My PSBP price tracking (Updated)

I just got some shares of Bluechips through PSBP for the month of December 2008. There was a change in plan as I decided to purchase only Capitaland and SGX through the program. I managed to buy Keppel Corp earlier with a lump sum investment at an attractive price.

I heard many PSBP investors have expressed their concerns that poems allocated them with unfair unit prices. According to these investors, the allocated unit price is always close to the high price of the day for each counter. I decided to track the price of my purchases through PSBP to see if the allegation is really true. You can see a table of my purchases below.

Date	Counter	Unit Price	Day Low	Day High
18-Dec-08	SGX	$5.39	$5.30	$5.43
18-Dec-08	Capitaland	$2.86	$2.81	$3.07
19-Jan-09	SGX	$5.21	$5.17	$5.29
19-Jan-09	Capitaland	$2.79	$2.76	$2.82
18-Feb-09	SGX	$4.83	$4.77	$4.99
18-Feb-09	Capitaland	$2.70	$2.63	$2.71
18-Mar-09	SGX	$4.78	$4.74	$4.82
20-Apr-09	Capitaland	$2.81	$2.77	$2.88
20-Apr-09	SGX	$6.11	$6.04	$6.16
18-May-09	Capitaland	$2.97	$2.94	$3.17
18-May-09	SGX	$6.73	$6.71	$6.96
18-Jun-09	SGX	$7.11	$7.05	$7.20
20-Jul-09	SGX	$7.44	$7.40	$7.73
19-Aug-09	SGX	$8.28	$8.24	$8.50
18-Sep-09	SGX	$8.62	$8.54	$8.68
19-Oct-09	SGX	$8.33	$8.30	$8.40
19-Nov-09	SGX	$8.18	$8.09	$8.21

My stocks portfolio - Oct 2009

Based on total invested capital, my stocks portfolio was down by 13.99% at the end of October 2009. Total portfolio loss adjusted to 8.37% after taking dividends into account.

There were 5 transactions for the month of October 2009.
Sold Cosco Corp at -64.9% loss
Sold Swiber at -57.6% loss
Exercise Fortune Reit RIGHTS, average price at $0.491
Exercise Genting RIGHTS, new average price at $0.709
Bought SGX (PSBP), new average price at $6.349

I decided to dispose away my shares with Cosco and Swiber. These are shares I bought in cash. I am still keeping my Cosco shares that were bought with CPF money though. I foresee that I may not be able to recover my losses in these two stocks anywhere in the near term so I decided to cut loss and also to prevent further losses.

Cosco is suffering from multiple blows in the shipping industry from problems like over supply of ships worldwide, deferments and cancellations of projects to lack of new shipbuilding orders. Swiber on the other hand is also lacking of new contract orders. Furthermore I see Swiber management of not creating enough value to the shareholders. First of all, Swiber is a non dividend paying stock. Secondly if you look at the cash flow over the years, there wasn’t any generation of free cash at all. Swiber has been continuously financing their capital expenditures through internally generated cash flow which I think is acceptable. But on top of that, Swiber issued external financing through debts too which I am getting a little bit uncomfortable. Suffice to say, I bought Swiber at the wrong price and made a mistake of not being cautious enough to look at its cash flow.

It seems that major stock markets are trending sideways and losing momentum to drive higher. After a huge climb from the bottom, I anticipate a minor correction to take place soon. So I plan to redeploy my funds collected from the sale into some small cap stocks.

I participated in two RIGHTS exercises with Genting and Fortune Reit. I did receive a modest amount of excess shares in these two companies so as to make my purchases slightly discounted. Fortune Reit holds a portfolio of retail malls and properties in Hong Kong. Based on my average price, it is trading at 0.3x of book value and offering around 10% FY10 dividend yield as forecasted by a few analysts. After the recent RIGHTS exercise, Fortune Reit will have no refinancing needs until 2013. I think my buy price offers quite a good margin of safety from further downside.

I did not receive any dividends for the month of October 2009.

