Friday, May 30, 2008

End-May 2008 Portfolio Summary and Review

2H May 2008 was relatively slower in terms of announcements and updates from the companies I own. One of the more important events was the release of FY 2008 financials for Boustead on May 28, 2008; while Pacific Andes has yet to release their FY 2008 results (as at the time of writing this). I will be providing a summary of each company’s results in my portfolio review below.

Meanwhile, oil prices have managed to hit a new record high of US$135 per barrel before dipping down below US$130 recently. Worldwide food inflation is still a major issue and Singapore’s April 2008 inflation rate hit 7.5% year-on-year ! This underscores the need for individuals to invest their money in order to beat inflation over the long-term, as bank deposits are yielding pathetic interest rates of less than 1% per annum. Even if one does not have the time to do the in-depth research and reading required to properly invest in quoted equities, one can still use a dollar cost averaging method to invest in index funds which are one of the lowest cost funds in the market. These index funds will yield market returns and are properly diversified to hedge against undue loss of capital.

Below is the summary of my investments and related news as at May 30, 2008 (STI at 3,192.62 points).:-

1) Ezra (Vested since October 6, 2005) - Buy Price $0.645 (bonus adjusted), Market Price $3.00, Gain 365%, YTD Loss 9.6%. Ezra’s special dividend of 5 cents per share will go ex-dividend on June 3, 2008. The dividend will be payable on June 18, 2008. I have not included this dividend in my realized gains until my mid-June 2008 portfolio review.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $1.295 (average), Market Price $2.02, Gain 56%, YTD Loss 16.2%. On May 28, 2008, Boustead released a sparkling set of results showing that net profit attributable to shareholders had increased 46% to S$51.5 million, representing a sixth consecutive year of record revenues and profits. In the spirit of celebrating their 180th Anniversary, the company has declared a final dividend of 5 cents per share and a special dividend of 2 cents per share, raising FY 2008 payout to a total of 10 cents per share. At my purchase price, this represents a yield of 7.72% which just manages to beat inflation of 7.5%. Also, on May 29, 2008, Boustead announced that they had increased their stakes in subsidiaries – ESRIA from 87.1% to 88.2% and ESRISA from 88% to 89%. The total aggregate cash consideration paid was A$330,705 funded from the company’s internal resources. I have also transcribed the entire audiocast of the company’s FY 2008 results presentation and subsequent question and answer session with Mr. FF Wong, and will present this in two parts. I will follow-up with a review of the company’s results and prospects moving forward in a later post.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $2.88, Gain 185.1%, YTD Loss 16%. There was no news for Swiber for the second half of May 2008, except a brief news report to say that they will be deploying their new pipelayer vessel, Swiber Chai, to assist CUEL as part of their 5-year deal valued at US$50 million per year.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.67, Gain 50.5%, YTD Loss 2.3%. There was no news for the company for the second half of May 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 $0.565, Loss 13.7%, YTD Loss 10.3%. This evening, Pacific Andes released their FY 2008 financials. Net profit after tax (and excluding exceptional for comparison) rose 98.7% from HK$242.1 million in FY 2007 to HK$481 million in FY 2008. A first and final dividend of 2.07 cents per share was declared. Based on my purchase price of 65.5 cents, this represents a dividend yield of 3.16%. I will be doing a full review of PAH’s FY 2008 results in a subsequent post (as readers may note, I have my hands really full with so many results releases, so please have patience).

6) China Fishery Group (Vested since November 20, 2007) - Buy Price $1.50 (average), Market Price $1.84, Gain 22.7%, YTD Gain 0.5%. There was no news from CFG for the period ending May 30, 2008.

7) First Ship Lease Trust (Vested since January 14, 2008) - Buy Price (Averaged Down) $1.105, Market Price $1.20, Gain 8.6%. On May 20, 2008, FSL Trust announced the successful completion of their acquisition of the first Yang Ming vessel, YM Eminence. The vessel will be leased back to the lessee on a 12-year lease and guidance for the DPU accretion of the third vessel will be announced once financing has been secured. I also received the DPU of 3.524472 Singapore cents per share today (at an exchange rate of 1.3608 to the USD).

Overall Portfolio

My overall portfolio has increased by 77.1% without taking into FSL Trust’s cost. If included, the gain is 58.1% from a cost of S$80.4K as at May 30, 2008. The market value of my portfolio without FSL Trust is S$103.2K, and if FSL Trust is included then the portfolio value is S$127.1K. Realized gains remain at S$5.9K (slight increase from projected 1.34 exchange rate for FSL Trust) until the XD date for Ezra. Boustead and Pacific Andes have yet to ex-dividend and thus these dividends are NOT included in computation of realized gains.

Comparison against STI

I have devised a new way to benchmarking my portfolio which makes it simpler for me. I will benchmark my previous portfolio performance BEFORE purchasing FSL Trust in January 2008; and do a separate independent analysis of the performance of FSLT to date against the STI.

The FTSE STI had declined by 8.32% since the start of 2008. My portfolio (without FSL Trust) has to date declined 11.6%. Therefore, I have under-performed the STI by 3.3 percentage points.FSL Trust has gained 8.6% thus far from my date of purchase while the benchmark STI has fallen 0.79% (3,218.14 as at Jan 14, 2008 to 3,192.62 today); I am happy to report that FSL Trust has managed to out-perform the index for FY 2008 thus far.

My next portfolio review will be on Friday, June 13, 2008 after market close.

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