Friday, September 22, 2017

China Banks, Trimming down Position


Stock Idea: China Banks

I have been buying China banks like China Construction Bank and Bank of China recently. In the currently slightly expensive market, China banks still have low PE and low P/B, notwithstanding doubts on their credit quality. I may continue to accumulate if their share price drop.

Trimming down positions

I have also been trimming down my positions in Aug - Sep:
- Sold a portion of 800 Super. After the sale, 800 Super is around 2% of my portfolio. 800 Super will start to operate the WTE plant at end 2017. Will wait to see how much the plant will help the bottomline.

- Sold my entire position in Soilbuild Reit after it announced its lease issue with NK Chemical. Soilbuild Reit's position is not large, around 2% of my portfolio. The sale carries a small profit as I bought the Soilbuild Reit at $0.66.

- Sold half of my stake in Ping An and 1/4 of my stake in CM Bank. The money from the sale are used to buy the China Banks

- Sold a smallish position in Nordic. Can't resist taking smallish profit as its price ran up. After the sale, my stake in Nordic is still around 9% of my portfolio

Thoughts

Cogent is finally running up. I have been accumulating around $0.80 this year. I think its management are smart and prudent in the use of capital. They gave out some dividend recently so as to return the cash they may not need. I saw business that hoard cash; business that don't hoard cash are rare.

Many people have commented on Comfort Delgro (CDG). Long story short, CDG taxi business is disrupted by Grab and Uber. Profits from taxi business is around 1/3 of its overall profits. I am not comfortable in owning businesses who are disrupted by technologies. Hence, I shall put CDG in my "too difficult" pile and skip this stock. I may be tempted to buy CGD if its price drop further and further. After all, in this slightly expensive market, stock ideas are very hard to get.

Sunday, August 6, 2017

Sell Sell stocks in SG market

For the past month, I have been selling stocks in the Singapore market

- Sold my second half of OCBC stocks at $11.20. Still keeping DBS. I do not intend to sell any DBS, even though the market is pricing in DBS having higher provisions.

- Sold all my stake in Far East Hospitality. I don't like its latest quarter results.

 - Sold my remaining stake in Valuetronics, before it went ex-dividend. The price of Valuetronics may be higher now after including the dividends. But I decide to take profit as I no longer like the risk-reward in Valuetronics

- Sold my stake in Fraser Logistic Trust at $1.11. The price-to-book ratio for Fraser Logistic trust is more than 1.15, which is no longer attractive for me to hold. Of course, Fraser Logistic trust may still have room to run.

Personally, I am finding that Singapore market is getting fully valued and it is hard to find any interesting stocks to buy. Yes, there are low price-to-book property stocks in Singapore market, but property stocks are not my cup of tea.

I have been nibbling at HK stocks and surpisingly, two Malaysian stocks.

I get the ideas on malaysian stocks from AbsolutelyStocks.com. I subscribed to The Edge magazine for 3 years, and it gave me free access to AbsolutelyStocks.com for three months. The AbsolutelyStocks.com. has live portfolios, which allow me to pick on their ideas.

Not sure if I will continue to subscribe to AbsolutelyStocks.com after three months. Personally, I like 'live' portfolios, as it gives you stock ideas and allows you to learn from other people's thinking behind their portfolio. 

Saturday, July 1, 2017

Mid Year 2017

Stock Portfolio Returns 

Year-to-Date Portfolio Returns:20.7%
STI index excl dividends: 12%

Number of stocks in portfolio: 24

Stock Portfolio Rules

1) Keep number of stocks in portfolio to 20-25 stocks.

2) I can only buy the stock till it is 10% of my portfolio

3) No stock can be larger than 20% of my portfolio. If the stock rises to above 20% of my portfolio, I need to trim my position in the stock.

Thoughts on Portfolio

It is harder to find stocks to buy in Singapore market. I have been sellng more Singapore stocks than buying in the last two months.

Instead, it is easier to find stocks to buy in the HK market. I have been buying HK stocks instead in the last two months.

Some portfolio actions in last two months:
Singapore Stocks
- Sold 1/3 of my Dutech position, in veiw of the poorer than expected 1Q 2017 results. If Dutech dropped by 10%, I may add to my Dutech position

- Sold down 75% of my position in Valutronics before the bonus share issue. The bonus share is 1:10. Is leaning towards keeping the remaining Valutronic shares for the dividends. Nonetheless, I may also dispose of the shares, as the position is smallish (around 1% of my portfolio).

- Sold 1/2 of my position in 800 Super at $1.32. The sale is due to the poorer than expected 3Q results. The sale will reduce my concentration in this stock to 5% of my stock portfolio. Prior to the sale, 800 Super is 10% of my stock portfolio.

- Sold 1/2 of my position in OCBC at $10.92. The sale is to take profit. After the sale, OCBC is around 1% of my portfolio. If the price rise further, I will sell all my remaining shares in OCBC.

- Add to my position of Far East Hospitality Trust (FEHT) at $0.615. FEHT is around 4.5% of my portfolio.

- Add to my position in Cogent. I think Cogent earnings should continue to grow in the next 1-2 years.

HK Stocks
- Bought Hui Xian Reit, which is now around 2% of my portfolio. This reit offers more than 8% yield and trades at 2/3 book value.
- Bought China Overseas Land, which is around 4% of my portfolio. It is a China developer with rather interesting ROE of higher than 15% in the last few years.

