Thursday, June 30, 2016

My Initial (Unexecutable) Post Brexit Action Plan

With the Brexit happening, everyone was expecting a bloodbath in all the global markets. It did happen for a while - but its only within foreign stock exchange. 

For Singapore stock market, STI has actually rise for the last 3 days post Brexit event! The STI downturn in January is actually much worse!

STI rises over the last 3 days!
This results have actually confused me and makes me realise Mr Market is always Irrational!

I even had my watchlist ready and was ready to pounce when my target price is hit. Nevertheless, this never happen and all my targets stayed "green" and move further away from my target price. In the end, I sold some of my holdings in Singtel and M1 rather than attempting any purchases.

(Do you want to know my targets? Join my 1st Sharing Session to know what's in my watchlist.)

Anyway I believe its good to share how I did initially review my watchlist, so that we can follow this action plan everytime prior to a significant event happening (and this can also serve a reminder to myself):


1. Review existing stocks in your portfolio. Average down selected stocks in your portfolio. These stocks should be those stocks you feel that are still fundamentally strong and this price fall is only temporary.

2. Search for stocks that passed the Enhanced Triple S Scorecard that aren't in my portfolio yet. Determine a target price and pick them up.

3. Be very selective on getting Blue Chips that are falling and extremely cheap. This is because Blue Chips are have higher price and there is still a possibility that it can fall further. Cheap can be Cheaper. Do Not Catch A Falling Knife.

4. Finally don't overspend on your purchases as the Brexit just happened - We still do not know the full extend of the damages of Brexit. But if you happen to have purchase any stock, at least have a 2 years timeframe in your mind. 

If you are thinking of looking at stocks for the long term, do give my initial Triple S Scorecard a try. It's still a good tool! 

I will only be releasing the Enhanced Version of the Triple S Scorecard for those that attend My 1st Sharing Session with T.U.B. If you are interested to attend, do not hesitate to contact me directly.

Oh... and do remember, please like our Facebook page - T.U.B Investing.

Sunday, June 26, 2016

1st Sharing Session with T.U.B

Dear Readers,

I have decided to conduct a "1st Sharing Session with T.U.B" to fulfill 3 purposes:
  1. To spread the usefulness of Enhanced Triple S Scorecard - I believe it will come to better use for the user when I explain how the scorecard works and what each criteria meant.
  2. Assist readers to pick good fundamental stocks - With “Brexit” confirmed, the stock market will be in turmoil for at least the next 2 years. The economy is already in a weaken state, this will only add fuel to fire. Thus, I like to take this opportunity to spread my unique investment methods to the public to help the user to pick good fundamental stocks in future.
  3. To spread the awareness of T.U.B Investing Blog - With a successful sharing session, I believe more readers will know of my blog. 

This will be my first attempt to do a sharing session with my readers. Although it is a paid session, I still hope you can support me and participate in this session.

Basically I will be sharing on: 
  1. My Value Investing Method
  2. My Way of Screening for Stocks
  3. Sharing of Enhanced Triple S Scorecard and how it works/has improved from its initial version?
  4. A try-out of using the Enhance Triple S Scorecard on a selected stock
  5. My Portfolio Details (I have not fully disclose my portfolio details before)  
  6. My Good and Bad Investment Stock Picks – The lessons learnt
  7. My Watchlist of Stocks/Future picks
Participants of this sharing session will definitely be having a soft-copy of the Enhanced Triple S Scorecard, which I have not shared with anyone yet, and also a small gift.

Details of the Sharing Session:

Target Pax: 10

Location: 73 Ayer Rajah Cresent, #01-11/12, Singapore (139952). (Walkable distance from One-North Circle Line MRT Station)
Date: 16 July 2016 (Saturday)

Timing: 10am to 2pm.

Price: $68 (via bank transfer. Email me for account number). Each confirm slot will be given upon the successful bank transfer.
 
 
If you have any queries, please feel free to contact me directly.
 
If you are thinking of looking at stocks for the long term, do give my initial Triple S Scorecard a try. It's still a good tool! 
 
Oh... and do remember, please like our Facebook page if you still yet to do it - T.U.B Investing

Hope to hear from you soon!

Saturday, June 25, 2016

Brexit Consequences For Singapore Investors

I have written about Brexit before it actually been confirmed yesterday.



(But they are still within Euro 2016...)

