Portfolio of 8 Singapore Stocks - Oct 2016

It's been over a year since I started a Portfolio of 8 Singapore Stocks on 28 Aug 2015 for fun. How has that theoretical $100,000 portfolio fared after all the gyrations of 2016?

Stock	No. of  Shares	28 Aug 15	3 Oct 16	Value
OCBC	1,300	$9.280	$8.650	$11,245
Keppel	1,700	$7.200	$5.300	$9,010
M1	4,200	$2.920	$2.440	$10,248
Boustead	14,600	$0.855	$0.815	$11,899
Kingsmen	15,200	$0.820	$0.650	$9,880
VICOM	2,100	$6.000	$5.720	$12,012
HourGlass	17,000	$0.735	$0.650	$11,050
GKGoh	14,900	$0.840	$0.810	$12,740

The portfolio is now $88,084 (dividends not considered) and completely red. It's been a complete wash-out. I guess if I am a fund manager, I'm pretty much out of a job by now.

At the start of the year, I had stretched my neck out with a prediction that the portfolio would be positive by the end of 2016. Looks like I have stuck my neck out a tad? It's been a fairly horrible year. 

With only two months till the end of the year, is there still hope yet?  Perhaps a bridge too far? Time to recall the 1st British Airborne Division from Arnhem. The ghosts of Operation Market-Garden beckons.

Disclaimer: I have not bought such a portfolio on those dates. I am only doing this exploration for fun. But it is true that I do have all these stocks in my holdings and did buy more of some of them during Aug-Sep 2015. And I am certainly not clairvoyant, so I can't predict the future!

Related:
Portfolio of 8 Singapore Stocks - 31 Dec 2015

The Market is a Bloody Mess!

So the headlines are now all gloom and doom.

What is Yuan may not be round

China devalues its Yuan and the rest of the world suffers a cold. As if Winter isn't cold enough for them. They need to export their cold to the rest of the world too.

Does it mean the Sing dollar will strengthen against the regional dollars? If so, then it's a good time to exploit the stronger exchange rate to go on holidays. I know, I know. Holidays are expenses. But what's life if we can't spend on gaining positive experiences discovering the wider world beyond our 700 sq km? Within limits of course.

At the same time, it's going to be bad for most local business as Singapore companies are often dependent on exports (Qian Hu). So that end of it doesn't look bright. I'd hate to be an exporter right now. Worse if you're an employee in a shaky company. Thy job is at stake too. Troubling.

What is zero can only go up

US Fed interest rate hike has taken the first step uphill and I'm sure the rest of the world will gradually follow suit. With interest rates going up, that means new bonds issues will be pegged at higher interest rates too? Sounds exciting for new bonds issue, especially since new rules are expected to be introduced soon to ease the issue of "seasoned" retail bonds in Singapore. I look forward to subscribing to new retail bonds.

The banks (OCBC, UOB, DBS) are suffering from heart attacks and are at incredulously low Price-Earning (PE) ratios. Is that a Big Singapore Sale going on here? Or are there more heart attacks to come? I think they are worth a close look. Very close. I'm suffering from irregular heartbeats from excitement.

What is going down must hit a bottom somewhere

The oil and gas, and consequently the marine industry (Keppel, SembCorp) have yet to pan out. The price of oil is now at a historical low. But the Saudi strategy of creating a glut to kill off its competition seems to be a long drawn process. It's bleeding oil until a turning point can be reached. The Saudis are patient people. Guess they have a lot of oil to spill.

How come the air tickets are still so expensive, and likewise the price of petrol at the petrol kiosks!? There's a de-sync somewhere. Somebody is making the money. And it ain't the consumer who are benefiting from the low price of oil (ExxonMobil, Chevron).

What is shiny may yet shine brighter

Amidst all these, we have a friend who has significantly faded in recent years - Gold. Is it now glittering brighter yet again? I'm not betting on it, but will keep watch. I might yet be blinded. Eventually.

Overall, as the Brits might say, "It's a bloody mess!"

Portfolio of 8 Singapore Stocks - 31 Dec 2015

On 28 Aug 2015, I started exploring a portfolio of 8 Singapore stocks with a value of ~$100,000 (Portfolio of 8 Singapore Stocks). Although the actual value would have been $99,126, I am assuming for simplicity it would be $100,000 after accounting for transaction costs.

