Sunday, December 20, 2015

"Dec 15" - SG Transactions & Portfolio Update"

No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
China Merchant Pacific
ST Engineering
Fraser Centerpoint Trust
IReit Global
Dairy Farm*
City Development
Stamford Land
Ho Bee Land
Nam Lee Metals
CapitaCommercial Trust
Keppel DC Reit
Silverlake Axis
First Reit
Total SGD

It's been quite a while since I last updated my portfolio towards the earlier part of last month. In the month of Nov and Dec, I've travelled quite a few bit to Bangkok and Jakarta as well as Malaysia for some business trips. As a result, I haven't been updating my buys and sells quite as regularly as I would have like to. I'll have to try to make it up in this section.

It's a rather long post so just a heads up.
There's been a flurry of activities I've made towards my portfolio in the late month of November and earlier December. I didn't really exactly remember the average price I've made as some of the counters were transacted over a period of time but for all the details, you may want to refer to the "Recent Transactions" page.

City Development (CDL)
First, I've added 2,000 shares of City Development at a price of $7.50 in the late month of November.
This is a counter which I have been eyeing for a while now and the recent fall especially this year has alerted my attention to go long on what I think is a rather compelling buy. CDL is one of the largest property in terms of market cap and for them to trade at a 45% discount to its rnav is rather unjustified, even if we are hitting the trough of the property cycle.
I could have gone on and on about this company but the gist diamond about this is they have kept their investment properties held at cost in their books instead of revaluing them to the fair value. They have also in recent times set up an investment platform in the form of PPS (Profit Participating Securities) which would enable outside third party capital to tap onto their investment securities and properties which makes it a viable option for CDL to recycle its capital on top of what they already had in their reits arm.
The recent Fed hike means that property sector is not one in favor but I think that's where you could find value in the midst of an unpopular sentiments. CDL has about 52% recurring income coming from the investment properties and while their residential sales remain muted, they have been trying to diversify their sales and purchase of land banks beyond Singapore alone.
Recently, the share price has dropped to slightly below $7 before bouncing back due to the positive sale announcement. My plan was to add onto this counter each time it falls by about 10% for at least 4 rounds so I think over the long run, this would be one of my more confident bets. It doesn't yield very decent as is almost all developers so investors interested in this might want to take into account that factor.

ST Engineering

I have also accumulated more ST Engineering by purchasing an additional 5,000 shares at a price of $2.89 in late November as well.

The company has been facing plenty of headwinds from all their sectors, in particular marine and aerospace. The management has guided that their bottomline will be somewhat lower as compared to the previous year, so we shouldn't see any short term upside to this. Having said that, the electronics sector is one where it could shine with projects such as the Smart Nation yet to come and they could be in favor to win the bids.

The stock is currently trading at a TTM PER of 16.94x and it is trading at -1 SD below their average 5 year mean. While earnings might come under pressure in the near term, I believe their core business remain solid fundamentally and they should get a re-rating up towards nearer to the 20x PER once business has stabilised. Meanwhile, just sit tight while I believe dividends of 16 cents should be maintained which translates into a 5.4% yield.

Dairy Farm

I have also recently added Dairy Farm by accumulating them at a price of $5.83 and $5.79 for 1,200 shares.
In case you are interested in the more detailed analysis, you can refer to my earlier post here.
I will not be going over the distance to explain this as I have already done so in my earlier post but this is a sector that is currently out of favor to investors as many similar consumers related companies such as Osim, Super and Kingsmen are also similarly facing slowdown.
However, given the strong track record in the management execution as well as some compelling valuations they are currently traded in, I believe this could be one to watch out for should they manage to improve margins and macro factors managed to restore confidence.
The company is also yielding a very delicious 4% given their strong free cash flow generating ability so I think I am very comfortable on this.



Next, I have also accumulated Ireit global by purchasing an additional 16,000 shares at a price of $0.67.
This is a pretty straightforward play since they are structured as a reit and my weigh towards both the risk versus reward when I accumulate this tend to favour towards the reward.
Given their high yield of 9.3%, strong WALE and extremely low costs of interest, I think this is a rather strong yield play compared to all the other foreign reits there we have right now. With Europe currently initiating a longer form of quantitative easing, I think this stock should outperform while the central bank is still injecting funds to boost the economy.
The company hedge towards Eur will also ends in FY2015 and management has guided that they will look into this as the current exchange is already too low for consideration and the company might benefit from now hedging the currency, though earnings will be volatile. Borrowings are done in Eur, so we have a natural hedge there against the properties they owned.
The only problem I might have here is the high gearing which means any acquisitions would most probably have to be funded by raising rights which can be annoying. But having just made an acquisition recently, I don't think they would make any acquisition within the next year or two at least.


