Wednesday, February 28, 2018

My Investment Portfolio (February 2018)

STI ended the short February month of 2018 at around 3518 points, a bit down from last month. Though the closing index value might not change much, it had been a very volatile month with the early part being hit by massive volatility due to US interest rate hike fears. In the middle of the month, corporate results managed to gain confidence back to the market, but volatility increased near the end of the month due to weak manufacturing data out from the region.

For this month, I have attended the following AGMs/EGMs/briefing - Pan Hong, K1 Ventures, United Engineers and Transcorp.

For my top 30 holdings, reflecting a volatile month, there had been some major changes. LTC Corp appeared in the list for the first time after its controlling shareholder made a cash offer for the company. DBS also made it to the list due to decent result release and also increased dividend payout policy. Other major movers include Venture and Best World. Spindex dropped out of the list due to poor earnings release.

I have bought the following companies from the market this month - EnGro, GL, Global Testing, Ho Bee Land, Hong Leong Finance, Hotel Grand Central, Hotung, Hotel Properties, Jardine C&C, LTC Corp, M1, Mandarin Oriental, Perennial, Sinarmas Land, SingTel, ST Engineering, Teck Wah, VICOM, Wheelock, Yeo Hiap Seng and Yoma. I have also closed my positions in Mirach Energy and Pan Hong.  

I have participated in the following scrip dividend schemes this month - ESR-REIT and First REIT.

Next month will be a quiet one for me as many companies with financial year ending 31 December 2017 had already reported their results. However, I will be going through those that I have not went through in details yet. With markets projected to be increasingly more volatile going forward, I will be adding onto my stronger positions more selectively while the process of closing out and pruning down weaker positions will continue.

My S'pore Stock Portfolio - Top Holdings, cash investment only (correct as at 28 February 2018)

Top 30 Holdings (Sing$ Denominated shares)
1. Jardine C&C
2. United Engineers
3. Haw Par
4. Venture
5. Metro Holdings
6. Tat Seng
7. UOL
8. Hotel Grand Central
9. Bonvests
10. Singapura Finance
11. Hong Leong Finance
12. GK Goh
13. Hong Fok
14. Bukit Sembawang Estates
15. Hiap Hoe
16. Keppel T&T
17. Sing Investment & Finance
18. Hotel Royal
19. Far East Orchard
20. Stamford Land
21. Best World
22. LTC Corp
23. Hotel Properties
24. A-REIT
25. DBS
26. Old Chang Kee
27. SGX
28. Isetan
29. ComfortDelgro
30. PNE Industries

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

Top Holdings (HK$ Denominated shares)
1. Shangri-La Asia
2. Tan Chong International
3. Fortune REIT

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

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

My Hong Kong Stock Portfolio
1. Peace Mark Holdings - Under Voluntary Liquidation
2. Z-Obee Holdings Ltd

My Australia Stock Portfolio
1. GPS Alliance Holdings Limited

My Unlisted Company Portfolio
1. Automated Touchstone Machines Ltd
2. Iconic Global Limited
3. Dongshan Group Ltd (formerly known as Greatronic Limited)
4. General Magnetics
5. Fastech Synergy
6. Beauty China - Under Liquidation
7. Memory Devices
8. Jurong Tech - In liquidation - Compulsory winding up (Insolvency)
9. FM Holdings
10. Zhonghui - In liquidation - Compulsory winding up (Insolvency)
11. FerroChina - Under Liquidation
12. FirstLink Investments
13. NEL Group
14. Jets Technics
15. Guangzhao Industrial Forest - In liquidation - Compulsory winding up (Insolvency)
16. Hongwei Technologies Limited (In Provisional Liquidation)
17. FDS Networks Group
18. Aussino Group - In Liquidation - Creditors' voluntary winding up
19. China Oilfield Technology
20. China Milk Products Group - Under Liquidation
21. Pacific Healthcare
22. Eratat Lifestyle - In Liquidation
23. Fung Choi Media - In Liquidation
24. P99 Holdings - In Liquidation
25. K1 Ventures - In Liquidation
26. Jaya Holdings - In Liquidation

My Unit Trust Portfolio:



Blogger retnuoc said...

Hi GH,

May I know what's your view on Venture? Do you think current valuation still worth to invest after more than 100% share price rally? Thank you

2:21 AM  
Blogger ghchua said...

Hi retnuoc,

Venture had a new growth business segment in life science, and it seems to be growing quite fast. It had also caught me by surprise and its latest result had shown that this is going to be stronger going forward. This plus their strong cash generating ability had allowed them to increase their dividend payout this year. But current valuation might have factored in some of these good news. Therefore, personally, I will not be adding onto my current position in Venture but I will not be selling anytime soon.

