As mentioned during the annual report of Sillyinvestor Inc, we will continue to trim our portfolio to hold more cash as and when opportunity arises.
The management does not think there is anything fundementally wrong with the company. The privatization of parent company is just noise.
With a holding period of 15 months, the return has been 16% including dividends. We feel it is a fair return as we await opportunity.
The management want to take full advantage or a bear/ correction as and when it happens. Management believes it should not need to wait more than 2 years. yes, we are attempting the impossible, trying to time the market.
In the 2 years, there might be opportunity loss in holding cash, but management is trying to press the reset button on its investment.
There is unlikely to be further selling in the portfolio as the company is already 50% cash and this ratio will further increase with injection of capital soon.
However, if there is any counters hitting or nearing targeted sell price, management will sell too. But with current prices, management think it is unlikely it will happen soon.
The vested equity portfolio value has fallen to 43k as a result of the disposal. But total portfolio value including cash has improved to 85k.
Disclaimer: Readers are advised against taking the coporate actions as any advice for buy or sell, either as a follower or contrarian.
Statically, you stand a better chance as a contrarian though. LOL
Dear readers, the theme in 2016 is surviving in a volatile world. There are 2 shocker news: first Brexit and next Trump's election. But the market survived and blossom.
We are proud to announce we have grow from strength to strength. The company manage a dividend of $3849 in 2016, from a capital base of about $57000, giving a yield of about 6.5%. This is a 2.5% improvement in yield and 40% increase in dividend.
However, trading profits is flat or negligible. The small profits in 1H was gone as we increase cash by taking a loss of Lippomall.
However, as compared to a year ago, where the vested amount is 15% lower than market value, we now have a equity portfolio that is 3% in the green. As mentioned in 1H intern report, we are going to include cash in the calculation of our portfolio. Hence the total portfolio size increase 13% to 85K, where 35 K is cash.
As a result, there is a drag in total returns over total asset, which is only an return of 4.4%. The return of STI's dividend yield better at 6% with the STI asset value flat. While we did better and improve our performance compared to a year ago, our performance is sub-par and we will continue to improve ourselves.
It is the management's wish to be conservative in the years ahead. We do not buy Trumpocomics. We believe there are many perilous moments in the calendar 2017. We might further increase cash holding beyond the optimal 50% if the price is right for us to further liquid our portfolio. Beyond heightened political tensions, possible trade conflicts, and terrorist risks, the fate of Euro is a question mark if we look at the coming elections of major Euro countries. Of course, we do not pretend to know how the market will react to these event, just like the market rallied instead of falling post-Brexit and Post-Trump.
The sponsor and founder of company, greenrookie is confident of cashflow, pending unforeseen circumstances, and has pledge to continue with cash injection in 2017. As and when it happens, the company look forward to manage the expanded portfolio but will conservative in the deployment of cash into equity.
Appreciation to readers:
This is a year of readers' activism. The management met up with several bloggers and exchange various investment views. Hence, the management has decided to declare a maiden "coffee treat" to future meet-up, if any. Although management is on course, he might be able to do Wednesday or Friday lunch at the Jurong area from 1230 - 2 p.m. LOL.
While the management's main focus is still dividends, management will not hesitate to sell off profitable companies. The worst performing counter is still Sembcorp Industries followed by Lee metals. The best performing counter is Venture.
CM pacific is privatised, and we added YZJ and SIngpost to our portfolio. We view both counters to be company with growth potential for different reasons.
We sold M1, Lippomall trust, Sembcorp Industries, ST engineering and Silverlake axis for varying loss and the gain came solely from Cogent, excluding the privatisation profits of CM pacific.
It finally crosses the threshold of $150. Company see this segment as negligible and might stop reporting its numbers. Although readership has somewhat increased compared to a year ago, the company see no future growth drivers in this area since the management after much deliberation has decided to reject attempts at affiliation links.
There is no difference to the beneficiaries we are adopting and the sum donated remained the same. With the change in credit card, there might be some temporary disruption to Sasco
Today, as I drive past NTU, I saw the path which I used to jog, saw the Hostel that I used to live and felt like crying. A bit emo, but don't ask me why. The memories just keep flooding back.
It is just a week, and I think I am a even hardworking student than when I am a undergrad. LOL. I really miss the reading. I went back to level 4 of the library, sit beside the window, the actual spot where I used to mug for exams. I already read 3-4 books although I did not completely read them.
Walking around the campus, it didn't change much except for the spanking new F&B block near block 1 of NTU. It is really a time to "smell the roses". Nope, I didn't actually have more time at hand, I still did some work at night, but there is minimal stress.
It felt like it was only yesterday that I was here, but when I look at the pupils at NTU, I thought: how good it is to be young. I am not so sure whether it is coincident or what, but the conversations that I overheard seem to always revolve around money, the salary or the expense or cost of this and that. Didn't remember doing that when I as studying.
