Tuesday, 15 August 2017

Top 10 Counters Quarterly Reporting (July to September)

With the exception of Micro-Mechanics, the rest of my top 10 counters have reported their quarterly report. I will update this post with MMs results when it is out later this month which I believe would be a good.

With the divestment of Best World in July, my recent purchase of VICOM has taken the last place of my top ten counters. I will post on the purchase of VICOM soon.

The tables below summarize their performances for the latest quarter.




A+
Valuetronics
Fantastic quarter by Valuetronics as it continues its turnaround with strong momentum in wireless lighting business and continuous growth in automotive segment. NPM average 6.9% over the last four quarters, much higher than the average of 6.2% in the preceding 4 quarters. A good decision made by management to exit LED business and go into automotive segment. 

The company also produces a presentation for 20181Q report which provides a good read of the company's business. Barring unforeseen circumstances, I expect the business to continue to do well for this year. Hence, I will continue to hold on to my shares.

Straco
Straco has a good quarter as its revenue and net profit continues to grow. With the exception of UWX, the rest of its attractions - SOA, SF and Lixing cable car saw higher visitor numbers.Straco's NPM has always been above 30% and with little capex, it is generate lots of cash that allows it to pare down its debt.

I am hopeful for an increase in dividend either for this financial year, if not by next financial year.


Micro Mechanics
Expect a good quarter from Micro Mechanics. To be updated.

A
ParkwayLife REIT
ParkwayLife continues to improve its DPU y-o-y and q-o-q. With the distribution of its divestment gain over the four quarters, the return is even more impressive. Management has good track record in improving DPU and has make gains from its divestment. They are also forward looking and in the latest report has indicated the decision to diversify their portfolio by investing in properties used for medical manufacturing & storage facilities & education facilities (target 5% of portfolio). 

The price has run up quite a bit in the last few months and it is indeed tempting to lock in some profit. However since I still believe in its long term growth, I will hold on to my current holdings.

Frasers Centrepoint Trust
FCT reported a stable quarter with slight decline in its DPU. With its AEI for Northpoint 90% completed, DPU should improve next year. With a low gearing of only 30%, one possible catalyst would be acquisition of Punggol Waterway Point within the next few years. 

I will look for opportunity to accumulate more if the price softens.

B
Food Empire
Food Empire continues its turnaround story with an exceptional increase in both revenue and net profit y-o-y. However, q-o-q the results is not as impressive and the its NPM is not very stable. 

In Q1, Indochina's weaker performance was attributed to a change in festive season date. However, Q2 results does not see a big change. Hence, as management highlighted in the report, they are facing tough competition. The strongest segment is their Other Markets which improves both y-o-y and q-o-q. 

Based on past record, it seems that their 2H performance is better than 1H. If they are able to achieve the improvement in Q3, I will up them to the A Band.

Singtel
Strong growth in revenue but net profit suffers due to intense competition in India. NPM remains high at above 20%. Singtel should be able to maintain its dividend and hopeful for special dividend when it records its gain from its divestment of Netlink.

VICOM
Revenue and net profit continues to drop due to decrease in car inspection because of COE cycle. However, company has pretty much maintain its dividend and has up its dividend policy to 90% payout.Strong net profit margin of above 20% and if it is able to maintain similar dividend for just a few more years, its revenue and net profit will grow again.

Will look for opportunity to increase stake.

C
Raffles Medical Group
Slightly better than 20171Q, with revenue up by 1.0% and net profit up by 0.7% as compared to 20161Q. Q-o-Q, the improvement is better. 

The report highlighted weaken demand from foreign patients but it still generated more than enough sufficient cash to support its expansion. Raffles Hospital Extension will open in Q4, Raffles Chongqing in 2018 second half and Raffles Shanghai in 2019 second half.

The market responded badly with this Q2 results, causing the price to drop to below $1.2. I will take the opportunity to further accumulate my holding at the correct price. Expect to see the benefits from its expansion from 2020 onwards.

Starhill Global REIT
DPU continues to drop due to poor performance for its office segment and AEI for Plaza Arcade. As with Q1 report, I stay satisfied with the current DPU and actions taken by the management.  I expect a better performance in 2018, hence may buy more if the price is good.

Saturday, 5 August 2017

Average down plan

Recently, Raffles Medical Group tumbled around 8% after it announced its 2017 Q2 results. As I still believe in its long term story, I did not sell the shares and was contemplating on averaging down. 

The questions are at what price? And buy how much?



Plan
After some thinking, I decided that for the growth stocks in my core holdings, I will adopt the following plan to accumulate more when there is a sell down. 

Firstly, will look at the business and financial and decide if there is any major change in its fundamentals. If there is deterioration in its fundamentals which increases in uncertainty and risk in holding on to the shares, I would have to decide if I need to cut loss. 

On the other hand, if fundamentals still hold strong, I will accumulate. I will average down when the price dropped by 20% from my average purchased price. Each time, I will add 20% of the original share count. Within the next 6 months (2 reporting quarters) of the first averaging down, I will continue to average down when price dropped by 20% of the last purchased price. After which the cycle will be reset.

Example
I have 10000 shares of ABC company at $1.000. If the price dropped to $0.80, I would add 2000 shares. With that, I would have 12000 shares at $0.97.

Within the next 6 month, I would only continue to average down if the price hit $0.64 ($0.80 x 0.8). If it does, then I would add 2400 shares at $0.64 ($0.80 x 0.8). With that, I would possess 14400 shares at $0.91. 

On the other hand, if the price has not dropped to $0.64 within the six months of the first average down, my next average down would be 2400 shares at $0.77. ($0.97 x 0.8). With that, I would possess 14400 at $0.93.

Conclusion
The plan provides a guide on how I will response when the price of my counter drop. I believe with this guide, it takes part of the emotion in my decision and hopefully it will turn out to be good. Having say that, I will not following the guide religiously. I am sure there will be occasions which require me to be more flexible.

I have not executed this plan yet on Raffles Medical Group as its price has rebounded last week. I do hope it will drop more in the coming weeks which will allow me to accumulate more shares in this outstanding business.