Stock	Mode	Unrealised P/L (SGD)	Stock	Mode	Unrealised P/L (SGD)
ARA	CASH	-14.61%	MACQ INT INFRA	CASH	-55.87%
ARMSTRONG	CASH	100.00%	NEPTUNE ORIENT LINES	CASH	20.73%
CAPITACOMM	CASH	21.18%	NOBLE GROUP	CASH	5.31%
CAPITALAND (PSBP)	CASH	66.33%	PAC ANDESW110722	CASH	NA
CHINA MILK	CASH	-39.52%	PLIFE REIT	CASH	57.49%
CITYSPRING	CASH	16.40%	RAFFLES EDUCATION	CASH	-38.95%
COURAGE MAR	CASH	-40.71%	ROTARY ENGRG LTD	CASH	4.37%
CSE GLOBAL	CASH	105.66%	SATS	CASH	46.33%
FIBRECHEM	CASH	-88.71%	SGX (PSBP)	CASH	27.26%
FORTUNE REIT	CASH	13.23%	ST ENGG	CASH	25.55%
FRASERSCOMM	CASH	-49.48%	TAI SIN	CASH	-32.51%
FRASERSCT	CASH	12.45%	TAT HONG	CASH	32.65%
FSL TRUST	CASH	-49.96%	UOB-KAY HIAN	CASH	-22.63%
GENTING SP	CASH	52.33%	VICOM	CASH	17.52%
HG METAL	CASH	-26.75%	VANGUARD EMER MRKTS	CASH	-15.77%
JAYA HLDG	CASH	-66.32%	iSHARES MSCI EAFE	CASH	11.31%
KEPLAND	CASH	123.97%	BH GLOBAL	CPF	-22.60%
KEPPELCORP	CASH	111.68%	COSCOCORP	CPF	-61.54%
KS ENERGY	CASH	-26.62%	SIAENGG	CPF	-41.03%

My stocks portfolio - Sep 2009

My overall portfolio was down by 14.27% at the end of September 2009. Total portfolio loss adjusted to 8.54% after taking dividends into account.

There were 5 transactions for the month of September 2009.
Exercise Cityspring Trust RIGHTS, average price at $0.494
Bought HG Metal, average price at $0.157
Bought SGX (PSBP), new average price at $6.198
Sold partial Keppel Corp at 109.5% gain
Bought Noble Group, average price at $2.488

After the recent months of huge rally across major market indices, I tried to do a filter for some laggard stocks to see if I can catch anything left behind. Laggard stocks are those that have not moved up that much with respect to the market and also its peers. Some of the criteria of the search that I made were that it must be a non-Reit, a penny stock priced below 20 cents and also has the potential of turning around should the economy heat up again. HG Metal suits these criteria.

I bought some shares of this veteran company just before the negative publicity on MarketWatch news that steel production has hit a fresh high in August. Nobody can perfectly time the bottom in the price of steel but in my opinion, buying HG Metal at the current price already gives me a good margin of safety for any further downside.



I am willing to hold my investment in HG Metal for the next few years and I look forward to top up some more shares should its share price fall below 10 cents. From what I can see, the price of 10 cents is a good support because it was at this price that S$22.5 million were collected from the recent private placement exercise. I believe the recent tie up of HG Metal, Novo and Posco, one of the largest steel producers in the world, can give a boost to the profitability of HG Metal in the years ahead. After the successful acquisition of BRC Asia, HG Metal can also ride on BRC strong exposure to HDB projects and some infrastructure projects by the Singapore government.

Another successful RIGHTS exercise for me was the Cityspring Infrastructure one. A business trust with a strong sponsorship from Temasek Holdings, owners of three high quality and stable cash generating assets, high current dividend yield, I believe the risk to reward ratio of my investment in this company is attractive enough. Based on my average price, dividend yield is about 15% and I think the downside of its share price is already limited.

Keppel Corp is one of the few stocks in my portfolio that has benefitted from the recent rally. My value in the company has risen so high that it is making up the biggest portion for a single stock in my whole portfolio. To reduce volatility of my whole stocks portfolio, I have decided to take a partial profit from Keppel Corp and switch into Noble Group.

