2017 9M performance

Performance
Another quarter has passed and it's time to take stock of portfolio's performance.

It is a muted performance for the quarter, resulting in a slight increase in NAV compared to 20171H performance. In fact, if not for the strong performance of Valuetronics and UMS over the past few days, this quarter will post a return lower than 20171H.

NAV of portfolio grew from $3.78 (30 Dec 2016) to $5.22 (30 Sep 2017), providing a return of 37.8% for 9 months. Definitely happy as this is well above my stretched target of 12% and also beats benchmark STI ETF which returned about 14% (inclusive of dividend) over the same period. 

The chart below shows the performance of  past 7 quarters.

The muted quarter's performance can be attributed to the following:

• weaker market sentiment for the past quarter, 
• continued sell-down of Raffles Medical Group, 
• correction of Food Empire,
• divestment of  Micro-Mechanics which shot up 20% after I sold, *ouch*
• increase in trading activities as I look for new ideas for the next few years.

Gainers and losers
The following tables show the top gainers and losers for this year thus far. The list should remain pretty much the same by end of the year.

I am glad that 7 out of my 10 core holdings have returned more than 10% thus far this year. Even with the divestment of Best World and Micro-Mechanics, the ratio of 5 out of 8 still looks good.

Looking at the table, it seems that I have a tendency to divest my non-core holding once it has done well. This is something which I wasn't aware of before this post. It will be something that I will take note of in future. Instead of divesting the counter after a strong performance, another option would be for me to spend more effort in understanding the counter and determine the possibility of turing it that into a core holding.

Punting on counters based on minimal information and uncertain business outlook continues to be a game of chance. Fu Yu went 10% up but Oceanus and Innotek went the other way. Not in a hurry to divest Oceanus and Innotek yet as amount put in was minimal, especially for Oceanus. Also, am still feeling positive of a possible turnaround next year or the year after next.

The table also highlighted the strong performance of my three counters in my CPF portfolio which returned 16% thus far. If this continues for the rest of the year, it will be the 9th consecutive year that my CPF portfolio beats STI ETF.

Allocation

Dividend vs Growth
With the divestment of two core holdings and exploration of the US market, the allocation looked quite different from the the first half of the year. Cash stands at a high of 15%. Dividend yield of portfolio based on cost is at a low of 3.4%. 

	Planned	Actual
Dividend	~ 60%	55%
REIT/ Business Trust	<= 30%	25%
Growth	~ 40%	30%
Punt	<=10%	3%
Cash	0%	15%

Singapore vs US

Being new to US market, I decided to allocated at most 15% of my fund to it till end of 2018. Currently, it stands at about 12% with 4% invested and 8% in cash.

Action

For the month of September, I have sold

• Dairy Farm at US$8.03 for a gain of 5.0%.
• Singapore O&G at $0.49 for a gain of 2.1%.
• mm2 Asia at $0.49 for a gain of 1.9%.
• Mapletree GCC Trust at $1.15 for a gain of 4.9%.

I have bought the first 3 in August due to their steep drop. Decided to divest them for a quick profit and re-invest them in other counters which I am more familiar with. As for Mapletree GCC, bought it last month with an incorrect understanding of the location of its HK property. Got lucky with it, so decided to take profit.

On the US Market, I have also sold 

• Cognex at US$114.45 for a gain of 3.4%.
• Mastercard at US$140.23 for a gain of 6.1%.
• Priceline at US$1840.60 resulting in a loss of 5.1%.
• Chipotle at US$307 resulting in a loss of 13.4%. 

Dug into the numbers and checked the PE and growth rate of my US counters. The current PE for the first 3 stocks are all much higher than its historical average and PEG are all above 2. Hence, decided to divest them. As for Chiptole, there is currently too much uncertainty and so decided to stay away from it for the moment.

I have added

• more Straco at $0.87. Continue to like its cash generating business. This article by the "Rock" in NextInsight provides a good reading.
• more Hong Kong Land at US$7.28. Same reason as initial purchase in August. Cheap P/B and good results.
• more 800 Super at $1.085 as it continued to trend lower after its announcement of its Q4 results. Two quarters of weaker performances but it has continued to increase its dividend. Looking for a better performance in 2018.
• more Japan Food at $0.435. Same reason as initial purchase - consistent dividend.
• iFAST at $0.87. Its price has slid from its high after announcing a strong 1H results. While its China business will take some time to break even, its other countries performance is growing very well.
• Hock Lian Seng at $0.445. High visibility due to strong record book. If the company is able to maintain its dividend of 2.5 cents, then the yield is about 5.6%.
• ComfortDelgro at $1.995. Bought a tiny stake as I felt that it is oversold. While Taxi business is under great pressure, rail and bus are still doing well. Due to a sudden turn in its share price, I sold it today at $2.08 for a small gain of 2.8%. 

You can click on July and Aug for my actions taken in those two months.

Core holdings

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 (at least 5% of portfolio); hence I am more likely to hold them for a longer period of time.

The current average holding period is about 2.4 years, as compared to 0.5 years for the remaining holding.

Divestment of Best World and Micro-Mechanics and purchase of VICOM has resulted in partial change of core holdings. These 8 (out of 26) holdings make up 53% of my outlay cost.

1. Food Empire (9%) @ $0.46
2. Raffles Medical (8%) @ $1.41
3. Straco (8%) @ $0.85
4. Parkwaylife REIT (6%) @ $2.32
5. Valuetronics (6%) @ $0.54
6. Fraser Centrepoint Trust (6%) @ $2.03
7. VICOM (5%) @ $5.75
8. Starhill Global (5%) @ $0.70

Looking Ahead

For the remaining quarter, I am looking forward to dividend from various REITs, 800 Super, RMG, SingTel, UMS, iFast and Japan Food. 

