Wednesday, August 15, 2007

Mid-August 2007 Portfolio Review

The market has been turbulent these past 2 weeks and opened up many opportunities for finding companies which are being undervalued according to Mr. Market’s manic-depressive mood swings. Some say it might be contrarian to actually feel happy when the market is crashing down, while others lament their hard-earned money going down the drain. However, I believe in buying to keep for a long time and thus my main business is purchasing, not selling. Purchasers always look for the lowest possible prices, and I am no different. Suffice to say that these last two weeks have made me very happy indeed as it has given me the opportunity to hunt for good bargains. I am commencing my research into one or two companies now and will post my findings once I am done.

Below is a summary and rundown of my investments and related news as at August 15, 2007 (STI at 3,273.25 points):-

1) Ezra - Buy Price $1.30 (bonus adjusted), Market Price $5.50, gain 323.1%. On August 7, 2007, Ezra announced a milestone contract for Lewek Champion, their maiden pipelay and accommodation barge. Recall that Lewek Champion was also chartered out to ConocoPhillips for another job which will end in FY 2008. Thus, this contract can ensure earnings flow till FY 2010, though the value of the contract(s) were not stated. On August 9, 2007, Ezra received in-principle approval for their bonus issue, which paved the way for them to declare an EGM to be held on August 29, 2007 to address the issue of share re-purchase, bonus of 1-for-1 and the sale of 43% of EOC. I have since received the circular for the EGM and will do a posting on it soon. I also intend to attend the EGM to probe for more answers to some nagging questions.

2) Boustead - Buy Price $1.295 (average), Market Price $2.07, gain 59.8%. On August 10, 2007, Boustead Projects announced another design, build and lease contract for a logistics facility for Panalpina Worldwide. The contract value was not stated but this is the 6th contract win for Boustead Projects this year, augmenting their order book strongly and giving the division a good start to FY 2008. Also immediately on August 13, 2007, Boustead also secured oil and gas engineering contracts worth S$26 million.

3) Swiber - Buy Price $1.01, Market Price $2.77, gain 174.3%. On August 6, 2007, the company announced the acquisition of North Shipyard Pte Ltd for S$10.3 million in order to vertically integrate their operations. This acquisition would be funded through internal resources. Subsequently, they reported their 1H 2007 results and saw a 300+% jump in net profits (excluding exceptional gains) as well as rising margins. Moving forward, they are targeting new markets such as India, the Middle East and China to expand into.

4) Global Voice - Buy Price $0.1775 (average), Market Price $0.165, loss 7.0%. GV snared two more contracts in the first two weeks of August 2007 with WuSys and LHV. They also announced a somewhat disappointing set of results yesterday as they were still loss-making. I will be doing a review of GV’s 1H 2007 financials so please stay tuned for that.

5) Suntec REIT - Buy Price $1.11, Market Price $1.84, gain 71.2%. There was no news for Suntec REIT during August 2007.

6) Pacific Andes - Buy Price $0.665 (rights-adjusted), Market Price $0.68, gain 2.26%. PAH released their 1Q 2008 results yesterday and I will be doing a detailed review of the financials as well as operations. Gross margins were up and net profit attributable to shareholders increased by 42%. I intend to add to my position should Mr. Market decide to price this company below 65 cents.

Overall Portfolio

My overall portfolio has increased by 93.3% from cost as at August 15, 2007. The market value of my portfolio is around S$85.7K. The recent sharp market correction has brought prices down to a more decent level, more on par with valuations as compared to when the STI was trading at 3,600+. I can see good opportunities arising from the downturn and will be waiting with sufficient cash to scoop up the bargains once I have completed my research on the companies I am eyeing.

My next portfolio review will be on Friday, August 31st, 2007 after market close and I will also report on Ezra’s EGM.

NOTE: My next post will be on Friday as I will taking a short break from blogging in order to focus on analyzing PAH and GV’s results. Cheers to all investors !

Update: Edited PAH's closing price as pointed out by la papillion. There is no change to my portfolio value or gain as I took the computed figure from my spreadsheet directly. It was just a typo error for PAH's closing price and gain.


Anonymous said...

Notice that your portfolio has lowered below 100% from the your last blog, still very impressive at current level. Sorry to be blunt, but won't you feel disappointed with the paper loss? The TA could have help you take profit and repurchase now? Rgds.

kolslorr said...

still as impressive as ever...

Waiting for the post for GV... Considering cut loss now

Anonymous said...

Looking forward to your analysis of PAH

musicwhiz said...

Hi Anonymous,

Thanks, it's ok as my blog is meant to act as a free forum for discussion and I appreciate your comments. Yes, my portfolio has dipped due to the current market sentiment but no worries as I intend for my portfolio to remain long-term. Dips are natural and to be expected as market values can fluctuate wildly due to the mood swings of Mr. Market.

I am not disappointed with the paper loss, though of course I had hoped the company (GV) would do better. I take it more as a learning experience when I analyze what went wrong and why this has happened. I do agree that TA would probably be useful for selling and buying back but I am not into TA and so would like to avoid the transaction costs associated with buying/selling. It's a personal choice.

Good luck in your investments ! :)

For kolslorr and anonymous, don't worry I will work on GV and PAH but it may take a little time as I need to digest the numbers/facts. Cheers.

la papillion said...

Hi musichwhiz...the price for pac andes as of 15th Aug is not 0.800, it's 0.680. Maybe it's a typo, and you might have to adjust your overall portfolio gains?

musicwhiz said...

Hi la papillion,

Thanks for pointing it out. It is indeed a typo and I have amended it. There is no change to my unrealized gain or market value as this figure was already updated in my spreadsheet which I use to compute the market value of my portfolio.


Anonymous said...

Note your sentiments on investment for the long-range and I also discover that convictions gets stronger with each dip, May 06, Feb 07, May 07 and now... like to leave a quote from WEB when he narrated Newton's fourth law of motion - "For investors as a whole, returns decreases as the motion increases". Best wishes.

Anonymous said...

Hi sgmusicwhiz- very good blog. Among my top reads! Your returns should include the average period invested, and should benchmark against say the index over the same period.

musicwhiz said...

Hi anonymous,

Newton's 4th law of motion ? Haha that's innovative ! Yes, I do agree more volatility will make one poorer, especially when one tries to trade in and out of such markets. The best is to have an idea of intrinsic value and buy with a margin of safety. I couldn't care less about other things.

musicwhiz said...

Hi Anonymous,

Thanks for your compliment. Yes you are right, I will incorporate the holding period into my summary as well in future. As for benchmarking agains the index, I will figure out a way to do so as there have been some slight changes to my portfolio since the start of 2007 so it might not be totally comparable.

Cheers, musicwhiz