Thursday, December 15, 2016

End Year Review of The Value Portfolio

It has been a long time since I wrote anything on The Value Portfolio. Nevertheless, this should be the final review of The Value Portfolio in 2016.

Before that, I will like to state my expectation for the next year - I want to achieve a gain in excess of 10% for The Value Portfolio in 2017.

This may not be significant to many, but I consider this to be really tough considering how our economy has been performing.

In order to achieve this target of 10% gain, I believe I should focus much more on capital gain rather than dividend gain. Therefore, in addition to my plan, I will be adding an extra factor into consideration when I purchase any counter: a Catalyst. This catalyst is suppose to allow its share price to increase significantly in the next year.

Nevertheless, I will not be ignoring dividend too. Companies that I invest in should continue to provide an acceptable dividend yield (at least 3% to 3.5%). This is to protect my downside in case the company's share price did not rise at all in 2017.

On the other hand, this does not meant that companies I am already vested in, which I cannot find any catalyst, will be sold. This group of companies should contribute about 50% of my existing portfolio.

So back to the main topic, here is The Value Portfolio as of 15 Dec 2016 and it will be listed from the company with the largest percentage in the portfolio to the one with the lowest percentage in the portfolio (I guess this is the first time I reveal so much more about the portfolio):

*Do note that this is a review straight after the announcement of Fed Rate Hike. 

1. Oversea-Chinese Banking Corporation

% of Portfolio
12.55%
Average Entry Price (After taking Dividend into Account)
$8.655
Share Price as of 17/12/2016
$9.150
% Gain per Share
5.723%

The main catalyst for this company will be their latest move to expand further into wealth management business via the acquisition of Barclays' Singapore and Hong Kong Wealth and Investment Management Business. 

Nevertheless, rather than growth, I will have prefer the company to manage their non-performing-loan for 2017 as we continue to "expect the unexpected".


% of Portfolio
7.94%
Average Entry Price (After taking Dividend into Account)
$3.357
Current Share Price:
$3.730
% Gain per Share
11.119%

The major catalyst for Singtel will definitely be the listing of the Netlink Trust. However, this could just be "all talk and no action" for 2017 if the economy continues to worsen.

3. Singapore Airlines Limited (Newly Added)

% of Portfolio
7.77%
Average Entry Price (After taking Dividend into Account)
$9.780
Current Share Price:
$9.730
% Gain per Share
-0.506%

Recently I bought this counter as I found that it's share price to be close to its 52 weeks low. 

As stated in my previous write up, I do not intend to invest in SIA due to various factors, I am actually also very skeptical about its management team, as I felt it actually wasted money over the last few years with the creation and listing of Tiger Airway, then the creation of Scoot, then delisting of Tiger Airway and then combining of Tiger Airway and Scoot. And all this while, Silkair is still around.

But the current low share price attracted me (It is also close to its 5 years low) and other factors such as continued low oil prices encouraged me.

Now that I am vested, I believe that the catalyst for 2017 will be its strategy to return to long haul flights into USA and Europe. This is further emphasized by its joint venture with Luthansa Group. 

4. ComfortDelGro Corporation Limited (Newly Added)

% of Portfolio
6.79%
Average Entry Price (After taking Dividend into Account)
$2.468
Current Share Price:
$2.550
% Gain per Share
3.310%

This is another counter that I bought recently due to its significant fall in price. Similarly, I was also skeptical about this counter due to the threat from Uber and Grab. However, the Delisting of SMRT Ltd and being the only transport company in SGX (other than SBS Transit, which is its subsidiary) made me attracted to this company.

Nevertheless, the main catalyst for 2017 is for its subsidiary, SBS Transit, to transfer its assets to LTA.


% of Portfolio
6.78%
Average Entry Price (After taking Dividend into Account)
$4.332
Current Share Price:
$4.630
% Gain per Share
6.886%

Rather than looking at catalyst, the most important factor for the company is to sell its property units on time before QC or ABSD charges occurs. Another factor to consider is if the company will maintain its dividend at 33 cents for 2017.


% of Portfolio
4.54%
Average Entry Price (After taking Dividend into Account)
$2.075
Current Share Price:
$1.950
% Gain per Share
-6.043%

I have wrote a recent article on M1 and it has my reasons for keeping this counter. I will continue to stay vested for 2017 unless the share price rises tremendously.


