February 2010 Portfolio Summary and Review

February 2010 was a somewhat interesting month, as troubles continued with PIGS (Portugal, Italy, Greece and Spain) amid talks of a potential bailout by Germany and France. Stock markets globally were on jitters due to fears of the potential fallout from these 4 countries, and the Euro currency was also threatened as people dumped it in favour of the USD as the Euro zone countries were perceived to be having numerous problems. There were even some calls for these countries to drop the Euro to prevent it from sliding further against the Greenback. Greece did get a little incensed at the Germans because Germany had implied that Greece had been imprudent with their finances, which led them into their current predicament. In retaliation, Greece demanded for more war reparations from Germany, citing the fact that Germany had yet to fully account for the atrocities they committed during World War II! This mud-slinging is likely to carry on for a while but Germany and France are unlikely to stand idly by and watch Greece sink, as a lot of their banks’ debts are also tied to Greek banks, so if Greece fails, the chain reaction would be catastrophic.

China also gave much cause for concern when it raised its reserve ratio twice within one month, reasons being possible overheating of its economy and also its frothy property market. Since China has remained the “bastion of strength” throughout the entire global financial crisis, managing to grow by a breakneck rate of 8-9% even amidst a global slump, many observers saw the tightening measures as a possible derailment to the global economic recovery. If China were to put the brakes on their red-hot growth, what would the impact be on other nations which are still struggling to overcome the effects of the deep recession?

There are also lingering doubts on the sustainability of the global economic recovery as the data coming out from USA points to a more prolonged slump than originally envisioned. The US Federal Reserve has also hiked up a key lending rate it charges banks on short term loans from 0.5% to 0.75%, signalling that they may be withdrawing their fiscal stimulus much earlier than anticipated.

In Singapore, the Government made a surprising announcement on February 19, 2010 to cool the property market, and implemented two measures to curb speculation and dampen housing prices in the private property sector before they turned into a bubble. The first was to impose a seller’s stamp duty on all sales of property made within 1 year of purchase. Previously, stamp duty was only applicable to the purchase of a property and not its sale. The second measure was to limit the Loan-To-Value (LTV) ratio to 80%, down from 90% previously. What this means is that a buyer is allowed to finance up to a maximum of 80% of the value of the property, instead of the previous allowance of up to 90%. I view these measures as being progressive but probably inadequate to address the red-hot property market, as there are still droves of people heading off to showflats and snapping up expensive high-end condominiums priced at $1,600 to $2,000 psf. I also doubt this will deter those with holding power and the HDB upgraders, who will probably still continue to purchase mass-market condos.

In the Budget Announcement for 2010 (delivered by Mr. Tharman Shanmugaratnam our Finance Minister on February 22, 2010), measures were introduced to help businesses as well as families, with more focus on businesses to grow during the recovery phase. More of the details can be found by visiting the Singapore Budget 2010 Website.

My own portfolio remained fairly dormant as no changes have been made to it since January 2010’s divestment of China Fishery and purchase of Kingsmen Creative. I have been building up on my cash reserves to wait for opportunities to purchase more shares of stable, well-run and growing companies; and hopefully these funds can be suitably deployed in the near future.


For the month of February 2010, some results were announced by the companies I own, as well as some business updates as follow:-

1) Boustead Holdings Limited – There was significant business activity and news for Boustead during Feb 2010. On February 1, 2010, Boustead announced that Salcon had been awarded two projects worth S$11 million from the power industry. Follwing that, on February 8, 2010 Boustead released their 3Q 2010 results. 9M 2010 revenus rose 3.6% while net profit rose 13.7%; but due to the nature of the earnings for Boustead’s project-based revenues, it will be better to review FY 2010 financials due in May 2010. Net cash balance increased further to S$173.8 million and order book is in excess of S$575 million. On February 12, 2010, Boustead announced that its 88.2% subsidiary ESRI Australia Pty Ltd had purchased the entire 100% stake in MapData Sciences Pty Ltd for a cash consideration of about S$3.16 million. It is good news that Boustead is on an M&A path to further strengthen their earnings base; and the acquisition was funded from the cash reserves of the Group.

2) Suntec REIT – Suntec REIT’s dividend of 0.318 cents per share was received on February 26, 2010. Other than this, there was no other news from the REIT.

3) First Ship Lease Trust – FSL Trust‘s dividend will come in on March 1, 2010; other than this there was no further news.

4) Tat Hong Holdings Limited – Tat Hong released their 3Q 2010 results on February 12, 2010 and it was pretty much a disappointment. Revenues dipped for 3Q 2010 and after adjusting for one-off items and exchange gains/(losses), earnings were much lower than anticipated indicating that a recovery was not yet under way. I will NOT be doing a full analysis and review of 3Q 2010 as I had just finished my 3-part 1H FY 2010 analysis. Separately, on February 17, 2010, Tutt Bryant announced a 50-50 joint venture with Fagioli of Europe, a privately owned company and one of Europe’s largest heavy lift specialists.

5) MTQ Corporation Limited – There was no news from MTQ for the month of February 2009.

6) GRP Limited – GRP released its 1H FY 2010 results on February 5, 2010. I did a previous posting on it which analysed the results and also gave my views on the prospects of the company.

7) Kingsmen Creatives Holdings Limited – On February 18, 2010, Kingsmen announced that they were appointed as the official events management services sponsor for the Youth Olympic Games (to be held from 14-26 August 2010). Also, Kingsmen released their FY 2009 results on February 24, 2010. I will be doing a comprehensive review soon as well as include my Analysis of Purchase (which is overdue), but a quick summary is that revenues for FY 2009 increased 27%, but net profit attributable to shareholders only increased 5%, due to lower margins from the Universal World Studios contract. A final dividend of 2 cents per share was declared, up 33% from last year’s 1.5 cents per share, payable on May 19, 2010.

Portfolio Review – February 2010

The entire month of February saw more and more bad news trickling in from Greece, China and USA, with USA Consumer Confidence hitting a 10-month low as well. My realized gains had increased to S$53.6K due to the interim dividend from GRP. The portfolio dipped slightly from an unrealized gain of +6% to an unrealized gain of +5.4%. If I had included the dividend received from GRP, unrealized gains would have been +6.1%, a marginal increase from last month. It is expected that sluggish conditions and all-round pessimism will continue for quite some time, and will make conditions very suitable for further investments into companies for the long-term.

For March 2010, it is generally a very quiet month with no corporate updates, and FSL Trust and Suntec REIT will only announce their results some time in late April 2010. Meanwhile, I will be receiving dividends from GRP and FSL Trust on March 11 and 1 respectively. I will then decide how to make use of the cash for re-investment.

My next portfolio review will be on March 31, 2010 (Wednesday).