How has it fared? It's been four months and here's how it looked like on 31 Dec 2015:

Stock	No. of  Shares	28 Aug 2015	31 Dec 2015	Value
OCBC	1,300	$9.280	$8.800	$11,440
Keppel	1,700	$7.200	$6.510	$11,067
M1	4,200	$2.920	$2.720	$11,424
Boustead	14,600	$0.855	$0.835	$12,191
Kingsmen	15,200	$0.820	$0.670	$10,184
VICOM	2,100	$6.000	$6.020	$12,642
HourGlass	17,000	$0.735	$0.785	$13,345
GKGoh	14,900	$0.840	$0.810	$12,069

The portfolio is now $94,362 (dividends not considered) and overall deeply in the red after 4 months. Obviously not making any money. The split is now 2-6 in favour of the losers. HourGlass continues to hold the fort positively alongside VICOM. But everyone else is underwater.

Market sentiments continue to be bleak, so I don't think it's going to see daylight anytime soon. But perhaps it is a good time for more fishing when pessimism is most severe?

It is the new year. So I'll stretch my neck out with a prediction: that the portfolio will be positive by the end of 2016.

Disclaimer: I have not bought such a portfolio on those dates. I am only doing this exploration for fun. But it is true that I do have all these stocks in my holdings and did buy more of some of them during Aug-Sep 2015. And I am certainly not clairvoyant, so I can't predict the future!

Related:
8 SGX Companies to Keep Watch On

A Review of Investments for 2015

2015 has actually turned out to be a horrendous year, or a wonderful year, depending on how you look at it as an investor. Checking against the STI, I realised it has actually suffered a -14.3% dropped compared to this time last year. Taking into account 3% of dividends which the STI index would not have accounted for, that would actually be -11.3% net in terms of total returns.

So if you're sitting on a 11.3% loss, you're pretty much doing market normal. You're normal. On the other hand, if you've been buying throughout the year when the market dropped, it's probably going to turn out great in the longer run. That is, provided you didn't buy a bunch of junk! You had a lot of guts and I wish you success! You're probably abnormal.

My stock investment has returned an IRR of -1.2% for 2015 inclusive dividends reinvested into the portfolio. So I guess I should take some satisfaction that I have outperformed the market for the 6th year running. Can I gloat somewhat?

However, my long term IRR has continued to slide: from ~20% (2012-13, 4-5 years), to 17.3% (2014, 6 years), and now ~12% (2015, 7 years). A case of reversion to mean? Still, 12% over 7 years is not a bad long term performance. I'm consoling myself.

The shares portfolio is taking on a more global outlook as I've started investing into other regional ETFs (esp. Europe, Asia-Pac and Japan) on top of my current holdings of Singapore and US shares. If this was a fund management company, I should probably use some other global benchmarks. But I'm not, so I will continue to reference STI as my benchmark, because that's what my opportunity cost is. I'm only accountable to myself.

Bought:
  Anheuser Busch (US)

  ARA Asset Mgt
  Aspial (bonds)
  Boustead
  Capitacom Trust
  Capitaland
  CIMB Asiapac Div ETF
  Exxon Mobil (US)
  Global Logistic
  HongKong Land
  JMH
  Keppel
  Lyxor Europe10 ETF
  Lyxor Japan10 ETF
  M1
  OCBC
  Second Chance
  The Hour Glass
  Union Pacific
  YZG
  Zagro Asia

Rights Issues Subscribed:
  ARA Asset Mgt

Sold:
  nothing!

Lots of buying, not much selling. To be precise, I've sold nothing throughout the year. I've been a stooge. Gave nothing away.

Dividend income grew marginally to $11,168 for 2015. This would have been higher of course, except that I chose to accept all options offered in the form of scrip dividends (i.e. additional shares in lieu of cash) as per previous year. I'm too lazy to figure out what the exact dividend amount would have been. But I estimate it would likely be in the region of $14,000 for the shares portfolio. That's not enough to live off my lifestyle on, yet.

But from an overall perspective, the total portfolio of shares, unit trust, investment-linked and cash/bonds has finally breached the 7-figure zone. The journey is progressing well. The point of "inflexion" (a.k.a. financial independence) is coming.

Despite a tumultuous 2015, here's wishing you a wonderful 2016 next. Happy New Year!

Portfolio of 8 Singapore Stocks - 28 Oct 2015 [updated to correct error]

On 28 Aug 2015, I started exploring a portfolio of 8 Singapore stocks with a value of ~$100,000 (Portfolio of 8 Singapore Stocks). Although the actual value would have been $99,126 (without considering transaction costs), I am assuming $100,000 for simplicity. You could think of the difference as the transaction costs.