I see a good potential in Noble Group being a future commodity powerhouse and since commodity is one sector that I am lacking of, it is a perfect opportunity for me to buy some shares in this company. I don’t think I bought at the best possible price but certainly I don’t wish to miss the opportunity again. I have overlooked this company when it was trading less than a penny a few months back so I hope I am not too late to go in now. My next buying price will be when it falls below $1.70.

Based on my purchase price and latest quarterly report, I am buying at 15x of annualized earnings per share after stripping off exceptional items. I don’t think that’s too expensive in my opinion. In my Corporate Finance class, I learn that the goal of a firm is to maximize its market share price. The statement is achievable in an efficient market but in an inefficient market where the market is sometimes driven by irrationality, the share price is not really a good barometer for business performance. I prefer to judge the performance of a business from the Net Asset Value (NAV) per share of the company. A good company should gradually increase its NAV per share over the years. Noble Group is an excellent example and you can see from the following picture.

I received total dividends of $346.58 for the month of September 2009.

Stock	Mode	Unrealised P/L (SGD)	Stock	Mode	Unrealised P/L (SGD)
ARA	CASH	-16.67%	NEPTUNE ORIENT LINES	CASH	35.16%
ARMSTRONG	CASH	108.00%	NOBLE GROUP	CASH	-1.53%
CAPITACOMM	CASH	17.78%	PAC ANDESW110722	CASH	NA
CAPITALAND (PSBP)	CASH	49.46%	PLIFE REIT	CASH	48.53%
CHINA MILK	CASH	-32.12%	RAFFLES EDUCATION	CASH	-37.73%
CITYSPRING	CASH	16.40%	ROTARY ENGRG LTD	CASH	14.31%
COSCOCORP	CASH	-64.44%	SATS	CASH	33.89%
COURAGE MAR	CASH	-27.88%	SGX (PSBP)	CASH	35.85%
CSE GLOBAL	CASH	104.37%	ST ENGG	CASH	20.72%
FIBRECHEM	CASH	-88.71%	SWIBER	CASH	-56.46%
FRASERSCOMM	CASH	-44.25%	TAI SIN	CASH	-35.26%
FRASERSCT	CASH	6.88%	TAT HONG	CASH	33.93%
FSL TRUST	CASH	-49.54%	UOB-KAY HIAN	CASH	-19.42%
GENTING SP	CASH	71.25%	VICOM	CASH	16.41%
HG METAL	CASH	-23.57%	VANGUARD EMER MRKTS	CASH	-12.92%
JAYA HLDG	CASH	-65.95%	iSHARES MSCI EAFE	CASH	15.21%
KEPLAND	CASH	116.09%	BH GLOBAL	CPF	-18.92%
KEPPELCORP	CASH	109.36%	COSCOCORP	CPF	-59.16%
KS ENERGY	CASH	-20.78%	SIAENGG	CPF	-45.87%
MACQ INT INFRA	CASH	-63.94%

Calculating stock returns

Do you still remember the article that I posted about a Guide using Excel XIRR? At that time I was too excited on how to calculate a stock return using Excel XIRR without truly understanding what the end numbers really are. Take for an example, the following cash flows:

Date	Cash Flows
1-Jan-08	$(1,000.00)
31-Mar-08	$25.00
30-Jun-08	$25.00
30-Sep-08	$25.00
31-Dec-08	$25.00
31-Mar-09	$25.00
30-Jun-09	$25.00
30-Sep-09	$25.00
31-Dec-09	$25.00
31-Dec-09	$1,000.00
Return (per annum)	10.38%

In this example I am assuming that I buy a dividend paying stock worth $1000 on 1 Jan 2008 and I sell the same stock worth $1000 at the end of 2009. I assume also that this stock is priced at a constant of $1 and the stock pays out quarterly dividends of $0.025 per share. If you put those cash flows in Excel and use the XIRR function, the annualised return works out to be 10.38% per annum. Now my question is does this 10.38% per annum return include dividends reinvested or without dividends reinvested into account?