I have also added OCBC recently by purchasing a total of 3,000 shares at a price of $8.80 (1,000 share) and $8.64 (2,000 shares).

One thing I like about valuations of banks right now is they are trading at -1 SD of 10 year mean based on P/BV. With the type of asset quality Singapore banks hold on their books, they will be strong enough to face any major deterioration as impairments.
OCBC, in particular, has also a stronger NIM earnings growth as key driver on the back of Fed decision to increase interest rate.
The risk with banks right now is probably on the guiding provisions taken to a slump in oil and outflow of junk bonds which could lead to a much lower credit quality and any possibility of liquidity crunch if things get worsen. With banks, you always have to consider these factors as they are the face of the economy.

FraserCenterpoint Trust (FCT)
I also managed to pick up an additional 7,000 FCT shares at $1.81 after the recent price weakness.  With the earlier 6,000 shares, I now have a total of 13,000 shares on my portfolio.
FCT is one of the reit which I am most familiar with after having vested with them for the past 5 years and having attended 3 AGMs in the past. Readers interested can search a couple of my posts on FCT written in the past.
There are so many things about FCT that I like which I have mentioned in the past so I will not be touching on the thesis again. The one thing which I am taking a close look though is on their refinancing which is coming up soon and interest costs are most likely going to trend higher given the current environment. Having said that, sensitivity analysis shows that 25 basis points increase would have negligible impact to the earnings distribution. So the pace to which interest rates are going to rise will be key in this instance.
Keppel DC Reit
Another Reit which I am initiating a new position in my portfolio.
I purchased 10,000 shares of Keppel DC Reit at a price of $1 after a very impressed recent results which I thought was very good.
The company is aggressively leveraging to make an acquisition in areas where it has a high barriers of entry such as Germany. The company also has some triple-net lease rental reversion upwards with their tenants which would ensure growing earnings for as long as they are tenanted. Moreover, the WALE for their exisiting tenant is as long as 9 years with almost full occupancy rate.

Accordia Golf Trust

I also made a total divestment of 38,000 shares of Accordia during the same month at a price of $0.55. It is a loss made on the purchase earlier, so I have to make that clear.

There are a couple of bloggers who had already touched on their recent results which I think was deeply disappointing, especially towards how the working capital was so negatively impacted that it affected its distribution. My take regarding the retained earnings they keep is to keep a buffer on the working capital for the 2nd half of the results, which I think is equally as disappointing as the first half.
The only saving grace for them at this point is probably the low LTV which means they can and will surely have to gear up to make some acquisitions in the near future which will help their earnings.
This is a good lesson I learnt that the type of business Accordia is operating on is highly cyclical and even short term it is very difficult to forecast. You put this together in the same category with hotel reits and you know why they are trading at higher yield than the other reits. Hotel reits have a rather similar quick turnover and they can be difficult to forecast, hence you need to pay a higher risk premium to account for that factor. Contrast this against some of the reits with long master leases with upwards rental reversion and you can barely find a 6% yielder at best.

The portfolio performance for the month of Dec has gone down slightly from the previous month but due to the capital injection from the year end bonus, dividends and some side income, I manage to bump it up using some of the capital injected into the portfolio.
As a result, the portfolio has inched up slightly to $360,600 this month (+1.2% month on month; +28.8% year on year). I am holding a total of 17 stocks now which remains part of my overall goal of maintaining around 15-20 concentrated portfolio.
The warchest portion has gone down quite a lot to around 14% of the overall portfolio as I continue to look for opportunities in the market and they will be deployed as and when it is necessary to do so. Overall, I'm still quite bullish on the market and I don't think the market would see a significant fall due to a few central banks quantitative easing, particularly in Asia and Europe which I think would support the economy. The market isn't totally overheated as well so it's unlikely we'll see a magnitude of gfc. The outflow of junk bonds and liquidity crunch could have serious circumstances if that happens but we'll have to progress along with the macros. In any case, I will still stick to the plan should the market continues to head downwards and I will welcome that anytime.
I'll try to update the annual portfolio return as part of the annual exercise to benchmark against the STI index in the next post so we'll just have to wait a couple more days for the year to wind off.

What about you? How did you do in the month of Dec?


