Stock Sniper's Portfolio For December 2017

Read about Stock Sniper's Portfolio HERE

 

Transactions done in Dec 17:

1. Fufeng Group

Initiated a new position in this company.

 

Fufeng is the largest manufacturer of MSG and Xanhtan Gum in the world.

The competition in the MSG market has eased since 2016 with many unprofitable small and mid sized producers exited the market after years of price competitions. With the liberalization of the corn market in the Northeast China and Inner Mongolia, Fufeng benefited from the lower input costs in 2016 and 1st half of 2017. Also, it completed the first phase of its manufacturing plant upgrades in 2016 which helped to improve the efficiency and lower its manufacturing costs. The Xanhtan gum prices also started to improve in 1st half 2017 after years of sluggishness due to low oil prices and demand.

Back by these positive factors, Fufeng reported a revenue growth of 5.1% and profit growth of 111.6% in 2016 and revenue growth of 12.7% and profit growth of 83.4% in 1st half of 2017. Note that the net profit growths were much faster as compared to the revenue growth due to improving gross profit margins as Fufeng had adopted a competitive pricing stance to consolidate its  market share leadership.

Key risks: Input cost of corn.

2. Singtel

Increased position slightly to take advantage of the price weakness after the share went ex-dividend. At this current price, it offers a dividend yield of 4.9% excluding special dividend.
(Refer to related articles HERE)

 

 

News for the rest of Portfolio companies during the month:

1. Goldpac:

(i) Goldpac announced receiving following awards:

a.  Model Enterprise for the "Mass Entrepreneurship and Innovation" and "Innovative Pilot Enterprise"

b. Enterprise for the 2017 Strategic Emerging Industries (Intelligent Manufacturing) 

 

Once again, these awards are further testimonies to Goldpac's leadership in the industry.

 

(ii) Executive Chairman, Mr Lu, purchased 1 million shares at the price of $2.10 as the share price experience much volatility in Dec 17.

 

(iii) On a side note, Gemalto, its substantial shareholder and strategic partner, accepted the buy out offer from Thales. It is not clear whether this move would have any impact on Goldpac at this juncture.

(Refer to related articles HERE)

2. Hopefluent:

Executive Chairman, Mr Fu continued to purchase more shares in Dec 17, buying a further 4,894K shares at an average price of $3.47.

For 2016, the insiders (Mr Fu and his wife, Ms Ng, both Executive Directors of the company) had recorded a total purchase of 13.3 million shares at an average price of $3.57, spending a total of HK$47.48 million.

(Refer to related articles HERE)

Overall, at the end of 2016 the portfolio is only about 50% invest. Shall keep on hunting for good value stock in 2017!

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Capitaland Limited: Quick Takes

The underlying sentiments towards Singapore residential and commercial property markets has been getting increasingly positive.

On 4^th Jan 2018, The Strait Times published an article titled Property market finally on the upturn. In that article, analysts were quoted saying that after three years of falling prices, 2018 is looking like the year that the Singapore property market's long-awaited turnaround finally gains traction.

In another news article dated 3^rd Oct 2017, Tide has turned for office market, say analysts, the industry watchers are predicting an office rental recovery as the supply of new completions dwindles.

Here, we shall take a quick look at some of key matrix of Capitaland.

Corporate Profile

CapitaLand is one of Asia’s largest real estate companies. Headquartered and listed in Singapore, it is an owner and manager of a global portfolio worth more than S$78 billion as at 31 December 2016, comprising integrated developments, shopping malls, serviced residences, offices, homes, real estate investment trusts (REITs) and funds. Present across more than 130 cities in over 20 countries, the Group focuses on Singapore and China as core markets, while it scales up presence in markets such as Vietnam.

2016 Statistics

CapitaLand’s competitive advantage is its significant asset base and extensive market network. Coupled with extensive design, development and operational capabilities, the Group develops and manages high-quality real estate products and services. It also has one of the largest investment management businesses in Asia and a stable of five REITs listed in Singapore and Malaysia – CapitaLand Mall Trust, CapitaLand Commercial Trust, Ascott Residence Trust, CapitaLand Retail China Trust and CapitaLand Malaysia Mall Trust.

(Source: Capitaland Annual Report)

Financial Numbers

Revenue and net profits have been growing steadily over the period despite multiple property cooling measures being implemented in its key markets of Singapore and China. This demonstrates the management and business resilience of Capitaland.

Its book values also have been increasing over the years from the retained profits and appreciation of its investment properties. The slight dip in 2016 was due appreciation of SGD against GBP, RMB and MYR.

Dividends

In line with its policy to grow core dividend on a sustainable basis, Capitaland has been rewarding its shareholders with increasing regular dividends over the years,. At the current share price, its dividend yield is about 2.7%.