If you think the 10.38% per annum is the return without dividends reinvested, I am sorry to say that you got it wrong just like me in the beginning. The 10.38% per annum as computed by Excel XIRR gives a return assuming that you reinvest the dividends at the same rate of return. This is an important point that I wish to point out in this article. It is difficult to explain mathematically but let me present the same example in a different manner.

Date	Stock Price	Dividends	New Shares from Dividends Reinvestment	Total Shares	Stock Value
1-Jan-08	$1.00	$-	0.00	1000.00	$1,000.00
31-Mar-08	$1.00	$0.025	25.00	1025.00	$1,025.00
30-Jun-08	$1.00	$0.025	25.63	1050.63	$1,050.63
30-Sep-08	$1.00	$0.025	26.27	1076.89	$1,076.89
31-Dec-08	$1.00	$0.025	26.92	1103.81	$1,103.81
31-Mar-09	$1.00	$0.025	27.60	1131.41	$1,131.41
30-Jun-09	$1.00	$0.025	28.29	1159.69	$1,159.69
30-Sep-09	$1.00	$0.025	28.99	1188.69	$1,188.69
31-Dec-09	$1.00	$0.025	29.72	1218.40	$1,218.40

Date	Cash Flows
1-Jan-08	$(1,000.00)
31-Dec-09	$1,218.40
Return (per annum)	10.38%

All the numbers are exactly the same here except that new shares are included to give an easier illustration of a dividend reinvestment scheme. Since all dividends are reinvested, there are only two cash flows remaining which are the starting and ending values. The return works out to be 10.38% per annum for this case too!

At this point, you know that there are two methods of calculating returns with dividends reinvested. How about the return of a stock if you choose to hold or spend the dividends instead? It is important to know how to calculate since this scenario can be a more likely case for everyone too. Under this scenario, you simply add all dividends collected to your final stock value (ie $1000 + 8 dividend payouts).

Date	Cash Flows
1-Jan-08	$(1,000.00)
31-Dec-09	$1,200.00
Return (per annum)	9.54%

A few points that you need to take note. The last example shows the effect of return if you choose to spend or hold the dividends instead. It also means that you reinvest the dividends at a rate of return being equal to 0% per annum and rate of inflation is assumed to be 0% per annum. Of course in reality inflation rate is not 0% so you are better off spending it now than spending it later or holding the dividends in your hands. And lastly for this example, the overall return falls to 9.54% per annum if you choose not to reinvest the dividends. It is lower due to a lesser compounding effect.

Now I hope you have a better understanding in calculating the annualised returns of your stocks investments after taking into account the effect of dividend payouts. And your decision on the dividends received can affect your overall returns.

Riding the Genting story

You know one of the stocks that I most touted about is Genting. Ever since it was trading at 60 cents, I have been telling my friends to buy Genting. At current price, I know its nuts but I do still recommend Genting with a smaller stake though, as risk of downside is already higher.

Some fundamentalist may argue that Genting has been a loss making company for the past few years and has a weak balance sheet. I would not deny that but to me valuing Genting is more than the numbers on the financial statements. It is about its future prospects. If one believes in the success stories of the things “Made in Singapore”, Genting might potentially be a multi bagger or bare minimum able to reward satisfactory returns to patient long term investors.

So don’t rule out the possibility of a loss making company to turn around. In fact, if you compare Genting with NOL, the latter has a higher loss per share. But why is NOL trading at a higher price? Well you may say that I am not making a fair comparison with a stock of dissimilar sector.

DBS Vickers issued a report making a comparison among gaming stocks around the world. From the table, you can see that valuation of Genting is not really that demanding provided you believe in the forward looking statements. Take note DBS is one the underwriter of Genting RIGHTS issue. Even though the disclaimer mentioned that the analysis was done independently, I advice everyone should take those data with a pinch of salt.


Source: DBS Vickers

With regards to the RIGHTS issue and for a company like Genting which requires a large capital expenditure to start off its Singapore operation, I do support their call in raising cash. The dilutive effect from the RIGHTS is not so significant after all. Genting plans to use some of the proceeds to reduce debt and thus lowering financing charges which is definitely desirable. I understand the misery of some long term investors who have participated three RIGHTS exercises in the past four years. If you are short of cash, I am sure you can always sell the nil-paid RIGHTS shares, get your shareholding diluted but still remain profitable.