% of Portfolio
3.99%
Average Entry Price (After taking Dividend into Account)
$0.273
Current Share Price:
$0.240
% Gain per Share
-12.006%

I have also wrote another article on Chuan Hup Holding Ltd. In addition to the acquisition, the company will be allocated 59,151,600 shares price at 80 cents for a cost of only about 60 cents only ($35,000,000/59,151,600).

Even if the acquisition did not materialize, the dividend yield on the current share price is still 4.16%.


% of Portfolio
3.96%
Average Entry Price (After taking Dividend into Account)
$1.497
Current Share Price:
$1.490
% Gain per Share
-0.489%

This is another counter that I purchased recently and I have written all about it here.


% of Portfolio
3.79%
Average Entry Price (After taking Dividend into Account)
$0.349
Current Share Price:
$0.380
% Gain per Share
8.947%

The main catalyst will be its ability to convert its current large order book to cash, and this will most probably take some time. 

10. ST Engineering Ltd

% of Portfolio
3.34%
Average Entry Price (After taking Dividend into Account)
$2.638
Current Share Price:
$3.350
% Gain per Share
26.975%

Government's support in terms of order book continues to be the most critical factor in maintaining its current share price. 


% of Portfolio
2.95%
Average Entry Price (After taking Dividend into Account)
$0.284
Current Share Price:
$0.380
% Gain per Share
30.243%

The main concern for Ellipsiz Ltd is the possibility of a decline in the orders from its customers - the Semiconductor Suppliers. It will be important for the company to continue to earn respectable margins in order to sustain its dividend yield and payout.


% of Portfolio
2.69%
Average Entry Price (After taking Dividend into Account)
$0.442
Current Share Price:
$0.810
% Gain per Share
83.278%

As shown above, I have gained significantly from this counter after holding it for a number of years. It's management has also been very generous with its dividend payout, and it is very hard to find such a generous management team nowadays. I doubt I will ever sell this counter.

13. Suntec Real Estate Inv Trust

% of Portfolio
2.20%
Average Entry Price (After taking Dividend into Account)
$1.559
Current Share Price:
$1.650
% Gain per Share
5.808%

I bought Suntec REIT a few years ago, when Suntec City was still renovating. At that time, there were limited shops and it hurt their ability to pay dividend. Fast forward to now, Suntec City has been fully renovated and I am already "in-the-money" for this counter. 

14. LTC Corporation Ltd

% of Portfolio
2.10%
Average Entry Price (After taking Dividend into Account)
$0.565
Current Share Price:
$0.525
% Gain per Share
-7.080%

This company was bought during my deep value investing days. It was kept in the portfolio due to this post by SG TTI. Nevertheless, I am ready to liquidate this position once my warchest depletes further.

15. Frasers Centrepoint Limited (Newly Added)

% of Portfolio
2.06%
Average Entry Price (After taking Dividend into Account)
$1.504
Current Share Price:
$1.550
% Gain per Share
3.059%

This is another counter that I purchased over the last few months and I have written all about it here.

16. Captii Limited

% of Portfolio
1.98%
Average Entry Price (After taking Dividend into Account)
$0.490
Current Share Price:
$0.495
% Gain per Share
1.089%

This company totally deserves a post of its own, just that I have been too busy to write a full article on it. Nevertheless, I purchase this counter due to the company's financials passing both my scorecards at my entry price. 

17. OUE Hospitality Trust

% of Portfolio
1.70%
Average Entry Price (After taking Dividend into Account)
$0.669
Current Share Price:
$0.640
% Gain per Share
-4.289%

I have actually bought this counter for quite some time. I was never really a "REITs" guy, but the interest in this company started when I realise that Victoria Secret and Michael Kors will be locating their flagship store at Mandarin Gallery. 

Now that Victoria Secret and Michael Kors have already started operations. I will be looking forward to more dividend and hopefully a capital gain on this counter.

18. Far East Hospitality Trust

% of Portfolio
1.60%
Average Entry Price (After taking Dividend into Account)
$0.601
Current Share Price:
$0.600
% Gain per Share
-0.242%

I am currently still holding this counter because it is a REIT and it will distribute dividend to average down my entry price.

19. Singapore Post Limited (Newly Added)

% of Portfolio
1.57%
Average Entry Price (After taking Dividend into Account)
$1.467
Current Share Price:
$1.475
% Gain per Share
0.522%

Singpost is a very interesting company. From my research, despite having numerous logistic companies in SGX, this is the only company to be fully engage in the revolution of eCommerce. Thus, I decided to purchase it as part of The Value Portfolio. 

