Archive for the ‘Shares and Derivatives’ Category

Posted on September 3, 2010 - by musicwhiz

August 2010 Portfolio Summary and Review

August 2010 was indeed an interesting month for me in terms of portfolio changes; as I made the somewhat painful decision to divest of my entire stake in FSL Trust (as I had previously blogged about in this post). The decision was a mixture of relief and regret, as the funds from this investment can finally be freed up to be redeployed into a more promising investment. What I dislike most is “deadweight” in my portfolio, and I will not hesitate to cut loss on a position in order to re-allocate the funds to another position should I objectively conclude that it would be in the best interests of my portfolio.

I had mentioned that I expected August to be a relaxed month; but it was not to be so as I spent quite a bit of time researching and poring over Annual Reports for my latest purchase – SIA Engineering Company Limited (“SIAEC”). In order to do a more comprehensive analysis as compared to my previous one on Kingsmen Creatives, I spent a lot more time dwelling on the Annual Reports, doing deeper analysis on each division, poring through SIAEC’s many associated companies and joint ventures; as well as doing a detailed competitive analysis for three of SIAEC’s competitors. The result is a rather lengthy report to justify my purchase of SIAEC which I will split into five separate sections (in order to keep each section readable). The full report is about 32 pages (along with 14 tables of figures) and it is my intention to post up as much of the analysis as I can in its entirety; as this is the first blue chip company (SIAEC is, incidentally, part of the Straits Times Index’s 30 component stocks) I have seriously researched on and I will need to get some feedback so that I can improve for future research and analysis work. (more…)

Posted on September 1, 2010 - by Alvin

Starhill Global REIT – Fundamental Analysis

Starhill Global REIT invests in retail space at prime location. Based on her 2009 annual report, there are 10 properties in the portfolio. Locally, the REIT has Ngee Ann City (27.33%) and Wisma Atria (74.23%). 7 of the properties are in Tokyo and 1 in Chengdu. They just acquired David Jones Building in Perth and intend to acquire 2 prime retail space in Kuala Lumpur. A rights issue was underwritten in 2009 to raised cash. See what the executive Chairman said:

“In 2009, Starhill Global REIT successfully raised S$337.3 million through a fully-underwritten and renounceable 1-for-1 rights issue. The fund-raising exercise was carried out from a position of financial strength and with a long-term strategic perspective, to achieve the REIT’s three-pronged objectives of paring down debt, asset enhancement and seizing attractive acquisition opportunities… As a further reflection of the Starhill Global REIT’s resilience, the REIT was able to seize opportunities to boost its portfolio with more asset gems overseas at attractive capitalisation rates resulting from the global economic slump. Read more…

Posted on August 30, 2010 - by musicwhiz

GRP – FY 2010 Analysis and Review

GRP released their FY 2010 results on August 20, 2010 (the company has a June 30 year-end). Suffice to say that there were no major surprises; either negative or positive, but the prevailing sentiment from me is that the Company can do more to either increase their dividend or to reinvest the cash which is just piling up. There was not much articulated about how the cash will be utilized or how the business would be grown beyond what it is now; so it was quite a disappointment for me. I will go through the usual review and analysis which will be kept brief as this is a simple company to analyze; but I will focus at the end on what I’d expect from the Company in FY 2011 and how I hope it can communicate better to shareholders.

Financial Analysis

Profit & Loss Statement

Revenue was essentially flat, rising just 1.4% from S$25.3 million to S$25.6 million; and was mainly due to the weakness in Hoses and Marine as well as the PVC pipes division (in China). Cost of goods sold, however, increased by 6.2%, which resulted in gross profit falling by 6% from S$10 million to S$9.4 million. (more…)

Posted on August 27, 2010 - by AK71

Saizen REIT: Better than expected DPU

Saizen REIT reported full year results this morning and declared a DPU of 0.26c, payable on 29 September 2010.  This is better than expected as the REIT did not have a full quarter to accumulate cash for distribution.  They also refinanced GK Choan and had to pay some fees as well as amortise that loan.  Read about it here.

So, I was expecting a smallish cash distribution of about 0.1c in September.  Instead, a DPU of 0.26c in September, given the difficult conditions, bodes well for the next DPU in December which would have a whole quarter to accumulate cash for distribution to unit holders.  I estimate the DPU in December to be between 0.4 to 0.5c.  Assuming it is 0.4c, that would give an annualised DPU of 1.6c and an annualised yield of 10% at the current unit price of 16c.

Some key numbers from the reports:

1.  Annual valuation of properties (161 Freehold buildings in Japan) declined 4% from a year ago from JPY42,051.1m to JPY40,381.7m.  The rate of decline has slowed and this is in line with the general view that real estate prices in Japan are bottoming.  Read valuation report here.

2.  NAV is still at 40c per unit given the strong JPY.  The JPY is likely to stay strong, given the concerns of weak recoveries in heavily indebted western economies. Read more…

Posted on August 24, 2010 - by Createwealth8888

High Dividend Yield Stocks? – Part 8

Read older post on? High Dividend Yield Stocks? – Part 7

I believe all investors will love high dividend yield unless you are a day trader who don’t really need to care on dividend.

Imagine a high dividend yield bandwagon is rolling past you. A few people on the back of the wagon are partying and playing music of their lives and singing the song of high yield. You may be unable to resist the sweet sounds being played and run to join the party.

But, before you jump on the bandwagon, you may want to wonder a bit as there can be more than one way of looking at high yield; its associated risk of future dividend cut and impact to its stock price.