Thoughts on Stocks

It is interesting that HSBC is now $72 and a year ago, you can snag it for less than $50. Too bad that I was not able to foresee this increase in share price and the under-valuation of HSBC a year ago, even though I am aware that the sentiment on HSBC was quite poor.

I read from somewhere that China banks are among those stocks with very poor sentiments. I agree somewhat with this view as the PE ratio of Big 4 China banks are quite low, even though there are some risks in investing in China banks. I may buy some shares in a big 4 China bank (listed in HKSE) if their share prices fall further.

Saturday, May 27, 2017

Portfolio Returns

Year

% Returns

STI (Excl Dividends)

Remarks

2004

6%

2005

35%

Returns/Declines boosted with slight leverage.


2008: Great Recession

2006

130%

2007

46%

15%

2008

-70%

-49%

2009

147%

64%

2010

78%

10%

2011

-46%

-17%

Declines in S-chips and excessive concentration into 5-6 stocks

2012

25%

21%

2013

15%

-1%

Diversified into 19 stocks

2014

8%

6%

2015

4%

-14%

Oil & Gas crisis

2016

19%

4% (incl div)

2017 Jun

20.6%

12%

 

Saturday, May 6, 2017

Bull Market, Buying Reits

It is a bull market this year, with STI (Strait Times Index) up 12.1% year-to-date.

Bull market implies, in general, more expensive valuation. I find that the current stock market are quite close to full-value and I expect lower returns down the road. 

As stocks are close to their full-value, it is getting harder to find good stock ideas.

I have sold some stocks recently i.e. FCL, Lian Beng, as mentioned in earlier posts, and thus have some capital to deploy.

The capital are used to buy two reits: SoilBuid Reit (SBR) and Far East Hospitalality Trust (FEHT). Personally, I don't like to own reits, as reits generally have high price-earnings ratio and we are in rising interest rate environment. However, due to the lack of ideas, I have to settle on reits.

SBR and FEHT are bought with the possibilty of 'turnaround' in dividends.

For SBR, its Loyang Way premise is 90% empty now, as it was vacated by an O&G company last year. If it manages to lease out the Loyang Way premise in the next 2-3 years, there will be some upside to the dividends and hopefully share price.

For FEHT, the idea was from 3Fs (A Path to Forever Financial Freedom) blog, who bought CDL Hospitality Reit (CDLHT) and FEHT, in anticipation of the turnaround in hotal room rates in 2018 or later. I have bougth FEHT, but not CDLHT, as CDLHT has run up quite a lot this year. FEHT is around $0.61, not far from its 0.58 low.

SBR and FEHT are low risk, low return ideas to me. You get paid for waiting for the turnarounds. If the turnaround don't happen, you still get your dividends. If the turnaround materialise, you get some capital gains. Of course, I may still lose money in SBR and FEHT, if their operating results are worse than expected. 




Sunday, April 9, 2017

Accepting what the market gives you

I am on investing note platform. Recently, investing note has a few post noting the possibility of market correction, and taking steps to prepare for the possible correction (e.g. buying low beta stocks at 52 weeks low, holding more cash).

Personally, I don't know if a correction is near. The market current seems more optimistic than in the past few 12 months. But, this was the market that fell from its high of STI 3,500 in 2015. Will more optimism lead to correction? No idea. I do note that the world economy is in a better shape now compared to last year, and the stock market reflected this.

Instead of preparing for correction, I will try to accept of what the market gives me and act accordingly.

If the market rises a lot and benefit me, so be it. As the market rises, more stocks may reach my target prices and I will start to reduce my position in them. In addition, I will be unable to find stocks meeting my criteria to replace the sold position. This lead to me holding more cash, if the market rise.

If the market corrects later and erase my gains, so be it. As the market fall, I may find new stocks meeting my criteria or average down on my stock holdings and hence increase my stock position. Currently, including CPF, I am around 60% in stocks. Thus I have ample funds if I am to buy more stocks.

Wednesday, April 5, 2017

Selling Developer Stocks

I own 2 property stocks sometime this year. One is Fraser Capital Limited (FCL), the other is Lian Beng. The position in each stock is not large. (It is around 2.5%-3.5% of my portfolio).

FCL was bought last year in July at around $1.50.  Last month, I sold it for $1.72, as it rose by fair bit, after the Government announced cooling measures on the property market. I sold it because I thought that the cooling measures do not really affect the property market. On hindsight, it seems that I sold too early. FCL traded at $1.765 today.

Lian Beng was bought some time in Jan this year at around $0.48. I bought it due to its low price to book value of 0.45. Some forumers have concerns on its high debt to equity ratio. I think that the high debt is mitigated by Lian Beng's diversified property portfolio and its prudent overseas ventures helps. (i.e. Lian Beng join other developers on overseas projects.)

Yesterday, Lian Beng run up by a fair bit and I sold it at $0.62 today. The run-up seems to be due to its 10% stake in Gaobeidian. I think that the 10% stake seems rather minor and may not affect Lian Beng's value a lot. Hence, I take the opportunity to sell it today. If Lian Beng falls below $0.50, I may consider buying it back.

After selling FCL and Lian Beng, I no longer own any developer stock. This is fine with me, as I find developer stocks hard to value. This is also why my position in property stock will not be large.