Saturday, 9 May 2009

9th May 2009 Update II Company Review (Cash portfolio)

As mentioned in the earlier post, YTD my cash portfolio is 9.4% up.  Currently, holding on to five counters Celestial Nutrifood, Kingsmen Creative, Pan United Corporation, Fibrechem and Thomson Medical.  The following is a review of their 2008 Performance and development this year.  

(a) Kingsmen Creative (Initial Purchase Dec 2006)

Kingsmen posted an increase of revenue and net profit by 30.4% and 51.0% respectively.  This is a very good set of results in a year of turmoil.  The group net profit margin has increased from 2.5% in 2005 to a credible 7.4% in the current year with ROE hitting 31.1%.  I must say that I am impressed by this MICE Company with a market cap of only 66 millions.  The management has guided that 2009 will be another strong year with contributions from Universal Studios and F1 Singapore in the pipeline.  What is exciting is its presence in both Greater China and Middle East.  If the expansion plans go well, the group will continue to grow in the coming years.  

With a dividend of 3 cents per share declared this year, my dividend yield stands at 10.5%.  I am looking into increasing my stake in this group soon.  

(b) Celestial Nutrifood (Initial Purchase May 2007)
Despite the challenging condition in 2008, the group has managed to grow its revenue and net profit by 27.9% and 19.1% respectively.  This was achieved through the increase of its selling price of products which did not affect the sales volume in the industry.  This is indeed good news as it shows that the industry is in favor of the group’s product.  The group decides to continue to commence on the production of two new health food and beverage products in 1H2009 – high protein nutrient beverages and high protein nutrient powder.  

A concern of the group is the potential redemption of RMB 1226 mil bonds on 12 June 2009.  The group has only RMB 812 mil in cash.  If we account for all current assets and liabilities, the group has net current liabilities of RMB 63.5 mil.  The management has shared that they are on the active look out for the re-financing of this potential redemption of the bonds but has yet to finalize any deal.  With only about a month to go, this is a growing concern.  Hopefully when the group announces its 20091Q results, this issue can be resolved.

(c) Pan United Corporation (Initial Purchase May 2008)

Revenue and net profit increased by 26.6% and 50.5% respectively.   The group’s Basic Building and Materials (BBM) and Shipping divisions have delivered growth; while the Port and Logistics division shows stable contribution.  Looking ahead, with Singapore’s strong pipeline of infrastructure, industrial and public residential projects; the group BBM division will continue to do well.  The shipping division is getting 7 new vessels in mid 2009 which should be well deployed for the year.  Port and Logistic division should continue be stable with the hope that China stimulus package will negate the slowdown in demand.  

A total of 3.8 cents per share was declared for dividend this year, my dividend yield stands at 7.6%.  I will continue to hold on to my 25 lots as the current price does not entice on further purchase or selling.

(d) FibreChem Technologies Limited (Initial Purchase October 2008)

After reading an article in Pulses on the fabric industry in China, decided to take a stake in FibreChem and Li Heng.  Both reported respectable results for their 9 months in 2008.  But the bombshell came in Feb 2009 just before FB announce their 2008 results, that the counter will be suspended as the auditor has difficulties in finalizing its trade receivable and cash balances.  The CEO has since resigned and independent investigator and financial advisor has been appointed.  The group was also granted an extension to the date it will announce its 2008 results to 31 May. 

As for Li Heng, it has announced a good set of results for year 2008 and declared a total dividend of 2.5 cents per share.  However, as guided by management 20084Q result is dismal and so will the coming 20091Q results.   As mentioned in the earlier post, I have since taken profit on this counter but will keep it in my radar.

(e) Thomson Medical Center (Initial Purchase December 2008)Thomson Medical has been on my radar for quite some time.   However, its valuation wasn’t quite attractive enough until this financial turmoil.  At my purchase price of $0.47, its PE based on its 2008 results is 12.3x.  Still no way near the single digit PE by other groups but for a health care group, this is acceptable to me.  I was choosing between TMC and Raffles Medical to invest in then and went with my gut feeling on TMC.  Raffles Medical has since increased by 50% since 2008 while TMC only increased by 7%.  Wrong decision?  Maybe, but I like both of them as healthcare is here to stay and will be at least provide a stable return in Singapore.  