From the chart above, it can be seen that the current share price of Capitaland is trading at low points of the Price Earnings and Price/Book ratios despite improving financial results over the period since 2010.

From its Q3 2017 results, the 9 months profits attributable to owners of Company has reached S$1.283 billion, exceeding the annual profit of 2010 and is the highest profit level since 2007. However, the share price still has not managed to break above the highs of 2010 and 2013 post financial crisis.              

In early Jan 17, Capitaland announced disposal of 20 malls located in the Tier 3 China cities worth S$1.71 billion with a net gain of S$75 million, to focus on the Tier 1 and Tier cities. Stock brokers cheered this move and some of them have upgraded their target share price for Capitaland as follows:

Stock Broker	Target Price
CIMB	4.25
OCBC	4.13
RHB	4.20
DBS	4.35
Average	4.23

Technical View

Technically, Capitaland has recently broken both above its short term down trend and resistance at $3.75 and may consolidate near this level for a while before deciding next move. 

Are there more legs to its upside?

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TA Investment Portfolio For December 2017

Read about TA Investment Portfolio HERE

The TA Investment Portfolio started off with 9 stocks added in Dec 17. More stocks may be added (or even reduced) in subsequent months based on TA strengths of the stocks identified and the prevailing market conditions.

Featured Stocks:

TravelSky Technology (Uptrend)

This stock has been on an uptrend move for several years. Its recent half year earnings was hit by the absence of huge government grant. The price correction which begun since July 2017 seems like coming to an end and its TA looks strong. Can it breakout of its all time high?


Select Sector SPDR Energy ETF: XLE (Turnaround)

This ETF provides exposure to some of the largest listed oil & gas related stocks in the US market. In tandem with the oil prices, this ETF has been in a long downtrend for several years. With the recent rise in oil prices, is this ETF about to change its trend?


Tenaga (Uptrend)

Tenaga is largely a monopoly player in the Malaysia power market. Its share price has been creeping up since the announcement on the change of the dividend policy. It recently dividend payout ratio is around 50% and it is at around 4% dividend yield at current price.



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Does Technical Analysis For Timing Stock Investment Work?

Please read the Disclaimer before you proceed with the rest of the article.

This portfolio is a mock-up model to test the investment thesis of the author for illustrative and educational purposes. The stock transactions in this portfolio may or may not reflect the actual actions of the author.

Monthly TA Investment Portfolio

During bull markets, very often, one may miss out on strong uptrending stocks as the prices just get higher and higher. Waiting for lower entry price may never materialize in the short to medium term unless major business issues or black-swan events happened.

I’m creating an experimental portfolio to test the hypothesis of using Technical Analysis (“TA”) for timing entry into strong trending stocks to take advantage of the temporary price corrections or pause in momentum to get into the train wagon to invest in blue chip stocks (e.g. index component stocks) or fast growing stocks when the bullish trend resumes - TA Investing.

To keep things simple, the following criteria for forming TA Investment Portfolio will be used:

1.      Stocks were previously in uptrend or bottoming formations is forming.

2.     Blue chip stocks and growth stocks (and situational turn-around stocks may also be selected).  Blue chips and growth stocks on uptrend are selected on the premise that they are fundamentally strong stocks.

3.       Enter at breakout of temporary downtrend, resistance line or bullish formation or signals.

4.      Protect capital, keep the losses small.

(a)  Set initial entry month stop-loss level at an arbitrary 5% below entry price or major support subject to a maximum loss of 5% from entry price. Stop-loss for the subsequent month may be reset based on support/resistance levels.

(b)  Weed out weaker stocks, keep the winners, and let the winners run. If there is eminent change of trend in the general market to bearish market, some or all positions may be closed.

5.      Time frame and profit target may not be initially fixed. Exit when major bearish formations or signals are formed or signs of eminent change of trend.

6.      Transaction costs are disregarded.

Total capital: S$100,000

Amount to invest each time: S$5K
Size of portfolio: 10 – 20 stocks
Benchmark: MSCI World Index

As this method entails using TA as a primary tool to increase the probability of successfully getting vested in fundamentally strong and bullish stocks on a portfolio basis, we will try to achieve reasonably large population of transactions over time so that the Law of Large Number can be applied.

Notes:
1.       This model is intended for getting vested into both fundamentally and technically strong moving stocks and not intended for short-term trading.

2.       While outcome of the test may dependent on the author’s TA skills, the TA used are the commonly applied methods, such be trend following, indicators, support & resistance, price actions and volume. TA Scores (out of a max of 9, being the strongest) are awarded based on the author’s subjective view of strength of the TA based on those factors. It is not the intention of this exercise to dwell on the details of the TA basis at this point. Over time, rule based TA signals may be developed for consistency test.

3.       Valuation of stocks may be a factor but not the final consideration for buying the stocks.


Click LINKS below to view Monthly TA Investment Portfolio

• December 2017
• January 2018

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