I have decided to migrate from blogger to wordpress. Hence, all postings from December 2017 will only be found at
https://mrtfi2024.wordpress.com/
Saturday 2 December 2017
Tuesday 28 November 2017
Buy and sell actions in November
This month, I sold some counters to raise cash for more compelling ideas. Also, increase my stakes in a few of my US counters.
(figure in bracket represents the % the counter is occupying my portfolio based on cost)
Sold
1. Divested ISEC completely at $0.315 even though it has reported a good set of numbers in the latest quarter. Still find this an interesting outfit but decided to temporarily say goodbye to it as I wanted to buy other counters.
2. Sold Hock Lian Seng (2.0%) at $0.47 for a gain of 7.6%. This reduced my stake in the company and it now only occupies only 2% of my portfolio. Continue to believe in its ability to sustain its dividend based on the cash that it has and its strong order book. However, I relatively like my new positions.
Accumulate
1. Re-entered Capital Mall Trust (2.3%) at $2.02 after attending a sharing by Deputy CEO of Capital Mall Asia, Wilson Tan. Basically, he opined that retail mall is here to stay and Capital Mall will continue to be a powerhouse a decade later. With the purchase of CMT, I now own a slew of retail REITs but each for a different reason.
SG Reit - my longest holding for its focus on mall in prime area and its overseas exposure.
FCT - for its focus on sub-urban malls with most of them near MRT stations.
CMT - for not resting on its laurels and continues to take actions to be at the fore-front of retail mall.
2. Added more UMS (4.1%) at $1.05 after it announced a good set of Q3 results. Optimistic about its upcoming performance for the next few quarters and confident that it will at least maintain its dividend.
3. Added Intuitive Surgical (1.1%) @388.85 as I forgot to update my spreadsheet for its stock split! Luckily, bought only 4 shares to round up my total shares to 10. Let's hope it can continue with its splendid growth, then the mistake can become a blessing in disguise.
4. Added Vail Resorts (0.7%) @235.77 as it continues to report good growth from its acquisition. While management guided that 2018 growth might be slower due to the strong growth this year, long term prospect should remain good.
5. Re-entered Priceline (1.0%) @1655.75. I had sold earlier in September at 1840.6, making a loss of 5.1%. Since then the group announces a solid Q3 results which beats its own guidance. However, the market bashed it down due to another muted Q4 guidance. Seeing that Priceline always beats its own estimate, I decided to re-enter Priceline at a better price.
(figure in bracket represents the % the counter is occupying my portfolio based on cost)
Sold
1. Divested ISEC completely at $0.315 even though it has reported a good set of numbers in the latest quarter. Still find this an interesting outfit but decided to temporarily say goodbye to it as I wanted to buy other counters.
2. Sold Hock Lian Seng (2.0%) at $0.47 for a gain of 7.6%. This reduced my stake in the company and it now only occupies only 2% of my portfolio. Continue to believe in its ability to sustain its dividend based on the cash that it has and its strong order book. However, I relatively like my new positions.
Accumulate
1. Re-entered Capital Mall Trust (2.3%) at $2.02 after attending a sharing by Deputy CEO of Capital Mall Asia, Wilson Tan. Basically, he opined that retail mall is here to stay and Capital Mall will continue to be a powerhouse a decade later. With the purchase of CMT, I now own a slew of retail REITs but each for a different reason.
SG Reit - my longest holding for its focus on mall in prime area and its overseas exposure.
FCT - for its focus on sub-urban malls with most of them near MRT stations.
CMT - for not resting on its laurels and continues to take actions to be at the fore-front of retail mall.
2. Added more UMS (4.1%) at $1.05 after it announced a good set of Q3 results. Optimistic about its upcoming performance for the next few quarters and confident that it will at least maintain its dividend.
3. Added Intuitive Surgical (1.1%) @388.85 as I forgot to update my spreadsheet for its stock split! Luckily, bought only 4 shares to round up my total shares to 10. Let's hope it can continue with its splendid growth, then the mistake can become a blessing in disguise.
4. Added Vail Resorts (0.7%) @235.77 as it continues to report good growth from its acquisition. While management guided that 2018 growth might be slower due to the strong growth this year, long term prospect should remain good.
5. Re-entered Priceline (1.0%) @1655.75. I had sold earlier in September at 1840.6, making a loss of 5.1%. Since then the group announces a solid Q3 results which beats its own guidance. However, the market bashed it down due to another muted Q4 guidance. Seeing that Priceline always beats its own estimate, I decided to re-enter Priceline at a better price.