I meet aspiring teacher and downright incompetent ones. LOL My teacher could not take off his jacket because his there is degeneration of tendons, yet he teaches passionately.
I miss my pupils quite a lot, but really glad I need not be caught in the scary typhoon of work.
One of these days, I must go eat swensen and enjoy the student's discount! LOL
I am sometimes able to draw parallel in the investing world with teaching and learning. This time round, it is the reverse, I draw valuable insights from teaching and learning that can be transferred to investment.
We have a module on reflection, and suddenly I realize in investing, we made many considerations but seldom do a check on our most fundamental assumptions.
Let's do this:
1) YZJ to be a cyclical play.
2) it to be a alpha company that will gain when turnaround happens.
3) it to be reasonably financially strong, unless u totally discount HTM (low debt)
4) it to be a good dividend payer as I wait. (About 4%)
5) the downcycle to be at bottom although I have no idea how long it will last. (Companies went bust, scrapping on ships increased, rates bottoming out)
1) That the turnaround will come and YZJ will benefit
2) The HTM will not turn sour
3) I am steady enough to av. In when it falls 20%
4) I have the cash to invest further in this counter
5) It will remain profitable even if profits falls.
6) Falling profits will not cause a plunge of share price beyond 30%
Of the 6 assumptions, I realise I might not be able to do point 4) since I am only 40% cash and if I double down on other down beaten counters.
The turnaround might never come, or when it comes does not benefit YZJ operations or shares price.
HTM turning sour.
Fall In profits leading to plunge in price
Thinking through such risk and assumptions thinking, it made me wonder what returns is fair enough to take this risk?
40-50%? I think it's possible. If we take reversion to mean of 5 cents dividend, and a fair yield play of 5% with prospect of dividend growth, $1 is not an demanding valuation with P/B still below 1. Note that when turnaround happens, earning should improve beyond "mean" and the ships valuation will improve too, further depressing P/B to our favor. YZJ payout ratio is historically around 30% although Ren hint strongly it will increase it this year to maintain a decent dividend yield.
In terms of operation capabilities, they have scale up the tech chain successfully so there are plenty of market segment where YZJ can tap on.
Then, how about down side?
It makes me wonder what amount of loss is enough to throw in the towel, and what should trigger that call?
The best scenario is price go down around 20%, I accumulate and it rebound. Possible gain, assume this happens - around $3500
The worst is it went down 20% and I accumulate and it went further down 10% and I cut. Loss will be around $1200
This risk reward profile is good enough for me.
LOL. Sorry I dun do numbers crunching. This is random thoughts series, when u expect
This is a CEO with operating expertise in logistic and freight forwarding. A timely change as it move to synergied its accquistions. With this CEO, I hope this pace of accquistions will stop over the next few years.
The second catalyst has happened. Market is not excited, but at least not disappointed. Singpost has risen intandem with the market
The third catalyst, will be out in 2 months. Alibaba has a record sale during Nov 11. Amazon also had record sales.
If u read their analysts meeting notes, Mervin has always "hint" that the loss making accquistions in US is for the longer term, and particular the holiday season is often quoted as an opportune window for ramped up businesses activities.
How much synergy did the alibaba and Singpost alliance bring? Let's explore the following possibilities:
1) Top line grow in high double digit figure and bottom line is in low single digit QoQ, YOY
2) Top line grow in high double digit figure and bottom line is flat.
3) Top line grow is single digit or low double digit and bottom line is flat or reducing
4) Top line and bottom line both deteriorate.
Market will only take scenario 1 or better (both high double digit growth) as a positive calayst.
Scenario 2 will most probably cause some downward pressure but I believe it won't be a heavy sell-off.
A sell-off will most probably happen if scenario 3 and 4 happens.
Personally, If 3) and 4) happens, it's time to say bye bye. Why?
The Singpost logistic hub which is "supposed to" be more productive is up and running, the capex for this and also the Singpost Mall is mostly spent.
Demand side, Alibaba is doing brisk business globally and SEA is growing too, these revenues should flow through Singpost's avenues.
If 3) and 4) happens, I can already predict their explanations. They will be
1) NP affected by loss of revenue from SP mall which will be online soon (who dun know, stop harping)
2) Their acquisitions are for the long term, and their costs management is US entities has ballooned.
3) Need more investment to able synergy to happen (huh? Then when will u start to harvest? )
Personally, if the fourth quarter is no-go, due to whatever reasons, I think I will start to doubt their execution capabilities.
I am penning down so that I dun give myself excuses when it is time to cut loss/ take profits.
If scenario 1 or 2 does materialize, then I will go on to wait for SP mall to contribute. The final catalyst....