ARA Asset Management Full Year Results

Net profits were down 11%, mainly due to dilution from rights issue as well as strong one off gains in 2014. EPS came in at 8.96 cents which was way way above my expectation of 7.5-8 cents per share. Dividend payout was also maintained. Overall this is a very positive set of news and as the stock has been heavily oversold, I do expect to see some short term rally due to its good results.

Asset under management continued to grow strongly at 11.9%, looking forward I expect to see AUM growing at least 5-10% annually in the coming decade or so. At under 12 times earnings, I think the market is seriously under pricing this fabulous growth stock.

Post rights issue the balance sheet looks pretty solid with total liabilities at around 54mil, compared with a total asset base of 580mil the company is very conservatively leveraged at under 10%
Going forward into 2016, I expect their new private funds to help boost earnings and their 5 cents full year dividend payout to be maintained.

Portfolio wise, I had recently liquidated my 11 year ntuc life policy to raise cash. The cash have been used to add more OCBC and M1, given the positive results of ARA I would strongly consider adding more tomorrow.

NameCurrent Price WeightagePEYieldPayout Ratio
CapitaCommercial Trust1.3214.0%15.36.6%100%
Sembcorp Industries2.4510.5%9.84.1%40%
ST Engineering2.747.0%16.15.1%82%

Total WeightPortfolio PEPortfolio YieldPayout Ratio


CCT Full Year Results - DPU Up 1.9%

Full year distribution per unit was up 1.9% at 8.62 cents, at the current price CCT yields around 6.5% which is pretty juicy.

Doomsayers prediction was totally off as the commercial property market did not crash, NAV still above $1.7 along with a healthy occupancy rate of over 97%.

 CapitaGreen should help lift DPU for 2016 as its over 90% occupied already.

On the down side debt profile looks worrying as they have over 20% of debt maturing in 2016, with interest rates on a uptrend I expect cost of debt to go up slightly.

Solid track record of high occupancy rate of 93-99% since 2004, their Asset Enhancement Initiatives have also been consistent with no screw ups.

Tenant mix seems to be taking a big shift as  BC/Media/Telecomm forms the largest weightage, up from 19% to 28%. In the past Banking and Financial Services was always took up the most space.

Solid track record of DPU growth, will continue to hold CCT for years to come for sure.

Portfolio Restructuring- Sold STI ETF - Added M1,ARA,UOB

NameCurrent Price WeightagePEYieldPayout RatioIndustry
ARA1.0916.8%14.54.6%67%Property Management
CapitaCommercial Trust1.3314.7%15.56.5%100%Commercial Reit
OCBC7.7414.7%8.34.7%39%Banking & Finance
UOB17.0313.7%8.74.4%38%Banking & Finance
Sembcorp Industries2.4010.6%8.04.2%33%Marine & Utilities
ST Engineering2.867.6%16.84.9%82%Defense & Engineering

Total WeightPortfolio PEPortfolio YieldPayout Ratio


Sold off all my STI ETF and have used the proceeds to add more of M1, ARA & UOB as all these 3 have declined way more than the index. I think I would get more value in the long run this way, even if it meant losing  around 0.6%  in total commission for the restructuring. Also as mentioned from my previous post, I should strive to beat the market instead of following the market.

M1 reported a decent set of results yesterday as full year earnings were up 1.5%, however dividend payout was reduced from 100% to 80% a fall from 18.9 cents to the current 15.3 cents. M1 still maintains its policy to pay at least 80% of earnings out as dividends. I think they are trying to retain some earnings as ammunition for their up coming battle against the 4th telco in 2017/18.
The market was shocked by the decline in dividends and M1 got sold down 4% today, which really triggered me to scoop more up.

After this restructuring move, all my counters now yield above 4% bringing my portfolio yield to 5.2% at current market prices so I would gladly add more when I collect my dividends in April. Diversification wise, my portfolio is pretty much just focused on 4 key areas

Banks - OCBC/UOB
Property - ARA/CCT
Telcos - M1/SH
Engineering - SCI/STE

As a safety measure I would also limit any individual counter to a maximum allocation of 20%, so if any counter rises sharply and goes above 20%, I would sell it down to below the safety limits.

STI Nears European Crisis Level Lows

Over the last 5 years the STI has gone down 15%, with the lowest point being 2640 on Oct 3 of 2011... which was the climax of the European crisis in which investors worried that the PIGS(Portugal,Italy,Greece,Spain) would default and the whole eurozone would collapse.

If the current 2700 psychological support breaks, we may see the STI testing this 5 year low of 2640 again. This is in the heart of major China worries, fear of a collapse in its stock market, fear of china's property bubble exploding, fear of china's GDP growing slower etc... in the near future, investors may turn back and call it the China Crisis?

I'm out of cash and unable to make any more purchases in this cheap market, however I'm eager to look at the full year results announcement coming this month end and in February, after which dividends would come in around april for me to make more new purchases as well as AGM (annual general meetings) to attend.

