I mentioned my earlier post that I was almost done with my actions by 1 November. Looks like I don’t quite understand myself. The following are the other half of my actions.
What did I sell?
AS mentioned in my earlier quarterly report, I decided to use my CPF-O to hold my VICOM shares, so I have divested them from my cash portfolio at $6.01, making a small gain of 5%, including dividend over the past year.
Also, divested three quarters of my UMS position after it cuts its latest quarter’s dividend as it experienced lower revenue and profit, with zero net cash in its balance sheet. Took the loss of 32% due to uncertainty of its dividend for the next few years. I am more comfortable with this much smaller stake as I let the boss and his team work out their plan to diversify the group.
Also, decided to divested JEP completely at $0.137, booking a loss of 47%. Yes, a punt that went wrong in the short term but small position so can still bear with it.
What did I buy?
There were 3 new positions added in November. Kingsmen Creatives, HRnetGroup and Nvidia Corporation. The rest of the cash are deployed to accumulate my current holding of REIT and some existing US counters.
I bought a small very amount (~ 1% position size) of Kingsmen Creatives at $0.51 just before it announced its Q3 results. An old favourite which fell from grace as its profit and dividend tumbled from 2016. Re-entered and exited in mid-2017 as the business fails to turnover. After reading blog posts by Evergreen Investing and Musicwhiz on the company, I decided to take a look at its recent results. 2018 Q1 results was not impressive with continued decrease in revenue but 2018 Q2 results saw an increase in both revenue and net profit.
The deciding factor for me to re-enter again is its higher order book. In Q2, it reported secured contract of $322 mil ($273 mil will be recognised for FY2018). This number is higher than last year’s number of $245 mil ($232 mil) and in fact the secured contract is already higher than 2017Q3 of $315 mil.
With its new business to create, build and operate NERF family entertainment centre (FEC) and its imminent shift to its new HQ, this might mark the start of another growth phase for the company.
Update after Q3 results
Adde more after it released a good set of Q3 results, with increase in both top/bottom lines. $345 mil (out of $403 mil) order to be recognised for FY2018 is higher than 2014’s all time high revenue of 334 mil. Key concern is its net profit margin which dropped to 1.8%! However, cash flow should improve from next year, now that they are housed in their own HQ. Expect the company to sustain its dividend of 2.5 cents, which gives a yield of about 4.8%.
Added more at $0.815 after it released a good set of Q3 results. Expect the momentum to continue in Q4, resulting in ~10% to 15% increase in revenue and ~20% to 30% increase in net profit for the full year. Since it is committed to at least 50% payout till 2018, expect dividend to be at least 2.7 cents which gives a yield of about 3.3% at current price.
I bought a small very amount (< 1% position size) of Nvidia at US$215.19. I have always wanted to have a stake in this giant GPU producers but always feel that I have missed the boat when I wanted to put in my money. I chanced upon its price on 6 November and realised that for the past month, the price has corrected by about 20%. At my purchased price, its PE is about 31x. While not cheap, it is much more acceptable for me. So made a quick decision to take a very small stake to whet my appetite.
Again I am poor at timing. The price plunged more than 30% not long after my purchase, when it guided a weaker Q4 results during its Q3’s briefing. Since I am positive about its business in the long term, I decided to add more at US$144 , bringing my average price to US$180 and a position size of 1%. Will leave it at this first until the next quarter’s results briefing.
Adding on to REIT
Re-deploy the cash from selling VICOM and UMS to add another round of REITs. The new average price and position size are as follows.
- Parkwaylife REIT @$2.39 [7.6%]
- Frasers Centrepoint Trust @$2.06 [6.5%]
- Mapletree Industrial Trust @$1.99 [5.5%]
- Mapletree Logistics Trust @$1.29 [4.1%]
- Mapletree North Asia Commercial Trust @$1.15 [4.1%]
- Mapletree Commercial Trust @$1.59 [3.8%]
Adding on to some US counters
With Black Friday coming early, I decided to add on to a few of my existing US counters. The idea is to continue to add to them in the next few years as I slowly increase my exposure to the US market. In 3 to 5 years time, they should occupy a more substantial portion of my portfolio. The new average price and position size are as follows.
- Booking @US$1948 [3.1%]
- Walt Disney @US$105 [1.4%]
- VISA @US$141 [1.2%]