End-September 2007 Portfolio Review

The market has managed to bounce back quite amazingly in just under 6 weeks, since the August 17 crash of the STI to the 2,900+ level. Now the index is back again and rallying to even higher levels of above 3,700 (a level previously reserved for the end of the year) while analysts (being analysts) are predicting and calling for STI to close the year at 4,000 to 4,200 points. Why is there so much optimism and why are people so eager to sink more of their money into shares when they are expensive ? That always gets me wondering. Suffice to say I remain a very sad and disappointed man in this rally, as valuations have all gone ahead of fundamentals and there are hardly any bargains left.

Below is the summary of my investments and related news as at September 28, 2007 (STI at 3,706.23 points):-

1) Ezra (Vested since October 6, 2005) - Buy Price $1.30 (bonus adjusted), Market Price $6.40, Gain 392%. On September 17, 2007, Ezra announced that they had contracted with Karmsund to purchase a large 27,000 bhp deep-water multi-functional support vessel for S$162.4 million. This will augment their new fleet of ultra-large 30,000 bhp AHTS which are going to be delivered in FY 2009 and FY 2010. On September 20, Ezra completed the conditional sale of 36,413,500 shares at NOK 22 per share (about S$219.71 million at NOK 22 = S$6.0338), which will leave them with a 55.2% stake in EOC Limited. Subsequently, on September 23, EOC Limited released its prospectus (approved by Oslo Bors) to retail investors to subscribe for 7,000,000 shares of EOC, which would further reduce Ezra’s stake in EOC to below 50%. The retail offering commences on September 24 and closes on September 28, and I believe Ezra will announce the subscription level and the gross proceeds raised from this entire listing exercise once they have the numbers ready.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $1.295 (average), Market Price $2.40, Gain 85.3%. On September 28, Boustead announced that the sale of 40 Changi North Crescent has been completed. This would mean that the profits from this transaction would be recognized in Boustead’s 1H FY 2008 financials as today is still within the 1H of the financial year.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $3.46, Gain 242.6%. Swiber is accelerating its expansion into other regions of South-East Asia by announcing, on September 26, 2007, that it had entered into non-exclusive co-operative agreements with two Vietnamese companies (PetroVietnam Construction JS Company and Vietsopetro JV). This will give them a presence in Vietnam in order to start bidding for EPCIC projects within Vietnam. Also, Swiber announced on September 28, 2007 that it had incorporated a new subsidiary called Kreuz Engineering Limited in Labuan.

4) Global Voice (Vested since November 23, 2005; averaged down January 25, 2006) - Buy Price $0.1775 (average), Market Price $0.175, Loss 1.4%. On September 18, GV announced that they have deployed IPNex for Allianz Worldwide Care; while on September 24, online travel company QCNS has selected them to set up a high availability platform which can support up to 350,000 transactions. Details can be found on the company’s website.

5) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.95, Gain 75.7%. There will be an EGM held on October 5 for the approval of the 33.33% stake acquisition of One Raffles Quay. Suntec REIT is also trying to raise funds via the issue of new units and convertible bonds as well. I will provide more details of this in a separate posting as this deal is technically complex.

6) 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 $0.775, Gain 18.3%. There was no news from the company during the half-month ended September 28, 2007.

Overall Portfolio

My overall portfolio has increased by 122.3% from a cost of S$46.8K as at September 28, 2007. The market value of my portfolio is about S$104.1K and unrealized gains total S$57.3K. Realized gains remain at S$4.2K in the absence of further dividends.

Comparison against STI

Someone had asked me to do a comparison of my portfolio’s performance against the STI, which is Singapore’s benchmark index. I have now included this and it will be a regular feature of my portfolio reviews.

The STI was 3,037.74 on January 3, 2007. It is currently at 3,706.23 today, representing a gain of 22.0%.

Adjustment of cost to ensure consistency of comparison – My cost and market value was S$33.9K and S$46.0K respectively as at Jan 3, 2007 while my current cost is about S$46.8K. Thus, I will adjust the market value of my holdings as at Jan 3, 2007 according to the % difference in cost in order to ensure a fair comparison. After adjustment, the new market value will be about S$63.5K. The market value of my holdings as at today is S$104.1K. This represents an increase of about 63.9%.

Thus, for YTD Sep 2007, I have managed a gain of 41.9 percentage points more than the STI. Please inform me if there is any error in my computation, and I will seek to rectify it as soon as I can.

My next portfolio review will be on Monday, October 15, 2007 after market close.