Portfolio Summary for May 2022

As of 31 May 2022

CDP

Security	# shares	Price S$	%
DBS	300	30.94	3.52
OCBC Bank	700	11.83	3.14
SGX	1,200	9.53	4.33
iFast	5,200	4.88	9.61
SATS	3,900	4.38	6.47
ST Engineering	4,100	4.11	6.38
Micro-Mechanics	7,900	3.05	9.13
Powermatic Data	5,000	2.81	5.32
TheHourGlass	5,000	2.34	4.46
Sheng Siong	13,000	1.53	7.54
ComfortDelGro	11,200	1.44	6.11
Genting Singapore	11,700	0.78	3.48
HRnetGroup	21,900	0.725	6.02
HC Surgical	35,500	0.47	6.32
China Sunsine	41,800	0.45	7.13
Kimly	27,000	0.38	3.89
Silverlake Axis	60,800	0.31	7.14

Portfolio Market Value = $263,928

Trade Actions
- Bought 5,200 shares of iFast Corp.
- Bought 6,600 shares of Micro-Mechanics Holdings.

SRS

Security	# shares	Price S$	%
OCBC Bank	900	11.83	9.67
SGX	1,300	9.53	11.26
iFast	2,100	4.88	9.31
SATS	2,200	4.38	8.76
ST Engineering	3,000	4.11	11.20
Micro-Mechanics	3,100	3.05	8.59
Sheng Siong	8,700	1.53	12.09
ComfortDelGro	6,900	1.44	9.03
HC Surgical	19,500	0.47	8.33
China Sunsine	10,800	0.45	4.42
TalkMed Group	3,700	0.40	1.34
Silverlake Axis	21,300	0.31	6.00

Portfolio Market Value = $110,060

Trade Actions
- Bought 2,100 shares of iFast Corp.
- Bought 3,100 shares of Micro-Mechanics Holdings.

Commentary:

It has been a brutal month for tech stocks and markets in general. The selloff amplifies whenever a megacap reports worse-than-expected result. Any relief rally dissipates quickly the following day. The S&P 500 Index is hovering just above bear market territory. Interestingly, the STI is holding up well with a positive 3.5% YTD return amid a sea of red. Post-pandemic reopening optimism trumps recession fear at the moment.

Slowly but surely, Singapore is facing the onslaught of global inflationary headwinds. The MAS reported a 3.3% YoY increase in Core Inflation for April 2022, up from 2.9% in March. [data] India, Indonesia and Malaysia have implemented export bans to cater to their own domestic demand. I wouldn't be surprised if more food exporting countries follow suit. So far, I haven't read of any local listed company being affected, but SMEs like chicken rice sellers are feeling despair. [article] We will likely see the adverse impact materialise in 2Q2022 earning results.

I built a stake in iFast Corp, the fintech company that suffered a massive selloff recently. I understand market jitters may cause the stock to decline further, but I feel $4+ is a fair price to pay for the earnings potential of the company.

I have also added Micro-Mechanics Holdings during the recent share price weakness. I like the company's net cash position, compared to other local semicon plays like AEM Holdings and UMS Holdings.

Silverlake Axis extended the dateline for their Equal Access Offer, which gave me sufficient time to inform my custodial bank. I will tender the full allotment of 6,200 shares from my SRS account.

Wifey said I have been paying too much attention to the stock markets lately. I would wake up around 4 plus and check how the U.S. market closes for the day, and which company is the latest victim of The Big Sale. This has become a habit. 

Latest Fed minutes suggest the Fed is prepared to hike interest rate further than expected. [news] At this juncture, it is hard to say whether the Fed will succeed in containing the runaway inflation without causing a recession. The current situation is exacerbated by issues beyond the Fed's control, namely supply chain bottlenecks, the Russo-Ukrainian war and China's draconian COVID-19 lockdowns. The economy and company earnings remain under pressure.