Then I realize every single soul has been talking about it on Facebook and blogs. Therefore, I will be echoing some of the views that I had read up which I think is important to the Singapore Investors:

1) Expect Volatility - STI falls 2.25% and Dow closes down 600 points. Expect the stocks to be in the red moving forward for the next week. If you are convinced your stocks have good fundamentals, then DO NOT SELL ON PANIC. If not, try to stay away from looking at the stock market the next week - Find a distraction, and currently Euro 2016 is a good one.

2) Look Out For Opportunities - Since the stocks will be in the red, re-look at your watchlist. If the stocks on your watchlist have hit your target price, go for it. Remember to BUY LOW. At least if you buy now, the price will not be at the highest.

3) Understand Your Stock Holding's Business and Determine Brexit Consequences - If you understand your stock holding's business model, you will be able to determine the "Brexit" consequences. A good write up by Motley Fool has also provided a point of view on this factor.

Another way of determining the consequences is to look up the segmented geographical revenue portion on the company's annual report. Then you will be able to determine how much revenue will be affected by this Brexit drama. An example of the breakdown for ComfortDeGro 2015 Revenue is shown below.

ComfortDelGro's Geographical Segment


4) Foreign Currency Volatility - Expect the Pound and Euro to WEAKEN in the short term and strengthen when everything stabilized. This will directly impact the bottom line of your stock's Income Statement due the currency conversion rate.

(This is actually a good thing for Singaporeans who are traveling to Britain or Europe within the next few months to change some money now.)


Anyway this is just my generalization of the consequences of Brexit in the next few weeks. However, if you have a long term view of 2 to 3 years on your portfolio and understand the business model behind each company that you have shares in, then do not panic and just ride through this volatility period.

If you are thinking of looking at stocks for the long term, do give my Triple S Scorecard a try.

I will be coming up with a sharing session on the Enhanced Triple S Scorecard in July. If you are interested in either the Triple S Scorecard or the sharing session on the Enhanced Triple S Scorecard, do contact me.

Please also like our facebook page as well - T.U.B Investing.

Tuesday, June 21, 2016

As The Brexit Drama Unfolds...

While everyone is busy with talking about Brexit, I have been focusing on the other “Brexit” in the Euro 2016.

(England, Wales, Rep of Ireland and North Ireland are in the Euro 2016.)

I guess Euro 2016 came at the right time, keeping my mind off the stocks. For this month, I didn’t even bother about how my stocks move (although occasionally, I still look at each stock update on a weekly basis).

But looking at the recent focus on Brexit, I will like to give you my two cents worth on this issue.

In my opinion, it didn't matter if Britain exit or remain in the Euro Zone because if you have confidence in the fundamentals of your stocks and are in for the long haul, you should not worry. Everything will most probably revert back to status quo again once Britain sort of the consequences of its decision on 23 Jun 2016.

However, if you can’t sleep at night because of the way you trade/invest, then regardless of the decision of Britain, you will still have a bad sleep. Find out the root case of your "insomnia" - change the way you trade/invest if necessary.

(Maybe you can come to my Sharing session on the Enhance Triple S Scorecard I am planning in July 2016. Contact me if you are interested.)



However, as of now till maybe 1 week after the decision of Britain, the share market will be very volatile and buying opportunities may arise – Just remember buy low and sell high.


If you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Please like our facebook page as well - T.U.B Investing.

Monday, June 20, 2016

PNE Industries Ltd - Bumper Dividend Ahead

This update is long overdue.

PNE Industries Ltd has released their half year financials on 12 May 2016 and their share price rocketed up.

Rise In Share Price

You can read about my initial write up on PNE Industries Ltd here.
Since it was initially a stock that passed the Triple S Scorecard, I also did a review using the latest financials on the Enhanced Triple S Scorecard. The results is as per below:

Based on the Enhanced Triple S Scorecard:

PNE Industries Ltd passed the Enhanced Triple S Scorecard without much difficulty.
Despite my capital gains, I am not still not selling…
  1. Passed the Enhanced Triple S Scorecard – If you have been following my posting, you should understand that Enhanced Triple S Scorecard is much more difficult to pass than the initial version. Thus, by passing the enhanced version of the scorecard without much difficulty, this speaks volume of the stock’s balance sheet strength and cash generation ability.
  2. Sold their loss-making entity – Although I have covered this point previously, but I like to emphasize that they have "confirm plus chop" sold the entity at USD 7,366,298.22! 
  3. Family business – I miss out this point which bought up by Alpha Vulture recently. With the majority of the owners being in the Tan Family while the management only holds 38% of the shares, the management will not “bully” the minority shareholders since many of them are family members as well.
  4. Bumper Dividend to Come – Other than this half year dividend, I will be expecting another bumper dividend to come at the end of the financial year 2016. With all these dividend, my cost of purchasing these stock will be down significantly – giving myself a larger margin of safety.
What are the question marks?

