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My Singapore Stock Portfolio Mid November 2012

11.19.2012 · Posted in Dividend Stocks, Singapore

This is an update to my Singapore stock portfolio for Mid November 2012. For previous months, please see

My Singapore Stock Portfolio Early September 2012

My Singapore Stock Portfolio Mid July 2012

My Singapore Stock Portfolio End May 2012

 

I have been relatively busy with running the course and also exams last 2 months so I haven’t had the time to update the stock portfolio here. I just managed to get some time to do this, so here it is.

 

img my singapore portfolio nov 2012

 

I took more profits from LippoMalls last month at about $0.48 as the yields are being compressed. Despite the negative comments on the recent acquisitions, I am still keeping a significant portion to get exposure to Indonesian economy. You can read my comments for the LippoMall acquisitions LippoMalls Goes On An Acquisition Spree In October 2012

I also initiated position in Golden Agri. CPO prices has take a huge beating recently and it is not certain when CPO prices will stop falling and start moving up. However, it does provide the opportunity to buy in some of plantation stocks as the stock prices have fallen drastically. Golden Agri is the 2nd largest palm oil company in the world and is one the few palm oil companies with a relatively young maturity profile and is also established enough to provide a dividend yield of approximately 3%. For some info on understanding palm oil stocks, read Palm Oil Plantation Stocks Tree Maturity Profiles.

As usual, I always start with a relatively small position to initiate.  Depending on how CPO prices move, I may accumulate more. However, since palm oil is getting used in so many areas including cooking oil, snacks etc., CPO will most likely still trend upwards over the long run with inflation.

 

For more information, you may be interested in:

My Singapore Stock Portfolio Early September 2012

My Singapore Stock Portfolio Mid July 2012

My Singapore Stock Portfolio End May 2012

LippoMalls Goes On An Acquisition Spree In October 2012

Palm Oil Plantation Stocks Tree Maturity Profiles

My Malaysia Stock Portfolio September 2012

My US Stock Portfolio Mid Aug 2012

 

35 Responses to “My Singapore Stock Portfolio Mid November 2012”

  1. Great to see a pure commodity play in your portfolio! CPO is massive in S.E. Asia!

    However, CPO itself is one very hated commodity (more than crude oil) because of its environmental and health impact. All efforts of making it sustainable have failed, and intense lobbying in Europe has also failed. The only markets willing enough to consume palm oil wholly would be India and China.

    • Hi Matt, yeah the environmental effects of CPO can be disastrous if out of control. However, due to intense pressure from the global community, Indonesia and Malaysia are forced to take certain steps in regulating. So we may see CPO prices go up as a result of this as well. It’s funny that they talk so much about CPO in SEA, but how about corn fields in the US? CPO and other cash crops like coffee in Brazil?

  2. hi, calvin and i am still in the States trying to follow whats happening back home.

    re-QAF Ltd , after CIMB wrote an upbeat article on this bread company and your analysis i put this company at the back of my mind so when the shares slide a little, i bought some shares. then i learnt that the company didnt distribute dividend this last round :(
    what is happening?

    • Hi patricia, not to worry about the dividends. QAF distributes dividends semi annually, not quarterly. So the next dividend payout would be in May next year. The question however, is the sustainability of the profits and how the bakery business will fare with greater competition.

  3. Hi Calvin,
    What do you think of the private placement by First Reit? The price seems to have dropped quite a bit, do you advise to buy in at this time? Based on current price, the dividend should be more than 7%, which is among the highest of the reits.

    • Hi TL Lee, based on annualized dividend for the last quarter, dividend yield comes to out be about 6.6% before the rights issue. We have to use that as the previous few quarters include pay out from the Adam Road Hospital sale which will not continue. It is still decent compared to other REITs.

      As for the rights issue, it is DPU accretive since they will be raising debt as well to finance 2 new acquisitions. They are sale leaseback transactions from the sponsor, so the tenancy should be generally stable. Overall, seems quite positive.

      • Thanks for the correction on the dividend yield. Do you think it is better to buy before or after the placement since price will usually drop after placement?

        • Generally it doesn’t make much of a difference since the stock price will be adjusted for the dilution in equity. What’s important is to see what is the purpose of the private placement. If it is to make good acquisitions, it may make sense to buy more of the stocks.

  4. Hi,

    Looking at QAF, the recent report has shown that their FCF has decreased significantly is there any cause for concern?

    Thanks.

    • Hi TL, yes revenues have decreased and thus net profit and also FCF have reduced. I can’t say there is no cause for concern, but it is one quarter. We will have to wait for a trend to be established. While capex is much higher in this quarter, we will have to see going forward if the high capex continues. The good thing here is that the company is still profitable and CFO is still positive. Will have to watch this stock closely.

  5. Hi Calvin,

    Did you evaluate Global Palm Resources before you purchase golden agri ? It seems to fall a lot more than Golden Agri.