A. High Yield High Growth

I don’t think you can find it now in the current market. If you can find it, don’t tell anyone. Sell your car and mortgage your home and load it up! Just kidding. LOL (more…)

Posted on August 23, 2010 - by musicwhiz

Tat Hong – FY 2010 Analysis and Review Part 3

Part 3 of this analysis delves into Tat Hong’s inventory levels for crawler cranes as well as tower cranes. It also attempts to discuss Tat Hong’s prospects for the next financial year and beyond by incorporating recent news as well as from attendance at Tat Hong’s FY 2010 AGM which was held on July 27, 2010.

Crane Inventory Levels (All Cranes)

Looking at Tat Hong’s total fleet profile, it can be seen that their inventory levels have hit a new high of 481 units even as they are trimming their inventory and boosting their fixed assets (transfer from trading stock to fixed assets for rental). The one glaring figure which explains the depressed performance is the overall utilization rate of just 56.6%, which is a far cry from their “peak” performance of 83.5% utilization as at June 30, 2007 (nearly 3 years ago). This would explain why revenues for crawler crane rental are so depressed – companies have not really kick-started their spending on buildings, oil and gas projects and infrastructure as these will lag the economic recovery; hence Tat Hong’s performance in this division will generally lag the economy by about 6 to 9 months. (more…)

Posted on August 17, 2010 - by Alvin

Sakae Holdings – Fundamental Analysis

I like sashimi. Sakae is an affordable Japanese restuarant to go to. It has become a name that is synonomous with Jap food and sushi. Let’s take a look how their stocks fare.

The current price of Sakae Holdings share is S$0.200. In 2009, the earnings per share is S$0.23. This gives a P/E ratio of less than 1, 0.9 to be exact. Pretty attractive huh?

Next we’ll look at the debt to asset ratio. The total debts in 2009 is S$26.769M while the total assets is S$47.024M. Hence, the debt to asset ratio is about 57%. Not bad either.

How about the consistency of the profits over the past 5 years? See the chart below:

(more…)

Posted on August 17, 2010 - by Market Uncle

Portfolio restructuring over the last 4 months

Partially divested First Ship Lease Trust(FSLT) into Pacific Shipping Trust(PST) on 29 June 2010

I can count myself ‘unlucky’ that FSLT had 2 of its ships returned prematurely and took a big hit to its total outstanding contractual revenue and just blame this on the ‘business’ risk. But looking further into the business to understand that the risk is actually much higher than I thought actually attributes more blame to myself. The high yield comes at a price that I sadly have to pay. Most of the contracts are made when shipping rates are over inflated and ships overvalued. When all things come crashing down, the odds are basically heavily stacked against FSLT. It is already fortunate that only 2 ships are returned. The only good news in this midst of this gloom is that the worse for shipping seems over. Though the global economy is still not on firm footing for full sustained recovery, at least the chance of another big recession is quite slim.

I have a habit of raising funds from one sector and putting them back there. Though this make no investment sense, but nonetheless, its just my preference. I decided to divest part of my FSLT into PST. PST also have simiar structure like FSLT but with a more sustainable distribution payout policy and loan repayment scheme. Its recent distribution accretive acquisition is the main factor that entice me to cross over. Though I’m aware that they do not yet have the funds to acquire them and most probably will require equity raising in late 2010 or early 2011, I believe the yield will still be higher post capital raising.

To put things in perspective. There are two deep cyclical sectors I’m vested, Shipping and Oil & Gas (O&G) Support. Both are still going through pretty bad storms (poor demand and oversupply of vessels) and no one can tell when the storm will blow over. But I’m pretty sure when the sunlight burst through the clouds, the returns will be good. No better time to invest other than bad times. Read more…

Posted on August 16, 2010 - by AK71

Healthway Medical: Second quarter results

Healthway Medical announced that it has entered into agreements with twelve (12) medical and dental centres in Shanghai and Hangzhou. To operate and manage these facilities, an investment of RMB38m (or S$7.6m) is required over a period of three months. They hope to increase the number of facilities under management to more than twenty by end of this year.

At the same time, Healthway Medical also released their second quarter results and the numbers look bad.

1. Revenue compared to the same period last year has tumbled 12.3% from S$24.45m to S$21.44m. This is worse than the first quarter when the revenue declined 6.3% compared to the same period a year ago.

2. Staff cost increased 22.9% which suggests that Healthway Medical is paying a lot more now to retain or to recruit staff. In terms of absolute dollars, the increase from S$10.75m to S$13.2m is no small change. Read more…

Posted on August 11, 2010 - by AK71

First REIT: Nick’s analysis

I got to know Nick recently while chatting in Bully the Bear’s cbox. I was so impressed with his analyses while chatting with him that I invited him to be a guest writer for my blog.

I am sharing Nick’s recent comments on First REIT in a proper post here:

I like to post the following 2 research reports released after the 2Q Briefing.

CIMB report is very interesting since there is information about the 2 potential acquisition targets and it mentions the need to raise funds from both debt and equity. It should be able to increase AUM by 50-70%. Looks like a good deal if CIMB figures are accurate.

SIAS:
http://firstreit.listedcompany.com/misc/First_REIT_-_2Q10_Update_Report.pdf

CIMB:
http://firstreit.listedcompany.com/misc/First_Reit.pdf

AND

I will most likely increase my exposure slightly near term. Naturally, we need to bear in mind that with the potential looming rights issue (could be announced in a matter of months), we need to conserve capital to subscribe for it. Read more…