Sunset Products and Business – Similar question still lingers in my head, whether this business can continue to grow and be profitable.

In Short

I will continue to hold PNE Industries Ltd as its fundamentals has not changed. However. I will be monitoring on its future direction when it announced its full year financials in November.

Currently with its net current asset per share of $0.773, it seems that there is still some margin of safety for new investor to come in. But based on my experience, since the stock is currently closed to its 52 week high share price, I will advise new investors to find other opportunities instead.

Current Price: $0.675 as of 20 June 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this stock/company at $0.570.

So if you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Please like our facebook page as well - T.U.B Investing.

Tuesday, June 14, 2016

Another Request from Reader - Vibrant Group Limited

Although I have been holding Vibrant Group Ltd for some time, but I didn't really find time to write about it. So since there is a request from one of the readers, I shall do my write up on Vibrant Group Limited.

As indicated in my portfolio, I don't only focus on 1 way of investing. Other than stocks that passed the Triple S Scorecard, I also invest in dividend stocks, blue chips and deep value stocks.

Vibrant Group Limited falls into the category of deep value stocks.

Deep Value Investing is totally different from my Triple S Scorecard investing. I focus solely on the significant Discount to Net Asset Value and Business Model.

Anyway Vibrant Group Limited satisfied the criteria at that point and so I decided to invest in it...

Profile In Short

Vibrant Group Limited was formerly known as Freight Links Express Holdings Limited, and changed its name to Vibrant Group Limited in November 2013 to reflect the Group’s new core business activities and to provide a clearer identity, as well as to reflect more accurately its diversified business profile moving forward.  

Initially it was only a logistics company. But it has since expanded into 2 other business segment - Real Estate and Financial Services. 

Based on the Triple S Scorecard:

As stated above, there will be no Triple S Scorecard calculation for deep value stock.

Why So Good?

The discount to Net Asset Value - As per 3rd Quarter 2016 Financials, its net asset value is $0.6786. As of today's price of $0.335, the discount is more than 50%!

Active Business Expansion/Growth Plan - Business expansion in the real estate segment;

  1. It owns a 35 percent interest in GSH Plaza (Formerly as Equity Plaza), a commercial space located within walking distance of Raffles Place. This property will be for investment purposes. 
  2. It has also bought Cecil House, also located in Raffles Place, and intend to redevelop it into a 16 Storey Building. This property will be strata-subdivide and sold. 
  3. The Group has also been able to engage in the Government Approved Resettlement Housing Project in Jiangyin China, which is also guaranteed by the Government. They are currently into working on their 2nd resettlement housing.
  4. It has also established a Changshu High Tech Industrial Park in China, which is already 50% leased out.
The Hidden Value in Assets - Do note that from my research into the company, I realised it had more than what it reveals or rather it's Assets has so much hidden potential to be larger. Other than interest in GSH Plaza, owning Cecil House and the Changshu High Tech Industrial Park, it also has the following:
  1. 25% of China Southwest Energy Corporation Ltd – Mining and Trading of coal
  2. 21% of Freight Management Holdings Bhd – A listed firm in Malaysia that engaged in the freight and forwarding industry.
  3. 20.5% of Figtree Holding Ltd – listed firm in Singapore that specialises in the design and building of commercial and industrial facilities in Singapore, Australia, China and Malaysia.
  4. 35% of Plaza Ventures Pte Ltd – The firm is in charge of the development of GSH Plaza in Raffles Place.
  5. A freehold property, Palas Condominium, in Kuala Lumpur.
  6. Huge amount of Quoted Equity Securities, which includes about 8% of Sabana REIT.
  7. A $45 Million loan to City Harvest Church, which is secured against the 39.2% that City Harvest Church own in Suntec Singapore (worth at least $100 Million)
  8. An initial of $30 Million funds injected into a Sentosa Asian Credit Offshore Feeder Fund Limited, a liquid ex-Japan Credit Fund Investing in both hard and local currency Asian bonds. 