So far, the market downturn has been pretty orderly. I do not see any sharp spike above 40 in the VIX, which is a pseudo indicator of widespread panic. Nonetheless, pockets of opportunity have started to appear in the local stock market. I will deploy my cash accordingly.

Chart of CBOE Volatility Index (VIX). (Source: Yahoo)

Speaking of waking up early, I was amused by my boss' surprised look when I told her I wake up at 5am to exercise, bathe and head to office. I start work at 7am when the sun has just risen. The quiet ambience is perfect for clearing my urgent priorities, although I sometimes get instant messages from my San Francisco colleagues for help, which add tasks to my To Do List. (Oh well.) This routine fits rather well to my Lion chronotype. [link] I am most productive in the morning. (Coincidentally, my Zodiac is Leo.)

How fast time flies. We are now approaching mid 2022. I read that many families are planning to travel abroad during the June holiday. Given the pandemic is still ongoing, my wife and I have opted to stay in Singapore. That said, we have booked another cruise in November. (Yes, I like the sea very much.) Looking forward to that.

Until next time, stay vigilant for buying opportunities, my friends!

---

Enjoyed this post? Never miss out new posts by subscribing here.

DBS and SGX

Somebody just dumped 11.1m shares of DBS at MOC:

Same for dumping 7.9m shares of SGX:

Not a phenomenon that you get to see everyday. Given it is EOM, it must be some fund doing portfolio rebalance.

---

Enjoyed this post? Never miss out new posts by subscribing here.

Surprised by SATS FY22 Result

I must admit - I am surprised by SATS FY2022 result:

- Revenue grew 21.3% to S$1,176.8m
- OpEx grew even more (24.4%) to S$1,219.4m
- Core PATMI is a loss of S$8.5m

Thanks to govt relief and its associates' profits, the company was able to eke out a 1.8 cents EPS.

Figure is way below Street concensus. Given that SATS stock price has been soaring recently, I will be watching to see if there is a selldown tomorrow.

Going to eat my dinner first before I start digesting the company's earnings report.

---

Addendum:
Okay, having gone through the earnings report, it seems SATS is ramping up operations to prep for the anticipated increase in flights. Staff costs alone went up 44% YoY while raw material costs went up 15.3% YoY.

Granted, the post-pandemic reopening has encouraged more visitor arrivals in Singapore. April saw a spike to 294.3k visitors. [data] The forgoing of FY22 dividend is a bummer. Hopefully, all these front-loading of costs will translate to better earnings for SATS in the next quarter.

---

Enjoyed this post? Never miss out new posts by subscribing here.

A Question to Myself

Pondering a question out loud to myself:

The underlying resilience in the Straits Times Index (STI) is mind-boggling. Are local investors truly oblivious to the worsening global outlook, or do they believe Singapore can emerged unscathed when other countries are suffering?

We shall see.

---

Enjoyed this post? Never miss out new posts by subscribing here.

Skipping Meals Because of Inflation

I read with sadness how one quarter of Britons have resorted to skipping meals amid crippling inflation in the U.K. [article]

One caterer even commented how schools are facing difficult decisions on whether to shrink food portions for students or use lower quality ingredients.

Spiking food inflation is one of the worst outcomes to befall on a nation, especially for importing countries. British grocery inflation hit 5.9% in April. In Singapore, the MAS reported a YoY increase of 3.3% in food inflation in March. [data] Looking at the current world situation, no country will be spared.

Wheat prices have risen sharply because of the Russo-Ukrainian War. Russia and Ukraine are both major wheat producers, and the war has caused their output to drop significantly. India has also banned wheat exports to meet their own domestic demand. Wheat is a staple used to make various foodstuffs like bread and noodles. A supply constraint means prices for these items will rise correspondingly.

Price of wheat futures at CBOT. (Source: Yahoo)

Indonesia has also banned the export of palm oil, another important ingredient used in processed foods.

Similarly, global energy prices have shot up. Persistently high crude oil prices mean electricity and even plastic packaging will incur higher base costs. The business of manufacturing, transporting and serving food has gotten more expensive.