  1. Wow, that's a lot of buys in the recent two months!

    And more importantly, the total value is closing in on $400K!

    1. Hi 15hww

      I think that needs to depend highly on the mood of the market. I do hope that it can grow organically though with some of those companies doing well.

  2. Hi B,

    It a great pleasure and enjoyment reading your blog! And it has became a natural habit of me reading up every latest post from you.

    Keep up the great work!

    1. Hi Seekay

      Always thank you for your encouragement and kind words. Appreciate it :)

  3. what a portfolio you have caught up to my networth at such a young age!

  4. That's a hefty amount of buy within two months but excellent buys. Fraser Centerpoint is on my watch list as well. I am also accumulating ST engineering.

    1. Hi Sweet Retirement

      I guess we are targeting at the very same companies which caught our attention. Let me know if you got any of FCT or ST Eng.

  5. Seems like u are trying to diversify by spreading into so many counters in just a short period of 2 months. Have u considered focusing on those few that u understand better instead? Like buying your top 3 ideas instead of 6?

    1. Hi Felix

      Contrary, I actually have a very good idea about the business I am buying, perhaps with exception to OCBC where I need to learn more about how banks operate. But other than that, I am not spreading into more companies for the sake of diversifying.

      I do really see value in all the 17 counters I am holding.

  6. Hi B,

    Congrats, your portfolio is nearing the 400k big mark ;) I think when the bull market comes, it should easily hit past the half million mark! LOL

    1. Hi LP

      Thanks :)

      I really hope that it can somewhat grow organically at some point so the capital could take a break from it but we'll have to sail along with the cycle.

      I still prefer STI to remain at this level or lower than having it go bull run much higher where it is difficult to deploy capital. lol

  7. Congrats, regarding for dairy farm since the exchange rate is rupiah for some stores in indonesia, isn't it dilute the forward earning in 2016 ?

    1. Hi Newbie

      Yes you are right.

      In fact, currencies such as Ringgit and Rupiah are depreciating against the USD which is impacting their earnings badly. So earnings won't be good for quite a while.

      However, if you do believe that currency movement is temporary while the business remains solid, that should come into your consideration when purchasing.

  8. Good way to end the year :)

    1. Thanks FD :)

      Good run for you too towards the new year.

  9. wow, you have been so busy this month! All the best in 2016!

    1. Hi Foodie

      Thanks and all the best to you too in the upcoming new year.

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  11. Hi B,

    Merry X mas.

    I am going to contrarian to the public reader as usual. Since we had known each other for awhile now, I think you will not mind. haha...right?

    As always, I prefer to speak my mind rather than sugar coat.

    While lots of good buy, but why the many actions within a short period? Getting itchy after being inaction for a while.

    Or getting a bit inpatient to expedite your FF goal?

    Still, I think your best action over the past few months is your family travel where you spend some money!

    Maybe we will find that stock portfolio is just a figure after all. And totally not meaningful to chase the target.

    1. Hi Rolf

      Hahahaha please speak your mind. I will not mind at all.

      But your comments baffled me a bit. Which part of the writing does it says that I am getting inpatient with chasing for FF?

      If those money are not invested, they will sit as warchest, so total networth will still look similar.

      You are bearish on equities while I am generally bullish on equities. Let's have a healthy discussion on the value of stocks instead than focusing on the portfolio. I think you read too much into it :)

    2. And regarding spending money, you can trust that I am not saving just because I am trying to reach FF earlier. In fact, I have a strong feeling that my expenses are even much higher than yours :D

  12. Hi Brian,

    Just wondering, as majority of your portfolio took a hit, during these two months, the growth you are talking about is inorganic right? As in you use your extra salary to pump in to buy more stocks to bring up your portfolio?

    1. Hi Hayden

      My portfolio didn't actually drop that much this year. I think it was overall almost flat including dividends but yes the last 4 months growth was mainly inorganic due to bonuses, dividends, AWS, side income and blog income, all of which almost came in in the last quarter of the year.

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  14. Hi Brian

    Chance upon your blog today. I must say you did well the last few years.
    Congrats! I can't say the same for my portfolio. I seems to pick all the wrong stocks. LoL...I should learn from you..will follow your blog from now on.

    1. Hi Patrick

      Many thanks for your kind words and support. We will all learn from one another , theres plenty of things to learn from in this community :)

    2. Hi Patrick

      Many thanks for your kind words and support. We will all learn from one another , theres plenty of things to learn from in this community :)

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