I wish all readers good health and good wealth in the year of the monkey, stay calm and collect dividends ^_^

Cheap don't buy then wait for expensive then buy meh? - random from HWZ forum

NameCurrent Price WeightagePEYieldPayout RatioIndustry
ARA1.1214.3%14.94.5%67%Property Management
CapitaCommercial Trust1.3113.8%15.26.6%100%Commercial Reit
OCBC8.2515.0%8.94.4%39%Banking & Finance
UOB18.1711.7%9.34.1%38%Banking & Finance
Sembcorp Industries2.6711.3%8.93.7%33%Marine & Utilities
ST Engineering2.877.3%16.94.9%82%Defense & Engineering
STI ETF2.778.2%11.23.5%39%Exchange Traded Fund

Total WeightPortfolio PEPortfolio YieldPayout Ratio


2015 - A Year of Disappointing Returns

Over the last 12 months the STI fell 15% from 3366 to 2877 and sadly to say my portfolio performance mirrored the index. I wouldn't make a bullshit statement that I outperformed the index because my portfolio yield of 4.7% is higher than the STI ETF's 3.3%, resulting in higher total returns of 1%... that's full of crap... as I am a full time investor, given the extra time and effort spent analyzing and picking these companies... my expectation is to outperform the index by a wide margin and this year's result was really a big slap on my face... if I can't make much higher returns than the index then I might as well just throw in the towel and put my $$ into the index!!! Isn't that so?

Looking back, what are the mistakes that I made and what when so so so wrong?

Well if I step back to like 3,4 or 5 years ago.... it was a period of pure focus instead of diversification, those were times that I had only 2 stocks in my 6 figure portfolio... I had like 80% on Challenger technologies and 20% on Starhub and managed to slide pass the 2011 European crisis quite unharmed, I also had explosive years... like in 2012 alone my portfolio was up over 35%, way outperforming the index!

Thinking about it, maybe it was just plain Felix Felicis luck that my 2 stocks performed so well... or maybe because I analyzed and selected great companies that were undervalued and finally got rewarded? To be honest, till this day I'm not even sure whether I'm really a good stock picker or that I was just lucky~!  Given the disastrous results this year, I'm beginning to doubt my own stock picking skills already.

Over the last 3 years, I gradually began to spread out my bets... from my usual super focus of 2 to 3 stocks, I expanded up to 5 stocks or under over the last 3 years and eventually this year I told myself its okay to own up to 10 stocks if I liked. (shaking my head)

As my portfolio grew bigger, the fear of losing it all on concentrated bets had overwhelmed me! I was being like a scared pussy, so instead of betting big on my top one or 2 ideas of the year.... I ended up putting $$ on my 3rd best ideas all the way downhill to even buying the STI ETF (how did I get such a stupid idea of betting on the index when I'm trying to beat the index???).

I was just so afraid of being wrong that I ended up being as right as how the index had gone.

Investing in stocks is a lot like playing a game of poker, often the brave and aggressive player is the one taking home the big pots... by betting and raise u can win by getting your opponent to fold or by showing the best hand, but by only checking and calling you win half less as you can never get your opponent to fold. 

For investing, diversification only leads to mediocre results... 

NameCurrent Price WeightagePEYieldPayout RatioIndustry
ARA1.1714.3%15.54.3%67%Property Management
CapitaCommercial Trust1.3313.6%15.56.5%100%Commercial Reit
OCBC8.8515.6%9.54.1%39%Banking & Finance
UOB19.4012.1%9.93.9%38%Banking & Finance
Sembcorp Industries3.1110.2%10.43.9%40%Marine & Utilities
ST Engineering3.037.5%17.84.6%82%Defense & Engineering
STI ETF2.948.4%11.93.3%39%Exchange Traded Fund

Total WeightPortfolio PEPortfolio YieldPayout Ratio


Last Purchase of The Year - Added SCI

SCI is down over 37% over the last 2 years due to the low oil prices which may trigger into defaults from their customers in taking delivery of their oil rigs. The recent lawsuit with marco polo brings even more fear. I do expect 2015/16 earnings to remain very weak and the recovery in earnings may only come in 2017.

I remain pessimistic on their Marine segment, however their Utilities segment should show better results next year as their mega power plants in India & China takes off.

However even with a lower estimated earnings of 35 cents, SCI trades cheaply at around 9.5 times earnings. With a 40% payout ratio of 14 cents that would give a dividend yield of 4.2% which is still decent. At one times book value, SCI is already trading at GFC and european crisis levels.
Overall this is still a risky bet and the expected recovery may take longer to come.

NameCurrent Price WeightagePEYieldPayout RatioIndustry
OCBC8.7615.5%9.44.1%39%Banking & Finance
ARA1.2114.7%17.24.1%71%Property Management
CapitaCommercial Trust1.3113.4%15.26.6%100%Commercial Reit
UOB19.4712.0%10.03.9%38%Banking & Finance
Sembcorp Industries3.329.6%9.54.2%40%Marine & Utilities
STI ETF2.948.5%11.93.3%39%Exchange Traded Fund
ST Engineering2.897.1%17.04.8%82%Defense & Engineering

Total WeightPortfolio PEPortfolio YieldPayout Ratio