Saturday, June 30, 2007

End-June 2007 Portfolio Review

The month of June came to an end rather quickly, in my opinion. Suffice to say that there were sufficient activities regarding my companies since the last half-month June 2007 review for me to post a lot of news and info. Readers would have seen that the companies involved have gone on various paths to grow their earnings (convertible bonds, share placement). Whether these measures will materialize or not will have to depend on the future. Below is a quick review of my shareholdings as at June 30, 2007:-

1) Ezra - Buy Price $1.30 (bonus adjusted), Market Price $5.80, gain 346%. There were no announcements from the company in the half-month since June 15, but JP Morgan has prepared a report on Ezra which states a target price of S$8.60 based on sum of the parts valuation. Essentially, the report values the newbuilds even before they come on-stream in FY 2009 and FY 2010, and attempts to project earnings forward all the way till FY 2009. It also makes assumptions that the 2 AHTS will go through a sale and leaseback while the new pipelay vessel will be 100% owned. They also assigned a market value to EOC and computed Ezra’s estimated 88% remaining holdings in the company after the Oslo OTC listing. This could be reduced to 50% by the end of the year should Ezra decide to dividend out shares in EOC to its shareholders.

2) Boustead - Buy Price $1.295 (average), Market Price $2.09, gain 61.4%. The only significant announcement from Boustead was the purchase of the Maxitherm combustion technology business in Australia . This will see them building up their core competencies in their 3 business units now, in order to prepare themselves to bid for more contracts. I am still waiting for news of the date of the AGM and also waiting for the Annual Report to arrive.

3) Swiber - Buy Price $1.01, Market Price $2.67, gain 164.4%. Swiber announced (on June 25, 2007) a new contract worth US$31 million going to a Malaysian customer. I did a detailed post on this. They also did a placement of 55.35 million shares at S$2.1748 per share to raise nearly S$12 million for business expansion and ordering of more vessels. This corporate move bodes well for the company as it is gearing up to take advantage of its specialization in the EPCIC niche industry. Moving forward, there is much to look forward to as the company aggressively embarks on its expansion and growth path.

4) Global Voice - Buy Price $0.1775 (average), Market Price $0.215, gain 21.1%. Much has already been written on Global Voice. If readers had kept track of my blog, they would know of the launching of Euro One by GV and how it impacts their fundamentals. What is not known is still their earnings capability and cash flow cycle. The problem with this company is that there are a lot of speculators, and include many people who may not understand or appreciate the business model. Anyhow, I am waiting for August 2007 to evaluate GV’s results and see what action is to be taken.

5) Suntec REIT - Buy Price $1.11, Market Price $1.94, gain 74.8%. A substantial shareholder, Lee Shau Kee, has just sold off a block of 75.1 million shares at a price of S$1.995 to S$2.04, thereby creating a sharp price decline amid a general loss of confidence in the company. Fundamentally, nothing much has changed for Suntec and looking forward, it is hoped that increasing office and retail rentals, coupled with organic growth within the mall, can push yields higher for unit-holders.

6) Pacific Andes - Buy Price $0.665 (rights-adjusted), Market Price $0.89, gain 33.8%. Pacific Andes is in “transition” now, with the rights being traded and unpaid for as at this point in time. Thus, my profit % is based on the ex-rights averaged price (S$0.52 + S$0.81 divided by 2) against the current market price. This may not be wholly accurate but it still gives a fair picture. % gain is now reduced but the magnitude of the gain remains somewhat similar. More news will be posted on the rights issue in July.

Overall Portfolio

My overall portfolio has increased by 115% from cost of about S$40K as at June 30, 2007. Market value of my portfolio is around S$86K. The portfolio is doing well mainly due to Boustead and Swiber, who have seen some corporate announcements being made since June 15, 2007. In the next few months, more financial results will be released and I will be reviewing each investment to see if they still generate good returns.

My next portfolio review will be on July 14th, 2007.

6 comments:

Aragorn said...

Read your comments on YP with interest.
Your views on singpost?

musicwhiz said...

Hi aragorn,

I did not really do much research on SingPost, so I will just give my comments from a layman's point of view on our postal service.

For SingPost, it has more or less the lion's share of the postal service market in Singapore, as it is a captive market. Thus, growing earnings through their core business may be very tough, as their core business is difficult to scale up unless they offer innovative solutions to their postal services now (I sometimes still get my mail late).

I have heard though, that SingPost is going into property investments. This may be the key to their growing earnings but then, it would not be their core competence anymore and one should be wary of companies which are trying to leverage on the property boom without requisite expertise.

My verdict is that it is a good and stable company which pays decent dividends, but growth may be severely limited in the long-term. Invest in it only if you have a shorter time horizon (e.g. if you are a senior citizen) and wish to enjoy a steady, consistent dividend.

tc said...

excellent portfolio and returns. have a query:
i'm holding onto quite a few counters with H1 results coming out in Aug. would you sell before the results come out, if the counters appreciate gradually from now till Aug, or wait for results to come out and review thereafter?

musicwhiz said...

Hi tc,

If the companies you hold display increasing earnings and strong fundamentals (including manageable debt levels), I don't see any point in selling. Good companies are very hard to come by, and I hope yours fit the category. :)

That said, it would also depend on valuations and what price you had entered, in order to judge if you had a sufficient margin of safety. This is to protect your principle investment amount in case of a sudden downturn or crash.

Review the financial results when they are released, with the view that you are the one managing the company ! In that way, you are looking at the biz from the point of view of business owner. If you were owning the business, I am sure you would want it to be sound.

Hope this advice helps ! Good luck !

littlecartnoodles said...

Hi, musicwhiz. Have you received the OIS for PacAndes already ?

musicwhiz said...

Hi,

Yes I have. Nothing really too complex about it. I will make a blog post about it soon.

Cheers !