Sponsor to Sabana REIT - Oh... this is interesting. The company owns 51% of the property management arm of Sabana REIT and it is the sponsor to Sabana REIT. So if it need cash, it can always sell its logistic properties to Sabana REIT, and the management of Sabana REIT will definitely have to accept it.

Catalyst - With so many catalysts stated above, there is so much potential to increased the Revenue over the next 2 to 3 years - especially if all the Cecil House units are sold. 

Why So Bad?

Highly Leverage - The company has currently over $300 Million of Borrowings against $557 Million of Liabilities. This leverage is significantly high and any increment in interest rate will cause major increment in finances cost.

Slowdown in China - The slowdown in China is definitely happening. However, the company recent expansion into China, especially with its financial leasing services in China, may be a cause for concern. A downturn in China will lead to their customers unable to pay the debt and resulting in write-offs.  

Sabana REIT and Associates - Vibrant Group Ltd holds various stake in many listed company. With the economy on a downward trend and various company share price dropping, these mark to market assets will be affected - directly decreasing the net profit and asset value.

In Short

Once again, I bought Vibrant Group Limited due to its discount to Net Asset Value. The hidden potential of various assets is also a big draw as the discount to Net Asset Value could be bigger. Furthermore, there are so many catalyst over the next few years that could push the revenue up, which should directly impact the net profit.

Hopefully by then, the company will release some bumper dividend.

Current Price: 0.335 as of 12 June 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this stock/company at 0.305.

If you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Please like our facebook page as well - T.U.B Investing.

Sunday, June 12, 2016

TTJ Holdings Ltd - Another Great Quarter

TTJ Holdings Ltd has just released their third quarter financials for 2016 and it was a pleasant surprise.

Revenue jumped 61% and Net Profit jumped 138%. These figures were amazing for a construction firm in this kind of economy.

I have always been emphasizing how awesome this company is and you can read it here. It remains one of the stock that passed the Triple S Scorecard and the enhanced Triple S Scorecard at the time when I invested in it. Now, with its latest financials, TTJ Holdings Ltd still continues to pass the enhanced Triple S Scorecard with flying colours.

Based on the Enhanced Triple S Scorecard:

I will not be talking about why it is so great as I have already stated in the previous posts. Additional pointers can be found from the discussion in valuebuddies.

What are still the question marks? 

The 2 questions of whether the company is able to keep up with the dividend and the future of its "Cash Cow" dormitory remains. 

In Short

I have previously stated that during the low point of $0.255, it was a good time to buy and hold. However, the share price has already rise to $0,340. Although, at this price, the stock will still pass the enhanced Triple S Scorecard, but I believe the economy is not in the best state and there will still be a time when the price is right and much lower.

Current Price: $0.340 as of 12 June 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this stock/company at $0.325.

So if you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Please like our facebook page as well - T.U.B Investing.

Saturday, June 11, 2016

Best World International Limited - A Lesson In The Making

Just like to highlight the recent share price dropped for Best World International Limited.

Profile:

Best World International Limited is a company that develops, manufactures, and distributes skincare, personal care, nutritional, and wellness products worldwide. The company operates through Direct Selling, Export Sales, and Manufacturing/Wholesale segments.

It is basically a MLM company (similar to that of Amway) that sell personal care products through direct sales channels. They have expanded their presences to many other countries recently. There are lots of discussion on Valuebuddies on this stock recently.

What Happened?

During the last 2 days, the price has dropped from the peak of $1.450 per share to almost $0.900 per share, then it returned back to $1.135 per share on Friday.

The Changes In The Share Price Over 5 Days

I don't really know the real reason for the drop in share price. But it could be related to its latest announcement of the queries in SGX, which I felt should not matter to its fundamentals.

Nevertheless, over the last 1 year, the share price did rised significantly.

The Rise In The Share Price

For those who bought the stock at the start of the year, there is still a lot of buffer for them to hold.

However, for those who bought over the last 5 days, you must be wandering what you should do with the stock?

My Opinion/View:

I am not vested in this stock and so I didn't do any Triple S Scorecard testing on it. But for me, I always wanted to invest in this stock, but that's after it became popular and I decided to go for other opportunities.

Anyway if you bought on a high and thinking whether you want to keep the stock, it will depend on 3 factors:
1. The due diligence you did.
2. How long can you hold?
3. The catalyst moving forward.

If you are have already did enough due diligence and deem the fundamentals remains unchanged, and in addition, you can hold for a very long time. I think you can still hold on to the stock for a while.

