A tough quarter for the team. Luckily the backline is still hanging strong, with good support from the midfield.
FCT and MCT have suffered injuries that will keep them out for the next 6 months. Nope, I am not selling my good players just because they are injured. They will contribute to the team again when they recover. In the mean time, AReit and CRCT are brought in to replace them. Also, with its recent strong performance, IFAST is also brought in for Disney as a substitute forward.
Defence
Resilient as always, Parkwaylife continues its steady growth of its revenue, net profit income and DPU for 2020 Q1 despite the pandemic.
I was lucky to add a little more at $2.60 in March.
Vicom provided Q1 update which shows a stable performance. However, the impact will come next week due to deferment in vehicle inspection and new car emission testing. Non-vehicle testing have been severely impacted too.
I am uncertain of its current financial year dividend and given that I am still in the green with the counter, I am likely to divest my stake before XD on 28 May.
Micro-Mechanics reported a strong Q3 with revenue and net profit growing by 13% and 48% respectively. The quarterly trend definitely looks good.
Thus far not affected by the pandemic but management is cautious of the uncertainty it brings in the short term.
I will hold on to my current shares. I am not adding more as I have already hit the CPF investment limit.
Valuetronics should be reporting its Q4 results at the end of the month or early next month. Based on its updates on 11, 19 Feb and 23 Mar, the company will see a lower revenue and hence profit for the second half of the year but its factories have resumed operation at a lower capacity. If it can operate at 2018’s level, then it should be able to sustain its dividend, especially with its cash hoard. Having said that, the group has been prudent over the years and I would not be surprised if it decides to cut its dividend.
I have added 10k shares during March but just sold this batch off as it is taking a bit too much of my portfolio. Will maintain my remaining holdings.
Ascendas Reit provided a positive Q1 update with no tenants requesting for termination thus far. CapitaRetail China Trust business update indicates a recovery over the past month and is cautiously optimistic of 2H2020.
I have already added more AReit and CRCT over the past two months. Depending on the market, I might add a bit more.
Midfield
Mapletree Industrial Trust reported a good Q4 results. Amount available for distribution is up by 15% but DPU drops by 7.5% due to withholding of cash to deal with pandemic. Similar to the other landlords, it might face more pressure in the coming quarters.
Not adding or selling at the moment.
DBS announced a fantastic Q1 results, with profit before allowance up by 20%. As CEO highlighted in the AGM in the afternoon, it’s an amazing results for a company of DBS’s size. I am also impressed by its strong growth for the past decade.
I think the group has done a reasonable projection on possible impact of Covid-19 to the group’s 2020 outlook and if they are right, then they will be at 2019’s level.
How sure am I of their projection? I can only say they are the experts and I am the noob. The only thing I can do is to be more conservative and subtract another 10-20% off their projection, which means they will drop 2018 or maybe 2017’s results which I think is still good. And even dividend is cut, it will not be too drastic. What is more important is that it has a very strong foundation which will see it rebounds strongly when the crisis is over. One last point which I found interesting is that unlike other global banks, the bank’s exposure to unsecured loan is very much smaller.
I am glad that I have started and built up my position on DBS this year and am very likely to hold it for pretty long time. Not adding more as it already took up 6% of portfolio.
OCBC’s net profit plunged by 43% for the quarter. This is largely attributed to unrealised MTM (marked to market) losses in the insurance business and increased allowances. Excluding the the unrealised losses, results would be similar to the other two banks. Knowing how volatile the market is, I am not concern with the losses in the insurance business. That loss would have been narrowed in the past month. Going forward, that should remain volatile but long term, it should still be a plus point for the bank.
As I have hit my CPF investment limit, I will just hold on to my current holdings.
In its business update, Raffles Medical reported a flat quarter’s revenue. Profit plunged by 45% due to the impact of Covid-19 in China’s operations. Excluding that, the drop in profit will be only 5%. Probably will see more pressure in the coming quarter due to the circuit breaker in Singapore but the good news is the beginning of recovery in China.
Last month, added some shares and probably will just keep to current holdings.
With stores closure during the quarter, Starbucks as expected reported a lower revenue and income for Q2. The positives are 1) almost 100% of stores in China have reopened with a lesser decrease in comparable stores sales; 2) drive through has mitigated the drop in sales in US; and 3) channel development with Nestle grew by 16%. So the group looks good to withstand this crisis.
Forward
Arista Networks reported lower revenue and earning but a similar margin. What interested me though is their slides deck which I found to be very informative. I am still clueless about the technical aspect of their business but I know they have disrupted CISCO, continues to gain market share and is led by strong leadership.
Sticking with what I have at the moment. Not adding or selling.
Ulta Beauty will be reporting its quarterly results in late May or early June. Similar to other retail stores, it has been impacted by the pandemic as it closed its stores. So I am expecting a hit in both top and bottom lines. Good news is that its online presence has allowed it to make some sales and it has introduced curbside pick up to mitigate the situation. In the latest update, it is in preparation to re-open some of its stores.
My only regret was not being decisive enough to pick up more of its share at US$140! Will stick to what I have at the moment.
Similar to other US counters, Intuitive Surgical started the year strongly but saw a decline from March. So they still grow in Q1 but at a much lower rate and expects to be worse hit in the next quarter. Reading through the transcript shows that they are working closely with the hospitals and while the procedures are cancelled for the moment, they would be resumed since it is necessary for the patients.
I have added more ISRG over the past quarter, bringing my initial position of a mere 1% to about 3% now. Will keep to current holdings.
Apple reported a resilient Q2, with a 17% growth in service. Accounting for only 20% of its revenue now, this should continue be Apple’s growth engine for the next few years and will make its earnings more resilient in the future. Wearables, Home and Accessories also established a new record for the quarter and accounts for 10% of its revenue. So all in all, a good set of results.
Sticking with what I have at the moment. Not adding or selling.
Not affected by the pandemic, IFAST reported a record quarter with net revenue up by 25% and net profit up by a whooping 127%. The company has shared that they see a record opening of new accounts for the quarter and stock broking is beginning to contribute meaningfully to the company. Being an online investment portal, they are not affected by the lockdown and are operating as per usual. Management thinks that the quarter’s result is not a one-off event and the momentum should continue.
I have added more to my original holdings and might just add a bit more in the coming months.
Final Thoughts
This pandemic provides an opportunity to observe how companies respond to crisis. I am glad that the companies I invested in are dealing with it quite well. The next two quarters would see a larger impact and numbers reported would be worse. However, I am quite sure the team will be able to withstand the onslaught and emerge stronger after that.
Towards Financial Independence 