For its 20091H results announced on 7th April, TMC posted a 8.3% and 5.3% increase in revenue and net profit respectively.  The group has completed renovation of first phase of Level 5 inpatient ward in 2009Q2 and secondary phase is expected to complete in April 2009.  This is expected to improve margin of TMC as it charges a higher rate with the renovated ward.  The group has also entered a joint venture to commence operation on Thomson Women Cancer Centre which is line with group’s objective to grow organically in the management of women’s health.  The group consultancy project in Vietnam is also progressing as planned with its target completion in third quarter 2009.  The hospital management services contract will take effect when it commences operation in Q1 2010.  With all this expansion progressing well, I am confident of the hospital growth in the coming years.

Friday, 8 May 2009

8th May 2009 Update I My portfolio performance

More than half a year has passed since my last update. 

Someone commented in the Wallstraits forum early this year that the forum is getting dead with little new postings and discussions.   Is there a correlation between number of posts and how the market is doing?  Apparently, it seems that I am suffering from the same psychological effect, with a drop in interest in updating during the past half a year when my portfolio paints a bloody picture.  Yes, there were occasions where I wanted to update but did not get down to it eventually.  Here I am finally but is it coincidental that this timing matches the rally on STI over the past 2 weeks or with the blood coming off my portfolio, I feel better to write about it.  In any case, it’s necessary for me to constantly reviewing my position since I wanted this to my alternative source of income which will help me to achieve financial independency.  So here I go.

As mentioned in October 2008, 2008 was a tough year and both my cash and CPF portfolio slid further to end up 38.8% and 48.4% lower than 2007.  Things did not look better early this year especially my cash portfolio which continued to drop by another 30% by February and NAV was lower than $1 (initial position in 2002) before it showed a better performance in March and April.  The last two weeks’ rally has really been amazing, resulting in a YTD 9.4% and 30.8% gain for my cash and CPF portfolio respectively.  Again, this show how hard it is to predict the market and how one can just miss the boat if he wants to catch the bottom.

Action from Oct 2008 to today
With limited cash, I did not do much trading.  I added Thomson Medical Centre (10 lots at $0.473) to my portfolio in December 2008 as I like their story especially when quite a number of my friends giving birth there.  With its expansion in Vietnam, it seems that the company is on track for further years of growth.

I also increased my stake in Celestial (average down to $0.326 with 50 lots at $0.11) in March 2009.  This was an exception and risky purchase as it would make Celestial occupying near to 40% of my portfolio.  With the news that its outstanding bonds might be redeemed by June this year and the company has yet to confirm the re-financing plan, it could mean that my stake could be wiped out.  I decided to take the risk since the offer was just too good to resist.  I offloaded 50 lots at $0.21 yesterday realizing a loss of $5833 for this counter.  While I am still confident of the company in next few years, the fact that re-financing is still unconfirmed with only 1 ½ months to go is not re-assuring.  I will decide when the company announces its 20091Q results whether to hold on to the other 50 lots or to cut loss.

I also increased my stakes of Kingsmen Creative (10 lots at $0.335) and Pan United Corporation (10 lots at $0.35) in March 09 and December 09 respectively.  Both companies did well last year and visibility is clear in the near future with attractive dividend yield of 10% and 7.5% respectively.

I bought Li Heng in October 08, increased my stakes in March 09 and sold all yesterday with a profit of $1609.   While I like its story, it is expected that 091Q results will be bad as indicated by management, so with little visibility, I decided to take profit.  The company will remain in my radar.

Sold Lantrovision today to realize a loss of $836.  The counter was brought for punting but decided to cash out so as to use the cash for investment in better companies.

The biggest story in my cash portfolio must be FibreChem which was suspended in March as the audit was unable to account for its cash balance.  CEO has resigned and pledged to assist in the investigation and extension of releasing of 2008 report was granted till June 09.  Worse case scenario will be $10 k wipe out.  This shows the importance of diversification as one will never know what will happen even if past records of company were good.

My CPF portfolio has remained stable with no purchase or selling of any of my stocks and unit trusts.