Added some recently and my average purchase price becomes SGD0.265.
Despite construction stocks being in a cyclical sector, HLS is somewhat mitigated by taking on government projects with the status of being a grade A1 contractor in the BCA civil engineering cat (I see this as a kind of economic moat for HLS where their "favoured status" should assure them a fair share of the pie for the foreseeable future).
Recently it just clinched a 100 million Changi Airport project.
And only just over the weekend, it added to its order book a 220 million MRT project.
Cool... These news gives me some assurance over its earnings predictability for coming few years.
I also like HLS's strong balance sheet, wide gross profit margins (seem quite good at controlling their costs, especially in the difficult construction sector, rising labour & other costs can be quite tricky) and its high & consistent dividend pay-out. This year a DPS of 1.8 cents was declared. This translate to a close to 7% dividend yield and the dividend pay-out ratio is less than 40% (likely sustainable given its track record).
With PE at 6 (should be less than 6 if we consider the two new projects) and at around NAV, while this is not a growth stock, HLS looks undervalued at 26.5 cents and an excellent income generator over the long term. I am also hopeful for a bump up to 2 cents DPS in near future if they continue to do well.
He's on his way home
Monday, April 21, 2014
Tuesday, April 15, 2014
Challenger
Added a little at SGD 0.59, making my average purchase price 50cents.
On Economic Moat:
Challenger is something that is probably familiar with most of us. A retail play specialising in IT products, it has branches all over Singapore and still expanding (e.g. the latest store just opened in Tanglin Mall).
I like Challenger over its competitors such as Harvey and Courts for its more focused approach.
I also like the "membership" strategy which gives it a more consistent customer base.
I see the Valore brand products as a potential growth catalyst.
Its financial numbers support the above narrative with consistent & growing earnings and a strong balance sheet.
On Margin of Safety:
Current PE is close to 12 based on approx. 5cents earnings. This being a growth company and anticipating some further growth to this company I think fair value is probably closer to PE 15.
Dividends & Debts:
This is what I like about this company, I am getting about 5% dividends and expecting further dividend growth. It is also net cash. =)
On Economic Moat:
Challenger is something that is probably familiar with most of us. A retail play specialising in IT products, it has branches all over Singapore and still expanding (e.g. the latest store just opened in Tanglin Mall).
I like Challenger over its competitors such as Harvey and Courts for its more focused approach.
I also like the "membership" strategy which gives it a more consistent customer base.
I see the Valore brand products as a potential growth catalyst.
Its financial numbers support the above narrative with consistent & growing earnings and a strong balance sheet.
On Margin of Safety:
Current PE is close to 12 based on approx. 5cents earnings. This being a growth company and anticipating some further growth to this company I think fair value is probably closer to PE 15.
My average purchase price 50cents gives me more than 20% margin of safety which is good enough for me.
Dividends & Debts:
This is what I like about this company, I am getting about 5% dividends and expecting further dividend growth. It is also net cash. =)
Wednesday, March 19, 2014
Matrix Concepts Holdings Bhd
Added a little at 3.72RM.
Matrix is a property developer based in Negeri Sembilan Malaysia, so this is an asset play.
It currently has two flagship projects in Seremban and Kluang, and also holds an ample balance of landbank in the pipeline to sustain its future operations until around 2020.
Strong balance sheet (net cash); good profit margins (PBT margin about 35%); ROA about 20% & ROE about 30%; and generous dividends (dividend policy minimum 40% payout).
At current prices, at a discount to RNAV estimated at close to 5RM(Based on RHB analysis) so margin of safety about 20%, PE ratio about 7x based on current year (I am expecting and hence assuming this level of earnings to be sustainable), dividend yield about 8% (may drop as this is based on payout of 60% this year, which they are not obliged to; but at 40% we should still expect a yield of 5%). In conclusion, this sounds like a reasonable buy.
But note that I bought a little earlier at close to IPO price (regret that I didn't buy more back then haha), so I am averaging up. My average price becomes around RM3 after current purchase so my actual margin of safety is bigger in this sense.