How has it fared since? In truth, two months is way too short a time to be meaningful. Nonetheless, here's how it looks:

Stock	No. of  Shares	28 Aug 2015	28 Oct 2015	Value
OCBC	1,300	$9.280	$9.200	$11,960
Keppel	1,700	$7.200	$7.160	$12,172
M1	4,200	$2.92	$2.870	$12,054
Boustead	14,600	$0.855	$0.955	$13,943
Kingsmen	15,200	$0.820	$0.780	$11,856
VICOM	2,100	$6.000	$6.150	$12,915
HourGlass	17,000	$0.735	$0.740	$12,580
GKGoh	14,900	$0.840	$0.825	$12,293

Thanks to CSCCC who highlighted that I had made a mistake with M1's price on 28 Aug 2015, I have adjusted the error as indicated in yellow highlights above.

The portfolio is now $99,723, so it really hasn't moved the needle over the two elapsed months. This valuation does not take into account any dividends. The split is 3-5 between the winners and losers (as indicated in red above). The only significant winner has been Kingsmen.  So it looks pretty flat-line for now and in need of some resuscitation.

Disclaimer: I have not bought such a portfolio on those dates. I am only doing this exploration for fun. But it is true that I do have all these stocks in my holdings and did buy more of some of them during Aug-Sep 2015.

Related:
8 SGX Companies to Keep Watch On

Portfolio of 8 Singapore Stocks - Aug 2015 [updated 31 Oct 2015]

On 14 Aug 2015, as the Singapore market trended down, I highlighted 8 Singapore companies to keep watch on. I figured that an opportunity would come soon if the downwards trend continued. Indeed, it came pretty suddenly on 24 Aug 2015 (see Playing with the bears of 2015).

While the STI never quite hit the official 20% bear territory, it was pretty close, reaching -19.9%? A 0.1% difference is perhaps just a technicality. Many stocks reached their low point that day.

I thought it might be interesting to see how a portfolio made up of these 8 stocks would fare over time. I assumed that a reasonable investor wouldn't have caught the lowest point to buy, but would have delayed a few days to watch how things unfolded before jumping in.

So, taking reference from the prices a few days later on 28 Aug 2015, here's how a $100,000 portfolio would look like for this portfolio of 8. No REITs nor business trusts. But the 8 are broadly diversified.

Stock	Number of Shares	28 Aug 2015	Dividend Yield	Price to Book ratio
OCBC	1,300	$9.280	4.03%	1.1
Keppel	1,700	$7.200	7.02%	1.15
M1	4,200	$2.920	6.43%	7.08
Boustead	14,600	$0.855	4.73%	1.46
Kingsmen	15,200	$0.820	4.43%	1.59
VICOM	2,100	$6.000	2.93%	3.82
HourGlass	17,000	$0.735	3.06%	1.23
GKGoh	14,900	$0.840	4.73%	0.73

In working out the above, I did not take into account transaction fees. The number of shares were based on approximately $12,500 for each stock, rounded to the minimum lot size of 100. With that, the whole portfolio would have cost $99,126. I guess if transaction costs had been factored in, it would have come close to $100,000 anyway.

Let's see how this fares over the next few years with a buy and hold strategy.

--
1 Sep 2015 ...

I forgot to indicate the dividend yield and their price-to-book (P/B) ratio of the stock previously. So I have updated into the above table, but these are based on the data on 1 Sep 2015.

These are all dividend yielding stocks, and mostly with P/B below 2.0. The exceptions were M1 and VICOM which had much higher P/B. These probably reflect the premium that M1 commands as a Telco and likewise VICOM in their vehicle inspection role.

I'm drawing inspiration from Teh Hooi Ling's article where she mentioned a finding from historical analysis that stocks with a healthy dividend yield over P/B ratio tended to perform better over time.
--

31 Oct 2015 ...

The data for M1 was amended due to earlier error. Changes are highlighted in yellow.

8 SGX Companies to Keep Watch On

In my recent interview by Giraffe, I mentioned several stocks that I felt may be worth keeping a close watch on due to various challenges that they are facing. So I thought I may elaborate a bit further on these.

OCBC. They have certain exposure to China and is hoping to grow its market there. With China experiencing some slow down, it will be affected. But my view is that a slow down does not mean that China will come to a halt. Business will continue to ebb and grow. It is a huge emerging market that is hard to ignore. And they will need capital (loans) to support business operations. Cash is king.

