My Investment Portfolio (July 2021)
STI ended this month higher at around 3166 points but it was a volatile month. Singapore went back to Phase 2 (Heightened Alert) status again during the month due to raising Covid-19 cases. Chinese government’s crack-down on technology, education and property sectors had also been making the headlines this month. Concerns on rising inflation and rising Covid-19 cases globally also contributed to investors' nervousness on markets.
For my top 30 holdings, Jardine C&C returned to the list after announcing a decent set of 1H21 result, mainly due to Astra. iFAST was also in the news, after announcing a set of results that disappointed the market due to lower than expected growth in non recurring income. CFM dropped out of the list after I reduced my stake in the stock. Not much changes had been seen in the other stocks in the list.
I have bought the following companies from the market this month - ABR, Asia Enterprises, Asia Vets, Bonvests, Brook Crompton, Bund Center, Chuan Hup, City Developments, ComfortDelgro, F&N, First Sponsor, Frasers Property, GK Goh, Global Testing, GuocoLand, Heeton, Hiap Hoe, HL Global, Hong Fok, Hongkong Land, Hotel Grand Central, Indofood Agri, Jardine C&C, Karin, Keong Hong, Keppel Corp, Kingsmen, KSH, LHT, Metro, Noel Gifts, OUE, Overseas Education, SBS Transit, shopper360, SingTel, TIH, Yanlord and Yeo Hiap Seng. I have reduced my stake in CFM and Metal Component. I have also closed my positions in Hoe Leong and Pan Asian.
I have participated in the following rights issue - Olam International.
Next month will be another busy one for me. I will continue to go through those half year result release from companies with financial year ending 31 December 2021. With increasing volatility in markets expected, I will position my portfolio defensively, with focus on value stocks. I will also continue to de-risk my portfolio by reducing exposure to higher risk and speculative stocks.
My S'pore Stock Portfolio - Top Holdings, cash investment only (correct as at 30 July 2021)
Top 30 Holdings (Sing$ Denominated shares)1. iFAST
1. Mandarin Oriental
2. Hongkong Land
3. Jardine Matheson
4. Dairy Farm
Top Holdings (HK$ Denominated shares)
1. Tan Chong International
2. Shangri-La Asia
Top Holdings (Aust$ Denominated shares)
1. AV Jennings
Top 5 Holdings (CPF OA investment)
1. Streettracks STI ETF
2. CapitaLand Integrated Commercial Trust
4. Keppel Corp
5. Challenger
My Hong Kong Stock Portfolio
1. Peace Mark Holdings - Under Voluntary Liquidation
2. Alpha Professional Holdings Ltd (formerly known as Z-Obee Holdings Ltd)
My Australia Stock Portfolio
1. GPS Alliance Holdings Limited
My Unlisted Company Portfolio
1. Iconic Global Limited
2. Dongshan Group Ltd (formerly known as Greatronic Limited)
3. General Magnetics
4. Fastech Synergy
5. Memory Devices
6. Jurong Tech - In liquidation - Compulsory winding up (Insolvency)
7. FM Holdings
8. Zhonghui - In liquidation - Compulsory winding up (Insolvency)
9. FerroChina - Under Liquidation
10. FirstLink Investments
11. NEL Group
12. Jets Technics
13. Guangzhao Industrial Forest - In liquidation - Compulsory winding up (Insolvency)
14. Hongwei Technologies Limited (In Provisional Liquidation)
15. FDS Networks Group
16. Aussino Group - In Liquidation - Creditors' voluntary winding up
17. China Oilfield Technology
18. China Milk Products Group - Under Liquidation
19. Pacific Healthcare
20. Eratat Lifestyle - In Liquidation
21. Fung Choi Media - In Liquidation
22. K1 Ventures - In Liquidation
23. DMX Technologies - In Liquidation
24. Europtronic Group
25. China Sun Bio-chem Technology
26. Attilan Group
27. Transcorp
posted by ghchua at 7:56 PM
28 Comments:
Hi mr chua,
Im asking about comfortdelgro n sbs transit.
With the gloomy outlook due to covid 19 which will go on a long time, y buy these 2 stocks or anything transport related. Besides looking at it from a value standpoint, anything u can share that make u press buy for these 2 stocks. Thanks very much
Hi 1,
SBS Transit revenue model for bus is bus contracting model. As long as they run those services that they bid for within the contract period according to specified performance standards, they will be paid. It is not based on number of commuters and amount of bus fare collected.