I am also hopeful of good quarterly result from Food Empire, Straco and Valuetronics which might have a positive impact on their prices. Raffles Medical Group should report another quarter of muted performance.

Barring any unforeseen circumstances, return for the year should be above 35%. With some luck, it might breach the 40% mark.

Buy and sell actions in August

Lots of action this month. Divested a few counters but bought quite a bit with the $$$ from divestment of Best World.

Out of Favour
Divested Kingsmen Creatives at the same price I bought. This is the turnaround story that is not working out yet. It reported a poor Q2 and I decided to wait for a clearer picture before re-entering again.

Divested half my stake in ISEC at 0.315. Tiny profit. Still an interesting outfit but its growth isn't exciting enough for it to occupy the middle of my portfolio. Hence decided to hold less and watch how the story unfolds.

Sold Capital Mall Trust at 2.10. It has risen more than 10% from my purchased price. Covered 2 years of dividend. Will recycle cash to other counters that offer higher dividend yield. Might re-enter when it offers a better yield.

Sold Mircro-mechanics at 1.41. Bought purely for its track record for dividend but its price has gone up to 7 years of dividend due to its good performance. Decided to divest it as its dividend yield dropped below 5%. Surprised me with a second rise of dividend this year and with a 8 cents dividend, yield gone up to 5.6%. On hind side, should have continued to hold on to it but actually felt pretty neutral about it. Probably am satisfied with the above expectation return from the counter.

Up the Dividend
Bought a lot more counters especially REIT to increase my annual dividend. Also, I like their outlook from next year onward.

Added Fraser Centrepoint Trust at 2.07. With the AEI of North Point completing this year, next year DPU should increase. Assuming a 12 cents DPU next year, it will translate to 5.8% yield and potential upside if DPU is even higher. Possible catalyst could be acquisition of Punggol Waterway Point.

Added Starhill Global Reit at 0.76. While Orchard office occupancy could still pose a problem, AEI at Plaze Arcade in Australia is expected to be completed in 20181Q. China property would have a more stable distribution with the completion of renovation by 20174Q. Expecting a minimal 4.8 cents DPU next year. This translates to a 6.3% yield.

Bought CDL Hospitality Trust at 1.575. I have bought and sold CDLHT a couple of times for the past 4 years. Win some, lose some and overall still negative. Betting on the improvement of its hotels in the next two years. Assuming a 10 cents DPU, dividend yield is approximately 6.3%.

Bought Mapletree Commercial Trust at 1.55. A retail and office reit which I have missed for the longest time. Its DPU has been increasing since its listing. Estimating a 9 cents DPU which will give a 5.8% yield.

Bought VICOM at 5.81 (cd) and 5.65 (xd). A subdue Q2 results but with immediate effect it is paying out at least 90% of its earning as dividend. It gives more certainty that the company can maintain its dividend for the next two to three years even when revenue dropped due to increasing de-registration of cars. From 2020/21 onwards, it should see an increase in its revenue and income again with more vehicles requiring checking.

Buying into the Sell-down
Quite a number of counters were sold down for the past month, for good or questionable reasons. The sell-down provided me an opportunity to buy some shares of the counter which I think could do well in the future.

Bought Dairy Farm at USD7.45. The company has announced a decent Q2 recently and turnaround seems to gathering speed with good progress in China. The price was beaten down by 2% to 3% in one of the trading day and I deem it as an opportunity to add some.

Bought InnoTek at 0.34. The stock is beaten down because it reported a poor Q2. However, 1H is still an improvement. While the remaining year might remain a challenge, effort has been put in by management to turn the company around. Initiated the position with the belief that the turnaround will come in 2018 or 2019.

Bought mm2 Asia at 0.475. The price has dropped sharply after its GV deal did not get through. Nevertheless, it reported a good 1Q results and I decided to take a punt on it.

Bought HKLand at USD 7.46. Read about its cheap P/B and good results. Hence, decided to take a stake when its price has dropped by about 5% from its recent high.

Bought UMS at 0.995. The price has dropped sharply after guidance of moderate performance in 2H. Nimble a bit as I believe it will maintain its dividend which is a tasty 6%.

Bought 800 Super at 1.12. The price has dropped after a poor Q3. The price weakened further just before it announced its full year results. Took the opportunity to re-enter the counter which I have divested at 1.26 in April. 

Bought Singapore O&G at 0.44. The price has dropped sharply after its weak Q2 results. Took a punt on it as company is still profitable and should get better results moving forward.

US Market 
Most of my purchase decision for the US markets come from the recommendation of MF subscription services. Unlike my local counters, I did not do as much homework on them. While I think that the valuations of the counters are high, I like their future stories hence my stake in them. All my purchases are small and will slowly wait for opportunity to accumulate more shares in the future. 

Bought Vail Resort at USD210.51. Luxury ski resorts operator. It has been growing through acquisition and opportunities to grow is still available. Its plan to keep its resort busy all-year round is working out well with Epic Discovery activities coming on more than one location.

Bought Cognex at USD105. Machine-Vision systems are used all around the world. Growth expected to continue. 

Bought Priceline at USD1870. Good Q2 results but market is spooked by its lower Q3 guidance. Taking this opportunity to have one bite on it.

Bought Intuitive Surgical at USD935. Intuitive Surgical have been growing for many years and its recurring income has increased. Decided to buy 2 shares to participate in its growth even though it has a high PE of 44x.