Keppel. A significant part of Keppel's business is in the marine sector which is facing challenges from the declining price of oil. Much of the oil around the world are moved by maritime shipping. There has been few new orders, although it does have a sizeable order book to carry it forward. If the situation persists, painful layoffs may well be necessary. Such layoffs could result in some loss of capabilities for the future. Since Choo Chiau Beng stepped down as its CEO, the new management team has had much to deal with.

M1. M1 is largely dependent on the domestic market telco market, unlike Singtel which has an international market for diversification. With a 4th entrant coming into the local telco scene, it would face cannibalisation from the competition. But the question is, will the 4th player survive? M1 has also been the first off the block to introduce new service schemes (innovation?) to try to take the market in the meantime.

Boustead. A part of its business comes from the oil and gas, as well as property development. Both of which are facing difficulties. The oil and gas challenge is similar to Keppel's problem. With a slowdown in population growth, the need for housing in land-limited Singapore is going to slow down. There is also a lot of competition from the many companies in Singapore. They are experiencing forex downside given the extensive business operations in Malaysia (rapidly depreciating M$) and Australia (A$ is almost the same as S$ now).

Kingsmen. If there is slow down in regional economies, resulting in less business shop upgrades and MICE events, then they are likely to experience difficulties in growing their revenue. But they seem to have a strong reputation. Good branding. The emergence of more and more theme parks in the region, as well as upgrades at existing ones, are continued business opportunities for Kingsmen.

VICOM. There are some on the shrinkage of car population with many cars due to replace those at the end of 10 years. As car owners replace with new cars, they will not need to go to VICOM that soon. Maybe there will be near term shrinkage in revenue. But VICOM is dominant and car inspections are legally required. All VICOM need to do is to just raise its charges?

HourGlass. Luxury goods would most certainly benefit from a large newly rich Chinese market, hungry for symbolism. But the stamp down on corruption in China has made many self-conscious, and an economic slow down would likely create further reason for pause and caution. The company is also in the midst of transition from its founders to the next generation.

GKGoh. It's businesses operations in Europe and Australia would probably be affected by the foreign exchange rates when translated into the S$ currency. Its Boardroom subsidiary (itself a SGX stock) seems to dominate in providing services to many SGX companies, providing a stable revenue stream.

But all the above are likely things that will blow over as things reach equilibrium with time (reversion to mean?). Demand for the goods and services will still be there to provide growth. Ultimately, the businesses will thrive, so long as they are not experiencing the "Kodak moment" and continue to be led by responsible management teams that do not engage in any shenanigan.

A ship full of bears

This week in particular has been an "excitable" week, with the market in a sea of red for a couple of days. Looks like a ship full of bears. But I'm a contrarian. The market goes down, I'm excited. So I'm buying. Gradually. Because I can't be sure the market wouldn't go down even further.

Disclaimer: Do conduct your own research and make your own decisions. I do not possess any all-seeing eye that claims to predict the future. So I am not a clairvoyant. Above is just a personal view of things.

My Singapore Team of Dividend Stocks 2015

My first 11 team of dividend shares have remained largely unchanged over the past year.

Goalkeeper

(1) OCBC remains my stalwart to guard the goalpost. An increasing interest rate environment can only benefit the banks.

Defenders

My defence is built around Real Estate Investment Trusts (REIT) in the form of (2) Capita Commercial Trust, (3) Capita Retail China Trust and (4) Mapletree Industrial Trust.  That gives me 3 REITs covering commercial, retail and industrial properties, with some exposure to China. 

My fourth defender is (5) Vicom.  a proxy play for car ownership in Singapore. It could be facing some windy resistance as there are supposedly less cars that require routine inspections over the next 3 years. But will there ever be less cars in Singapore? Not in my view. So long as there is a high level of demand for car ownership, there will be business in car inspections and Vicom is dominant in this regard.

Midfielders

Midfielders need to control the play. They have to create opportunities for offensives, and at times have to roll back to the defensive. For this, I am standing by (6) Boustead, (7) Hour Glass, (8) Kingsmen Creative and (9) SATS.

Boustead is about to break off its property business. For Hour Glass, its founders continue to buy its stock. I view that as positive. Kingsmen Creative has been doing well, expanding regionally and in Greater China. There are many MICE events and theme parks being built in the region. SATS on the end could face some issues with the airline business somewhat affected by negativity with the number of unfortunate air crashes and economic challenges.