5:09 AM  
Blogger Alucard said...

For venture I think it will drop back to 26 or even 25 after rising too fast..
What goes up so sharply must come down.

I bought at 23 where it dropped to 21 during the correction and sold at 28, waiting to reenter at a better price. A quick profit. Wish I did buy more.

Just wondering, what's your XIRR / ROI p.a. for your unit trusts? seems doing very well.

Also surprised you invested using CPFSA.. i cannot find any unit trust that can beat the 4% guaranteed interest significantly .. the best is one with a 5% p.a. ROI but the risk-reward ratio not worth it.

Surprised both at the number of unit trusts bought and havent taken profits yet.

how do you select which unit trusts to buy?

8:35 AM  
Blogger Alucard said...

for UT purchase using CPF-OA i tought there's a 3% hidden sales charge for initial investment, and 0% for subsequent .. So I try to buy as few as possible and then gradually add on subsequent investment to avoid the initial sales charge.

The more counters you buy, the more you pay for this initial sales charge aka frontload fee.

The trick is to buy the bare minimum initial and then buy more subsequently.

8:41 AM  
Blogger ghchua said...

Hi Alucard,

I think as a long term investor, I will not comment on short term price movement of a particular stock. Venture had been in my portfolio for a very long time, and its dividend yield is also quite decent. Therefore, since my portfolio is well diversified, I am not too concerned on whether an individual stock is overvalued or moved up too much in the short term. Rather, I will only take action when I am not comfortable with its allocation in my portfolio after accessing its future prospects. At this moment, I will maintain my exposure to Venture.

I did not calculate XIRR/ROI pa for my unit trusts as I believe in the long term, I will be able to beat CPF-OA interest rate of 2.5%pa. It is quite a no brainer actually. For unit trust selection using CPF-OA, I actually decide on the specific geographical and sector that I wish to be exposed to before selecting those funds to invest in. I have selected mostly funds with low expense ratios like those from Nikko, Lion Global, UOBAM, Schroders etc. There are of course some exceptions like Aberdeen which has higher expense ratio for their funds but I like their investment approach so I can live with their higher fees. Basically, the concept of investing my CPF-OA funds is pretty simple. I have used global and regional funds as a baseline and overlay them with single countries or specific sector fund ideas. If I have say an idea of a specific country/sector being oversold, I will add more onto them. Otherwise, I will just add onto a more generic baseline fund like a global, regional or emerging market fund.

Why I have so many unit trusts? I think the main reason to diversify away fund manager specific risk. Another reason is because some of those funds had already been excluded from CPF Investment Scheme and I could not add onto my existing holdings. Therefore, I have to find an equivalent one in the market that could utilize my CPF monies. But I try not to add any more new funds and had been only adding onto existing ones during the past few years.

For CPF-SA, I have detailed the reasons for selecting those 3 funds to invest in the blog post below. Again, I must add that some of these funds might have already been removed from CPF-SA investment scheme and you could no longer invest in them. Therefore, your screening for CPF-SA funds might have missed out some of those.

Could you clarify on your comment on initial sales charge using CPF-OA unit trust investments? I have invested using online platforms like FSMOne and there is no sales charge at all. The only charge is from CPF agent bank.

Hope that the above long post clarifies some of your questions.

7:01 PM  
Blogger Alucard said...

Some of the unit trusts prospectus or fact sheet (forgot which) states the sales charge is 3% for cpf-oa. Not sure whether it is absorbed or it is charged when you buy directly from fund manager. It is quite confusing

I think it may be absorbed by the fund house . On a sidenote, the fund house may even need to pay the broker some commission fee for referring us to buy. Otherwise how does broker earn?

It may seem the sales charge is absorbed or not charged as when i calculate the units times unit price i am able to get back the total investment amount. If i buy from a bank there is an explicit sales charges.

Ok now it seems the sales charge is just a guideline to be administered by the agent broker

7:43 PM  
Blogger Alucard said...

In this uncertain climate i prefer not hold long term. Esp venture it may end up being a one-hit wonder stock that peaks once and die down (if no more big contracts). Stocks like AEM and venture do not have good price actions for the past years until they shot to fame.

A lot of local companies are reliant on contracts for earnings and thus very inconsistent in earnings.

For electronics exposure i rather buy big players like apple or samsung. But in general i prefer companies with big economic moats like facebook with a strong network effect

Just my humble opinions

7:51 PM  
Blogger Alucard said...

