Towards Financial Independence

journey of an average retail investor

core, food empire, ifast, review, rmg, straco, valuetronics, vicom

Quarterly Report (Apr to Jun) Non-REIT

A more tepid quarter with most reporting slowing growth in either revenue or net profit. However, all are still profitable with positive medium to long term prospect.


VICOM [CPF@$6.06]

I first purchased VICOM in August 2017 after it announced its 90% dividend payout policy. I am glad that the possible catalysts I have written then turned out right as there was an increase in inspection fees last year and also the group has increased its dividend to $0.36 for the past two years.

Of course at a dividend payout ratio of 120+% (based on net profit) and 110+% (based on free cash flow), there is a concern if it can sustain the dividend. Based on this latest quarter report, there are signs that it should be able to do so. Revenue grew by 4.1% and net profit is up by 4.8%. Also, looking at the latest  cars’ age distribution figure, it looks like the number of car for inspection has turned the corner and there will be an increase in the next few years.

Screenshot 2019-05-11 at 10.06.30 PM

So for the near future, things look good. Assuming the same dividend of $0.36, it provides that provides a yield of about 5.6% at current price of $6.50.

Will hold on to my current stake and probably add more when I have sufficient fund in my CPF-IS account.


iFAST [7.6%@$0.92]

First bought in September 2017 and for the first time since I reported on their quarterly report from 2018, I am downgrading its performance from A to B.  The latest quarter’s result saw a slight increase in its net revenue by 4.4% and a steep decline of its net profit by 42.5% YOY. While recurring revenue has grown 8.8%, its non-recurring revenue declined by 13.2%.

What is encouraging is that its AUA has grown to a record high of 8.75 billions by the end of the quarter. Also, operating cash flow continues to be higher than its net profit and together with its strong balance sheet, the group is able to continue to dish out 0.75 cents of dividend for the quarter.

Management has guided a possibly stronger Q2 performance QoQ, so I expect YOY comparison will be muted. Hopefully, if the market sentiment continues to improve, the groups’ second half performance can be better.

Will just hold on to my shares unless there is at least a 15% drop from its current price before I consider buying more.

Valuetronics [7.4%@$0.60]

Yes, the final dividend is maintained at HK$0.20 after posting a good set of results with a slight dip in revenue and net profit for the full year. Exclude the provision made for loss due to flood at Danshui plant, its net profit would have increased. If not for the uncertain outlook due to trade war, I would have given Valuetronics an A grade.

Screenshot 2019-05-29 at 10.23.38 PM.png

Despite the near term uncertainty that affects its CE segment, these are the positives

  • Continued growth in ICE segment for the past few years
  • Cash pile continues to grow
  • New customers for ICE segment
  • Plan to move some of the lines to Vietnam

When I first bought the counter in 2016, I have perceived that the management is nimble as it took steps to move away from the mass market LED business and decided to grow its ICE segment by going into automotive components.  It looks like the management is continuing this traits as it took quick actions to diversify its manufacturing plant now with the trade war threat.

At a PE of less than 8, PE ex-cash less than 4 and a dividend yield of 7+%, the current price looks good. However, since it already occupies 7.4% of my portfolio, I am unlikely to add more.

Food Empire [5.6%@$0.67]

A slight drop of 2% in its top line but a 6.6% gain for its bottom line. The drop in revenue is attributed again to the currency fluctuation for Russia. In local currency term, Russia’s revenue continue to grow. The net profit gain was due to rationalising its advertising and promotion expenses.

Screenshot 2019-05-12 at 8.55.37 AM

Continue to be impressed by its Indochina growth but am surprised by the drop in the Others segment. Will continue to monitor that.

Things are moving as expected. Will continue to hold on to my current stake.

Raffles Medical Group [5.4%@$1.28]

Revenue continues to grow and net income beginning to drop with the operation of RafflesChongQing. From DBS report and OCBC report, things are moving along in the various arms of the group.

  • Raffles Hospital refurbishment/renovations works on the existing building are expected to be completed by next quarter.
  • RCH expects improvement in traffic after the slower Q1 due to CNY.
  • RafflesShanghai to be completed by Q4 and may open after next year’s CNY.
  • MCH is turning the corner and is ready for next phase of growth

I first bought the shares in December 2015 due to RafflesHospitalExtension and its joint venture to develop RafflesShanghai. No regret in buying with the exception of getting too much in the initial stage. Still believe in Dr Loo and expect things to turn out good eventually. So holding on to my current stake.

Straco [4.7%@$0.81]

Accumulated a bit more at the beginning of the month, bringing Straco back to my core holding. Key reason for the purchase was the increase in dividend from 2.5 cents to 3.5 cents. Based on past record, it is likely that the group will maintain this dividend for the next few years. Straco reported a sensational figures for the quarter with revenue increased by 31% and net profit up by 139% but that is due to the 2 months closure in 2018 Q1. Compared to 2017 Q1, revenue and net profit dropped by 11% and 5% respectively. The group also reported lower revenue for SOA and UWX on lower visitor numbers.

Nonetheless, its cash pile continues to grow and there are some development of its assets in the coming two years as highlighted in this Motley Fool’s report on 2018 AGM.

Straco does not own the most exciting visiting places but they are still brining in the dough. Will continue to hold on to my stake and might add a bit more along the year.




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