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Thursday, February 28, 2013

Review of Noble FY2012 Results

Noble Group reported its full year results today, with net profit for the year up 9% YoY, from US$ 431 Million (FY2011) to US$471 Million. However, if you look closer, its Earnings before Interest and Taxes (EBIT) has actually decreased from previous year, down 11% YoY. The reason why net profit is up is due to the utilisation of its deferred tax assets from previous year, resulting in a tax credit, and hence a better net profits.


 
Overall working capital has also increased by some US$847 Million compared to previous year, resulting in a weaker cash flow from its operating activities for FY2012 as compared to FY2011. The management has attributed this due to the increasing segment of its energy business. More cash is also used to repay debts as the company focuses on deleveraging its debts. Net debt to capital has improved to 48.8% at year end.
 
Cash & Cash equivalents stood at US$751 Million as of FY2012 year end, much lower than previous year of US$1.5B. However, if we include the cash from the merger between the Gluocester Coal and Yancoal Australia, which they receive in Jan 2013, Cash equivalent would have been over US$1B.
 
Chairman Richard Elman has summarised the company's FY2012 results as being only "satisfactory" due to the headwinds in its agricultural business, which resulted in a lower confidence from retail investors for commodities. Moving forward, the Chairman is confident that Noble Group will perform better, with investment in Brazil, Africa and Russia starting to take off in 2013/2014 and also increasing global demand in its energy and agricultural business.
 
The company announces dividends of around US$0.0181, which is equivalent to about S$0.02 a share. That would present approximately 2% at current yield. For investors who are willing to hold for longer term, Noble looks good to accumulate at current price. I am currently vested and will be looking to add further more.


Wednesday, February 20, 2013

"Feb 13" - SG & US Transactions & Portfolio Update"



Counters
No. of Lots
Average Price (SGD)
Total Value (SGD) based on average price
Market Price (SGD)
Total Value (SGD) based on market price
Total Dividends collected (SGD) since purchase
FraserCenter Point Trust
15
1.69
25,350.00
2.13
31,950.00
1,185.00
SPH
4
4.09
16,360.00
4.14
16,560.00
0.00
SIA Engineering
3
4.12
12,360.00
4.86
14,580.00
210.00
Neratel
21
0.46
9,660.00
0.64
13,440.00
400.00
First Reit
11
0.89
9,840.00
1.10
12,100.00
519.00
SembCorp Ind
2
5.44
10,880.00
5.50
11,000.00
0.00
Ascott Reit
8
1.29
10,320.00
1.355
10,840.00
386.00
PLife Reit
3
1.85
5,550.00
2.41
7,230.00
556.00
Boustead
6
0.92
5,500.00
1.325
7,950.00
140.00
Second Chance
17
0.43
7,210.00
0.42
7,140.00
456.00
Ascendas Hosp. Trust
7
0.89
6,250.00
0.995
6,965.00
63.00
ST Engineering
1
2.82
2,820.00
4.29
4,290.00
1,240.00
Singtel
1
3.09
3,090.00
3.59
3,590.00
316.00
QAF
3
0.71
2,135.00
0.84
2,520.00
20.00
Noble
2
1.12
2,240.00
1.18
2,360.00
0.00
Total SGD
 
 
129,565.00
 
152,515.00
5,491.00

My portfolio for the month of Feb 2013 has hit an all-time high and leap across the S$150K mark for the first time in my life. This of course, has been aided by the uptrend movement of stocks across STI recently especially since the beginning of the year. Almost all of my stock holdings are hitting their 52 week high, other than my poor Noble of course :( I will also be receiving dividends this month mainly from my core Reits holdings of FCT, ART, First Reit and PLife Reit. This is what I like about REITS. They give me quarterly dividend payments to boost my opportunity funds.
 
For the month of Feb 2013, I'm pleased to have added a conglomerate bluechip that I really like for a long long time - Sembcorp Industries. The first time I wanted to add the stock was when it hits a low of around $3.50 back during the Euro Crisis in 2011. But heck, I added FCT at 1.45 and ST Eng at 2.80 so no complaints really. The reason for my purchase for SembInd is due to its fair valuations (PE = 12+), strong operating cashflow from its growing utilities business, revenue recognition from its stake of the marine business from Sembcorp Marine and dividend payout shortly in May. In my opinion, there's no reason why this conglomerate industries should trade lower than its peers like KeppelCorp or ST Eng. I think this would be a really good growth company to own with.
 
On the sell side, I've started taking profits mainly on FCT and Neratel, two of my bigger holdings. Many have asked whether I've traded them as casually or as often as it is but the fact is that I would love to keep them long term but the recent uptrend within a few weeks have led me to exercise my exit strategy earlier than expected.
 