This is because moving forward, it seems like the company will have a bumper year and it has been increasing its dividend over the last 3 years. Furthermore, it is very easy to expand in a MLM direct selling business in new countries - thus this maybe a catalyst in future.

In Short

The lesson I learnt from this incident is that;

DO NOT BUY A STOCK WHEN ITS PRICE HAS REACH THE PEAK and remember,

WHAT COMES DOWN WILL GO UP and WHAT GOES UP WILL COME DOWN.

There are always other opportunities lying around, you just need to search for them.

Current Price: 1.135 as of 11 Jun 2016

Please do your own due diligence before you invest in this stock.

Do note the author is not vested in this stock/company.

If you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Please like our facebook page as well - T.U.B Investing.

Sunday, June 5, 2016

Do Survey For Spare Cash?

Hi Readers,

I am writing this short post after reading B's recent post. I commented that I knew the people doing these surveys and could get "lobang" for those interested in doing these surveys for some spare cash.

I regularly receive this email on a monthly basis

Then a few of the FB friends started asking me.

Thus, I started wondering "I maybe able to help my readers who are interested as well".

Therefore, I will be consolidating a list of emails to the coordinator for them to forward future surveys.

If you are interested, please contact me on FB or email me directly.

In the meantime, please like my facebook page as well - T.U.B Investing.

PS: I am not earning any fees from this service. Just helping. 


Saturday, June 4, 2016

A Request From Reader - Singapore Airlines Ltd (SIA)

A reader recently asked about my comments about "Singapore Airlines Ltd" (SIA) and whether it is worth to collect at $10.60? (As of today, it is $10.65.)


So here are my comments: 

1. Business dependent on tourism and economy - Recently my boss went overseas for work and took SIA. She commented she was very worried about the economy, because when she took the business class and there was almost no-one. Do note that this was a Friday night, which usually will mean the business class will be packed. To her this is the barometer of our economy - Less people taking business class meant that the economy will be getting worse. In this context, you can also use this as an estimate of the future of SIA business.

2. Fixed assets which are mostly planes - Although planes are fixed asset with a resale value, but the actual number of buyers are limited and thus, planes are not easy to sell off. In this situation, this meant that if SIA intend to sell any of their planes to get some extra cash (maybe to pay dividend), it will have a hard time.

3. Heavy capital expenditure - A company with heavy capital expenditure will not have enough free cash flow to pay as dividend or expand business. SIA require to service its planes on a regular basis to ensure every flight is a safe one. Thus, SIA always has high capital expenditure yearly.

Net Cash Provided by Operating Activities

Capital Expenditure

After deducting the Capital Expenditure from the Net Cash Provided by Operating Activities, Free Cash Flow for FY'14 is NEGATIVE $533 Million, while FY'15 is only a small $96.5 Million.

4. Dividend Yield - Due to the lack of Free Cash Flow, I believe this has adversely affected the dividend yield. As per Dividend Seeker website, the dividend yield of SIA has been ranging between 1.5% to 3%. With the same amount of Cash, you can buy OCBC shares and get better yield out of the investment.

SIA Dividend Yield

OCBC Dividend Yield

5. SIA Engineering Ltd - This listed co. is 77.87% owned by SIA. However, do note that SIA passes SIA Engineering Ltd to service their planes and then SIA owed SIA Engineering. Then SIA Engineering announced dividend to pass to SIA and then...etc..etc... I believe there are too many related transaction between this 2 companies and how much of the earnings by SIA Engineering Ltd is consolidated in SIA financials. So how much are actual earnings? We will never know.

6. Silkair, Tiger and Scoot - Following the recent acquisition and delisting of Tiger Airway, SIA will have 3 fully-owned subsidiaries (correct me if I am wrong...), which are competitors of each other. This increases expenses for SIA but will adversely affects its revenue as these subsidiaries will compete with one another over the same target customers.

In Short

As per my assessment above, I do not think SIA is a good buy currently. What you are paying in excess will be basically the "SIA" brand. Moving forward, its financials will definitely affected with lower revenue and higher expenses.

However, if the price moves further downtrend, maybe below 9 (below 2008/2009 lowest point), there could be a possibly to relook at this stock.

Current Price: 10.65 as of 4 Jun 2016

Please do your own due diligence before you invest in this stock.

Do note the author is not vested in this stock/company.