ComfortDelgro business is well diversified in various countries and not in Singapore only. Among all their business arms, I expect their Singapore taxi business to be most affected by Covid-19. Having said that, the company is looking into ways to innovate in this new normal, and yes, there is value in the stock as they are in the process of unlocking assets to realize some cash.
All in, I don't think Covid-19 will spell the end of transportation here in Singapore. People still need to travel around Singapore. It is just that in this new normal, a hybrid way of working model is preferred. Therefore, we might see different start work hours for the entire population and transport operators will have to adjust accordingly.
Hi Mr. Chua, may I know your reasonings for buying into TIH? Is their bulk of investments in OUE behind it? TIH other ventures have not really made much headways. Thank you.
Hi Jamesbond007,
I think if you look deep into TIH, you would have realized that there is much value in the company.
1. It is trading at around 50% of its NAV. NAV is make up of mostly cash, debt and equity investments. Zero debt.
2. Among those investments, you are right to say that bulk of it (around 40%) is under Fortune Code, which invests in OUE. OUE is trading at a decent discount from book value. By buying TIH, you are actually getting OUE at a discount over discount from its book value. Why do I say that? TIH is trading at a discount from NAV. TIH's investment is Fortune Code is marked to market. Since OUE is trading at below book value, one is effectively buying OUE at a discount from its market value via TIH. So, we get two sets of discounts here.
3. It is incorrect to say that TIH other ventures are not making much headway. In 2020, TIH made one divestment and received total proceeds of US$16 million. Some of these private equities, funds and credits need time to realize their value. So, you won't see consistent kind of returns every year, but some quiet years and some big divestment in another year.
I guess closed end funds like TIH had always been under-appreciated by markets. Since TIH also invested in private equities, it makes it even worse as some of these investments might not be well known by the market. We just need to be patient for value to be realized by the market one day.
Hi Mr Chua, may I have your view on ara logos logistic trust. Is it over value? Thanks.
Hi Unknown,
I don't think ARA Logos Logistics Trust is overvalued, but it is decently priced right now. Which means, its not cheap enough for me to buy. In fact, a good opportunity to add more was their last rights issue, which had been reasonably priced.
I am still holding onto the REIT, but will not be adding onto my position anytime soon.
Most of the logistics and industrial REITs are now trading above book (including ARA Logos Logistics Trust). With dividend yield of around 5%pa for most of them, I think it is not at a bargain cheap price.
Hi Mr Chua, thank you for offering your valuable advice.
Hi GH,
I'm your silent reader.
I saw you had increased your exposure to Kingsmen Creative in July updates. Kingsmen is very badly in this pandemic and the short term outlook is not looking promising.
Do you like to share your reasons with me? Thanks.
Hi setan,
Kingsmen Creatives is currently trading at around 0.5x NAV. With around $80m in cash and equivalents in its balance sheet, I believe they are in a strong position to tide through this pandemic.
With the easing of Covid restrictions in Singapore going forward, there is a good possibility that large events and tourists will be coming back soon. That will benefit Kingsmen's businesses in their Exhibitions, Thematic & Attractions and Retail Interiors business segments.
I believe that their current low valuation had factored in most of the not so promising short term outlook that you have mentioned.
GH congrats on ur $ayn position. I was one of the guys at the bid for the past 2 months. Is there anyway to DM/email u to talk about deep value stocks?
Hi Janeo
Congrats on your investment in Global Testing too.
I think going forward, shortage of semiconductors will push up testing prices too, which will benefit the company. It is a unique Taiwan based company that is really undervalued by the market. Trading at less than 0.5x book with no bank loan, they have been careful in expanding their capex for the past few years and returning excess cash to shareholders via capital reduction. But I noticed that they have recently purchased more PPE, which might indicate that demand is coming back again.
We can chat on deep value stocks here. After all, this is an open forum where one can discuss on any stocks, not only those that are in my portfolio.
Thanks. I was afraid of derailing the post.
Do u own deep value stuff listed on the hkex as well? There's quite a number of interesting names over there it seems like.
