Friday, December 19, 2014

Recent Stock Actions: Keppel Corp

It's been a busy few months as I prepare for a career switch early next year. So there's been no new post from me the past few months. Just a short post to note down my recent stock actions on KeppelCorp. With the massive sell down in the O&G companies following the drop in oil prices, I've finally initiated a position in KeppelCorp.

I've always liked Keppel for its diversified and fundamentally strong business model. It has also been fairly consistent in growing its dividend payouts over the years. However, I've never felt its pricing was attractive enough to justify entering a position. I see the recent sell down as an opportunity to start a position in the company. At current prices, it has a pretty attractive dividend yield of around 5%. Of course, we cannot be sure if it can continue with its dividend payout, especially with the uncertain macro environment which will likely impact its earnings in time to come.

I'm not particularly concerned about the current oil situation as the O&G industry tends to operate in market cycles. Hence I do believe it's part and parcel of the market cycle in the industry. We can't predict how low oil prices will go or how long the current downtrend will last, but it will likely recover in time to come.

But I do think we shouldn't ignore other potential business risks in Keppel which has not been priced in currently. One area I would pay attention to would be Keppel's property business, particularly in China. I do think the China property market is due for a correction and if and when it does happen, would likely impact Keppel further as a large part of their property business is based in China.

Saturday, August 16, 2014

Has Super lost its steam?

Super Group reported a lacklustre half yearly results recently. Just how bad is bad? The headline figure does look pretty alarming. A whooping 43% drop ($25 mil) in the profits for the period.  I take a look at its latest financial report to find out what happened.

Going deeper into the report, we can better understand how the drop came about. A large part of it was attributed to (or rather lack of) a one-time gain of $17mil from the disposal of a company interest that was recognised in 1H13. Another $2.4 mil was explained by forex gain in 1H13 and $1.6 mil for amortisation of deferred gain. Once we removed all the one time items, the drop in profits doesn't look as bad. Effectively, profits would drop from $39mil in 1H13 to $34mil in 1H14. This represents a drop of about 12%. Still bad, just not as bad. Purely looking at operating profits, the report records a drop of 22% from $47mil to $37mil.

Other than profits, we can also take a look at other stock fundamentals of the company. Dividends effectively remained the same after accounting for the 1-for-1 bonus issue. Debt to equity ratio increased from nil to 4.2%. Net profit margin based on operating profits fell from 17.7% to 14.6%. Price to earnings ratio is about 23 based on annualised 1H14 EPS of $0.0295.

All in all, the results are not good. But definitely not as bad as the headlines would suggest. Maybe the expectations for Super was just too high based on the past outstanding performance. That said, all companies go through ups and downs. And perhaps this could present an opportunity to accumulate more of the stock. The biggest question lingers if this is the start of a prolonged downturn, or just a temporary drop in an otherwise "super" track record.

Update 23 Oct: I've added on to my holdings in Super Group with the recent slump in the share price.

Edit 18 Aug: Added projected earnings chart below for my own reference. 
$0.01 + $0.0255 = $0.0355 (50%)

$0.01 + $0.035 = $0.045 (50%)
2H14 (projected)
FY14 (projected)

$0.01 + $0.019 = $0.029 (50%)
*Re-stated based on bonus share issue

Thursday, August 14, 2014

Dividends in Oct - Dec 2014

Riverstone - $0.0092/share - $46 (9 Oct)
Cache Logistics Trust - $0.0214/share - $64 (26 Nov)
FCT - $0.02785/share - $56 (28 Nov)
AIT - $0.024/share - $480 (10 Dec)
SATS - $0.05/share - $50 (12 Dec)
Boustead - $0.02/share - $300 (27 Jan)

Total - $996

Saturday, August 2, 2014

City in the North

Northpoint City

Northpoint City. That's the name of the latest integrated development by Frasers. Being a northerner myself, I'm happy to see the latest slew of developments that will bring some excitement to the otherwise quiet north. Northpoint City is set to anchor the developments in the Yishun area when it's completed by 2018. Besides Yishun, we will also expect to see infrastructure as well as commercial space development that will gradually bring the north up to pace with the rest of Singapore.

North Coast Innovation Corridor

One of the broad overarching development is the North Coast Innovation Corridor. This will be spread out over Woodlands, Sembawang, Seletar and Punggol. In time to come, expect to see more business  and commercial spaces that will yield greater job and business opportunities to the north over the next 5 to 10 years.

Infrastructure Developments

Set to complete by 2020, the North-South Expressway will cut travelling time to the city by up to 30%. The new Thomson MRT Line will also be completed by 2021 and travel time from Woodlands to Orchard will reduce to 35 min as compared to 50 min. 

The newly announced Canberra MRT will be completed by 2019. This will serve the needs of residential development in the Canberra area. With a large cluster of private and public housing developments, the new station will bring added convenience and vibes to the area.

Woodlands Regional Centre

Perhaps the biggest potential in the north lies in the Woodlands Regional Centre. Compared to the Eastern and Western Regional Centres which has seen much progress over the last 10 years, Woodlands Regional Centre is still relatively quiet with just Causeway Point and Woodlands Civic Centre. This is set to change with the re-zoning and plans laid out in URA Masterplan 2014. 

Indeed, it's exciting times ahead for northerners. Expect to see more developments as the plans are rolled out and infrastructure is completed to pave the way for growth in the north. 

Friday, August 1, 2014

Recent Stock Actions: Cache Logistics Trust

Recently added Cache Logistics Trust to my portfolio of reits. The stock is currently going at about 7% dividend yield.

It's a fairly simple trust that currently owns 14 warehousing properties (13 in SG and 1 in China). It was listed in 2010, and since then have been fairly consistent in growing its distribution income. In terms of balance sheet, it's gearing is moderate at about 30% currently.

One of the positives I see is that one of its Singapore properties (DHL Supply Chain Advanced Regional Centre) is still undergoing construction and due for completion in 2015. This will contribute to its income in due time.

The main risks I see going forward are the impending increase in interest rates which will affect all reits and the increase in supply of industrial properties over the next few years.

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