Tuesday 14 November 2017
Core holdings quarterly report (October to December) Part 2 - Non-Reit
This is part 2 of core holdings quarterly report which focus non-Reit counters.
iFAST and 800 Super replaces Micro-Mechanics and SingTel in the core holdings since the last quarterly report. Micro-Mechanics was divested before its last quarterly results as my return provided 5 to 6 years of dividend which was my initial investment reason. Since my divestment, its price has continued to hit new high to remind me of my pain. SingTel just dropped out of the core holdings as I purchased more of the other counters.
The tables below summarizes their performances for the latest quarter.
A+
A
Food Empire
Food Empire reported another good quarter with a minor increase in its revenue and a higher growth in its net profit. From the beginning of its turnaround last year, it has continued to generate good cash flow. Coupled with its regular scheduled repayments of its debt, the company is finally in net cash position after being in net debt from 2013.
Going forward, the growth might not be as strong with management highlighting stiff competition for IndoChina market and maturity of its ingredient business. With the positive experience in the ingredient business and increase in cash, I am confident that the management will announce further expansion in the upstream project in due course.
Having average up a few times over the past year, Food Empire is currently my top holding, occupying 8.5% of my portfolio (by cost). While I believe that it will continue to do well and pay out more dividend, I will not add on more shares as its growth might slow and currency risk while reduced, is still a concern.
iFAST
iFast continues with a strong showing this quarter as compared to previous year. However, the increase is much lesser from previous quarter. I expect the momentum to continue and its Q4 will be about the same as this quarter, with the potential of upside surprise. The company has also increased its dividend by 10% from $0.0068 to $0.0075.
High valuation of PE 29x if Q4 results is within my expectation and PEG of about 1. So pretty much fairly priced but I continue to like how the company goes about executing its strategies. While China loss widens, it continues to establish itself. the recent step in an institutional business partner in China (Beijing Financial Alliance Technology Co Ltd) is evident of its effort.
I am happy with the gradual growth for the next one to two years with the a possible explosion in growth (and price) once it establishes itself in the China market.
B
Straco
As I was expecting quarter three to continue its growth momentum from the previous two quarters, I was disappointed to see the dip in performance when I first took a glance at the results. Feeling more neutral when I realized that the weaken performance is largely attributed to UWX due to a restriction of visitor to the island. The other attractions reported an increase in revenue.
Straco continues to generate a large amount of cash and now has a net cash position of 137 mil. With a quarter to go, I would expect its net cash to be in the range of 140 to 150 mil by the end of this financial year. That is a whooping $0.17 per share.
Before Straco bought Singapore Flyer (SF) in 2014, it generated about 12 to 15 mil per year. When it acquired SF, its net cash was at 110 mil. After SF, it has been generating about 40 mil per year and with the record cash that it is holding, I am pretty confident that it will increase its dividend for this year.
Hence, I will continue to hold on to my current stake. I am unlikely to increase my stake further until there is more clarity on how the company is going to deal with the cash that they have.
800 Super
800 Super produces a stable quarter with minor increase in revenue and minor decrease in net profit compared to previous year. However, its performance is better than the previous quarter and net profit margin is back to 11%.
It has obtained TOP for its WTE plant and will be carrying out testing of its biomass boiler. The plant is expected to commence operation from 2018 first quarter. The development of sludge treatment plant is in progress and is on track for completion in 2018 second quarter.
Looking forward to the completion of the above two projects in the coming quarters.
VICOM
Vicom produces another stable quarter with minor decline compared to the previous years. Next quarter's report will be interesting as we can see the effect of the minor price adjustment for vehicle inspection.
I continue to stay confident of its ability to generate cash and am quite sure it will at least maintain its dividend by the end of the year.
C
Raffles Medical Group
Results continues to be flat with Hospital Services Division's revenue increased by 3.1% but Healthcare Services Division's revenue decreased by 4.2%. Looking forward to the opening of
Raffles Hospital Extension by end of this year which should improve both top and bottom lines as it has been operating at full capacity in recent times.
It continues to generate strong cash flow and cash balance has maintained at around 110 mil, even after distribution of 9 mil of dividend and payment of 31 mil for investment properties under development.
With Raffles Chongqing opening in 2018 second half and Raffles Shanghai in 2019 second half, it is exciting time for the company.
