Year End Review 2012~!

Hi guys! It is that time of the year again!

A time where we reminiscent and reflect on the the things we regret doing or not doing, what we have achieved, and most importantly the lessons learnt for the past year.


This year was a year where I experienced the loss of a loved one, met and fell in love with a wonderful girl, spent time rekindling old friendships and quality family time, picked up a new language, travelled overseas to see wonderful sights of nature, "gave birth" to my blog, and read many wonderful books contributing to my personal and spiritual growth.
Looking at the myself now, I feel more accomplished, fulfilled intrinsically than I was one year ago.
No major regrets this year was an additional sweetener. :-)

Looking forward in 2013, I strive to grow to become a more balanced person, while embracing life during this process.
Like what the late Zig Ziglar said before: " Be grateful of what you have, while in pursuit of what you want."

Wishing everybody a Happy and Prosperous 2013! Cheers!


Now for my stock commentary--->



Portfolio Commentary

Portfolio @ start of the year:

Portfolio @ end of the year:

2012 saw the largest increase in my portfolio size in a single year since the year i started buying stocks.
The total market value of my stocks increased from $260k to $384k.
This represents a paper gain of  $124k. Very tempted to take profits!
Albeit being paper profits, the performance was way beyond my expectations and I am happy that the hours/hard work I spent doing my qualitative & quantitative analysis paid off, plus alot of help from Mr Market, of course!


The amazing thing was this gain was primarily due to price appreciation and the reinvestment of dividends, as no leverage was used, and only a little savings was deployed (I injected only $10k additional capital from my cash holdings this year).


Nonetheless, stock prices are not as important as the value of the business behind the stock. I will be reassessing each company in my portfolio again on their own merits and decide in due course if there is a need for taking of some profits to recycle capital. Like what Peter Lynch said in his classic One Up On Wall Street, "Check the story periodically".

An intangible improvement in the quality and sustainability my portfolio also occurred this year, as I reduced my exposure in Australian Hospitality and suburban malls to diversify into businesses that does Engineering, Singapore Hospitality, Commercial Ppty, Property Development, Retail. It can be quite thrilling to know that you have a stake in businesses you can visually see.

 

Miscellaneous thoughts --->

A key concept I came across this year was the analogy of approaching stock investment as a business analyst.

It is a very apt concept and analogy that helps us simplify our thoughts in this chaotic financial world of ours. I find it a very good way to approach my future investments, as a Business Analyst.

I stumbled upon this in articles written in a couple of blogs that I follow regularly, namely Drizzt of Investment Moats (http://www.investmentmoats.com/) and Mr B of 3Fs(http://foreverfinancialfreedom.blogspot.sg/).



Since I discovered the world of blogging, other blogs I follow regularly and gained immense knowledge and opinions from are ASSI for investment philosophies and thought processes (http://singaporeanstocksinvestor.blogspot.sg/),
Dividend Warrior, for his drive towards regular passive income  (http://dividendsrichwarrior.blogspot.sg/), Singapore Man of Leisure for his fantastic outlook on life (http://singaporemanofleisure.blogspot.sg/), just to name a few.

These are very good investment blogs with quality posts on Value Investing which I learnt alot from as well. Thanks guys for sharing snippets of your lives and well written articles! Keep it up!
Readers might like to follow these good blogs.

I aim to continue on Part 4 Investment Philosophies thread with a writeup to share my views on a company's management. Stay tuned!


:-)



  

Portfolio: December 2012

The month of December saw a big jump in the market value of my portfolio.
 

This was mainly due to: 

a) 36% surge in share price of UE since my last post.

 
Actions taken in Dec:
Nil

My top 3 holdings are:
1) United Engineers, 4% yield, Holding for large % CAPITAL GAIN
2) Frasers Centrepoint Trust, 5% yield, Holding for stable CASHFLOW
3) Stamford Land, 4% yield, Holding for large % CAPITAL GAIN 

Strategy Commentary:  

Am in the midst of reviewing the valuations of the companies in my portfolios as it is the year end. 

However, as I do not see exuberance for these companies share prices yet, 

I guess I will just hold them for now.  :-)  

Portfolio: November 2012

The month of November saw the market value of my portfolio drop.
 

This was mainly due to: 

a) Reduction in my FCT & Stamford Land holdings.

 
Actions taken in Nov:
A) Purchased 12 more lots of United Engineers. 

B) Sold 10 lots of Frasers Centrepoint Trust.

C) Sold 50 lots of Stamford Land. 

My top 3 holdings are:
1) United Engineers, 4% yield, Holding for large % CAPITAL GAIN
2) Frasers Centrepoint Trust, 5% yield, Holding for stable CASHFLOW
3) Stamford Land, 4% yield, Holding for large % CAPITAL GAIN 

Strategy Commentary: 
United Engineers is now my top holding for a few reasons. 

I took a walk at Changi Bizhub area last weekend and noticed a few things:

(a) Changi City Point was overflowing with Traffic. Both Human & Vehicles. 

     Traffic spilled over to UE Bizhub's NTUC & car park respectively.     

(b) Capri by Frasers, a business hotel nearby seem to be at full occupancy. 

     It is a great locality to build a business hotel, come to think of it. 

     One MRT stop to the Airport, close to a Big Shopping Mall too.

     UE's 300-room Park Avenue Changi should likely do as fine. 

     (http://www.parkavenueintl.com/changi)

(c) 2 Catalysts to Cashflow coming in 2013. 

     (i) Though UE Bizhub Changi is far from occupied, the income potential seems huge 

         from the setup there. 

         There will be steady recurring revenue when occupancy stabilizes next year.

     (ii) SPVs holding Orchard Gateway will be sold to OCBC next year. 

          This will likely help in its debt reduction. 