I still have little opportunity funds left for small purchases so I would keep them first until I see good opportunities around. On my watchlist is currently Noble and YZJ, both of which are due to report earnings shortly.
 
Counters
No. of Shares
Average Price (USD)
Total Value (USD) based on average price
Market Price (USD)
Total Value (USD) based on market price
Total Dividends collected (USD) since purchase
Verizon (VZ)
20
43.22
864.40
44.50
890.00
0.00
AT&T (T)
20
34.43
688.60
35.67
713.40
0.00
Coca-Cola (KO)
5
37.07
185.35
37.67
188.35
0.00
Merck & Co (MRK)
2
41.00
  82.00
42.22
  84.44
0.00
Total USD
 
 
1,820.35
 
1,876.19
0.00
 
 
On my US Portfolio, I didn't make much additions for this month other than the small tiny addition to MRK, a healthcare company which I like and provide decent dividend yield at 4.1%. I will be monitoring my US Portfolio within the next few months to see if there is good opportunity to enter.
 
 

Wednesday, February 13, 2013

Review of Boustead results Q3 FY2013

For Q3 FY2013, the Group achieved revenue of $141.5 million and net profit of $26.2 million, an impressive YoY increase of 49% and 373% respectively. Out of the $26.2 million from the net profit, $5.8 million comes from the one-time gain on the disposal of available for sale investment and $3.4 million from tax refund.
 
All 4 business segments registered good growth in revenue (slight decrease in the water & waste engineering segment) YoY, with the "Real Estate Solutions" segment doubling its revenue to $77 million, an increase of 121% YoY due to completion of order book backlog revenue recognition from FY2012.
 
 
 
As of 31 December 2012, the Group financial position remains healthy, with Cash & Cash Equivalent of $178.7 million after netting off all the borrowings. The Group's NAV is up from 50.4 cents to 53.8 cents, out of which 35.6 cents is net cash.
 
Given its strong cash position and huge order backlog within the Group, I expect the company to raise its dividends payout up from 5 cents to 7 cents (including interim and final) for the upcoming FY2014. A 7 cents payout would means $35 million cash outflow from the company's financing activities and is something that the company can afford to do so to reward their shareholders. It would translate nicely into 5.7% yield given the latest closing price of $1.23.
 
With the company's strong order backlog, cash cow net balance sheet and a group of good management led by Mr. Wong, Boustead looks like a strong performer in the year 2013.

Saturday, February 9, 2013

~Happy Lunar Snake New Year 2013~

 
Between the God of Wealth, Success, Well-being and Harmony, which one will you choose? Watch the youtube clip below to find out for yourself. A very simple and short but inspiration clip for everyone. Wishing everyone a happy lunar new year :)
 
 

Friday, February 8, 2013

A 2nd Published Article on Yahoo - "6 Simple Steps to Wealth"

First of all, I would like to thank MoneyMatters for the editing and publishing of my article.

My article on "6 Simple Steps to Wealth" was published on yahoo this week (Click Link Here). Not surprisingly, everytime I read an article on yahoo that are related to some Singapore news, the people who commented on it would always be negative and relay the blame to the PAP govenrment for each and every single matter that comes out of it. It is as if all that has happened to them thus far (whether good or bad) is not their fault. The simple message to them was the government HAS to take care of them. As long as the PAP is around, these people can NEVER get enough salaries, they can NEVER save and they can NEVER be rich. That is the bottomline.
 
To me, I feel it is with such naiveity that these people think like that. Sure the government may not be perfect and the policies imposed may not have benefited these people. But to put the blame simply on the government is like simply failing an exam when you did not study well for it and yet blame your luck on that day.
 
 
 
Most of the people think that they are not getting enough salaries, are not able to get a decent job that pays well and they can't save enough for their rainy days. I feel all of these can be handled well if you make a decent planning ahead. For instance in my case, my expenses for the month are usually in the range of $500 to $1000. Well, to be fair, I am currently single and live with my parents and so I am able to save on the rental and utilities expenses, which perhaps is the biggest expenses for anyone. But what if you are not single? What if you are married with 2 kids? What if your health is poor? etc, etc.
 
To me, it is all down to good planning planning and planning. There's a reason why all companies did their budgeting plan well ahead before the new financial year hits. You can too while you are young and single. My advice to all singles out there is save as much as you can whilst you are still young and single. If you feel that you are not ready for a family whether financially or mentally, don't get married and have the burden on yourself, your wife and your children and regret. Plan your schedule ahead accordingly. I remember reading an article about a Singaporean family whose monthly household income is only $1,800 and the couples have 6 children in the family. To me, it is simply down to improper planning. Would you rather have fewer children whom you can give nothing but the best education, the best food, the best care and concern or more children but live and eat poorly?
 
