Same old same old. Very similar story as compared to a quarter ago.

VICOM continues to increase its dividend with positive outlook in the near future.
Valuetronics continues its attempt to mitigate the US-China trade war impact.
Food Empire continues to be affected by foreign exchange.
IFAST continues to grow its top line but struggles with bottom line.
Raffles Medical continues to grapple with gestation cost.
Straco continues to grow its cash pile.

A

VICOM [CPF@$6.14]

Another good quarter with revenue and net profit up by 3.7% and 4.9% respectively. Cash pile at end of period is about $9 mil below previous year ($89 mil vs $98 mil), largely due to the increase in dividend payout. It continues to increase its interim dividend from 13.46 cents to 14.11 cents.

The company provided a positive outlook for its vehicle inspection business which is aligned to my view stated in the last quarterly report.

“The vehicle inspection business is expected to remain strong as more cars that were registered after April 2014 pass the three-year mark and are now subject to a new emission test requirement by the National Environment Agency.”

Another positive news is the announcement of the new regulatory framework for private-hire vehicles from June 2020. All private-hire vehicles will undergo annual inspection.

So things are looking good and assuming a similar payout of 36 cents, that will give a dividend yield of about 5% based on the current price of $7.10. Even if it drops its dividend to 32 cents, the yield still looks good at 4.5% when coupled with the positive short term outlook.

VICOM is held in my CPF portfolio and I added 800 shares in June at $6.70. As the currently available amount for investment stands at -$680, I will just hold on to my current stake.

B

Valuetronics [7.2%@$0.60]

As expected Valuetronics is affected by the US-China trade war tension. Revenue and net profit decreased by 7.1% and 3.2% y-o-y and both ICE and CE segments are affected. To manage the trade tension, it has swiftly found an alternative plant in Vietnam and I am pleasantly surprised that its Vietnam plant has started mass production in June 2019.

The objective of buying Valuetronics was for its dividend. As seen from the table above, it has been giving out dividend for the last 11 years and has increased its dividend as it grew its business. While I expect the revenue and net profit to be lower this year, it should be better than FY17 and with a strong balance sheet, I believe that dividend for the year will be at least HK$0.20 and there is a chance that it will stay at HK$0.25.

Current price is near my average purchase price and I deem it as attractive. However, since it already occupies 7.4% of my portfolio, I am likely to just hold on to my current stake.

Food Empire [5.4%@$0.67]

Similar to Q1, revenue dipped by 2%, largely attributed to foreign exchange. Net profit is up by a surprising 144%, mainly due to a 23% drop in selling and distribution expenses, and no foreign exchange loss as compared to US$2M for last year.

Cash flow stays strong with a drop in net cash due to purchase of property, plant and equipment, which is probably for its second instant coffee processing facility at Andhra Pradesh.

The drop in Russia’s revenue is due to depreciation of Russian Ruble. In local currency, the revenue continues to grow. As for Indochina and Other Markets, the decrease is due to rationalisation of business. I interpret that as not going all out to gain market share which they did last year. Hence, while top line decreases, they are getting more profit.  The decision to grow revenue or have a higher profit will probably based on management’s priority and their reading of the market. Hopefully, can see both top and bottom lines grow together.

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

iFAST [5.2%@$0.92]

Another quarter with a mixed performance. The positives are record AUA at $9.04b and maintains a dividend of 0.75 cents with strong cashflow. The negatives are a drop in net profit which is largely attributed to increase expenses, and slowing business in China.

I am still positive about its long term prospect but might see some short term turbulence due to trade war and Hong Kong protest.

I have pared down my stake last month at $1.11 but still occupy a relatively larger position in my portfolio.

Raffles Medical Group [5.2%@$1.28]

Revenue continues to grow and net income continues to drop due to gestation loss of RafflesChongQing. Things are moving as expected.

Having reduced my stakes along the years, I am comfortable with the current amount that I am holding. Not going to add or sell but just participate in its expansion with my current stake.

Straco [4.6%@$0.81]

A disappointing quarter from Straco as revenue dropped by 6.5% and net profit dropped by 16.8%! However, operating cash flow for the quarter is up by 4.1%. Also, year to date’s revenue and net profit is up by 8.4% and 21.8% respectively due to full operation of the Singapore Flyer for the year.

I am slightly concern with the decrease in revenue and visitor numbers for all the three attractions in China but will just continue to monitor how it will pend out over the next few quarters. For the year, it should report a slightly higher or flat revenue and net profit. So it is likely to maintain last year’s dividend of 3.5 cents.

Bought for dividend and still believe that it will continue to bring in the cash which will continue to be distributed as dividend and should slowly grow too. So will just hold on to my current stake.