Nevertheless, the drop in its dividend payout and a change in its dividend policy will definitely reduce its dividend yield and eventually its share price.

However, the fact that Amazon is coming to Singapore and with the continued investment from Alibaba, I believe that there are still significant catalyst in place for the share price to eventually hit a new high in 2017.

As of today, Alibaba has also gotten the "nod" to increase its stake in Singpost!

20. CDW Holding Limited

% of Portfolio
1.53%
Average Entry Price (After taking Dividend into Account)
$0.255
Current Share Price:
$0.255
% Gain per Share
-0.154%

This counter was purchase because it passed both of my scorecards at my entry price. However, there are definitely major concerns in this counter. The recent share price is supported by the major share buybacks by the company.

The only catalyst for the share price to "wake up" is the company to get its customer interested in its new product.


% of Portfolio
1.46%
Average Entry Price (After taking Dividend into Account)
$0.211
Current Share Price:
$0.365
% Gain per Share
72.922%

In the previous post, I have stated that I wanted to sell off this counter. However, I have only managed to reduced my holdings as the share price has been dropping. I am reluctant to sell this quality company at such a cheap price. Therefore, I will wait for either the share price to rise eventually before I sell, or for to drop significantly before I purchase more.


% of Portfolio
1.03%
Average Entry Price (After taking Dividend into Account)
$0.305
Current Share Price:
$0.310
% Gain per Share
1.647%

The near term catalyst for the company will be how their newly acquired hotel business will affect their bottom line.

The long term catalyst will be its future property development at the residential site at Fernvale Road, which was recently purchased.

However, the short term negativity will be its ability to offload all the remaining units at Robin Residences before ABSD charges hit them.

23. BBR Holdings (S) Limited (Newly Added)

% of Portfolio
0.73%
Average Entry Price (After taking Dividend into Account)
$0.182
Current Share Price:
$0.184
% Gain per Share
1.175%

This is another counter that I purchased recently and I have written all about it here.


% of Portfolio
0.07%
Average Entry Price (After taking Dividend into Account)
$0.218
Current Share Price:
$0.154
% Gain per Share
-29.358%

These shares are the left over, which I didn't realise I had, until my SGX monthly summary came. Thus, this is a reminder for me to track my portfolio holdings properly.

Remaining Warchest: 14.88%

Overall Portfolio Gain since April 2011: 1.75% 

STI Index since April 2011: -8.26%. However, if we assume a collection of 3% dividend yield per year since April 2011 (a collection of 3% across 5 years, estimated at 15% in total), the similar STI Index could have produced a gain of 6.74%! This will be better than the return from The Value Portfolio.

Companies Sold since the previous review of The Value Portfolio:
CH Offshore Ltd
Hupsteel Limited
Top Global Ltd
The Development Bank of Singapore Limited

In Short

This revelation may result in me losing some readers. But do note I also know this is a VERY BAD SET OF RESULTS.

On foresight, the reasons I did not perform up to expectation in 2016, were due to the losses I made on a few investments, such as the sale of Sin Ghee Huat Corporation Limited, USP Group Ltd, Top Global Ltd and even DBS. As stated previously the venture into deep value stocks did not produce the results I wanted and the lack of funds made me sell some of the counters which I really did not want to sell.

Moving forward, I believe I will have to stick to my plan and be more patient with my portfolio. This post serve as a reminder for myself and I will be back with a review of the portfolio at the end of the 1st Quarter of 2017.

Do note that this is not a recommendation to buy/sell any of the following counters.

Please do your own due diligence before you invest in any of the above counters.

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

2 comments:

  1. For SIA, you should probably read up on the article below. I believe SIA is too slow to act. Furthermore, SIA is fighting for the market that China is fighting for, and Aus side there is Jetstar. Airlines like southwest already offer free wifi, and built up quite a following through their reputation.

    https://www.bloomberg.com/news/articles/2016-12-12/china-s-flood-of-cheap-air-fares-deals-blow-to-global-carriers

    and this one as an additional interesting read.
    https://www.bloomberg.com/gadfly/articles/2016-11-24/airasia-s-new-lease-of-life

    ReplyDelete
    Replies
    1. Hi Simple Investor,

      Thanks for commenting and reading my post. THanks for the information too. It was a good read.

      My view is the first to hit is already Cathay Pacific. However, I understand SIA maybe slow to act, but at this current price, there is still certain upside available.

      Regards
      TUB

      Delete