Also I'm curious about ur unlisted portfolio. Is there any liquidity in them? How does one buy/sell those in Singapore?
Hi Janeo,
No. I don't do HKEX. I am only focusing one SGX listed stocks. However, there are some stocks that are dual listed on HKEX and SGX and I bought them on SGX. Examples include Shangri-La Asia, Willas Array, Tan Chong International, China Everbright, SIIC Environment etc. These are some deep value stocks which I spotted listed on HKEX and I bought them on SGX.
No, there is no liquidity in these unlisted companies. Most are troubled ones that were delisted from SGX last time without an exit offer. Most of them are no longer alive, just zombie companies.
Thanks for the revelation. I always felt fascinated about the unlisted stuff.
Have u looked at Tye Soon (SGX:BFU)? Trading at a discount to ncav and Bapcor (ASX:BAP) recently took a 25% stake at 57c with the intention of future collaboration.
Also I noticed quite a lot of corp activity going on with ur portfolio. Is merger arb a big part of ur portfolio as well?
Hi Janeo,
I have been holding Tye Soon for a long time. It is a traditional kind of distribution business which is managed by family related controlling shareholders until recently when Bapcor came in. A lot of these trading and distribution businesses listed on SGX had been trading below NCAV. Most of these are characterized by high inventory, high receivables and low margin. I don't think Tye Soon is different from any other players out there. With Bapcor coming in, they might be able to scale faster in Australia, but that will also come with risk in running a bigger footprint.
No. M&A is not in my consideration when I bought a stock. Most of the time, I bought it because they have deep value. Corporate activities might be due to the fact that some of these controlling shareholders recognize the value of their company and therefore they take actions to unlock value in them.
Glad to find another Tye Soon holder. Nice gains haha.
Have u looked at Procurri (BVQ) also? Trades at single digit fcf multiple and its largest shareholder launched a tender offer at 36.5c few months back. Post tender this had fallen down to ~30c.
Btw, how do u generate ur ideas and what are the main things u look out for usually?
Hi Janeo,
No. I don't have Procurri. I don't really like the stock. First, it is not a deep value stock as it is not trading below NAV. Second, even if you talk about FCF, the matter of fact is that they are not paying any dividends. Where did all the cash flow gone to? Third, they are basically an IT contractor. Which means, their earnings might be lumpy at times. For these kind of companies, I will normally look at buying them at below NAV.
My investing ideas can be very wide. From blogs, reports, AGMs, annual reports etc. I hunt quite widely but only on SGX. My investment criteria also varies, but most importantly, they must be cheap. Therefore, I normally prefer deep value stocks, but I am not against growth provided that their business model is robust enough. But most of the time, I prefer value over growth.
Appreciate ur thoughts on Procurri.
I own some Brook Crompton and AF Global too.
Would love to hear ur thoughts on the record high vol traded on Brook Crompton in June. Not a ton in absolute dollar amounts but seems like a decade high in terms of shares traded.
Also have u done any work on AF Global failed asset sale a while back? Buyer walked away during covid and it seems like they're still doing some negotiating in private.
Hi Janeo,
I don't know about Brook Crompton trading volume in June. Normally, I don't look at trading volume in making my investment decisions. As long as a stock is trading at good value, I would be interested.
For AF Global, I dunno how long the Xuzhou Gulou Square project will drag on. The case is still under court proceedings but they are still in discussion with their JV partner on how to resolve the issue.
Do u own stocks under "sgx watchlist" as well? Some of them seem cheap (maybe for a gd reason) but I'm not quite sure of them so I generally avoid them.
Hi Janeo,
No. I don't purposely avoid those stocks in the SGX watchlist. Have to look at each individual stock on a case by case basis. Some are obviously junk ones, while others might be turnaround stories.
Hi ghchua,
I noticed that you rarely sold any stocks in your top 30 holdings. It generally works well and you have multi-baggers such as iFAST. Do you set any criteria to take partial profit when any of your top 30 holdings hit your initial profit taking target?
Hi Janeo,
I do a lot of analysis on stocks listed in Hong Exchange too. If you like to link up, you can set up an account with www.valuebuddies.com with profile name Janeo and I can private message you some stock ideas on companies listed on HK exchange. Thanks.