If you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Please like our facebook page as well - T.U.B Investing.

Thursday, June 2, 2016

Bukit Sembawang Estates Ltd – The Giant Has Awaken!

Bukit Sembawang Estates Ltd has recently release their latest full year 2016 financials. I have shared previously in 2 separate posts why I invest in this company.

Upon release the financials, the share price has jumped from 4.44 to 4.77 within 5 days – Awakening the Giant!


So let’s review what was stated in the latest financials:
-          The company has decided to keep to their aggressive dividend policy (YESHHH…33 Cents per Share) despite net profit dropping significantly.
-          The company balance sheet continue to remain debt-free.
-          Today’s price of 4.660 is still below its Net Current Asset Value by more than 5%.


So Although I made gains but I am keeping and not selling because…

1. Debt-Free – It still remains one of the developers in Singapore that do not have any debt in its balance sheet. This is significant because the company will not need to pay any finance costs and is able to direct these “excessive cash” into dividend.

2. Price continues to be below its Net Current Asset Value – This is another amazing point of this company. Normally for property developers, their Current Asset Value will not be able to cover all its liabilities. But in the case of Bukit Sembawang Estates Ltd, their Current Asset Value is able to cover all its liabilities and has excess amount left. In value investing, this meant that if you bought this stock at the current price, you will be getting the business and its fixed assets FREE OF CHARGE!

3. Continue to be a “Singapore Only” Developer – This company has not been tempted to expand into foreign countries yet, unlike other developers going into China/Malaysia and getting “bruised”. This also gave me an impression that the company only do business (in this case develop properties) in places that they are familiar with.

4. Land Bank and Special Shareholders – Although the Annual Report has not been released and I am unable to verify the truth in these points, but I believe these points still remains true as there are not much announcement in SGX on purchases of land bank and shareholder changes for the last 12 months.

5. Lack of Activities – This is a positive point for me because this meant that the company understand about the current situation (Economy is on a downward trend) and also the fact that there will be a high number of properties available over the next few years. The company will most probably concentrate on selling their existing properties on hand to maximize its return for its shareholders, especially with the effects of QualifyingCertifications.

6. Ability to generate Free Cash Flow – Although I stated previously that I do not use the Triple S Scorecard on blue chips, but with the Enhanced Triple S Scorecard being created, I tried it with the latest financials of Bukit Sembawang Estates Ltd. As expected, it failed the Enhanced Triple S Scorecard. But it did reveal a very interesting point of the company, which is the company’s ability to generate Free Cash Flow. Just look at the Free Cash Flow (Net Cash from Operating Activities minus Capital Expenditure) the company generate over the last 5 years…


What are the question marks?

1. Future projects – Without reviewing the annual report, I am unable to tell whether the company has enough projects to last for the next 5 years.

2. Sustainability of the Dividend (Part 1) – This will be the main issue with Bukit Sembawang Estates Ltd has to deal with. Over the last 2 years, the company has announced 33 cents of dividend each year. However, it has stopped short of stating that 33 cents as the final dividend. It is actually Final Dividend of 4 Cents plus Special Dividend of 29 Cents. Thus, there is always the possibility that the company could reduce the Special Dividend amount or in the worst case scenario, giving out a Final Dividend of 4 Cents only. This is less than 1% Dividend Yield!

3. Sustainability of the Dividend (Part 2) – If the property market continue to deteriorate, the company may not have enough cash to pay a high dividend. This reduction in Dividend may cause a chain reaction in the share price, reducing it sharply.

In Short

Although the marco factors are not in favour of Bukit Sembawang Estates Ltd, but the micro factors within the company continue to remains a pull factor for me.

I believe there will be a point which the government will review its policies and remove TDSR completely or the property sector will just recover as more and more people make new purchases. When this happens, Bukit Sembawang Estates Ltd will then start to “come out to play”.

The management also seems to know what they are doing, especially during this period of poor economy. Instead of aggressively expanding to hold stable the revenue and net profit, the management decided to maximize its net profit by concentrating on selling their unsold units. In addition, the management also announced this bumper dividend to hold the share price.

Moving forward, IMO, I believe the excessive property supply will last till 2017. Thus, the management should probably announced another year of bumper dividend to manage expectations.
If the share price falls after XD and continues to fall below 4, then I may add more to my holdings.

Current Price: 4.66 as of 2 Jun 2016

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this stock/company.

So if you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.


Please like our facebook page as well - T.U.B Investing.