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Friday, July 29, 2011

My Investment Portfolio (July 2011)

US debt crisis was the focus of this month. Markets seem to factor a downgrade in credit rating of US government bonds, or even to the extent of a default. There were AGMs held for companies with financial year ending March 2011. For the record, I have attended Bukit Sembawang Estates, Global Yellow Pages, IndiaBulls Properties, Willas-Array, Metro Holdings and GP Industries AGMs this month.

Not much changes in my top 30 holdings for this month. There are some movements here and there but these are really due to stock price rather than anything significant.

I have bought the following companies from the open market this month - Bukit Sembawang Estates, CFM Holdings, Harry's Holdings, Hiap Hoe, Hong Leong Finance, Hock Lian Seng, Hong Fok, IFS, Intraco, Lion Teck Chiang, Miyoshi, Multi-Chem, New Wave, OUE, Oxley, PM Data, Popular, PSC Corp, Singapore Land, SHC Capital, Stamford Tyres, Straco, Tiong Seng, Wing Tai and UOI. As usual, no sales transaction was made.

I have participated in the following scrip dividend schemes - DBS and Raffles Medical Group. I have converted the following company warrant to shares - Asia Water. I have also accepted the following takeover/delisting offers - Ocean International and KS Energy warrants.

Next month, I will be spending more time to research on companies in my watchlist for investing ideas. I might also attend some company's half-year result briefing for those companies having financial year ending 31 December 2011.

My S'pore Stock Portfolio - Top Holdings, cash investment only (correct as at 29 July 2011)

Top 30 Holdings (Sing$ Denominated shares)
1. Jardine C&C
2. Noble Group
3. SembCorp Marine
4. F&N
5. SGX
6. A-REIT
7. Bukit Sembawang Estates
8. CapitaMall Trust
9. KepLand
10. OSIM International
11. Metro Holdings
12. Portek International
13. Cosco Corp
14. Sarin Technologies
15. K-REIT Asia
16. Transpac Industrial Holdings
17. Hersing
18. The Hour Glass
19. Singapura Finance
20. Keppel Corp
21. APB
22. PSL Holdings
23. Fragrance
24. CapitaCommercial Trust
25. CDL H-Trust
26. OCBC Bank
27. Wheelock Properties
28. First REIT
29. Aspial
30.
Challenger Technologies

Top 5 Holdings (US$ Denominated shares)
1. Jardine Strategic
2. Dairy Farm
3. Hong Kong Land
4. Jardine Matheson
5. Mandarin Oriental

Top Holdings (HK$ Denominated shares)
1. Fortune REIT
2. Tan Chong International

Top Holdings (Aust$ Denominated shares)
1. AV Jennings
2. AustLand PG

Top 5 Holdings (CPF OA investment)
1. Keppel Corp
2. Streettracks STI ETF
3. CapitaMall Trust
4. A-REIT
5. Challenger Technologies

My Hong Kong Stock Portfolio (listed on SEHK)
1. Peace Mark Holdings

My Unlisted Company Portfolio
1. Automated Touchstone Machines Ltd
2. Iconic Global Limited
3. Greatronic Limited
4. China Printing & Dyeing Holdings
5. General Magnetics
6. Fastech Synergy
7. Beauty China
8. Memory Devices
9. Jurong Tech
10. FM Holdings
11. Oriential Century
12. Japan Land

My Unit Trust Portfolio:
http://www.fundsupermart.com/main/community/Portfolio_View.svdo?id=P199

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21 Comments:

Blogger Dividends Warrior said...

Any views on telcos?

8:42 AM  
Blogger ghchua said...

Hi Dividends Warrior,

I have no particular view on any sector, except to say that each of them have their own merits. As for telcos, they are a defensive sector with good cash flow generation and a stable customer base. If you are going for dividend, then this is a sector you can consider for long term investment.

7:23 AM  
Blogger faith said...

Hi ghchua,

Thanks for your previous reply and they have been enriching. I noticed you don't include gold etf in your portfolio. Would you advise buying gold etf for long term investment? If a recession lasts for a year, would you buy more stocks, hold on to your entire portfolio or sell stocks to cut loss? Do you advise to sell cyclical stocks and buy defensive stocks once you see theres a reverse in trend? Thank you.

5:07 AM  
Blogger ghchua said...

