Wednesday, 21 September 2016

Portfolio August and September 2016

For the past two months, I have made the following adjustments:

1. Added my holdings to Capital Retail China Trust, Fraser Centrepoint Trust and SIA Engineering. All these are to increase the dividend payout received from them. 

2. I divested Vicom due to uncertainty in its short term business outlook.

3. I divested SGX due to lack of affinity to it.

4. I have initiated a position Micro-Mechanics as I see a constant stream of dividend from them.

Also, base on better understanding of how I view the individual stock, I have re-classified Straco under Dividend category and Food Empire under Punt category.

With all these adjustments, the "For Income" category has ballooned to 67.3%, beyond my initial plan on 60%. It does make me think and I am still thinking on my initial figure.

My current dividend yield (based on purchase price) is 4.9%.

For Income (67.3%)

REIT (34.3%)
Parkway Life REIT
Starhill Global REIT
Capital Retail China Trust
Fraser Centrepoint Trust

Dividend Stocks (33.0%)
ST Engineering
SIA Engineering

For Growth and Punting (30.5%)

Growth Stocks (25.3%)
Best World
Raffles Medical

Punt (5.2%)
Food Empire

Why I buy Raffles Medical?

It was 8 years ago when I decided to purchase Thomson Medical over Raffles Medical (RMG). The decision made was not base on its financials or a study of its fundamentals but more of an emotional one. I simply bought Thomson because my first daughter was due in a year and my wife's gynaecology was based at Thomson.

Do I regret the decision? Yes, but not because I bought Thomson as I did a good exit price when Peter Lim made it private. I regretted that I decided to choose one instead of buying both. 

RMG has more than double its net profit and free cash flow since 2008. Stretched it to 2004, RMG has quadrupled its revenue, net profit and free cash flow. So RMG has a solid track record over the past decade.

Why buy?
RMG is expensive in terms of valuation and that has always stops me from buying it for the longest time. So why did I purchase it last year and buy even more this year? It boils down to the report I read from Motley Fool on the group's near and mid-term plans and I am optimistic of its growth.

The group recently completed its development and started its operation of its Holland Village medical/retail complex. RMG is also building its extension in the adjacent land next to the current hospital. This is expected to be completed in the first half next year and will increase its capacity by 80%. The last development is a joint venture with Chinese state-owned enterprise Shanghai Lujiazui Group to develop a new 400-bed internal hospital in Shanghai. This is expected to be operational in 2018.

So if RMG is successful in its execution of its plan, then while valuation appears rich now, it is reasonable when one considers its growth. 

What I expect?
I expect that in near term, the net profit might not grow as much due to expenses for expansion. Things will look brighter after the initial expenses.

When will I sell?
I would love to hold it for as long as I can since it is a great company and should continue to grow for a long time.

Recent results
20161H revenue grew by 21% but net profit grew by 4%. All is in line and will continue to hold on to my current holdings.

Why I buy Starhill Global REIT?

I first wrote about Starhill Global REIT here and my reasons to purchase its shares remain the same.

Why buy?
I bought Starhill Global then mainly for its yield and my perceived good properties in Orchard Road. No regret so far as its dividend has gone up over the years though it is getting flattish

What I expect?
I think the REIT would provide stable distribution for next 2 to 3 years. The possible up side might come from asset enhancement of its Australia properties.

When will I sell?
I would like to hold on to this REIT for as long as possible as I am getting about 7.7% yield based on my purchase price. Sell will only comes in if there is major negative changes in its fundamentals.

Recent results
2016 distributions increased be 1.4% with a flat 4Q. Full contribution from Myer Centre but drop in contributions in Japan and China. Fortunately, China only takes up about 2% of its portfolio.

No impetus to buy or sell. Hold and continue to receive the dividends