  6. Hi Calvin,
    I noticed you don’t own any Kep reit in your portfolio. The recent Muddy Water/Olam case was about high gearing. I checked the Singapore Reits and Kep reit appear to have the highest gearing at 44.1%. I always thought that the highest gearing level allowed for reit is 40%. So is Kep reit abit over stretching itself here and is that the reason it is not in your protfolio?

    • Hi Anonymous, I don’t own any Kep REIT at this point of time as I am still staying defensive. Kep REIT is office so its very cyclical. The highest allowed for SREITs is 35% without rating and 60% with credit rating. However, Kep REIT leverage is indeed on the high side.

  7. Hi Calvin , Can you share why you pick Golden Agri ? In term of maturity profile , i think Kencana Agri having better profile than Golden . I also invested in palm oil company but all are Bursa listed like IOI , HSP and Bstead , my opinion is Malaysia based palm oil company are better established , as i’m not familiar with Indonesia based planter , can you roughly share strength and weak point between the two country planter ?

    TQ

    • Hi Anonymous, one of the reasons I picked Golden Agri over Kencana is that it is much larger, in fact it is the second largest palm oil company in the world. So it is considered a blue chip and in general has better research coverage and is more stable. Another reason is that Golden Agri has a much better dividend yield as it is already more established.

      Comparing Indonesian planters to Malaysian planters, in general the valuations for the Indonesian planters listed on SGX are more compelling compared to the Malaysian planters. Golden Agri has one of the most undemanding valuations with low core P/E ratio, forward P/E ratio, P/B and so on. I will write a post on this.

      • Sorry have you ever take into account their fair value gain of biological assets? If this was stripped out their P/E, P/B are not as cheap as what portrait in their account!

        • Hi Imenwe, yes all the core P/E ratios strip out the gain on biological assets from the earnings. We do not really look much at these gains as it is just an accounting treatment and has not cash flow impact.

          • Erm eventhough Golden Agri is well managed and larger in term of land bank but I believe First Resources and Bumitama are better than it. In term of P/E, First Resources appear cheaper than Golden Agri if fair value gain of biological assets are stripped out. First Resource and Bumitama’s trees’ age profile are way younger than Golden Agri. For your info First Resources is quite generous on paying out dividend but Bumitama had yet established its own dividend policy. For dividend player you might avoid Bumitama and opt for First Resources as First Resources had reached its prime period whereas Bumitama need a few years to reach this stage.

          • Hi Imenwe, I feel First Resources yield is somewhat low, the value has not dropped low enough for it to be attractive.

  8. Hi Calvin ,
    Can you share why you pick Golden Agri instead of Bursa listed planter ?In my opinion Malaysia based planter is better established . I’m not familiar with indonesia based planter , but after roughly went through their financial report , i found Golden debt level is high compare to first resource.In term of maturity profile ,
    kencana agri also better than Golden Agri , besides being bigger size , any other reason you add Golden in your porfolio ?

    TQ

    • Hi WF, I am not sure if you are the same person who made the earlier comments, but the response is pretty much the same.

      One of the reasons I picked Golden Agri over Kencana is that it is much larger, in fact it is the second largest palm oil company in the world. So it is considered a blue chip and in general has better research coverage and is more stable. Another reason is that Golden Agri has a much better dividend yield as it is already more established. Debt to equity is reasonable at about 0.17x.

      Comparing Indonesian planters to Malaysian planters, in general the valuations for the Indonesian planters listed on SGX are more compelling compared to the Malaysian planters. Golden Agri has one of the most undemanding valuations with low core P/E ratio, forward P/E ratio, P/B and so on. I will write a post on this.

  9. You should look at its potential growth in the future rather than its current yield. First Resources had higher production than Golden Agri and it just reached its prime stage there is still room for its production to grow higher. Furthermore it has more than 100k hectares of land yet to be planted.

    • Hi Imenwe, it’s a matter of growth versus value. First Resources does have good growth potential, which is normal for a much smaller company. Golden Agri is much larger and more established but provides good value at about $0.60. No rights or wrongs here, it is a matter of opinion. You choose what you like to invest in.

  10. Hi Calvin

    This for your advice and merry x’mas to you…

    If I am thinking of investing in REIT for yield. Any particular one which you would recommend?

    • Hi Win, thanks!

      It really depends on what you are looking for, income, growth, value or combination? Most REITs are looking pricey at the moment but some still have yields exceeding 6% like Starhill Global, Cache etc.

  11. Hi Calvin,

    may I seek your opinion if it’s a good time to vest in cache now?

  12. Hi Calvin,

    Happy New Year. Have you made any changes to your Singapore Portfolio during the mini bull run recently? Do you intend to take profits or do you think this year will be a good year for stocks? Some of the shares have risen quite fast and one of them is Capital Retail China.

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