Hi faith,

I don't have gold in my portfolio simply because it doesn't pay dividend. Gold, if you remember, also crashed in the last financial crisis, along with other financial instruments. When there is no liquidity in the market, investors just panic and sell everything.

If you had been following my blog, I have adopted a defensive approach in my portfolio management for quite sometime. You should not attempt to spot market trend and try to switch stocks. Rather, you should position your portfolio ahead of the crash. If you felt that the market is overvalued, try to overweight more defensive stocks in your portfolio. Even if you are in a defensive position, you should still have some cyclical stocks in your portfolio.

I will continue to buy stocks even during recession. I will still hold onto my portfolio, just like what I did during the last financial crisis. As long as you have an investment plan, you should follow through it.

5:42 AM  
Blogger ZhuKoLiang said...

hi shifu,

if no active income, should buying of stocks lessen?

3:49 PM  
Blogger ghchua said...

Hi newbie_george,

Not really. I have some spare cash in hand and also some passive income from my portfolio. I can choose to buy aggressively if I wanted to. But that is normally not my style as I like to be slow and steady and spread my purchases throughout the month/year.

8:00 PM  
Blogger Everlearning said...

Hi ghchua,

This year I have quite a few stocks that either go dual-listing, consolidating, or both. SM Summit has changed into dormitory's business and a new name was given. Swing Media is consolidating from 5 to 1, just to list these two as an example.

I don't really know how to anticipate to this kind of news. You, an experienced investor, have any good advice for me?

10:40 PM  
Blogger ghchua said...

Hi Everlearning,

I don't try to anticipate news coming out from companies. Rather, I try to look at their business and past corporate actions to form an idea of what it will do going forward. If you have been following, Swing Media had done a few rights issues for the past few years and the number of shares out there is getting more and more. So, it is no surprise to me that they are going to do a share consolidation.

As for SM Summit, they are distributing cash out from their balance sheet for the past few years. It is quite clear that their business is mature and not much growth. Therefore, they are changing to a new business.

11:28 PM  
Blogger ZhuKoLiang said...

Shifu,

1) r u a shareholder of sino-env?

2) can a shareholder of sino-env attend the "Court Meeting of Creditors"?

3) can shareholder dun accept the takeover of the sino env shares by AVIC?

12:29 AM  
Blogger ghchua said...

Hi newbie_george,

1. Yes.

2. No. But you can attend "Court Meeting of Shareholders".

3. To be very frank with you, there is no other choice. The AVIC scheme is the only one option on the table now. If you don't accept, the company will be delisted from SGX and you will be left with nothing. In fact, the judicial managers do not have control over those PRC subsidiaries and therefore the only asset that can be realized is $1.8 Million cash in the S'pore bank. But it is not enough to pay off the creditors. Therefore, the company is technically gone case and the scheme is the only way to start all over again with a new company and to satisfy all the creditors. Even the creditors will have to write-off some of their debt by accepting the scheme.

I will vote for the scheme.

1:52 AM  
Blogger JTK said...

Hi GHChua

Can you share your strategy on the capital allocations?
I notice that you have been buying stocks for every month.

How do you allocate the capital for every-month stock-purchase? Is the amount fixed or variable?

How do you reserve the cash for the downturn when the stocks are on sale (Maybe 50% discount)? And emergency fund?

Now I am a bit confused how I should do with my portfolio to get ready for the probable looming recession on the horizon.
To sell or not to sell, that is the question. I believe you seldom sell your stocks. Could you share the virtue of buy-and-hold based on your experiences?

The last question is how to determine when to switch from Value to Growth investing.

Thank you in advance

JTK

4:23 AM  
Blogger ghchua said...

Hi JTK,

My strategy for capital allocation is very simple - i.e. to remain almost fully invested at all times, with some spare cash for emergency purposes.

Allocation of capital for investment every month is variable. It depends on how much cash I got from my investment every month (via dividend, corporate action etc) or if there is an investment opportunity. I don't need to sell my stocks to get funds for investment. For example, this month I got a sudden inflow of fund due to the takeover offer of Portek International. I have yet to fully invest the proceeds and therefore I have a cash drag at this moment.

I don't normally reserve cash for big stock sale but sometimes I do hold some cash if there is no investment opportunity. But I try not to hold more than 5% cash at any one time. Emergency fund is reserved when there is an urgent need for cash and they are not invested.