Price of Brent crude oil futures at NYMEX. (Source: Yahoo)

Then there is the wage-price spiral. As workers demand higher salaries to handle the rising expenses, companies have no choice but raise their product prices. Workers have to spend more of their paycheck per item, thus they demand higher salaries...and the death spiral goes on.

Consumers are forced to choose cheaper alternatives and dial back on non-essential spending. Companies, already facing margin pressure, suffer from lower revenue. Cost cutting takes place, layoffs happen and before you know it, a recession comes knocking.

Granted, such an apocalyptic scenario does not occur overnight, and there is a possibility we can avert this crisis if higher interest rates can curb demand to cater to the reduced supply.

However, it is a fact that interim higher prices on basic necessities will cause more hardship for families living just above the poverty line. Woe to the household who has to decide between buying groceries or footing the utility bill.

I hope the children will not have to go to bed hungry at night.

---

Enjoyed this post? Never miss out new posts by subscribing here.

In investing, a half-truth is worse than a whole lie

I once read a satirical article on how to market a stock newsletter successfully. It goes something like this:

Take 1,000 free subscribers. Split them into two groups. For 500 of them, make a bold declaration that Company X's earnings will be so disastrous, its stock price will crash at least 5% overnight; to the other 500 subscribers, declare that Company X's result will be so wonderful, its stock price will rise at least 5% overnight.

If Company X's earnings proves disastrous and its stock price crashes at least 5% overnight, take the 500 subscribers who received your accurate forecast, split them into two groups again. To 250 of them, declare that Company Y's earnings will be so disastrous, its stock price will crash at least 5% overnight; to the other 250 subscribers, declare that Company Y's result will be so wonderful, its stock price will rise at least 5% overnight.

If Company Y's result turns out better than expected and its stock price soars at least 5% overnight, you should now have a group of 250 subscribers who are fairly convinced of your predictive power.

To those 250 converts, market your stock newsletter at no less than $100 per subscription. If you have 100 of them who sign up, you will have earned $10,000. Not bad for two hours of work.

I hope you can see how evil selective omission of information can be. What then, is a whole lie?

That will be the facade staged by the Bernie Madoffs and the Ng Yu Zhis (of the nickel scam saga) of this world. Unfortunate as the victims may be, at least the truth came to light and the perpetrators were put behind bars.

But those 100 paying subscribers will never know the truth. They may remain faithful to the guru, even if later predictions turn out to be inaccurate (a.k.a. the sunk cost fallacy).

There are two morals to take away:

First, always read every stock opinion you found on the Internet with a pinch of salt (including this author's blog). You are entitled to reject the thesis, but are strongly encouraged to consider the FACTS presented about the company, especially if they run counter to your view. This will ensure you arrive at a balanced judgement of the company;

Second, nobody has a crystal ball into the future. Before you sign up for a stock newsletter or an investment course, be clear on the end goal. You should try to get behind the thought process of the investment coach, so that you can apply it in your own analysis. If you are looking for quick and easy profits like copy trading, you are bound to be disappointed over the long run.

A healthy dose of objectivity and scepticism will make us better investors.

---

Enjoyed this post? Never miss out new posts by subscribing here.

All eyes on the U.S. CPI number tonight

A quick post here to note the tense atmosphere in the market. It is fair to say all eyes are on the U.S. CPI number tonight.

U.S. CPI hit 8.5% YoY in March 2022 - the highest level in the past 40 years. The professionals are saying that inflation has likely peaked, and April figure should be lower. Bloomberg consensus pencils it at 8.1%.

I am thinking aloud how the stock market can swing. If the figure is higher than act. 8.5%, another selloff may occur; if the figure is lower than est. 8.1%, a relief rally may occur.

Either way, volatility is here to stay, which means possible opportunities to load on quality stocks.

Keep your cash ready.

---

Enjoyed this post? Never miss out new posts by subscribing here.