Mid-May 2008 Portfolio Summary and Review


May 2008 is turning out to be a very interesting month indeed as there are a couple of positive events relating to the companies I own. In addition, China Fishery and Swiber had also released their 1Q 2008 results yesterday and I am pleased to say that both saw good growth in their businesses, with earnings registering growth of 33% and 184% year-on-year respectively. Inflation continued to be high in Singapore and the effects of the sub-prime crisis are still felt now and then when a US company announces a major write-off, but it seems like the worst part of the crisis may be over. Hopefully, the cleaning up will begin soon to let banks weed out all their lousy debts and to build up confidence in their lending abilities.

During May, cyclone Nargis hit Mynamar and caused untold suffering and pain to the poor residents there. It is estimated that in excess of 100,000 may eventually die from the effects of this disaster. Recently too, a major earthquake measuring 7.9 on the Richter scale hit the Sichuan province in China, resulting in over 20,000 deaths and untold suffering. I urge all readers to join me in offering a prayer for the victims of these natural disasters, and to hope that aid and assistance can be swiftly delivered to enable them to rebuild their lives. Please also help to contribute whatever you can to charitable organizations to help these unfortunate people.

Below is the summary of my investments and related news as at May 15, 2008 (STI at 3,207.43 points).:-

1) Ezra (Vested since October 6, 2005) - Buy Price $0.645 (bonus adjusted), Market Price $2.54, Gain 294%, YTD Loss 23.5%. On May 7, 2008, Ezra announced 2 new orders for vessels, one being a 30,000 bhp multi-functional support vessel (MFSV) and the other a 12,000 bhp AHTS for S$95 million. On May 14, 2008, Ezra announced that their Vietnamese Fabrication Yard owned by HCM Logistics secured a third contract worth US$55.4 million to be delivered in FY 2010. This brings their order book to US$214 million.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $1.295 (average), Market Price $2.08, Gain 60.6%, YTD Loss 13.7%. On May 14, 2008, Boustead announced that their acquisition of the additional 10% in GBI Realty was completed. Boustead's FY 2008 results should be released around 24-25 May, 2008 and this year will see the company celebrating their 180th Anniversary.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $2.89, Gain 186.1%, YTD Loss 15.7%. Swiber released their financial results for 1Q 2008 yesterday, and I will be doing a review and analysis of their results soon. In a nutshell, net profit increased 184% while revenues increased 267%. Higher admin expenses (probably staff costs) and finance expenses eroded some of the increase in revenues, and the contribution of shipbuilding from Kreuz probably softened gross margins from 28% in 1Q 2007 to 25% for 1Q 2008. Moving forward, it will be good to see their drilling division contributing soon to revenues from 2H FY 2008 onward.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.51, Gain 46.8%, YTD Loss 4.7%. Suntec REIT announced a good set of results and declared a dividend of 2.5185 cents per share (note that part of this dividend has taxation of 18%).

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 $0.555, Loss 15.3%, YTD Loss 11.9%. There was no news on Pacific Andes during the period ended May 15, 2008. They should be releasing their FY 2008 results by May 30, 2008.

6) China Fishery Group (Vested since November 20, 2007) - Buy Price $1.50 (average), Market Price $1.86, Gain 24.0%, YTD Gain 0.5%. CFG announced their 1Q 2008 results on May 14, 2008. Revenues dipped by 2% due to softening of fishmeal prices, while net profit improved by 33% to US$40.4 million. They also reiterated that fishmeal prices are likely to stay stable after dipping last year, and will trend upwards slowly as demand for fishmeal is still very strong. The 3 upgraded supertrawlers will be deployed to the South Pacific by 2H FY 2008 and each supertrawler should contribute about US$12 million extra in revenues. Assuming CFG continues its strict policy of cost control, I am confident that FY 2008 will see higher profits compared to FY 2007.

7) First Ship Lease Trust (Vested since January 14, 2008) - Buy Price (Averaged Down) $1.105, Market Price $1.15, Gain 4.1%. FSL Trust had, on May 12, 2008, announced the acquisition of three container ships from Yang Ming Marine in Taiwan. My previous post had discussed the financial effects of this acquisition and stated the yield accretion. Financing has yet to be secured for the third vessel but FSLT has already exceeded its 1:1 debt-equity ratio. Thus, it may have to issue equity in future to fund further acquisitions.

Overall Portfolio

My overall portfolio has increased by 72.5% without taking into FSL Trust’s cost. If included, the gain is 53.5% from a cost of S$80.4K as at May 15, 2008. The market value of my portfolio without FSL Trust is S$100.5K, and if FSL Trust is included then the portfolio value is S$123.4K. Realized gains have increased to S$5.8K due to the XD of Suntec REIT, China Fishery and FSL Trust. The funds should be arriving in late May 2008. Ezra has yet to cum-dividend, thus I have not included it under my realized gains.

Comparison against STI

The FTSE STI had declined by 7.9% since the start of 2008. Without FSL Trust, my portfolio has declined 13.9%.To date in 2008, my portfolio has under-performed the new benchmark FTSE STI by 6 percentage points.

My next portfolio review will be on Friday, May 30, 2008 after market close.