For venture The new growth area remains to be seen and may hurt earnings due to capex? Market is very sensitive to earnings. Rally like this may not last long (i prefer to be more conservative) . Who knows whether it will die down after a bad or less-than-expected earnings result

7:56 PM  
Blogger Alucard said...

Honestly aem and venture reminds me of bitcoin price chart haha. Look what happened

7:59 PM  
Blogger Alucard said...

Ok since u already hold venture before it shot up, i think it is reasonable to maintain it.

For new investor like me i dont think the high price now is very stable esp during an old bull climate.

Prefer to take profits and exit

8:05 PM  
Blogger ghchua said...

Hi Alucard,

I only invests in local listed companies currently so will only be looking at companies listed on SGX.

I do agree with you that a lot of technology stocks listed on SGX are contract manufacturers rather than product innovators so they are very much driven by technology cycles and demand from their customers, which are mostly MNCs. But there are many companies that could ride through many cycles and are cash flow positive, pay decent dividends throughout the years and still survive. Venture is one of them. Even during bad years, they have paid out decent dividends. This is due to their good capital management and also prudent capex. Others include CEI, PNE Industries, Spindex etc. Some good ones like Innovalues had been taken private. Therefore, there is still gem to be found on SGX for technology stocks. Just need to keep working hard to pick the good ones.

3:40 AM  
Blogger Alucard said...

Whats sg’s competitive asvantage in electronics manufacuring?
Thought taiwan and china and our neighbours can provide cheaper land and labor.
The skills and knowledge are low barrier to enter

5:35 AM  
Blogger Alucard said...

Thats why sg has started moving into precision eng such as nano tech

5:38 AM  
Blogger ghchua said...

Hi Alucard,

Singapore listed electronics manufacturers have plants all over the place, so they are not only based in Singapore. Most of the better players that have done well are actually in the high mix, low volume manufacturing business model. Which means, their plants might not run 24x7 and churning out high volume but standard parts, but they are involved with their customers from the design stage all the way to production. In this way, their value-add is on their skill set in partnering their customers all the way and manufacturing products that serve only their customer's unique design needs. Margins for these players tend to be higher as you can see from the likes of CEI, PCI, PNE Industries etc. This stickiness in relationships allow these players to retain their customers even during technology cycle downturn.

Electronics Manufacturing business is not only about cheap land and cheap labour. There is more to that. For low volume, high mix kind of business model, one don't need a lot of land and labour to make it work. Rather, having Singapore as a design centre and a few manufacturing plants near customers overseas, these companies can make it work with more value added services.

6:44 PM  
Blogger Everlearning said...

Hi ghchua,

It has been quite a while that I last commented in your blog. Just feel that I should drop a line or two to say that I am keeping well and have been keeping very minimal equity investments.

There is nothing better than keeping one mind's sane in this erratic environment of investments by staying far, far-away from it. There are too many pitfalls knowingly or unknowingly for me to decipher. Too many stock counters have been suspended or delisted from the stock exchange. All that I have now are either for dividends' income or gradually to disappear from the listing.

I don't think I take pleasure in seeing stock counter becoming just a playing ground for people to speculate the prices to make profits, or a legitimate ground for companies to raise money to use subscription rights to pay off their doubtful debts, escalating bonuses or some expansion projects, etc... year after year.

If only I have your intelligence and discernment which I think I am lacking, I am slowly weaning myself away from equity investments. It is really good to have known you and the numerous advice and tips you shared with me and your readers. Wishing you every success in your investments.

11:16 PM  
Blogger ghchua said...

Hi Everlearning,

Nice to hear from you again. No, I don't think I have more intelligence than any of you out there. I am also an ordinary retail investor like many of you guys out there.

I am not in the market to speculate, but it doesn't mean that there are no speculators out there. The market makes up of different players with different investment profile and objectives. That's what makes the market interesting. Therefore, as long as we stick with our own investment objectives and strategies, we can just ignore them. After all, they are part of the whole ecosystem and we cannot stop them from participating.

I think we can choose which stocks we can invest in and avoid those which raises funds often and destroy shareholders value in the long term. I admit that I have quite a lot of them in my portfolio currently and therefore I have started the process to prune down and eliminate some of these counters. There is no hard and fast rules in terms of dealing with these stocks and there are also some grey areas. But yes, I do agree with you that in general, all these stocks have no place in our portfolio.

On the topic of delisting, I think we could not stop them from doing so but we can certainly try to make things difficult for them. If there is a meeting, try to attend or at least vote against some of these delisting resolutions via proxy if you are unhapppy with it. I think as minority shareholders, that is the best we can do. Unfortunately, not every time we can stop a delisting but at least we have tried our best.