Hi weii,
I normally don't sell stocks in my top 30 holdings list, as these are my high conviction picks. However, I do top sliced some stocks that went into my top 30 holdings list due to massive price appreciation during a short period of time. Examples include Best World and most recently, CFM.
I don't have initial profit taking target for any stock in my portfolio, as I examine each stock on its own basis. It doesn't mean I have to top slice every stock that had experienced massive price appreciation during a short period of time, as long as the risk is managable in my portfolio in terms of allocation. For iFAST, although it has higher allocation than CFM, my personal view is that CFM is a higher risk stock. Therefore, CFM deserves a lower allocation in my portfolio and so I sell some of my holdings to keep it outside my top 30 holdings list.
Hi ghchua,
Thanks for enlightening us on your exit strategy which is based on portfolio allocation risk management. May I know whether you have any monthly target for amount allocated to cash (say 5% since I understand that you intend to be fully invested in the stock market most of the time)? What is the percentage range of monthly amount allocated to cash through these 10 years? Does this percentage allocated to cash tend to increase during times of market volatility and decrease when market volatility has subsided and prices have fallen to attractive level. What is the percentage amount you normally allocated to cash after an extended bull run?
It is good to know that you do not always buy stocks that are in your top 30 holdings list even though these are your high conviction picks and those business models that you are more familiar with. Do you have a grading system where you allocate some additional points to stocks in your high conviction picks, stocks with high cash level and minimal debt and stocks whose business models you are more familiar? By using a grading system, you are less likely to purchase stocks that look cheap but fall outside your current comfort zone level unless they are very undervalued. Thanks.
Hi weii,
Quite a number of questions here on portfolio management, but I try to address them as much as I can.
For cash allocation, yes, I prefer to be fully invested at all times, regardless of market movements. But it doesn't mean that I will hold zero cash. This is because dividends, corporate actions etc happen frequently and I will have some cash drag at any one time. As for percentage of allocation, on average it is less than 5%. The percentage of cash holding is really based on market opportunities and also cash inflow at that point in time. It is not about whether I purposely hold more cash. For example, if there are a lot of dividend payouts during the month (like in May after companies hold their AGMs in April and paid out dividends), I will normally hold more cash as I could not deploy those dividends fast enough. But gradually, as time goes by, those cash will be deployed. If market corrects, normally I will try to deploy faster. If there is an extended bull market, then I will deploy more slowly. But the aim is still to deploy as much as I possibly could. Even during a bull market, there are investment opportunities.
I don't have a formal grading system, but I do have a group of stocks which I am comfortable in deploying regularly. Those are normally in my top 50 holdings list. I think if you read my blog long enough, you would have observed repeated deployment into those stocks. There are those that I felt that I could only deploy when say, for example, STI crashes. These are normally blue chip index stocks. I don't like to buy blue chip stocks often during bull market as they are mostly fairly valued.
But one guiding rule I have is always no gearing. Therefore, there is no leverage on my portfolio.
Hope that the above answered most of your questions.
Hi weii, I've set up an account (Janeo) over at valuebuddies. Cheers!
Hi ghchua,
Thanks for your generous sharing on how you build your portfolio with minimal cash drag on performance. If the companies you invest in are able to generate long term free cash flow above the current bank interest rate and are willing to share it with investors in the form of dividend, this strategy is likely to work well in the long run if there is no great depression of the scale similar to the previous one in 1929.
Hi Janeo,
Thanks for setting up the account in valuebuddies.
Hi weii,
Unfortunately, not all the companies that I have invested exhibit those qualities that you have mentioned here. Some are able to generate good long term free cash flow but not willing to share with shareholders. Others are not able to but they do have assets that are valuable but we have to wait for them to unlock value by selling them. For example, we have a company trading at 0.3x book value and they have assets sitting on freehold land but generating cash flow to pay their salary only, with little or no dividend payout. Is this company in my radar? The answer is yes as it is a deep value stock.
In conclusion, I am not only looking at free cash flow and dividend payouts only. The company must also be attractively priced. In fact, there is no such thing a long term free cash flow. You have to monitor their business performance regularly. We have seen stocks like SPH, SingPost, Starhub, Asia Pay TV etc which were previously consistent high dividend payers and their share price crashed after they cut those payouts. One must be careful looking at the sustainability of those cash flow.
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