Monday, February 28, 2011

February 2011 Portfolio Summary and Review

It has been a very relaxing month for me in terms of blogging as I have eased up on the frequency, and have instead focused more on my personal life and other pursuits. Other than checking on the results of the companies which I own, I also did some reading and simple analyses on other companies which had released their results, in a relaxed and non-hurried pace. After all, if a company is really good, it should remain so even into the future. The problem, of course, is getting Mr. Market to sell it to you cheaply so that you can maintain your margin of safety.

The economic and political news has probably been dealt to death in the newspapers so I will not dwell on it except to mention the headlines – troubles in Libya, Bahrain, Yemen and Middle East in general, an earthquake in New Zealand and COE prices moving north again in Singapore. Inflation hit 5.5% and raised quite a ruckus among economists who (as usual) did not expect it. And who can forget the most “sensational” news of all this month – (Election) Budget 2011 and the confirmation of electoral boundaries, signalling an impending General Election.

Without further ado, below is a snapshot of my portfolio and associated comments for February 2011:-


1) Boustead Holdings Limited – All I can say is, Boustead got hit by pretty bad news this month as the unrest and violence in Libya spiralled out of control and threatened the safety of staff situated there. As a result, on February 21, 2011, Boustead announced the evacuation of staff from Libya and on February 25, 2011, it followed up by announcing that all staff had been safely flown back home with the help of International SOS and embassies. Of course, such a political volatile situation will not bode well for Boustead’s Al Marj Project in Tripoli, even though it was announced on February 1, 2011 that they had reduced their stake in the Joint Venture from 65% to 35% and let their JV partner GCBC take over the completion of the Township to expedite matters. Additional announcements include one on February 1, 2011 where Boustead Projects clinched a Design, Build and Lease Project (its third since start of 2011) to build an integrated aircraft MRO facility for Hawker Pacific Asia Pte Ltd. This will add to Boustead’s recurrent revenue and cash flows as their real-estate solutions division builds up its portfolio. Boustead also released their 3Q 2011 financial statements on February 14, 2011. To summarize, 9M 2011 increased 34% to S$450.5 million, gross profit was up 41% to S$135.3 million and net profit attributable to shareholders was up 84% to S$53.3 million, but this included a one-off gain on disposal of a property. FCF generated was healthy and the business seems to be chugging along fine. On February 18, 2011, Boustead announced that it was purchasing the remaining 8.33% stake in Boustead Projects from Mr. Ngo Wu Ping for a consideration of S$16 million. Interestingly, this values Boustead Projects at about S$192 million. Boustead’s total market value is only about S$470 million (using 93 cents per share), so this implies the other 3 divisions in total are worth just S$278 million. Considering the other three divisions are very well-established with a good clientele base, it seems unlikely that it is just worth S$278 million. So perhaps this is an indication that Boustead may “spin off” some of its divisions in future to realize hidden value.

2) Suntec REIT – There was no news from Suntec REIT for the month of February 2011.

3) MTQ Corporation Limited – There was no news from the Company for this month, except that the unrest in Bahrain might have an impact on MTQ’s investment in Bahrain. Thus far, their IR has assured that they are monitoring the situation and that they plan to be in Bahrain for the long-haul. Still, I am concerned that the protests may escalate and cause major economic and political trouble, which in turn will affect Bahrain’s attractiveness as a commercial hub. I will keep updated with the latest events as time goes by, and hope for the best.

4) GRP Limited – GRP released their 1H FY 2011 results on February 11, 2011. Revenue fell 2.1% while COGS increased 4%, so effectively gross profit fell by 13% to S$4 million. Other operating income also dropped 92% to S$128,000 as there was no more rental income from the property at Bukit Batok due to expiration of lease. As a result, net profit dived 47.3% to S$1.2 million. However, in spite of the weaker results, Management declared the usual 1 cent/share interim dividend, and this has been reflected in my realized gains as the counter has gone ex-dividend.

5) Kingsmen Creatives Holdings Limited – Kingsmen released their FY 2010 results on February 22, 2011. FY 2010 revenue decreased by 2.8% to S$235.2 million but gross profit increased about 10% to S$65.4 million due to better gross margins. Net profit was flat (an increase of just 1.1% to S$15.1 million), but the Company declared a 0.5c special dividend in addition to a 2c final dividend due to their 35th Anniversary. I will be doing a more detailed analysis of Kingsmen’s FY 2010 results and prospects in a future post.

6) SIA Engineering Company Limited – There was no news from the Company for February 2011.

Portfolio Review – February 2011

Realized gains increased to S$55.4K as a result of realized gains from the divestment of Tat Hong, as well as dividend from GRP.

For YTD February 2011, the portfolio has fallen -5.7% (using XIRR and including GRP dividend) against a -5.6% fall in the STI. Cost of investment has decreased to S$185.3K, and unrealized gains stand at +11.8% (portfolio market value of S$207.1K).

March 2011 is expected to be a quiet month as there are no results being released, so it will give me time to do some analyses on my existing companies as well as allow me to analyse the results of companies which I find an interest in deploying my cash into. However, I must stress that there is no immediate urgent rush to deploy the cash unless ALL factors are in my favour and unless I can guarantee a reasonable margin of safety. Patience is the key to long-term sustainable returns and I intend to just let the money sit in the bank account if I cannot allocate it efficiently.

My next portfolio review will be on March 31, 2011 (Thursday).

6 comments:

Dividends Warrior said...

Ur portfolio is still looking strong in this correction.

Mine is just barely in the green though. Lol

Market Strategist said...

I love Boustead. I think this stock can double in value.

My portfolio is now 80% cash now. Waiting to buy China consumer stocks listed in HK.

Musicwhiz said...

Hi Dividends Warrior,

Thanks, some of my purchases were made some time back, and the businesses have been doing decently and growing, and also paying dividends. That is enough for me as a shareholder.

All the best!

Musicwhiz

Musicwhiz said...

Hi Market Strategist,

I think Boustead is a well-run company but I will not speculate on the share price. All I am happy with is that it is paying me a very decent dividend.

Cheers,
Musicwhiz

Dennis said...

when did u start investing into stocks? Total returns of 41% over 5 years, that's very poor returns after you have done so much "work" in investing.

Your returns would have at least been a few hundred percent if you learn TA which would have managed to help you avoid the Stock Market Crash in year 2008 and you bought stocks again after the market crash.

That's precisely what I did.

JH said...

MusicWhiz:

Impress with your detail writeup on your Portfolio Summary.

Thumbs up for your good effort, and thanks for sharing.

Keep in up.