I hope that you have not given up on our stock market. I have certainly benefited from investing in it throughout the years and will continue to do so. I will not let these setbacks bring me down and will focus on the big picture of investing for long term to achieve my investment objectives.

11:12 PM  
Blogger Chong said...

Hi ghchua,

I have some queries regarding the rights issue and warrants of MTQ. This is my first encounter with a warrant attached rights.

I realised that the counter XR on 20/3. Based on the announcement from SGX, we were told that the book closure date is 22/3 but other than that, there is no announcement of the last day of trading of rights shares and warrants. Does that means these rights and warrants cannot be traded like the normal rights?


6:10 AM  
Blogger ghchua said...

Hi Chong,

I think you have mistaken. "Nil paid" rights will give you the right to subscribe for the rights shares plus free warrants. There is no separate warrant "nil paid" rights trading. Therefore, if you sell away all your "nil paid" rights, you have no right to apply for those rights shares with free warrants. Those free warrants are only detachable and traded separately after the rights issue had been concluded and those shares and warrants had been issued and credited into your account.

The dates had not been announced yet for nil paid rights entitlements trading period for MTQ but they are normally listed for trading in a short period of maybe only one week or so. Do look out for their offer document to be sent to you via post or visit the following link below:

The offer document will have all the information that you wanted, including the dates of key events like the date of commencement of “nil-paid” rights trading.

10:33 PM  
Blogger Chong said...

Hi ghchua,

Thank you for your reply. So this rights cum warrant issue is basically the same as the normal rights issue that I have taken part previously. So is there a possibility that I can apply for excess rights?


7:11 AM  
Blogger ghchua said...

Hi Chong,

Should be able to apply for excess rights if you wish to. I will wait for the offer document to come out first. Details will be there.

9:20 AM  
Blogger Chong said...

Hi ghchua,

I received the rights offer document for MTQ this week. With regard to applying for excess rights, I would like to find out for every 4 EXCESS rights that I apply, does that mean I have to also automatically pay for 1 warrant to convert it to MTQ shares?

Eg. If I have applied for 12,000 EXCESS rights shares, does that mean I have also have to pay for 3,000 warrants automatically to convert these warrants to MTQ shares at the ATM? I have tried it out at the ATM but there was no mentioned of warrants and I terminated the transaction prematurely.

Appreciate your advice.


1:48 AM  
Blogger ghchua said...

Hi Chong,

No. You do not need to pay for those warrants at the ATM. The warrants are issued free of charge to you and detachable from the rights shares. Which means, you are free to sell your warrants in the market or convert them to shares (by paying $0.22 per warrant to convert thwm to shares anytime from issue date to 5 years after that) after the rights issue had been completed. Details on the warrants are found on Page 60 to 64 of the rights offer document for MTQ.

In your example, you will need to pay $2400 for 12,000 MTQ excess rights shares. If you are successful in all your excess rights application, you will be allotted 12,000 MTQ shares and free 3,000 MTQ warrants. You can then decide what you wish to do with your 3,000 MTQ warrants (whether to convert all/some of them to MTQ shares or sell all/some of them in the market) after the rights issue closes and they will be listed on SGX as a separate counter. You can also choose to buy more warrants from the market if you wishes to. The warrants have a life of 5 years so you have plenty of time to decide. But do remember that if you did not do anything to the warrants after 5 years, they will expire worthless.

Hope that the above helps.

12:35 PM  
Blogger Chong said...

Hi ghchua,

Thank you for your help to clarify my doubts. I received the notification from SGX regarding the result of the rights issue. As this is the first time I am dealing with warrants, may I know how am I going to convert these warrants to shares? Does ATM allows me to do this conversion?

Also from the results of the rights issue, the substantial shareholders like KKK and KBW are getting excess rights which seems to imply that many shareholders have not participate in this exercise. It seems to me minority shareholders are not optimistic of the business will turn around. Care to share your views?


6:01 AM  
Blogger ghchua said...

Hi Chong,

You are most welcome.

To convert those MTQ warrants, you have to call up the warrant agent to ask them to send you the warrant conversion form or you can collect it from their office personally. After that, fill up the form, attach a cashier's order (payable for the full amount needed to convert those warrants to shares) with it and submit it back to the warrant agent. Details on the warrant agent can be found on the rights issue offer document and SGX website.

Yes, I think the rights issue is not very well taken up. I guess investors might not be optimistic on MTQ going forward due to the challenges in the oil & gas industry currently. However, they have managed to raise the amount they need for this rights issue which means it will help them to at least tide through the next two years. We shall wait and see whether investors are right or wrong in their view.

6:54 AM  

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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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