Recent Actions - Sept & Oct 2017

Mapletree Logistics Trust

Added 2,300 shares from preferential offering. Total holdings at 7,300 shares.

Received S$85.30 dividend this month.

CapitaLand Commercial Trust

Added 1,000 shares from rights issue. Total holdings at 4,000 shares.

mm2 Asia

Sold for some small profits this month.

ISOTeam AGM 2017

ISOTeam's AGM is held at Sheraton Towers this year. 

The room size is about 100 seating and from my observation about 80% seated.

The AGM started with the usual Q&A and taking the questions are the chairman, CEO and the CFO.

In all only three persons, including myself asked questions. Listed as follows are the Q&A as far as I can remember. Probably have missed couple of them due to my forgetfulness. Was listening intently to the replies from the board. Sorry about that.

Q: General, admin and finance costs are high - pg 66 of annual report. Revenue went down but these costs went up.

A: This is due to the increased in staff and admin costs of the new acquisitions. The company is working to streamline these additional manpower resources to bring down the costs.

Q: Big drop in R&R revenue.

A: This is due to classification of projects. Some projects involve R&R and A&A works for example. The revenue is classified under A&A segment if major portion of the project consists of A&A works.

Secondly due to the recent lift problems, town councils allocated 40% of funds to fire fight lift the issues. So nowadays project values are only around S$1 M compared to S$5 M last time.

Q: Doubtful debt.

A: One customer is in receivableship but this debt is not written off yet.

Q: Cash receivable is negative.

A: This is mainly due to 3 reasons:

ISOTeam invested S$5 M in Sunseap. Bought another company for S$5 M. Invested in a new company HQ in Changi to consolidate operations.

ISOTeam will be selling off existing properties in Kaki Bukit, AMK, etc. This will have cost savings and generate profits.

Q: How is ISOTeam mitigating the increased competition from smaller players in the R&R segment?

A: Streamlining costs and acquisition of recent companies enables ISOTeam to offer a whole suite of services including M&E to customers.

Suggestion: A suggestion was also made to the board to use thinner paper for annual reports next time since it's in line with ISOTeam's 'Green' initiatives and will also leads to some cost savings.

Lastly, all resolutions are passed.

Summary for the Q&A:

Management gives the feeling that they know what they are doing.

Their answers are sincere. No brushing off of questions unlike AGM of other companies.

Most important point of the entire AGM. The food! Haha just joking.

Customary photo of the refreshments as follows. I thought the selection is nice. Not too excessive.

After the meeting has ended, the CEO is seen engaging in small talks with shareholders at the refreshment area. I crept over discreetly to join in and asked some further questions of mine.

This is what I gathered.

Next 1 to 2 years will be exciting years for ISOTeam and shareholders. Fruits of their recent plantings will bear by then and results are going to be very positive.

This is due to the several new streams of income from the new BUs and expected improved macro environment which will boost the performance of their R&R, A&A and C&P segments.

CnO and SGBikes are expected to contribute significantly to the top line and bottom line soon.

CnO is pending registration with NEA as a vector control product. Once done this will be pushed to other areas in Singapore with the support of the town councils. Successful trial has already been conducted in Tampines.

SGBikes is working very closely with the town councils, LTA, NParks and HDB. They have kicked off in Bukit Panjang and will extend very soon to Nee Soon. After that it will go on to other adjoining new towns.

There's another news which I won't share here due to the potential sensitivities. But this will be a huge advantage to SGBikes in the local bike-sharing industry.

By the way SGBikes is targeted to contribute 10% of ISOTeam revenue by next year. Imagine that!

Currently town councils are allocating 40% of their budget to fire-fight the lift issues. This is expected to change soon with the budget reverting to the previous HDB upgrading projects and this will likely boost the earnings of ISOTeam's traditional segments.

One key advantage of ISOTeam is that they are working closely with the government in their initiatives as mentioned above. The close relationships doesn't hurt do they?

Last but not least, get your bullets ready. There MIGHT be a big positive news coming up in months time.

In conclusion, this is somewhat similar to my experience with OCBC AGM 2016. I walked away from that AGM feeling confident of the company.

This time round I felt the same. Perhaps even more. Especially after my chat with the CEO and CSO during the refreshment after AGM.

I learned much more about the company and it's future plans from the informal chat than from the actual AGM and annual report.

I am seriously considering adding another 50,000 shares of ISOTeam now. Currently vested with 50,000.

These 3 Reits Go Ex-Dividend in these 2 Days

Since I am reading the results of and following some counters in my free time, I thought I might as well share some brief albeit important points from these readings, especially for the counters that interest me.

Capitaland Mall Trust (C38U.SI)

CMT probably needs no introduction. It is Singapore's first and largest retail Reit by market capitalisation, S$7.1 billion (as of 20 Sept 2017), and is listed on SGX since July 2002.

CMT's portfolio is a diverse list of 16 quality shopping malls with 2,900 local and international leases.