The virtue of buy and hold investing is often misunderstood. It is not buy once and hold but rather consistently committing funds into the market every month, regardless of market conditions. The dividend received and the compounded rate of return are few examples of merits of this method of investment.

I don't switch from one style of investment to another, just like I don't switch stocks. Rather, I overweight or underweight ideas in my portfolio. With slow growth expected going forward, I don't expect to overweight growth stocks in my portfolio anytime soon. However, I will still buy growth stocks when opportunities present themselves.

9:03 PM  
Blogger faith said...

Hi ghchua,

In your opinion, are K Green and Cityspring good defensive stocks with strong fundamentals to buy for now? Thanks for advise.

4:45 AM  
Blogger ghchua said...

Hi faith,

Though Business Trusts like CitySpring have long term contracts and decent cash flow, their capital structure is not defensive. Most of these Business Trusts are highly geared at corporate level and/or at asset level. Also, some of their debts are short term in nature and they face re-financing risk. Some of these debts/bonds are also badly structured, and they are sometimes being hit because of rating agencies downgrade, depreciation of their asset value etc.

I don't recommend Business Trusts as defensive assets. In fact, they are most risky during financial crisis as liquidity dries up and they are at the mercy of their banks/creditors. Be prepared to fork out more monies for rights issue and cut in dividend payout when times are bad.

8:35 PM  
Blogger ZhuKoLiang said...

Shifu,

HAIZZZ... the HAIZZZleck wahlan looks out of the money. Should we sell the wahlan since market price < exercise price?

Haizz... This haiLEG really got no leg to run...

3:08 AM  
Blogger ngcheeki said...

Hi ghchua,

I was unable to attend Metro AGM last month. Would you mind share with me some of the highlight during the AGM?

2:26 AM  
Blogger ghchua said...

Hi ngcheeki,

Basically, shareholders are concerned about its share price which trades at a discount from its NAV. There had been suggestions of using share buyback to narrow the discount, but the board rule that out as they said that they should not artifically trying to pop up the share price. They are concerned about managing the company well.

There is also question on selling some of their China malls into a REIT, but board also rule that out. Some shareholders also suggest the board to be more aggressive on dividend payout and asked about their dividend policy, but board said that they are careful about distributing too much dividend as they want steady dividend payout every year rather than depleting their cash reserves with aggressive payout.

Board also want to conserve cash because they want to reduce their bank borrowings. They are conservative with their capital structure.

8:54 PM  
Blogger ngcheeki said...

Hi ghchua,

Thank you for your summary of Metro AGM.

The share buy back remark was what the CEO of Sing Holding said too on share buyback during the AGM. Personally, I prefer company to have share buyback especially during market crash.

On the "conserve cash because they want to reduce their bank borrowings" remark sound like what I heard during the Bukit Sembawang AGM too. Personally, I like their approach of having conservative capital structure but one sore point is that the company is paying Group MD Jopie Ong too well between 8.75 million to 9 millions :( :(

5:44 AM  
Blogger faith said...

Hi ghchua,

I have bought some Cambridge and First Reit. Do you think I should hold them through the recession? How about commodity stocks like Noble Grp and Golden Agri? Everyone seems to be selling stocks nowadays to cut loss. Recently I have bought Jardine C&C at nearly $50. I wonder if I should hold them as I am not sure if the company has invested in US or Europe. What is your advice? Thank you.

6:45 PM  
Blogger ghchua said...

Hi ngcheeki,

I don't think the high pay for Jopie Ong will be repeated. It was high during the last financial year because they sold their China mall and made some money.

8:34 PM  
Blogger ghchua said...

Hi faith,

I do like First REIT because of their defensive healthcare assets. I don't really like Cambridge due to their previous high gearing which results in two rights issues last year and this year.

Commodity stocks are highly volatile. They will be badly affected when the stock market is not doing well. However, if you are a long term investor, you should not be too worried about short term price movements.

Jardine C&C's key asset is its over 50% stake in Astra. Astra is a diversified business group with interests in plam oil, automotive, financial services etc. Its business is spread across South East Asia with good exposure to Indonesia, and I particularly like its stake in Bank Pertama and plam oil business via Astra.

I don't think Jardine C&C as a group has much exposure to US or Europe.

8:51 PM  

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A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!

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