Mid-June 2008 Portfolio Summary and Review

The first half of June 2008 was a surprisingly quiet month for me as my companies had nothing much to report. I would assume that their business is chugging along fine, though of course as the global economy reels from high inflation and a receding economy, this would inevitably have some impact on my companies’ businesses. Furthermore, Vietnam as a country is experiencing many economies woes such as high inflation, a ballooning trade deficit and a rapidly depreciating currency. This may affect my investment in Ezra as they have two shipyards located in Ho Chi Minh City and Vung Tau and thus will be exposed. It is a relief that their contracts for Saigon Shipyard thus far have been denominated in USD, but I am still keeping a watchful eye to see if their business may be adversely impacted.

A combination of high oil prices (hitting a record of US$139 before settling to US$136) and more troubles from reputable bank Lehman Brothers also caused global stock markets to correct sharply in the last 2 weeks. Opportunities abound for the intelligent investor to look for good growth companies trading at undemanding valuations for long-term investment, and one should always have funds ready in such environments to take the opportunity to deploy them to generate a decent return (hopefully above projected inflation rate of 8% in Singaopore !).

As for the coming 2H June 2008, I would expect it to be quiet as well as this period is traditionally less active in terms of newsflow from my companies. July 2008 will see the start of the reporting season for 1H results, and I am expecting results from Ezra (3Q 2008), FSL Trust (1H 2008) and Suntec REIT (3Q 2008).

Below is the summary of my investments and related news as at June 13, 2008 (STI at 2,979.56 points).:-

1) Ezra (Vested since October 6, 2005) - Buy Price $0.645 (bonus adjusted), Market Price 2.58, Gain 300%, YTD Loss 22.3%. There was no news from Ezra during the half-month ended June 13, 2008. As mentioned above, I am monitoring the economic situation in Vietnam as Ezra has substantial exposure there due to the presence of two shipyards being built in Ho Chi Minh City and Vung Tau.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $1.295 (average), Market Price $2.23, Gain 72.2%, YTD Loss 7.5%. There was no news from Boustead during the half-month ended June 13, 2008, except a minor announcement that the company is setting up new subsidiaries.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $2.58, Gain 155.4%, YTD Loss 24.8%. There were no announcements or press releases for Swiber since the middle of May 2008, but there was news recently (on June 8) that a fire broke out on a vessel berthed at Kreuz Shipyard, Swiber’s 100% owned subsidiary, and that one man was killed and several others badly injured. The incident is not expected to have any material impact on Swiber and my condolences go out to the family of the man who was killed in the explosion. A recent Deepwater Drilling Seminar held at Swiber’s headquarters also highlighted the prospects for deepwater drilling, and a recent CIMB report was particularly bullish on Swiber’s prospects of securing a 3-year contract for its new equatorial driller, which Swiber is going to announce soon with respect to the yard which it commissioned to construct the driller.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.53, Gain 37.8%, YTD Loss 10.5%. There was no news for the company except for the issue of units to the Trust Manager, thus resulting in slight dilution.

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 $0.505, Loss 22.9%, YTD Loss 19.8%. There was no news from the company (nor did I expect any) for the period ending June 13, 2008.

6) China Fishery Group (Vested since November 20, 2007) - Buy Price $1.50 (average), Market Price $1.70, Gain 13.3%, YTD Gain 8.1%. There was no news from CFG for the period ending June 13, 2008, culminating in a very quiet half-month indeed.

7) First Ship Lease Trust (Vested since January 14, 2008) - Buy Price (Averaged Down) $1.105, Market Price $1.21, Gain 9.5%. There were no updates from FSLT regarding the financing for their third vessel as well as their plans moving forward for securing additional funds to continue their acquisitive trail. Current market conditions have resulted in a unit price which gives an estimated forward yield of close to 13%; thus issuing equity will not be a good idea at this juncture. I suspect that Management may continue to increase the debt-equity ratio (i.e. increase their borrowings) in order to fund future acquisitions.

Overall Portfolio

My overall portfolio has increased by 65.5% without taking into FSL Trust’s cost. If included, the gain is 50.0% from a cost of S$80.4K as at June 13, 2008. The market value of my portfolio without FSL Trust is S$96.4K, and if FSL Trust is included then the portfolio value is S$120.5K. Realized gains have increased to S$6.2K due to the dividend from Ezra to be paid on June 18, 2008.

Comparison against STI

Using my new benchmarking technique:-

The FTSE STI had declined by 14.4% since the start of 2008. My portfolio (without FSL Trust) has to date declined 17.4%. Therefore, I have under-performed the STI by 3 percentage points.

FSL Trust has gained 9.5% thus far from my date of purchase while the benchmark STI has fallen 14.4%; 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 Monday, June 30, 2008 after market close.