are looming near the end of the year, which will certainly take away a significant chunk of my cash. I guess it is just another form of investing for their sake and mine, as I do not want the burden of forking out a large sum for their tertiary education when I am near retirement.

Looking forward, I shall concentrate on rebuiling my cash board. Some stocks on my watchlist have run up quite a bit, and I do not want to chase the rally for FOMO. It is better to be patient and wait for retracement before nibbling.

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Portfolio Summary for June 2020

As of 30 June 2020

CDP

Security	# shares	Price S$	%
DBS	400	20.80	5.82
OCBC Bank	1,500	9.00	9.44
SGX	1,200	8.34	7.00
SATS	3,900	2.86	7.80
ST Engineering	4,100	3.30	9.46
CapitaLand	3,500	2.92	7.15
Singtel	4,000	2.46	6.88
Powermatic Data	2,800	2.48	4.86
Micro-Mechanics	1,300	1.75	1.59
ComfortDelGro	7,900	1.45	8.01
Genting Singapore	11,700	0.76	6.22
Old Chang Kee	4,700	0.725	2.38
TheHourGlass	3,000	0.69	1.45
HRnetGroup	11,600	0.495	4.02
HC Surgical	19,100	0.31	4.14
Nam Lee Metal	28,200	0.31	6.11
Silverlake Axis	20,800	0.235	3.42
Kimly	27,000	0.225	4.25

Portfolio Value = $142,984

Trade Actions
- Added 1,200 shares of Singapore Exchange.
- Added 1,300 shares of Micro-Mechanics Holdings.
- Added 1,800 shares of CapitaLand.
- Added 3,000 shares of The Hour Glass Ltd.
- Added 20,800 shares of Silverlake Axis.
- Sold 300 shares of Old Chang Kee.

SRS

Security	# shares	Price S$	%
OCBC Bank	900	9.00	12.54
SGX	1,300	8.34	16.78
SATS	2,200	2.86	9.74
ST Engineering	1,700	3.30	8.68
Singtel	2,000	2.46	7.61
CapitaCommercial Trust	5,000	1.69	13.08
Sheng Siong	8,700	1.65	22.22
HC Surgical	19,500	0.31	9.36

Portfolio Value = $64,614

Trade Actions
- None

Commentary:

I used the recent market pullbacks to add some stocks to my CDP portfolio.

SGX - The selling abated around $8, which is a 23% drop from its high. I feel SGX still has the potential to earn a decent, albeit lower revenue. (It's a duopoly with HKSE in derivative trading within the Asian region.) SGX initiated stock buyback during end June, which could lend some near-term support. The exchange had taken its first baby step to replenish its derivatives offering, with the introduction of the SGX FTSE Taiwan Index Future [announcement]. SGX had also announced acquisition of the remaining 80% ownership in BidFX, a cloud-based FX trading platform for institutional investors [announcement]. This will become another revenue source over the long term. SGX is set to report its FY2020 results on 30 July.

Micro-Mechanics Holdings - This company popped up on my screener some months back. Its fortune is tied to the notoriously cyclical semiconductor industry, similar to other broker recommended stocks like AEM, Frencken and UMS. Balance sheet and margins look healthy, even though revenue and profit is seasonal. In 2019, the semiconductor industry suffered its worst year in almost two decades [article]. (I know it personally because my wife was forced to clear leave.) But if the predictions of the World Semiconductor Trade Statistics organization were to come true, annual global chip sales should increase 5.9% in 2020 and 6.3% in 2021. This bodes well for Micro-Mechanics.

CapitaLand - I'd be the first to admit: this company has a poor ROE (10%), although management is working to improve it. I like the diversity in its revenue, both in geography and sector. (CapitaLand sells properties, leases them and manages private equity funds & REITs to own them.) Dividend yield (above 4%) is attractive at current price. The company has offered scrip election for its latest dividend [announcement], but I won't be going for it because I dislike holding odd number of shares in my portfolio.

The Hour Glass - THG turned in a pretty good set of FY2020 results [announcement]. Total revenue was $754.6m (up 4% y/y). Net profit was $77.5m (up 9% y/y). Only disappointment is the 2 cents annual dividend (Ex Date TBA), compared to 3 cents last year. The luxury industry had been hammered by the Circuit Breaker, but given THG's sizeable cash hoard of $183.1m (which covers its debt and payables comfortably), it should be able to weather through. Gross margin is an admirable 28.8%, and I believe their affluent customers' disposable income is hardly impacted by COVID-19. As The Business Times columnist Ben Paul remarked, "What better way to spend money earmarked for a cancelled trip to Europe than by picking up another luxury timepiece?" [article]

Silverlake Axis - Brian from 3foreverfinancialfreedom.com wrote a detailed article [here] on this company. The stock suffered from a short seller's report in Aug 2015 and it has been on a downtrend since. Nonetheless, the company is looking attractive at current price, with a FY2019 ROE of 41% and margins above 30%. Software is indeed a lucrative business (just ask my boss). Barring any adverse development, this company should be able to sustain its dividend.

Old Chang Kee - I've put up my position for sale, but the liquidity is pathetic. I was initially attracted to its high GPM and inflation-resistant pricing power. But increasingly, I'm getting bearish as the Circuit Breaker shut their eateries, even though the company commented offsite bento meal deliveries should help to minimize the loss in revenue [announcement]. Regardless, I expect their 1H 2020 result to be devastated and it may take some time for the revenue to recover. Will offload into the rally.

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Portfolio Summary for August 2019

As of 31 August 2019

Cash Equity

Security	# Shares	Price	Portfolio %
DBS Group	400	$24.53	30.03%
OCBC	900	$10.65	29.34%
SATS	2,000	$4.8	29.38%
Old Chang Kee	5,000	$0.735	11.25%

Portfolio Market Value = $32,672

SRS Equity

Security	# Shares	Price	Portfolio %
SGX	1,300	$8.20	22.56%
OCBC	900	$10.65	20.28%
Sheng Siong Group	8,700	$1.18	21.73
SingTel	2,000	$3.17	13.42%
CapitaCommercial Trust	3,000	$2.13	13.52%
Frasers Commercial Trust	2,446	$1.64	8.49%

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.

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