A "C" grade for current performance but a "B" for its potential in the new few years. I will continue to hold on to my current stake and may add more at the appropriate juncture.
iFAST and 800 Super replaces Micro-Mechanics and SingTel in the core holdings since the last quarterly report. Micro-Mechanics was divested before its last quarterly results as my return provided 5 to 6 years of dividend which was my initial investment reason. Since my divestment, its price has continued to hit new high to remind me of my pain. SingTel just dropped out of the core holdings as I purchased more of the other counters.
The tables below summarizes their performances for the latest quarter.
A+
Valuetronics
Another fantastic quarter by Valuetronics. Revenue and net profit increases for the seven consecutive quarters, contributed by both CE and ICE segments. The strong performance for the past few quarters have been attributed to smart lightings of CE segments. The ICE continues to grow but at a slower rate.
It also declared its first interim dividend of HK 7 cents. The momentum should continue to carry on for a few more quarters and I hope to hear more growth from its ICE segments, since it has increased its capital expenditure for the last 2 quarters on new machineries.
At forward PE of about 12x (and only 9x excluding cash), and probable yield of about 4.6% (based on $1 price), it is not a compelling buy. Having said that if the price corrects to around $0.90 or more good news is announced in the coming quarter, I might add more.
Food Empire
Food Empire reported another good quarter with a minor increase in its revenue and a higher growth in its net profit. From the beginning of its turnaround last year, it has continued to generate good cash flow. Coupled with its regular scheduled repayments of its debt, the company is finally in net cash position after being in net debt from 2013.
Going forward, the growth might not be as strong with management highlighting stiff competition for IndoChina market and maturity of its ingredient business. With the positive experience in the ingredient business and increase in cash, I am confident that the management will announce further expansion in the upstream project in due course.
Having average up a few times over the past year, Food Empire is currently my top holding, occupying 8.5% of my portfolio (by cost). While I believe that it will continue to do well and pay out more dividend, I will not add on more shares as its growth might slow and currency risk while reduced, is still a concern.
iFAST
iFast continues with a strong showing this quarter as compared to previous year. However, the increase is much lesser from previous quarter. I expect the momentum to continue and its Q4 will be about the same as this quarter, with the potential of upside surprise. The company has also increased its dividend by 10% from $0.0068 to $0.0075.
High valuation of PE 29x if Q4 results is within my expectation and PEG of about 1. So pretty much fairly priced but I continue to like how the company goes about executing its strategies. While China loss widens, it continues to establish itself. the recent step in an institutional business partner in China (Beijing Financial Alliance Technology Co Ltd) is evident of its effort.
I am happy with the gradual growth for the next one to two years with the a possible explosion in growth (and price) once it establishes itself in the China market.
B
Straco
As I was expecting quarter three to continue its growth momentum from the previous two quarters, I was disappointed to see the dip in performance when I first took a glance at the results. Feeling more neutral when I realized that the weaken performance is largely attributed to UWX due to a restriction of visitor to the island. The other attractions reported an increase in revenue.
Straco continues to generate a large amount of cash and now has a net cash position of 137 mil. With a quarter to go, I would expect its net cash to be in the range of 140 to 150 mil by the end of this financial year. That is a whooping $0.17 per share.
Before Straco bought Singapore Flyer (SF) in 2014, it generated about 12 to 15 mil per year. When it acquired SF, its net cash was at 110 mil. After SF, it has been generating about 40 mil per year and with the record cash that it is holding, I am pretty confident that it will increase its dividend for this year.
Hence, I will continue to hold on to my current stake. I am unlikely to increase my stake further until there is more clarity on how the company is going to deal with the cash that they have.
800 Super
800 Super produces a stable quarter with minor increase in revenue and minor decrease in net profit compared to previous year. However, its performance is better than the previous quarter and net profit margin is back to 11%.
It has obtained TOP for its WTE plant and will be carrying out testing of its biomass boiler. The plant is expected to commence operation from 2018 first quarter. The development of sludge treatment plant is in progress and is on track for completion in 2018 second quarter.
Looking forward to the completion of the above two projects in the coming quarters.
VICOM
Vicom produces another stable quarter with minor decline compared to the previous years. Next quarter's report will be interesting as we can see the effect of the minor price adjustment for vehicle inspection.
I continue to stay confident of its ability to generate cash and am quite sure it will at least maintain its dividend by the end of the year.
C
Raffles Medical Group
Results continues to be flat with Hospital Services Division's revenue increased by 3.1% but Healthcare Services Division's revenue decreased by 4.2%. Looking forward to the opening of
Raffles Hospital Extension by end of this year which should improve both top and bottom lines as it has been operating at full capacity in recent times.
It continues to generate strong cash flow and cash balance has maintained at around 110 mil, even after distribution of 9 mil of dividend and payment of 31 mil for investment properties under development.