Matrix is a property developer based in Negeri Sembilan Malaysia, so this is an asset play.
It currently has two flagship projects in Seremban and Kluang, and also holds an ample balance of landbank in the pipeline to sustain its future operations until around 2020.
Strong balance sheet (net cash); good profit margins (PBT margin about 35%); ROA about 20% & ROE about 30%; and generous dividends (dividend policy minimum 40% payout).
At current prices, at a discount to RNAV estimated at close to 5RM(Based on RHB analysis) so margin of safety about 20%, PE ratio about 7x based on current year (I am expecting and hence assuming this level of earnings to be sustainable), dividend yield about 8% (may drop as this is based on payout of 60% this year, which they are not obliged to; but at 40% we should still expect a yield of 5%). In conclusion, this sounds like a reasonable buy.
But note that I bought a little earlier at close to IPO price (regret that I didn't buy more back then haha), so I am averaging up. My average price becomes around RM3 after current purchase so my actual margin of safety is bigger in this sense.
Thursday, February 27, 2014
My Core Portfolio
Aim to review my stock portfolio half yearly and my rationale for holding them.
I will just highlight my top 5 significant holdings especially since they make up the main proportion of my investment portfolio (the core), without being distracted by some of my other scattered small number of lots in other stocks, preference shares, bonds and precious metals which serves more as diversification and/or "tikam tikam".
I am getting approximately a good 7-8% dividend yield on this core portfolio.
I will just highlight my top 5 significant holdings especially since they make up the main proportion of my investment portfolio (the core), without being distracted by some of my other scattered small number of lots in other stocks, preference shares, bonds and precious metals which serves more as diversification and/or "tikam tikam".
| Lots | Cost Price | Market Price | Paper Gain/Loss | |
| FCL | 6 | 1.5 | 1.525 | 1.67% |
| Naratel | 15 | 0.67 | 0.73 | 8.96% |
| CM Pacific | 12 | 0.88 | 0.905 | 2.84% |
| Saizen | 14 | 0.865 | 0.885 | 2.31% |
| FCT | 7 | 1.64 | 1.735 | 5.79% |
- Fraser Centerpoint Limited is my latest addition. Am of the opinion that this one owns blue chip assets like capital land and Keppel land but more undervalued at current prices. Also am hopeful that they will be giving out a generous dividend, as alluded to in their annual report. We shall see...
- Naratel I like its stable earnings and bought it for dividends, am delighted of its recent 6 cents dividends which is very generous. Gives me a close to 9% yield. Am however unsure if this level of dividends is sustainable.
- CM Pacific also like it for its stable earnings and brought it for dividends too. Also think that it is undervalued, probably due to its status as a S chip. Was delighted with the 7 cents dividends giving me a close to 8% yield. But also need to try to understand if this is sustainable as well.
- Saizen REIT is an undervalued REIT owning Japanese residential units, giving stable returns of 7.5% yield.
- Fraser Centrepoint trust is giving me close to 7% yield. I like the stable earnings from its two main contributing assets, namely Northpoint and Causeway Point.
I am getting approximately a good 7-8% dividend yield on this core portfolio.
Wednesday, February 19, 2014
China Merchant Pacific
Added a little today at SGD0.90.
I am investing in the economic moat of toll roads in China.
The company buy toll roads and operates them. Warren Buffet love businesses that exhibit "toll bridge behaviour", as they offer only one option for local consumers, use it or you don't cross the bridge at all...
So how about investing in the "real thing", the "toll road itself"?
The PE ratio is about 7, and dividend yield more than 6%.
I think it is undervalued and intrinsic value should be more than SGD1.
I am also anticipating dividend growth from this company which is continuing to grow.
The company has announced that they are aiming for a listing in HK, and to qualify they will need to continue to acquire more toll roads.
The gearing is high, but mitigating factor is the economic moat of this type of business which provide the company with steady and consistent cash flow.
One risk I suppose is that this is a S-chip, I suppose it being a S-chip has also something to do with it being undervalued...
I am investing in the economic moat of toll roads in China.
