Portfolio Update - Post FY2014 Results


NamePrice Dividend Per ShareDividend YieldEPSPEEarnings YieldIndustry
OCBC10.480.363.4%0.9211.48.8%Banking and Finance
Keppel Corp8.750.485.5%1.038.511.8%Marine/Property/Infrastructure
Starhub4.290.204.7%0.2120.44.9%Telecommunications
ST Engineering3.510.154.3%0.1720.64.9%Land/Marine/Aero/Electronics
ARA Asset Management1.630.053.1%0.1015.76.3%Property Management
Semb Corp Industries4.230.163.8%0.449.510.5%Marine/Utilities











Portfolio YieldPortfolio PE
STI ETF YieldSTI ETF PE



4.0%12.6
2.7%14.0

As we head into the year of the goat, let me recap on individual stocks in my portfolio. You can click on any of the stock names which will be linked to my full year results review of the company.

OCBC
Kep Corp
Starhub
ST Engineering
ARA
Semb Corp Industries

As a whole I'm pretty happy with the results, as overall portfolio earnings and dividends grew slightly despite the challenging global business environment.2014 was generally a weak year as quite a number of companies reported earnings below estimates leading to some of the recent sell offs.

Although I'm diversified among different sectors, I'm still pretty heavy on marine stocks (kep corp & semb corp) which the two posted pretty decent FY14 results, a very strong performance as compared to small/mid cap marine counters that posted lower earnings and even losses.

I do think that new investors should avoid marine stocks as a whole as there are too many traps even with the depressed prices. If the adventurous investor should insist in trying to bargain hunt in the marine sector, I think it would be wiser to stick to the large caps with strong balance sheets and at least a proven track record from having recovered before in the last 2 down cycles (1997 AFC and 2007 GFC), so far kep corp and semb corp would be the 2 blue chips of my choice that passes this test.

After 7 years of general uptrend (2007-2014) many investors are starting to believe that a bear market is coming soon and have started to move their holdings towards cash. As a value investors I do believe that there are still plenty of good deals around and some blue chips/mid caps are selling at close to 2 years low (example SCI/STE/ARA which I hold)  

Overall the STI is only trading at 14 times earnings, which is not a speculative level. However I would start to be cautious when the STI trades towards the 15-20 earnings range. Meanwhile, just stay vested, keep calm and slowly collect the dividends.

Wishing all my readers a prosperous year ahead and good health always.




ST Engineering Full Year Results Review - Net Profits Down 9%


The last 2 years was a tough one for STE as its stock price fell close to 15% due to worries in the Europe region as well as earnings pressure on their Marine and Aerospace division. Fundamentally STE posted a 1% dropped in revenues as well as a significant 9% drop in earnings per share in which the market had factored in.

However dividends came in as a surprised as it was maintained at 15 cents, the same as last year. I was expecting around 13-14 cents so this year's payout gave me something to cheer about.




In the CEO statement, there will be challenges in their Land and Marine businesses, but they seem confident in maintaining revenues and profits for FY15. With no indication on dividends for FY15, I'm hoping for the 15 cents to be maintained again. Do note that STE has a dividend policy of paying out at least 75% of earnings.

STE currently trades at 20 times earnings with a dividend yield of 4.3%, in my view its pretty much fairly valued for this net cash defensive stock. The dividend yield of over 4% will give support in keeping its stock price stable.

Cheers

Starhub Full Year Results Review - Net Profit Down 2%, Broadband Under Siege



Full year revenue remained stable at +1%, however net profit dipped 2%. I think this is pretty much in line with expectations. Free cash flow per share stood at 19.2 cents which is quite close to their 20 cent dividend payout, so I do think they should have no problems maintain the juicy dividends.

Mobile and Pay TV services remained stable however Broadband Services saw a big 16.5% decline in revenues!

As you can see, Starhub has actually done a great job of growing its Broadband business as total customers is still on a uptrend.




However the pain comes from lower revenues per customer as we see the down trend from $42 to $34. For consumers this is good news, as we singaporeans are paying lower fees to access the internet at a much faster speed thanks for the fibre optic network. However due to the lower barrier of entry, we have seen new competitors such as My Republic putting up a fight against the 3 giants.

I personally do see the downtrend continuing and will probably bottom at around the $30 level, cause anything lower than that doesn't seem profitable nor logical.

Starhub currently trades at over 20 times earnings with a dividend yield of 4.5% along with zero growth, so its pretty much overvalued like the other 2 other telcos.

When interest rates move up, this sector might face a correction.

Cheers