Portfolio: October 2012

The month of October saw the market value of my portfolio increase significantly.
 

This was mainly due to: 

a) Frasers Centrepoint Trust price skyrocketting offsetting slight weakness in price of Stamford Land.
b) Buying in of more United Engineers.
 

 
Actions taken in Oct:
 A) Purchased 11 more lots of United Engineers.
 (note: year end results coming, Plus its developments like Changi Bizhub are nearer to completion)
 
My top 3 holdings are still:
1) Frasers Centrepoint Trust, 5% 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
 
I am now still sitting on some cash, albeit lower quantity, to allow me to redeploy. 

Think will stop buying in the meantime and wait patiently for dips. 

Keeping my fingers crossed for value-unlocking in Stamford Land and United Engineers. :-)
 
  
 

Review of FY2012 results: Frasers Centrepoint Trust

Frasers Centrepoint Trust (FCT) announced stellar FY2012 results last week.

Picture of Causeway Point from Streetdirectory.com

FCT is a REIT that earns income primarily from the rental of the tenants in its suburban malls.

(1) Causeway Point       Occupancy: 87%
(2) Northpoint               Occupancy: 99%
(3) Yew Tee Point         Occupancy: 96%
(4) Bedok Point            Occupancy: 99%
(5) Anchorpoint            Occupancy: 98%


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

Number of shares issued (including treasury shares): ~824m
Current share price: S$2.00
NAV: S$1.53
Net Income + distribution from Hektar: $78.3m ($0.095)


I would like to take this chance to share my own experience on my decision-making process with FCT since its now my biggest holding


Background history on the purchase of FCT
---------------------------------------------------

In 2009 May, the REIT market was generally in the doldrums due to frozen credit facilities. This stoked fears that the property owners may experience inability to refinance their mortgage loans.
REITs usually trading at 4~5% yield were trading at abnormally high yields ranging from 10% to 20% then! It was a rarely seen opportunity .
Reality was, I can choose to take action and buy.
But the question was which REIT can best grow my money?
I chose retail malls as their income sources are the easiest to analyze and see. ( investment philosophy 2: http://sustainable-income-sg.blogspot.sg/2012/06/investment-philosophy-part-2-buy_13.html)

I was deciding between FCT and CMT. I ended up chosing FCT simply because it had malls situated near my home and i could study occupancy easily.
Also:
(a) It did not have major refinancing needs near term and unlike CMT, did not do any rights issue due to its prudent gearing levels.
(b) FCT's pipeline for acquisition was clear too, with Yew Tee Point & Northpoint 2 next in line.
(c) Though Northpoint 1 was undergoing intense AEI, FCT's  other malls were having healthy occupancy too.
(d) It had smaller number of shares outstanding compared to bigger REITs like Suntec/CMT. Thus, it implies future earnings growth will lead to bigger impact on EPS/DPU.

 
Probably i was lucky but looking back from now til 2006, the management performed extremely well. Since inception til now, FCT never once did a rights issue. And even when private placements were done for acquisitions, DPU for existing shareholders increased year after year! The existing shareholders never lost out.

My decision to enter FCT involved hours of homework, mall-walking to check on occupancy, speaking to investor relations, doing projections of future income (simple/common sense ones) versus current valuations.

I bought 100 lots of FCT since 2009 in various batches. My average price being $0.94.

My yield on cost (based on $0.10 DPU) is a cool 10.6% p.a.
Though I have sold 35 lots along the way to recycle capital (should have held on to them! but well, shouldn't be too greedy ya!), I am thankfully still holding on to 65 lots. 


My concluding thoughts & future outlook
------------------------------------------------

Frasers Centrepoint Trust continues to be well poised for future growth  via:
A) Organic -  Definite increase in occupancy in CWP plus stepped-up rentals
B) Potential Acquisition - Changi City Point (possibly debt + equity financing)

Caveats though, would be if:
A) Share price hits exuberant levels, causing yield compression to below 4%.
B) Rental price increases cause more vacancies.

For now, the growth trajectory for FCT is pretty clear and straightforward ---> DPU increment!

Portfolio: September 2012

Hi guys! Have not been updating my blog much as have been very busy with work and family matters recently.
Well, my granddad passed away recently. During this time, it led me to reflect on how important it is to spend time with your loved ones while they are still around.
Though financial freedom is my ultimate goal, it is important that along the journey, we do not neglect relationships with those we care. Relationships take efforts too.

I heard a phrase from Zig Ziglar many years ago which states "Be grateful of what you have, while in pursuit of what you want". I found it a very enlightening philosophy and have been subscribing to this ever since.
 
Looking back, I am thankful and have no regrets that during my sabbatical 3 years ago, I spent more time accompanying my grandad on walks on his wheelchair, listening to his WW2 stories and how he survived.  I got to know him better and I will remember his happy-go-lucky spirit and bravery for life. In short, in our hustling and bustling city life, do remember to take extra effort to treasure those around you, ya!

  
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Now for my portfolio commentary.
The month of September saw the market value of my portfolio increase.
This was mainly attributed to the 13% surge in the share price of UE & 11.5% for Wing Tai over the past month.

Actions taken in Sept:

 -Nil

Overall strategy: 

My top 3 holdings are still:
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

The stock market is fairly valued in general, and I cannot predict if it will go up or down......well, even Buffett says he can't, who can? Most stocks are indeed more expensive versus at the start of the year.
I am keeping my small pile of cash aside as usual while waiting.


Nonetheless, a key fact, which is driving my investment hypothesis is that regulators around the world are clamping down on financial regulations and auditing standards. Just my feel from the ground, talking to various people, plus the news and reports around.
So in general, though the growth going forward might be curtailed, it is actually more solid and sustainable. That is the reason why I still have a substantial % of my portfolio invested.  

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.