June 2011 Portfolio Summary and Review

June 2011 was one of those months where there was a lot of economic and political news – that of Greece (almost daily), USA, China and India; but not even a whisper of corporate news. So I guess I spent most of the days relaxing and catching up on precious family time as well as digging deeper into work (yes, my workload has increased). My previous post had mentioned that my daughter was admitted to hospital, and this also consumed my time somewhat. Fortunately, she has been discharged and I am now more wary of bacteria and viruses which could potentially infect my poor child again. Call it fatherly instinct if you will, but now every time she sneezes or coughs I almost have a fit. Thankfully, I have very helpful in-laws as well as my own parents who spend a lot of time fussing over my daughter to make sure she gets the best possible care.

On the property front, the release of a massive supply of housing (as mentioned in my last blog post) and the (in)famous $880,000 (reduced to $778,00 later on) Sim Lian DBSS had the whole internet community abuzz, though mostly with decidedly negative reactions. While it remains to be seen if the measures will have any effect, countries like China are still seeing real estate prices go UP. Only when the hot money stops flowing from the West to the East will this inflation finally subside.

To avoid being overly long-winded (again), let me dive right into my portfolio and corporate summaries. My portfolio and comments for June 2011 are as follows:-

1) Boustead Holdings Limited – Boustead had a relatively slower month in June 2011 as there was only one announcement of contract win. On June 16, 2011, Boustead announced that its Energy-Related Engineering Division had secured S$23 million worth of contracts for downstream oil refineries and gas processing plants in Australia, Singapore and Turkmenistan. Adding these contracts to the S$25 million announced in April 2011, Boustead’s order book for this Division stands at over S$55 million in just the first three months of the financial year, and represents a good start for Boustead. Since I am already planning an analysis of their FY 2011 financials to continue into Parts 2 and 3, I shall say no more here.

A piece of disappointing news announced on June 24, 2011 was that of Corporate Guarantees demanding from it from Bank of Commerce and Development for about US$18.8 million. These were related to the Libyan Township project which was now put on indefinite hold due to the ongoing crisis. Boustead had not made provisions for this amount in its FY 2011 results as it was advised by its legal counsel that there was no necessity for it at the time. So it looks as though Boustead may be exposed to another potential S$23.3 million in losses for FY 2012 which would impact its financial performance.

2) Suntec REIT – There was no news for Suntec REIT for June 2011.

3) MTQ Corporation Limited– There were no corporate announcements from MTQ for June 2011 per se, but Neptune Marine Services (“NMS”) did announce that Blossomvale (a 100% subsidiary of MTQ) had increased its stake in the Company from June 8 to June 27, 2011. Please refer to the table above for the stake changes. Over a period of 11 trading days, MTQ had taken the opportunity to average down on their original purchase of NMS shares (200 million shares at A$0.05 per share) by purchasing an additional 68,455,000 shares at prices ranges of A$0.035 to A$0.0387. This had the effect of increasing their stake in NMS to 268,455,000 shares (or 15.31% of the total issued share capital) and lowered their average cost in NMS from A$0.05 to A$0.0467.

I am also expecting MTQ’s FY 2011 Annual Report in July 2011, as well as news on the location and timing of the AGM.

4) GRP Limited – Predictable, there was no news for GRP for June 2011.

5) Kingsmen Creatives Holdings Limited – There was no news from Kingsmen Creatives for June 2011.

6) SIA Engineering Company Limited – On June 28, 2011, SIA Engineering announced the renewal of an MRO Agreement with SIA Cargo valued at $385 million over 3 years, to be extended by two more years if conditions are fulfilled. Since this is a renewal agreement, there is no material impact on FY 2012’s financials. SIAEC’s AGM will be held on July 22, 2011 11 a.m. at Marina Mandarin Ballroom.

Portfolio Review – June 2011

Realized gains have remained at S$59.2K due to the absence of any shares going ex-dividend (SIAEC will go ex-dividend in July while Boustead on August 3, 2011).

For the month of June 2011, the portfolio has dropped by -2.2% (using XIRR in MS Excel to compute) against a -2.2% fall in the STI; thus my portfolio performance is on par with the STI. This was 0.4% better than May 2011’s under-performance of -0.4 percentage points. Cost of investment remained at S$210K and unrealized gains stand at +12.2% (Portfolio Market Value of S$235.5K).

For this month at least, I managed to blog about some topics on valuations and also relate some of my experience along my investment journey. I guess July 2011 should see some interesting AGMs coming up – that of MTQ, Boustead and SIAEC. However, as I am bogged down with work commitments, I guess I have to be selective with regards to which AGM I decide to attend. Boustead’s analysis will also continue this month, and I may also have time to squeeze in a post on Porter’s Five-Forces and perhaps wrap up my long-overdue Kingsmen Comprehensive Analysis Part 5.

If you think June 2011 was amazingly dry in terms of corporate news (just see the above summary and you will know what I mean), July 2011 might just beat it as it is also well-known for having very little corporate news (at least, this applies to the companies I own). Some companies seem to release news almost daily, like Olam for example. Only Suntec REIT will announce results in July 2011, and since I own such a pathetic amount of shares I don’t even see reason to comment on it! I will have to wait till August 2011 to see Kingsmen release their 1H FY 2011 results. UPDATE: SIA Engineering will release their 1Q FY 2012 results on July 26, 2011 (Tuesday).

My next portfolio review will be on July 31, 2011 (Sunday).