Strikers

For the offensive play, I am looking for some excitement, in particular, growth players that may not be as yet high yielding but have the potential to go far. No change to my strikers with (10) Global Logistic Properties (GLP) and (11) Yangzijiang, giving me exposure to China, Japan and Brazil.

The poor outlook of the shipping industry could well affect Yangzijiang. Likewise, the slowdown in China could well see impacts to both. I'm normally averse to holding China plays. But I'm making an exception for Yangzijiang. It however requires some close watching.

Reserves

Nothing has therefore changed after a year to the team composition. But it looks like there could be some challenges in the performance of my first 11 in the year ahead. To mitigate, I've expanded my team by beefing up the bench strength and recruited (12) GK Goh, and (13) Keppel.

GK Goh holds a portfolio of interesting investments (more) with significant insider buying in recent months. Keppel on the other hand is my contrarian play. There is much fear in the market given its lack of new contracts and poor segment outlook in oil and gas. But with a Price-Earning ratio so low, it's too good to ignore given my long term outlook towards my investments.

Play ball! Oh wait, wrong game.

[Disclaimer: I hold all the above stocks. But this is not a recommendation to buy any of these. Do make your own assessment before investing, always. I acquired them at different times over the past five years (post Global Financial Crisis) and have benefited from their growth and reinvestment of dividend payouts since.]

Post National Day Rally 2014 - Education, CPF and Infrastructure

The National Day Rally 2014 has come and gone.

Education

So we started with the subject of "education" and discovered the line that multiple pathways to success need not necessarily require a degree. Can't have a whole country of just managers and no doers isn't it? Skilled labour need to be respected in a balanced world. And for a first, we find Prime Minister interviewing a cohort from a wide spectrum. Keppel had a field day of free advertisement. We are re-educated.

Retirement

Then we have Prime Minister becoming a Financial Adviser. As he said, last year he was a Property Agent, but things haven't been looking up, so he has switched to become a Financial Adviser. I thought he did a fantastic job to link the logic behind why property is part of the CPF system, and the many options to monetise the property for retirement income.

I felt his advise for a retiree to continue to own a property, even if staying with their children, a particular insightful remark. He must surely have seen the many cases when the parents had fall-outs with their children, or worse, cheated by their children, and then having no roof over their head. Abandoned.

And so we have the declaration that the Minimum Sum for the CPF Special Account would be raised to $161,000 in 2015, and the statement that there would not be a further increase thereafter, subject to a review from time to time (ah, always leave the option open!). For me, this was a boo-hoo-hoo moment. I had so looked forward to continuing benefiting from the 4% return with a continually revised ceiling. Where else to get this kind of returns for a risk-free investment? Unfortunately that is not to be.

$161,000 it shall be. And no way am I going to pledge my property to cash out half the sum at age 55. I want my full return of $1,200 per month from age 62 onwards (I was previously under the impression that this sum would only be received from age 65).

Infrastructure

Finally, the great infrastructure development. Having discussed about the great airport move from Paya Lebar Airport/Airbase to the expanded Changi Airport over the next few decades along with the Jewel of the East last year, Prime Minister described with much graphical details the great Jewel of the West this year.

We already have Jem and Big Box, and the new but delayed General Hospital at Jurong East. But the elaborate plan looked like the creation of a New York Central Park in the form of the Jurong Lake Gardens. A new monumental go-to place in the form of a new Science Centre, and the possibility of a future Express Train terminal to Malaysia. Certainly a major transformation from the current drab and boring looking Chinese and Japanese Gardens, which for years have languished in a never changing state, seldom used, venues of zero excitement. Transformed, it shall be. "There is only do, or do not", as Yoda might say.

Concluding Remarks

As a foreign dignitary once said, each year he come by Singapore, he sees something new and exciting. The landscape is ever changing. This trend looks set to continue. Change is certainly a consistency.

Looks like the construction industry will continue to have positive prospects in the years ahead. Major infrastructure development will continue to place demand - numerous MRT lines criss-crossing our tiny island, highways realigned and expanded, monumental artistic buildings and gardens rebuilt, bigger and better. The list goes on.

I am inspired by the exciting future of our country with each passing year. Toast!

p/s: Tat Hong (cranes), Kingsmen Creatives (artwork), Pan-United (cement) could be potential beneficiaries?