Monday, March 31, 2008

End-March 2008 Portfolio Summary and Review

The second-half of March 2008 saw more business activity with respect to the companies I own. The market continued to recover somewhat slightly, though I think that will be scant relief for those who probably bought at the height of the bull market. This evidently illustrates the importance of purchase with a margin of safety, and to also assess the potential investment rationally to see if it has prospects for top and bottom line growth in the years to come.

April 2008 will prove to be an interesting month, as I am expecting results announcements from FSL Trust, Suntec REIT and Ezra. Also, I am looking forward to attending the AGM and reading the Annual Reports for Swiber and China Fishery.

Below is the summary of my investments and related news as at March 31, 2008 (STI at 3,007.36 points).:-

1) Ezra (Vested since October 6, 2005) - Buy Price $0.645 (bonus adjusted), Market Price $2.07, Gain 221%, YTD Loss 37.7%. On March 27, 2008, Ezra announced the clinching of charter contracts totaling US$77.6 million; these include new and renewal charter contracts. I have details on this in my previous post. Ezra should be releasing their 1H FY 2008 results by mid-April 2008, and I will provide a review and analysis before my next portfolio review.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $1.295 (average), Market Price $1.98, Gain 52.9%, YTD Loss 17.8%. On March 24, 2008, Salcon announced S$32 million worth of contracts from Toshiba and Samsung. Also, just this evening on March 31, 2008, Boustead Projects announced the award of a S$15 million contract to construct a warehouse and office facility for LuxAsia Pte Ltd. Contract flow has started again after a drought following the August 22, 2007 announcement of a record S$300 million Libyan township project. This is Boustead Project’s 9th Project for FY 2008.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $2.54, Gain 151.5%, YTD Loss 25.9%. Swiber announced on March 17, 2008 that it had been awarded a multi-year contract from CUEL Limited for installation of platforms and pipelines in the Gulf of Thailand. The project will commence in 1Q FY 2009 and is worth US$50 million per year for 5 years. Following this, on March 18, 2008, Swiber announced the appointment of Mr. John Payne as the CEO of Kreuz International Pte Ltd. This is seen as another sign of Swiber investing in human resource to beef up their Management team. On March 26, 2008, Swiber announced that Kreuz had successfully delivered two floating crane barges to their 30% associated company OBT Holdings Pte Ltd, which demonstrates Kreuz’s ability to deliver on time. Two days later, Swiber announced that they had raised S$100 million by issuing 3-year bonds at 4% interest rate, in fixed and floating rate tranches. Finally, on March 31, 2008, Swiber announced the formation of a joint venture company called Principia Asia-Pacific Engineering Pte Ltd.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.45, Gain 30.6%, YTD Loss 15.2%. There was no news on Suntec REIT in the half-month ended March 31, 2008.

5) Pacific Andes (Vested since March 29, 2006; Rights Issue July 11, 2007 at S$0.52 per share; averaged down August 17, 2007) - Buy Price $0.655 (rights-adjusted), Market Price $0.515, Loss 21.4%, YTD Loss 18.3%. There was no news on Pacific Andes during the period ended March 31, 2008.

6) China Fishery Group (Vested since November 20, 2007) - Buy Price $1.50 (average), Market Price $1.51, Gain 0.7%, YTD Loss 18.4%. There was no news for CFG for the period ended March 31, 2008.

7) First Ship Lease Trust (Vested since January 14, 2008) - Buy Price (Averaged Down) $1.105, Market Price $1.11, Gain 0.5%. FSL Trust’s AGM will be held on April 2, 2008 (Wednesday) and they have also announced on March 31, 2008 that they had appointed a new Head of Sales Mr. Vijay Kamath for East of Suez. Hopefully, with his experience and expertise, this means that FSL Trust can embark on more acquisitions which can enhance yield for unit-holders.

Overall Portfolio

My overall portfolio has increased by 51% without taking into FSL Trust’s cost. If included, the gain is 37.0% from a cost of S$80.4K as at March 31, 2008. The market value of my portfolio without FSL Trust is S$88K, and if FSL Trust is included then the portfolio value is S$110.1K. Realized gains remain at about S$4.9K until the ex-dividend date for China Fishery comes along.

Comparison against STI

The FTSE STI had declined by 13.6% since the start of 2008. Without FSL Trust, my portfolio has declined 24.6%.To date in 2008, my portfolio has under-performed the new benchmark FTSE STI by 11 percentage points.

My next portfolio review will be on Tuesday, April 15, 2008 after market close.


java_guru said...

Yo MW,

why do u keep stating portfolio performance w/o FSL?

If FSL is in, then just count it in. I know it brings your perf down from 51% to 37% but it is just like that.


musicwhiz said...

Hi Java_guru,

There is a simple reason for it. I would like to compare my performance before my portfolio change (i.e. before adding FSL Trust) to last year's closing figure which will then indicate how the portfolio is faring ex FSL Trust. With FSL Trust, of course the returns are negated due to the fact that it is a dividend stock, not a growth company.

The net gains is of course 37% which is very plain to see. The 51% is just for reference to last year's portfolio reviews which used the portfolio without FSL Trust.

I know some people have suggested using NAV set ay $1.00 to "index" my old portfolio, and adjust it accordingly. However, I am not familiar with the mechanics of such a process and thus have resorted to the "old-fashioned" method of using 2 % figures. I am sorry if it has caused confusion as its intention was not to mislead or deviate from the truth.


Anonymous said...

Hi Musicwhiz,

Noticed you haven't been picking up any new stocks after FST. Do you think the subprime problem is beginning, midway or has ended given the recent rally? Would you pick up stocks in your current portfolio or are you studying new companies?

musicwhiz said...

Hello Anonymous,

Yes, you can say I've missed a few good buys because I have not had time recently to do much research (due to personal commitments). I guess I am guilty of the sin of "Sloth" as I have not been devoting too much time to researching new prospects due to the significant amount of effort required. But hopefully in the months to come I will get down to it. Even then, Mr. Market must offer a good price in order to entice me....

I think there are probably still a few nasty surprises lying in wait in terms of the sub-prime; and credit markets have yet to settle down. In a way, this is good as it can create buying opportunities for the discerning investor. But of course, one must be equipped with objective research first and have an understanding of valuations.

I would surely pick up companies if I find their valuations attractive and if they have firm and visible growth prospects. However, I do not feel compelled to purchase just for the sake of it; I do not mind waiting a substantial amount of time for a good opportunity. In the meantime, my current portfolio should also be keeping me busy and should be reaping me decent returns.


java_guru said...

your comments on being inactive becoz u are unsure abt the value is a GOOD call. Don't buy for the sake of buying.

However, in the LT, i feel one should develop of an ongoing watchlist of GREAT companies but not good value due to high current prices. Once the drop comes, just execute. U can also buy into your current favs which are already vetted and offer great value at low prices.

Of course, easier said then done.

musicwhiz said...

Hi java_guru,

Yes that is actually the best way of going about things; to have a watchlist of good companies and just wait for Mr. Market to sell them cheaply to you. However, as you said, it's easier said than done because a lot of time and effort needs to go into researching each prospect.