Based on results of 3Q17,

Ex-Date: 26/10/2017
Payment Date: 29/11/2017

Dividend per Unit (DPU): S$0.0278 (2.78 cents)
Annualised DPU: S$0.1103 (11.03 cents)
Based on today's closing price, yield comes up to: 5.43%

Net Property Income (NPI): S$121.4 million (increased of 1.6% yoy)
Distributable Income: S$98.7 million (increased of 0.3% yoy)

Portfolio Occupancy Rate: 99.0%

NAV: S$1.95

First Reit (AW9U.SI)

Listed on November 2006, First Reit is Singapore's first healthcare Reit that aims to invest in real estate and / or real estate-related assets in Asia that are primarily used for healthcare and / or healthcare-related purposes.

First Reit's portfolio valued at S$1.3 billion consists of 19 properties located in Indonesia (15), Singapore (3) and South Korea (1).

Based on results of unaudited 3Q17,

Ex-Date: 27/10/2017
Payment Date: 29/11/2017

Dividend per Unit (DPU): S$0.0214 (2.14 cents)
Annualised DPU: S$0.0858 (8.58 cents)
Based on today's closing price, yield comes up to: 6.1%

Net Property Income (NPI): S$27.47 million (increased of 3.2% yoy)
Distributable Income: S$16.7 million (increased of 2.2% yoy)

NAV: S$1.006

Mapletree Greater China Commercial Trust (RW0U.SI)

Listed on Mar 2013, MGCCT with a market cap of S$3.2 billion, is the first commercial Reit with assets in China and Hong Kong.

MGCCT's portfolio currently consists of 3 properties - Festival Walk (Hong Kong), Gateway Plaza (Beijing) and Sandhill Plaza (Shanghai) which totaled S$6.0 billion in portfolio value.

Based on results of 1H18,

Ex-Date: 26/10/2017
Payment Date: 20/11/2017

Dividend per Unit (DPU): S$0.03714 (3.714 cents)
Annualised DPU: S$0.07428 (7.428 cents)
Based on today's closing price, yield comes up to: 6.06%

Net Property Income (NPI): S$142.9 million (increased of 4.5% yoy)
Distributable Income: S$104.4 million (increased of 4.1% yoy)

Portfolio Occupancy Rate: 98.2%

NAV: S$1.246

Pennies are Better than Blue Chips for Trading?

I am not so much of a trader for 2 reasons.

1. I'm a lousy chart reader.
2. I'm investing for an income portfolio.

However when opportunity strikes I would enter some small positions here and there for hopefully, some quick bucks. The holding period for my trading positions usually range from 5 days to 6 months though I am often not nimble enough when the trend moves against me.

Anyway through my poor and amateurish trading eyes, I noticed that the price of blue chips usually move within a tight range and is usually more influenced by the big boys.

Sometimes the big boys choose to sell or buy a particular blue chip contrary to the news in the market.

Take for example CapitaLand. Despite a slew of positive news recently, its share price has been inching down last month (though thankfully it has recovered slightly since last week).

I took a look at the top institutional sells then and if I remember correctly CapitaLand was among the most heavily sold counter amongst the big boys.

On the other hand, price of pennies are more easily influenced by retail traders / speculators who are in turn, often influenced by market news.

Big boys usually shun the pennies since there is often not enough volume on the other side of their trades to effect their transactions anyway.

This means that the pennies have higher volatility and the share prices have potential for greater swings than that of blue chips. Profit-taking opportunities are higher too.

Having said that, I also noticed technical analysis is sometimes not applicable to pennies due to for example, fast price swing on piece of news before the charts can capture.

Of course this might be due to my own inadequacies in TA.

For pennies, the risks are higher. But the potential rewards are correspondingly higher too.

Last but not least, a gentle reminder which I always keeps in mind: Only buy what you can afford to lose.

Stock Screening on a Wet Sunday

Feeling curious on a rainy Sunday, I decided to do my periodic stock screening which I have not done so for some time.

Using my usual screening criteria, the result actually surprised me this time.

I use the P/E, P/B, dividend yield, net profit and gearing in terms of debt/equity for my screenings.

P/E - Less than 10. However for today's screening I set it as 20 with reason given below.

P/B - Less than 1. Depending on the circumstances I usually do not want to over pay for my stock.

Dividend Yield - At least 4%. Above the risk-free interest rate from CPF.

Net Profit - At least 10%. I feel more comfortable with this figure as I feel there is more sustainability in the business.

Gearing - Less than 40%. Obviously I do not feel comfortable investing in a company with high debt level.

So with this set of screening criteria, I managed to get only 3 counters this time. These are:

1. Frasers Centrepoint Limited
2. Global Investments Limited
3. Keong Hong Holdings Limited

This is a far cry from the previous screenings where I usually get at least 10 - 20 results. If I set the P/E ratio to 10, Global Investments Limited will be out of the picture.

So what does this tells us about the current market?

Anyway for Frasers Centrepoint, it has always been in my watch list. I have no qualm in investing into this company once my TP hits.

For Global Investments, I have only recently started to read up on this company. Without more in-depth understanding I won't take any further action for now.

For Keong Hong, I have previously done some study here. It continues to be in my watch list.

With focus being on my new company now, I will probably be less active in the market unless good bargains appear.

Good luck everyone.