Why I buy Capital Retail China Trust?

My first exposure to China retail sector was my purchase in Metro in 2008. Bought with CPF, I have held on to it until now, with near to 200% return (including dividend) and yield based on purchase price is near to 15%. Just two days ago, Quarz Capital Management have written an open letter to urge Metro to return cash. Hopefully that will get Metro to take some action to further unlock shareholder's value.

I decided to purchase Metro rather than CRCT was due to my familiarity to the brand then and hence CRCT seldom came to my mind as a purchase idea.

Why buy?
My main reason to purchase CRCT is its high dividend yield. I was attracted by the more than 7% yield and the trust have increased its dividend payout over the years, though the increase is not linear and dropped in two years.  With these information, I believe that the group can continue to give consistent dividend in the coming years.

What I expect?

I expect that in near term, the dividend payout will be pretty stable. While the recent purchase of Galleria, Chengdu is DPU accretive for the trust, I feel that the impact will be pretty small.

When will I sell?

I will sell when Mr Market decides to value it higher and provides me a return of at least 3 years of dividend, without any change in its fundamental.

Recent results
20161H revenue and net profit income is pretty stable and there is a slight dip in the interim DPU. I will continue to hold on to my lots to collect dividend.

Why I buy Singapore Technologies Engineering?

I bought and sold ST Engineering shares numerous time over the past 12 years. I decided to dig into my record and check the details and these are the details.

2003 - Purchased a lot at $1.81 and sold at $1.96 within the year.
2009 - Purchased 5 lots at $2.38 and sold at $3.10 in 2010. 
2011 - Purchased 10 lots at $2.81 and sold at $3.35 in 2012.
2015 - Purchased 5 lots at $2.985 and sold ???

My purchase in 2003 was of course during a time when I was still clueless about investing. Yes, I made a gain of $100 but that was without any homework done. If I know the financial of the company better, I would have definitely held on to my lot and even buy more at a price below $2.

The subsequent purchases weren't really much better. By 2009, I roughly know what the company does but its business is very much more complex for my simple mind. As you can see from the purchase price each time, it has been creeping up, though the last 2 purchases were below the previous price that I sold. 

So unlike my purchase of Best World, Parkwaylife Reit, Raffles Medical, Straco and Starhill Global Reit, I don't seem to be buying ST Engineering for long term.

Why buy?
Based on its track record, ST Engineering delivered a pretty stable performance. From 2011 to 2015, revenue and net profit is around $6 bil and $5.3 mil respectively. EPS is around 17 to 18 cents and DPS is around 15 cents. 

My assumption is that the company will continue to pay out dividend annually and there won't be much change in the amount of dividend in the coming few years. Hence, I have a sense of comfort buying it whenever the price dropped below $3, as at 15 cents, that give me a good yield of 5%.

What I expect?

I expect that in near term, the revenue and net profit should continue to be stable. There might be a dip as economy seems to be drifting at this moment. The dividend payout should remain pretty stable at 15 cents too.

When will I sell?

I will sell when Mr Market decides to value it higher and provides me a return of at least 3 years of dividend, without any change in its fundamental.

Recent results
20161H revenue grew by 5% and net profit grew by 2%. Management guides that revenue would continue to grow in 20162H but profit before tax will be lower. 5 cents of interim dividend declared which is the same as last year.

Will hold on to my 5 lots and continue to monitor.

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%)

Straco

ST Engineering

Valuetronics

QAF

SIA Engineering
Micromechanics

For Growth and Punting (30.5%)

Growth Stocks (25.3%)

Best World

Raffles Medical

Punt (5.2%)

Food Empire

ISOTeam

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