With Raffles Chongqing opening in 2018 second half and Raffles Shanghai in 2019 second half, it is exciting time for the company.
A "C" grade for current performance but a "B" for its potential in the new few years. I will continue to hold on to my current stake and may add more at the appropriate juncture.
Thursday 9 November 2017
Core holdings quarterly reporting (October to December) Part 1 - Reit
Decide to break up my core holdings quarterly reporting to two parts as my 3 REITS have completed reporting and the rest of my holdings are still reporting their results until the end of the month.
Again, my definition of core holdings are counters which I am more familiar with. These are counters which I am more confident of and have a more substantial holding (about 5% of portfolio); hence I am more likely to hold them for a longer period of time.
The tables below summarizes the 3 REITs performances for the latest quarter.
A+
Frasers Centrepoint Trust
As seen from the above table, FCT reported a strong quarter with increase in revenue, net property income, DPU and NAV. This despite the fact that Northpoint City is still about 18% vacant due to AEI. The strong showing comes from increase in occupancy in Changi City Point and Bedok Point, and 8.3% rental reversion for the past quarter.
I expect even better performance for the next two quarters with completion of Northpoint City. Also, with the opening of Downtown line, that will boost the traffic to Changi City Point.
The DPU might not jump in quantum as I think the proportion of management fees to be paid in Units will reduce from the current quarter of 70%. However, I believe that the management will want to continue to increase its DPU for the 12th straight year. Hence, I expect its DPU for next year will grow between 3% to 6%.
Also, with a low gearing of only 29%, acquisition of Punggol Waterway Point within the next few years is definitely a possibility.
The price of the counter has gone up quite a bit before the results is announced. It dipped to $2.17 recently which is not cheap with respect to its NAV of $2.02. However, with its proven track record and my thinking of its next year's DPU, I increased my stake by another 25%. With this increase, my average price is $2.06.
A
ParkwayLife REIT
Parkwaylife continues its stable and strong performance. Even excluding the divestment gain, its DPU has gone up by 2.9% compared to 2016Q3. For this financial year, its DPU has slowly increase too (Q1 3.06, Q2 3.10, Q3 3.15). No complain about it except that its price has really run up too much for me to accumulate further at this point. Might start considering again if yield increases to at least 4.8%.
C
Starhill Global REIT
All metric continues to drop as compared to a year ago but it seems to have stablized over the previous quarters. The key concern still lies with its office occupancy but the bright spot is management has shared that they are finalising the deal for 1/3 of its vacant space.
Going forward, things should look slightly brighter with the above, completion of Australia AEI and stable income from China properties. The price seems to have factored in the outlook as it hardly move after the announcement of the weaker results. I am going to continue to hold on to my current stake (average price of $0.70) which occupies 4.8% of portfolio.
Again, my definition of core holdings are counters which I am more familiar with. These are counters which I am more confident of and have a more substantial holding (about 5% of portfolio); hence I am more likely to hold them for a longer period of time.
The tables below summarizes the 3 REITs performances for the latest quarter.
Frasers Centrepoint Trust
As seen from the above table, FCT reported a strong quarter with increase in revenue, net property income, DPU and NAV. This despite the fact that Northpoint City is still about 18% vacant due to AEI. The strong showing comes from increase in occupancy in Changi City Point and Bedok Point, and 8.3% rental reversion for the past quarter.
I expect even better performance for the next two quarters with completion of Northpoint City. Also, with the opening of Downtown line, that will boost the traffic to Changi City Point.
The DPU might not jump in quantum as I think the proportion of management fees to be paid in Units will reduce from the current quarter of 70%. However, I believe that the management will want to continue to increase its DPU for the 12th straight year. Hence, I expect its DPU for next year will grow between 3% to 6%.
Also, with a low gearing of only 29%, acquisition of Punggol Waterway Point within the next few years is definitely a possibility.
The price of the counter has gone up quite a bit before the results is announced. It dipped to $2.17 recently which is not cheap with respect to its NAV of $2.02. However, with its proven track record and my thinking of its next year's DPU, I increased my stake by another 25%. With this increase, my average price is $2.06.
A
ParkwayLife REIT
Parkwaylife continues its stable and strong performance. Even excluding the divestment gain, its DPU has gone up by 2.9% compared to 2016Q3. For this financial year, its DPU has slowly increase too (Q1 3.06, Q2 3.10, Q3 3.15). No complain about it except that its price has really run up too much for me to accumulate further at this point. Might start considering again if yield increases to at least 4.8%.
