Portfolio: August 2012

The month of August saw the market value of my portfolio drop substantially.
This was mainly due to:

a) 2 of my largest holdings (Stamford Land & Frasers Centrepoint Trust) going XD.   [Substantial Dividends in!]
b) Reducing some of my exposure to Stamford Land.

The drop was slightly buffered by a pleasant dividend announcement surprise from Wing Tai holdings which strengthened its share price.
 

Actions taken in August:

 -Sold 50,000 shares of Stamford Land.
  I made the decision to reduce exposure to Stamford Land in favour of cash as I would want to have  more funds available to purchase higher yield stocks for cashflow. I do not foresee it able to pay higher than $0.02 dividend in the coming year. However, its potential asset value unlocking is the reason why I am still holding a substantial position.



Overall strategy: 

I did a relook at my excel sheet and replaced the "Proj. Dividend (2012)"  with "Proj. Annual Dividend" column instead. 
I hope this improves clarity as it better displays my philosophy of using recurrent income projection to judge the health of my stocks.
This gauges the sustainable cashflow of my portfolio as it is generated by the dividends of the companies I hold.
I have put in MY own projections of the annual dividends going forward. 



For my remaining top 3 holdings, I am holding them for the simplified reasons below:
1) Frasers Centrepoint Trust, 6% yield, Holding for stable CASHFLOW
2) Stamford Land, 4% yield, Holding for large % CAPITAL GAIN
3) United Engineers, 4% yield, Holding for  large % CAPITAL GAIN

As mentioned in my previous post in July, my goal now is to improve the overall yield of my Portfolio.
I am now sitting on a more comfortable amount of cash to allow me to redeploy them in companies offering higher sustainable yield (i.e CASHFLOW instead of CAPITAL GAIN) should the market fall.      

Review of FY2012 results: Wing Tai Holdings

Good day to all! This will be my first post on Wing Tai and what a time to post it~!
Coincidentally, Wing Tai just announced its FY2012 results and it was the last developer to announce results for the Apr-Jun quarter.

Wing Tai is a company with generally 3 core businesses.
(http://www.wingtaiasia.com.sg/Businesses/Retail/)

(1) High-end Property development
(2) Rental from Investment properties
(3) Retail / F&B 

Its largest shareholders are the Cheng Brothers at slighty > 50%.

 

Some key numbers (based on FY2012 financial statement & presentation slides) 

Number of shares issued (including treasury shares): ~794m

Current share price: S$1.51

NAV: S$2.69

Ppty development EBIT:$194.3m

Investment Property EBIT: S$33.9m
Retail EBIT: S$29.7m

TOTAL NET PROFIT : ~S$263m

Full year EPS: ~$0.31

My analysis

Truth be told, I only spotted Wing Tai in March this year and it is not a company I am very familiar with.
This explains why I do not have a large position in it yet.
Thus I prefer to give a simple and general analysis on it rather than a detailed one.

I bought it for only a few reasons. To put it simply:
A) Huge discount to NAV - high margin of safety
B) For a property developer, it gives a very high dividend protection versus my buy px of $1.28 
     (Historically gave $0.04 to $0.07 in recent years). Compared to others like CityDev/SC Global, it
     seems a value-for-money.
C) Its Balance Sheet is damn strong (Gearing 18%, flush with cash)
D) Its Cashflow Statement is damn healthy (Net Operations + investments + financing = +ve)
E) Diversification of income source including involvement in retail of major brands like G2000 and 
    Uniqlo (though not a high % of income, this segment had been consistently growing)
F) Key Risk factor though is if there is going to be a protracted downturn to the high-end property market. But given its strong balance sheet, Wing Tai should be able to weather any downturn due to its holding power, or even take advantage of it in a big way.

My concluding thoughts

This seems to be a very good company though and I initiated a small position purely on these glaring positives as it seems too good to be missed when I saw it at $1.28.
I will research more about this company in due course and just might add on if the price falls.

:-)

Review of 2Q 2012 Results: United Engineers

United Engineers just released their 2Q results on Friday.
Here are some figures --->


Key numbers (2Q2012 financial statement) 
Number of shares issued (including convertibles): ~321m
Current share price: S$2.32
NAV: S$3.97
Ppty development Operating profit: 0  (1Q also 0)
Rental Operating profit: S$9.5m (1Q  S$14.5m)
Engineering Operating profit: S$6.6m (1Q  S$2.5m)

TOTAL OPERATING PROFIT: S$16.1m
TOTAL NET PROFIT : ~S$10m
EPS: $0.025 this quarter


My analysis 
A glaring issue that I noticed was a drop in the Operating profit of recurring Rental income by S$5m QoQ. I was surprised by this as i expected at least an equal amount to 1Q2012.

UE Bizhub East (extracted from website of CPG consultants)

Regular readers should know I watch income from recurring assets like a hawk as I believe strongly in sustainability. The income from this segment is also the basis for my valuation of this company.
Thus, I need to reconcile the reasons for this massive drop.

A likely reason, I speculate, is it could be due to one-off maintenance expenses or staff bonuses.  
For now, I can't be certain.
I'll be watching the performance of this segment in the coming months.
Would like to hear from readers if they have any views on the possible reasons for this drop, though?

 Meanwhile, the list of recurring income assets for this company that I gathered is as follows:
1) UE Square + Park Avenue Suites
2) UE Bizhub Central
3) Park Rochester Hotel
4) Rochester Mall
5) UE Bizhub East  (Obtained TOP in 2Q2012, no significant contribution yet)
    http://www.cpgcorp.com.sg/CPGC/Project/Project_Details?ProjectID=1249


Overall, the catalysts for growth as explained in my 26th July post on UE are still intact.



Stock investing is never easy though, always having to make decisions with incomplete information~! Guess thats why they say it is part art, part science!