The company buy toll roads and operates them. Warren Buffet love businesses that exhibit "toll bridge behaviour", as they offer only one option for local consumers, use it or you don't cross the bridge at all...
So how about investing in the "real thing", the "toll road itself"?
The PE ratio is about 7, and dividend yield more than 6%.
I think it is undervalued and intrinsic value should be more than SGD1.
I am also anticipating dividend growth from this company which is continuing to grow.
The company has announced that they are aiming for a listing in HK, and to qualify they will need to continue to acquire more toll roads.
The gearing is high, but mitigating factor is the economic moat of this type of business which provide the company with steady and consistent cash flow.
One risk I suppose is that this is a S-chip, I suppose it being a S-chip has also something to do with it being undervalued...
Tuesday, February 18, 2014
Saizen REIT
Added a little at SGD0.89.
On Economic Moat:
This is a Residential REIT owning apartments in Japan and renting them out.
In a country like Japan, there is a sizable population who rent (as opposed to Singapore who are mostly owners), so while nothing exciting, I am expecting this type of REIT to remain stable over the long term.
On Margin of Safety:
Its NAV is currently estimated at about 1.20, that is more than 20% margin of safety. I think Saizen REIT is one of the more undervalued REITs in SGX. Not sure why, but my wild guess is that it is just too boring? (think boring apartments in far faraway Japan... yawn...).
Dividend: Current dividend yield more than 7% which meets my expectations.
Debt: Gearing is 30% plus which is not low. With the impending rise in interest rate due to QE tapering (which I suppose is a question of when not if), I need to be assured that the interest rate hike will not "kill" this REIT. What I understand is that most of its loans are fixed at relatively low rates (I think Japan is trying to keep its interest rates low), as well as a recent refinancing of their loans extended their loan maturity commitments to 2018 (from previously 2015). Sounds like the management has got the situation under control.
Additional risk: Country risk and especially FX risk with the JPY possibly seeing further decline with so much "printing of money" under the new Japanese Prime Minister.
On Economic Moat:
This is a Residential REIT owning apartments in Japan and renting them out.
In a country like Japan, there is a sizable population who rent (as opposed to Singapore who are mostly owners), so while nothing exciting, I am expecting this type of REIT to remain stable over the long term.
On Margin of Safety:
Its NAV is currently estimated at about 1.20, that is more than 20% margin of safety. I think Saizen REIT is one of the more undervalued REITs in SGX. Not sure why, but my wild guess is that it is just too boring? (think boring apartments in far faraway Japan... yawn...).
Dividend: Current dividend yield more than 7% which meets my expectations.
Debt: Gearing is 30% plus which is not low. With the impending rise in interest rate due to QE tapering (which I suppose is a question of when not if), I need to be assured that the interest rate hike will not "kill" this REIT. What I understand is that most of its loans are fixed at relatively low rates (I think Japan is trying to keep its interest rates low), as well as a recent refinancing of their loans extended their loan maturity commitments to 2018 (from previously 2015). Sounds like the management has got the situation under control.
Additional risk: Country risk and especially FX risk with the JPY possibly seeing further decline with so much "printing of money" under the new Japanese Prime Minister.
Wednesday, February 12, 2014
Fraser Centrepoint Ltd
Added little more at price SGD1.42.
Previously I bought a little at 1.6. During the recent market correction, many stocks fell and FCL is not spared. At 1.42, the margin of safety is more than 30%. There are some other stocks that I am monitoring that are also near my target prices. But I have only "one bullet" to spend and after some deliberation, decided in the end to take this opportunity to add to FCL. Among the shortlisted stocks, this one at current prices look most attractive. Super subjective of course.
Previously I bought a little at 1.6. During the recent market correction, many stocks fell and FCL is not spared. At 1.42, the margin of safety is more than 30%. There are some other stocks that I am monitoring that are also near my target prices. But I have only "one bullet" to spend and after some deliberation, decided in the end to take this opportunity to add to FCL. Among the shortlisted stocks, this one at current prices look most attractive. Super subjective of course.
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