Portfolio Update - Reduced Keppel Corp, Waiting for Singapore Saving Bonds (SSB)


NamePrice YieldPEIndustry
UOB23.103.2%11.7Banking and Finance
OCBC10.593.4%11.5Banking and Finance
ARA1.623.1%15.7Property Management





M13.854.9%20.4Telecommunications
Starhub4.244.7%20.2Telecommunications





Keppel Corp9.055.3%8.8Marine/Property/Infrastructure
ST Engineering3.524.3%20.6Land/Marine/Aerospace/Electronics
Semb Corp Industries4.343.7%9.8Marine/Utilities







Portfolio YieldPortfolio PE


3.8%13.0


I spoke about keppel corp in january, after they announced a great set of full year results. The stock price was really depressed due to all the worries of the oil bear. Valuations were really cheap and I couldn't resist making a bet. KC has since had a good ride up and I took this opportunity to lock in a 10% profit for half my position.

Oil has been bouncing around the $50 (WTI) level, and has shown no signs of a fast recovery. As unprofitable oil rigs slowly shut down, this should eventually bring back balance to supply/demand, however it could be a slow process and may take like a year or so.

With the recent rally in the local market, my portfolio has gained quite a bit. This results in a higher PE ratio, from 12~ish level to the current 13 times and a drop of yield from 4% to 3.8%. However I do not think that valuations are expensive .... its still somewhere comfortable.

http://www.businesstimes.com.sg/government-economy/govt-to-offer-singapore-savings-bonds-for-local-investors

THE government will introduce the new Singapore Savings Bonds (SSB), a type of Singapore Government Securities (SGS) for local individual investors.

Like SGS, the Singapore Savings Bonds are safe investments, principal-guaranteed by the government. Holders of the SSB can also get their money back in any given month, with no penalty, and can earn interest that is linked to long-term SGS rates. Also, unlike bonds that pay the same coupons each year, the SSB pays coupons that increase over time.

In theory the bonds seems pretty interesting and attractive, but I will have to wait for more details... I'm wishing for yields of 2-3% or higher, given that sibor already crossed 1%... we may see rates going higher and thus making bonds an decent investment again.

While many are worried of a market crash or waiting for a fire sale, I do believe that I have no talent in timing the market, as such I would continue to stay vested and keeping a good balance in my portfolio.

I'm currently at 85% Equities and 15% in Cash. My equities are yielding only 3.8% while cash on fixed deposits are yielding 1%+, so overall I'm getting like 3%+ which is nothing impressive.

As the market goes higher, I do hope to gradually take some profits and reduce my equities positions. Once interest rates have improved, I would really like to pick up some bonds. Ideally I wanna go move to an allocation of something like 75% Equities 25% Bonds.


"Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves." - Peter Lynch

Portfolio Update - CMT Out M1 In



NamePrice Dividend Per ShareDividend YieldEPSPEIndustryType
ARA1.610.0503.1%0.10415.6Property ManagementGrowth
OCBC10.490.3603.4%0.91911.4Banking and FinanceGrowth
UOB23.040.7503.3%1.97011.7Banking and FinanceGrowth








M13.780.1895.0%0.18920.0TelecommunicationsDividends
Starhub4.180.2004.8%0.21019.9TelecommunicationsDividends
ST Engineering3.440.1504.4%0.17120.2Land/Marine/Aero/ElectronicsDividends








Semb Corp Industries4.290.1603.7%0.4439.7Marine/UtilitiesCyclical
Keppel Corp8.880.4805.4%1.0308.6Marine/Property/InfrastructureCyclical











Portfolio Yield
Portfolio PE




3.9%
12.6



Today's biggest news would be the passing of our founding father, may he rest in peace. I actually thought that the market will take a small correction, but instead it seems to have already been factored into the market.

I wrote about my CMT position recently and it had since when on a strong rally, in which I sold off today to lock in some profits. I also wrote about M1, in which it dropped a bit today and I'm quite happy to move the funds over to this 5% yield-er.

Overall there's still no changes to my main strategy, with 3 growth 3 dividends and 2 cyclical stocks to form a good balance in riding out the slow economy. I'm also 90% vested with 10% in cash.

Cheers





M1 vs Starhub - Which One Should You Buy?



The pure local telcos M1 and Starhub have had a great run over the last 5 years, as both gained 80% over the period! Currently both of them trade at around 20 times earnings along with a 5% dividend yield. So if we ask me which one should we buy? I would say... why not own both~!

I'm have been vested in starhub for over 5 years, which I wrote about in detail over here. I had always been reluctant in adding more into telcos and that mistake had caused me to miss out the great run that M1 had. But the big question now would be... is it too late to enter???

I think the answer could be a No, as I still continue to see an uptrend. Telecommunications is not a difficult industry to understand, basically M1 makes money from selling 2 main services that we Must use in our daily lives, our mobile phones plans and our internet plans.

Nowadays when I take the bus or mrt, I can't help to notice that more than half the people are always glued to their smart phones... be it playing games, chatting or watching videos. Even uncles and aunties (age 40 and up) are starting to pick up on technology and this is a healthy trend for telcos.

Do you still watch TV? free channel 5 and channel 8? probably not... as we move island wide into the fibre optics connection, more people are enjoying video streaming from the comfort of the computers and tablets. I think it may be only a matter of time before companies like media corp become extincted.

I think the defensive nature of the business is what really makes it shine, Singaporeans just can't live without telecommunications, so along with a 3% growth rate (peg at the rate SG economy is growing) it seems pretty decent.