 

Thursday, February 7, 2013

Review of Neratel results FY2012

Nera Telecommunication reported Q4 results which saw them going lower 5.3% on its revenue QoQ but an impressive 14.5% increase YoY due to higher turnover from the Telecom and Infocomm business segments. Operating expenses increase slightly YoY due to the higher payroll and admin charges. This resulted in a 25.3% Gross profit margin increase YoY from $44.6m to $55.9m.

For the full year ended 31 December 2012, the company has announced a dividend of 4 cents, payable to the shareholders in May. This translates to 6.7% yield based on the latest closing price of $0.59.



The best thing about Neratel is it is a cash cow company. It's cash and cash equivalent amounted to $43.7M while trade receivables amounted $56.1M out of a total $128M of current assets. Based on last year similar 4 cents payout, the company paid out approximately $14.5M from its cash flow from financing activities. The company has also an almost zero debt financing ($7K debt repayable as of 31 Dec 2012) which means that they can use the rest of their cash after dividends for further growth in their telecomm and infocomm segments. NAV is 18.2 cents and PE is approximately 11.

Given a relatively strong expected results, I would expect the market to react only fairly to the news. This is due to some investors like myself who would expected higher dividends given its strong cash flow. A 5 cents dividend would translate nicely to 8.5% yield at the latest closing price of $0.59. This would mean $18M payout from the company's cash flow. The company is clearly capable of doing that and it would give a massive boost to the company's share price into breaking the uncharted territory of $0.60. Nevertheless, a 4 cents dividend is still reasonable given the company's citing competition awareness in its outlook and strategy.

Will we see another takeover in the near future? Maybe so. And hopefully this time we'll see a much higher bid than the two previous bid takeover.


Wednesday, February 6, 2013

Review of SIA Engineering Q3 Results

SIA Engineering reported Q3 results PATMI of SGD 204.2m, with revenues 8% weaker YoY on lower fleet managemen and project revenue. Nevertheless, the company has managed to save on cost control, contributing to an overall operating margin of 10% YoY.


At current price, the stock is trading at a high PE ratios of 20.5, which is about +1.5 SD above the mean. This means that if you are thinking of entering SIA Eng at this point, bear in mind that you are paying a premium valuation. The RSI also indicates an overbought situation, given its recent surge in the price in the past week. The stock is yielding about 4.5% at current price.

PhilipsCapital cites the below reasons as catalyst to its TP of S$6.10, which is based on a multiple of 23X FY14. To me, it is rather ambitious in stating its target price, given the way above premium multiple it is citing.

1.) Exposure to aviation and global air traffic - expected to grow at 5% per annum in the next 20 years. SIA Eng is one of the largest MRO service providers in the world and would benefit from the trend.

2.) Dominant player for tourist arrival - expected to benefit from the growing tourism industry as STB (Singapore tourism board) continues to increase tourist arrivals.

3.) Parent Group SIA backings - Robust demand order book and larget fleet from the SIA group would benefit SIA Eng to increase its workload.

4.) Cash cow machine - the company has no debt/borrowings and it generates a Free Cash Flow of S$250m per annum, which allows the company to pay out increasing dividend to shareholders.

Saturday, February 2, 2013

My Portfolio PE Ratio


Counters
Current P/E
P/E High Avg (5 years)
P/E Low  Avg (5 years)
Beta
FraserCenter Point Trust
8.61
17.63
5.35
0.95
SPH
17.73
17.26
13.23
0.47
SIA Engineering
20.56
17.23
7.77
0.72
Neratel
9.48
12.27
6.94
0.54
First Reit
10.48
10.31
3.79
0.74
Ascott Reit
9.46
9.35
5.29
1.47
PLife Reit
12.58
17.93
9.84
0.61
Boustead
8.92
10.08
3.94
1.19
Second Chance
9.67
-
-
0.94
Ascendas Hosp. Trust
-
-
-
-
ST Engineering
21.35
22.18
15.06
0.37
Singtel
13.96
15.78
11.71
0.71
QAF
11.55
43.69
4.28
1.34
Noble
13.11
16.94
4.09
1.20

From the above table, it does look like most of the current PE ratio is geared towards the high rather than the low. As we are probably in the stage of a super bull run with the Dow hitting the 14,000 mark, STI stocks are probably somewhat lagging and we could see them playing catch up within the next few weeks.
 
I am also pleased that in the past couple of years, my portfolio has now been catered to more defensive and better protected than before. If the market continues to go up, I will be playing more defensively as a means to protect the portfolio better. Keep in mind though that in the event of a crash, no stocks will be spared.
 
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