C
Starhill Global REIT
All metric continues to drop as compared to a year ago but it seems to have stablized over the previous quarters. The key concern still lies with its office occupancy but the bright spot is management has shared that they are finalising the deal for 1/3 of its vacant space.
Going forward, things should look slightly brighter with the above, completion of Australia AEI and stable income from China properties. The price seems to have factored in the outlook as it hardly move after the announcement of the weaker results. I am going to continue to hold on to my current stake (average price of $0.70) which occupies 4.8% of portfolio.
Monday 30 October 2017
A look at my recent buys (Part 3) - 800 Super
I first came across 800 Super in 2015 when its price was only
40+ cents. A cusory glance at its balance sheet puts me off as it is in a net
debt position and its debt had been increasing. The company’s share price burst
into action in the second half of 2016 and reaches a high of $1.38 on 12 May
2017.
I finally took a small bite of it at $0.93 in December 2016 and sold
it off at $1.26 in May 2017 for a 36% gain. The recent dip in its price to
$1.1+ allows me to take a second bite at it. Together with the few recent buys
of iFast, Hock Lian Seng and UMS, I decided to take a closer look at the
company’s past record.
What do they do?
Listed on Catalist on 15 July 2011, 800 Super is an established environmental services provider for both the public and private sectors in Singapore. The Company's environmental services include waste management, cleaning and conservancy and horticultural services. The company is one of the four licenses public water collectors appointed by NEA. It has been the Public waste collector for Ang Mo Kio-Toa Payoh sector since July 2006, and was re-awarded the contract in 2014 for 7 years and 9 months.
In its IPO
document, the company stated the following as their business strategies and
future plans.
• Expand our
material recovery facilities capacity and the capacity of our vehicle depots
• Enhance the
efficiency of our services and capacity
• Venture into
waste treatment and renewable energy businesses
• Focus on
public sector projects
• Continue to
focus on operational excellence
• Explore
strategic investments or alliances and acquisitions
• Expand into
overseas markets
Based on the
past few years record, tt seems that they have been executing their plans, with
the completion of the material recovering plants and vehicle depot at Tuas
South. Also, they were awarded integrated public cleaning for North-West (6 years)
and South-West (7 years) sectors in 2014.
Recent Development
The group had a hiccup in its growth of both top and bottom line
in the latest year with poorer performance in the last 2 quarters. This
coincides with the delay of its completion of its Waste-to-Energy (WTE) plant
which was slated to be in operation in 2017Q2. I suspect they are ironing out
some teething problems and hopefully it can come into operation by end 2017.
In October 2016, the company was awarded a15-and-a-half-year,
S$133.65 million contract that the Public Utilities Board (PUB) for a sludge
treatment facility. This is slated to be completed in 2018 second quarter.
In the latest financial year, the
company continues to increase its dividend from 2.5 cents to 4.0 cents.
Management
The Lee brothers Lee Kok Yong (Chairman), Lee Cheng Chye (CEO)
and Lee Hock Seong collectively have a 75% stake fo the company.
It is my opinion that they are networker and are
people-oriented leaders with interest aligned to the shareholders. My opinion comes from the position they held
– Lee Kok Yong is a direction of Ang Mo Kio Joint Temple Association and Lee
Cheng Chye is currently the treasurer for Bishan East
Citizens Consultative Committee and was conferred the Public Service Medal
(PBM) by the President of Singapore at the 2015 National Day Awards.
The company has also
increased its dividend over the years, from 1 cent in 2012 to 4 cents in the latest financial year.
Crunching the numbers
The company has grown its EPS by about 24% over the past 5 years. I opined that the company can at least grow by 15% in the next few years which would give its PEG of about 0.85.
Dividend has been increasing and based on the payout ratio and
likely increase in cash balance, I think it can at least sustain its 4 cents
and that provides an yield of about 3.3% based on current price of $1.215.
The company seems to believe in using debt to grow and it is not
something that I am comfortable with. However, its ability to generate cash is
improving over the past few years and net debt has gone down until the recent
increase in debt to finance the buiding of the sludge treatment plant.
Conclusion
After taking a closer look at the company, I must say that I am
impressed by how the company has kept to what it has set out to do in its IPO.
It has grown over the past 5 years and increases its dividend. While debt is
something I am not comfortable with, it seems that the company has been able to
deal with it and moving forward, the chance of paring it down seems high.
Weighing the risk and reward, I decided to add on to my holding
today, resulting in an average price of
$1.16. It now occupies 5.4% of my portfolio.
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