However the days of making 20%(15% capital gains +5% dividends) a year from telcos are definitely way over. Overall one should expect to get around 8% average annual returns (5% dividends + 3% growth) which is still comparable to market returns but at a lower beta (riskiness)

Portfolio Update - Added UOB


UOB Five Year Results Summary Table

What I like about UOB is its consistency in growing profits for share holders as seen from the table above. Earnings per share grew from $1.52 in 2010 to $1.98 last year, for 2015 I'm pretty sure they will make over $2.00. Dividends were also pretty consistent over the last 5 years, with exception of a small dip to 60 cents in 2011 due to the Europe crisis.

At 11.5 times earnings and 3.3% dividend yield, I felt comfortable adding more exposure into the banking industry. As I mentioned in the past before, as long term interest rates move up, banks should see net interest margins improving.

Looking at my portfolio, I think I'm getting quite a good balance between growth, dividends and value. Banks/ARA towards growth and defensive stocks such as CMT/SH/STE towards dividends. The riskier plays would be KC and SCI, as oil is still low and has not yet shown any signs of recovery, however given their low PE and decent yield I see those 2 as very good value bets. Even if their earnings come off a bit in FY15, say 20% drop in earnings... they would still trade for around PE 12 or so, which is not expensive.


NamePrice Dividend Per ShareDividend YieldEPSPEIndustryType
ARA1.560.0503.2%0.10415.1Property ManagementGrowth
OCBC10.250.3603.5%0.91911.2Banking and FinanceGrowth
UOB22.620.7503.3%1.97011.5Banking and FinanceGrowth








CapitaMall Trust2.090.1085.2%0.17911.7Retail REITDividends
Starhub4.170.2004.8%0.21019.9TelecommunicationsDividends
ST Engineering3.430.1504.4%0.17120.1Land/Marine/Aero/ElectronicsDividends








Semb Corp Industries4.220.1603.8%0.4439.5Marine/UtilitiesCyclical/Value
Keppel Corp8.620.4805.6%1.0308.4Marine/Property/InfrastructureCyclical/Value











Portfolio Yield
Portfolio PE




4.0%
12.1



10 STI Blue Chips Selling Near 2 Years Low~!!!!


First of all, don't let the STI level of 3400 fool you that its a bull market. The 3 local banks have done very well in 2014 and they made up one third of the index! So the index is mostly reflecting the uptrend of our banks but the cruel reality is that many blue chips have been sold down badly over the past 2 years.

Genting Singapore, down 37% over the last 2 years. Worries are on its high roller bad debts and slowing tourism rate in Singapore. Potential catalyst would be its expansion into Korean and Japan.



GLP, down 3% over the last 2 years, its business covers Japan, Brazil and China. Yen has been very weak due to its massive QE and SGD has been even weaker... this lead to poor results when reported in our local currency. Potential catalyst would be its expansion into the US market.


HPH, down 30% on slow down in port business as well as one time write down of good will. Its a cyclical industry and I don't see things recovering that fast. The 8% yield looks high but the depreciation in NAV per share is even faster.


Keppel Corp, down 22% over the last 2 years on worries of the oil bear which would fundamentally lead to a cut down in capex by oil explorers and less oil rig orders. Kep Corp is likely to fully absorb Kep Land, which post deal half of their earnings would come from the property segment, a good time for management to diversify.


Noble, down 20% on weak earnings as well as bearish reports by Iceberg. Potential catalyst would be a rescue attempt by a white knight, say founder buying more shares or a new major shareholder via placement or rights.



SCI, down 18% due also to the oil bear. Don't forget that half of its earnings comes from the Utiltiies sector, which generates stable and recurring income. Potential catalyst would be a spin off/listing of its Utilities business.


SIA Engg down 14% due to weak results from its aerospace business, however the dividend yield of over 4% should give this a floor price.


Semb Marine, down 33% as the pure marine company got hit hardest by the oil bear. If you are betting on a oil rebound this would be the highest correlation bet as compared to KC and SCI which are conglomerates.



SPH down 8% as its media business continues to rot, I'm not even sure if its dividend yield can be sustained.



STE down 17% as earnings for FY 14 came in below expectation, however the over 4% yield seems to be supporting the current levels.

There you have it, 10 blue chips selling near 2 year lows.... I'm pretty sure we are not in a bull market and those holding lots of cash waiting for a crash would continue to see their purchasing power getting eaten by  inflation. This year I have aggressively added some of these blue chips to my portfolio, and I think in the long run things will get better. Those crying a toppish bull market must be color blind to not see all the red in the sea.

Be Fearful When Others Are Greedy
Be Greedy When Others Are Fearful ~ Warren Buffett


NamePrice Dividend Per ShareDividend YieldEPSPEEarnings YieldIndustry
CapitaMall Trust2.120.1085.1%0.17911.98.4%Retail REIT
OCBC10.310.3603.5%0.91911.28.9%Banking and Finance
Keppel Corp8.700.4805.5%1.0308.411.8%Marine/Property/Infrastructure
Starhub4.290.2004.7%0.21020.44.9%Telecommunications
ST Engineering3.470.1504.3%0.17120.34.9%Land/Marine/Aero/Electronics
ARA Asset Management1.560.0503.2%0.10415.16.6%Property Management
Semb Corp Industries4.220.1603.8%0.4439.510.5%Marine/Utilities











Portfolio Yield
Portfolio PE




4.1%
12.2