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.

24thJune Mid Year Review II

(e) Kingsmen Creative

Kingsmen posted an increase of revenue and net profit by 34.1% and 89.7% respectively.  Prior to its 2-to-3 splits, I bought another 5 lots and after the split, the average purchase price of my 30 lots is $0.222.  The company has declared a dividend of $0.015 per share which gives me a yield of 6.76%.  I will continue to hold on to this counter as I expect the company to turn in good numbers over the next few years.

(f) KODA

Since decreasing my stack in this counter to 5 lots in Oct 2007, the price of the counter has dropped by more than 50%.  Its 20083Q result is disappointing and the company is definitely affected by the sub-prime as it reported one $2 mil order is delayed.  It is expected that the next few quarters the company’s earning will be lumpy and it will probably take the next one or two years for it to get back to its growth path.  Fundamental has changed but not the management which still impressed me with its forthcoming report.  I purchased 5 lots this month to average down my purchase price to $0.553.  I do not expect the counter to touch this price this year, might not even reach this next year.  However, I believe that in long term, it has a potential to be a multi-bagger.  In the latest Edge issue, the company reported that it is looking into China as a possibility for future growth.  Currently, the management is studying the feasibility and risk before committing to this expansion plan.

(g) Pokka

Pokka reported an increase of 15.4% and 629.8% in revenue and net profit for FY2008.  Net profit margin is still at a low of 4.2% with ROE jumping to 18%.  A general offer to take the counter private was made last week at a price of $0.66.  This translates to a gain of about 39% for me.  The offer seems to be at the low side especially with the company doing so well over the last year.  Fellow forummers share similar views and at the moment I am not inclined to take up the offer.  Of course, if Pokka is able to round up 90% of the total shares, the offer will be irrevocable.  If that’s the case, I will enjoy the 39% gain. 

(h) Inter Roller

My thinking that the big drop in profit in 20071H is a one-off event does not seem to stand.   For the year 2007, the company reports a decrease of revenue and net profit by 13.7% and 32.5% respectively.  Visibility for the year 2008 is low with a poor 20081Q results.  However, I still believe that this is a well-run company and in medium term, it will get back to its growth path.  The price has dropped by near to 50% since I took up a small stake in Oct 2007.  I am still weighing the choice of averaging down since I am already 93% invested at this point.

(h) Lantrovision

A punt I made in last November which is suffering from a 50% drop.  As this only takes up only 4% of my portfolio, I have no intention to sell (as I believe it will do pretty well this year) or buy (visibility not that clear) at the moment. 

(j) SIA Engineering

I purchased 2 lots of SIA Engineering to add stability to my cash portfolio.  Short term, there isn’t much surprise but I am positive of the company’s prospect in the next 2 to 3 years with the increase earning from JV and also a new income source from A380.  At my purchase price of $3.84, the dividend yield stands at 5.2% which I will enjoy collecting yearly.

(k) Pan United Corporation

Another counter which I have bought and sold in the past.  At my purchase price of $0.66, this small to mid cap company is trading at a PE of 7.7x.  An attractive entry point for me since the visibility of its profit for the next few years is high.   Based on 2007 dividend, I stand to get a dividend yield of 6.8%. 

CPF Portfolio

To date, my CPF portfolio has dropped 14.6%.  If this continued, this will be the first time since I started using CPF to invest in stock which I will post a negative return.  Subsequently, this brings my CAGR down to 12.9% as compared to an average of 20% over the past few years.  Is there any different this year? Any major mistake?   Taking a look at last year buy-sell decisions that I made, I will attribute to this performance to two factors.  The key factor again the sub-prime factor which has caused most stocks to drop in values and hence the low price is the few counters I am holding now even though I am confident of their long term prospect.  Another mistake is the purchase of Food Junction for its historical dividend yield, which did not keep up this year.  I have since divested FJ at a loss of $1400 not just because its dividend has not kept up but I am not impressed by the new initiatives, concepts came up by the management.  The final decision came when I had dinner at the newly renovated outlet at Bugis Junction.  It is not that bad but it does not meet up with what the management has described in their report.

(a) Singapore Land

Cheap can get cheaper.  I thought at $8.45 per share, it’s cheap but it became cheaper and dropped to $6 plus by May 2008.  I purchased another lot at $6.31 as I still believe that mid-term prospect of Singapore Land is positive especially with the properties that the group holds in the prime areas.  Current dividend yield of 2.7% is not impressive but I am still comfortable holding on to this counter as it offers large discount to its RNAV. 

(b) Metro

Another property counter that is selling at a huge discount to its RNAV.  I am confident of the group’s management of its China properties which it has ventured into in early 2000.  A dividend yield of 5.36% soothes the drop in principle.

(c) First Reit

Its price has been pretty stable and so far it has distribute out its dividend.  Yield stands at 8.5%. 

(d) ComfortDelgro

It faces pressure from the run-away oil price.  Over the past four years, the counter only provides a compounded return of 3.3%.  I am still positive of the group in posting a jump in results once the oil price stabilizes.  Dividend yield stands at 5.85%.

2007 in Review

Cash Portfolio

2007 has been a good year for my cash portfolio. NAV of my cash portfolio has increased by 49.4% from $1.44 to $2.15.  I have no confidence that I will repeat this performance in 2008 but I believe that in long term (10 to 15 years), getting a compounded return of 10% from stock can be quite easily done.  With this record-breaking performance, my compounded return over the 8 years is 10.1%.

The best move of the years must be the selling of People’s Food.  PFood was sold at an average price of $2 after it announced shortage of pigs.  Since then, the price has retracted to $1.11, which translates to a PE of 10 but I will continue to monitor the situation before getting back to the counter.

The mistake of the year must be the series of transaction near end July.  Instead of holding on to the build up in cash position, I hurried to purchase a couple of counters which does not offer really good values and results in a loss of $2.2 k in a month.

Currently, I am still positive of long term prospect of Celestial, Pacific Andes despite sitting on paper loss.  I am confident of performance of Hour Glass, Pokka, Kingsmen Creative and Inter Roller going into 2008.  As for Mid-south, Lantrovision and Koda, I am neutral on them.

Companies that are within my radar are FSL (for its high dividend yield), Apex Pal (bold expansion plan), Pan United (benefiting from construction boom), Beauty China (re-entry if valuation becomes attractive again)

CPF Portfolio

NAV increased by 10.3% from $2.19 to $2.41.  This is the lowest YTY increase for the past 5 years but it is still much better than CPF return of 2.5%.   Compounded return for the 5 years now stand at 19.3%.

The portfolio would have better showing if I had not sold off Sincere to raise cash for Jardine C&C and this mistake is compounded by the subsequent selling of Jardine in September.  Again, I need to be discipline in holding to a winning counter instead of realizing the gain!

For the currentlportfolio, I am confident of a steady return in terms of dividend at an average yield of 6.22%.  Any positive move in price will come from market revaluating the counters due to NAV (Metro, Singlan).  Food Junction remains a wild card which I might dispose of if there are better buying opportunities.