In my opinion, having Genting as a small portion of your portfolio is not going to make any harm. I feel the odds are much better of buying Genting than punting at Singapore Pools. So should you buy due to speculation or fundamental reasons? I leave the reasons entirely up to you to decide. Let us put the fundamental or technical aspects of Genting aside. Barring any systemic stock market failure, I expect irrational exuberance to continue to drive Genting share price higher as we head towards the opening of Resort World Sentosa.

Indicative timetable for Genting RIGHTS

18 Sep 2009 Shares trade ex-Rights
23 Sep 2009 Books Closure Date
28 Sep 2009 Despatch of OIS
28 Sep 2009 (from 9 am) Commencement of trading of “nil-paid” rights
6 Oct 2009 (5 pm) Last date and time for trading of “nil-paid” rights
6 Oct 2009 (5 pm) Last date and time for splitting of “nil-paid” rights
12 Oct 2009 (5.00 pm, 9.30 pm for electronic Shares applications) Last date and time for acceptance of and payment for Rights Shares
12 Oct 2009 (5.00 pm, 9.30 pm for electronic Shares applications) Last date and time for application and payment for excess Rights Shares
12 Oct 2009 (5.00 pm) Last date and time for renunciation of and payment for Rights Shares
20 Oct 2009 Expected date for issuance of Rights Shares
21 Oct 2009 Expected date for the commencement of trading of Rights Shares

My stocks portfolio - Aug 2009

My overall portfolio was down by 15.98% at the end of August 2009. Total portfolio loss adjusted to 10.45% after taking dividends into account.

There were 3 transactions for the month of August 2009.
Sold Pacific Andes at 53.1% gain
Exercise Frasers Commercial Trust RIGHTS, new average price at $0.287
Bought SGX (PSBP), new average price at $6.005

I sold away Pacific Andes at a profit of 53%. The sale was a strategic move in reducing my exposure to China S-Shares listed on SGX. There is nothing much I want to comment about this company. Currently I am more comfortable holding China Milk and Cosco which are the only two S-Shares in my stocks portfolio. If ever I want to increase exposure to Chinese companies in future, I will choose to buy Exchange Traded Funds (ETF) like DBXT China 25 or Lyxor China Enterprise instead. I believe these ETF are the best proxy if one wants to ride on the Chinese economic growth and less the risk of coporate governance failures.

Frasers Commercial Trust (FCOT) is one of the few companies that I bought when its price peaked. I bought at a high price of $1.054 when it was formerly known as Allco REIT. Then I witnessed the share price spiraling downwards as the company suffers from the impact of global economic crisis. I am glad that I resisted the temptation of averaging down this stock at that time. After the rights exercise, I am slightly better off with the excess shares allocated in bringing down my average price to $0.287.

Going forward, I am more confident of FCOT under the umbrella of Frasers & Neave which is one of the leading Singapore based property company. I believe it is a step in the right direction to inject Alexandra Technopark into its portfolio. This business space property will reduce FCOT reliance on its previous office and retail properties which were the only two sources of property income. Also the injection of this local property will result in a reduced foreign exchange impact to future FCOT earnings stream. These are some of the reasons why I am supporting FCOT RIGHTS exercise.

I received total dividends of $709.75 for the month of August 2009.

Stock	Mode	Unrealised P/L (SGD)	Stock	Mode	Unrealised P/L (SGD)
ARA	CASH	-16.15%	NEPTUNE ORIENT LINES	CASH	22.25%
ARMSTRONG	CASH	84.00%	PAC ANDESW110722	CASH	NA
CAPITACOMM	CASH	0.79%	PLIFE REIT	CASH	35.72%
CAPITALAND (PSBP)	CASH	49.06%	RAFFLES EDUCATION	CASH	-34.68%
CHINA MILK	CASH	-25.40%	ROTARY ENGRG LTD	CASH	24.25%
COSCOCORP	CASH	-62.96%	SATS	CASH	46.33%
COURAGE MAR	CASH	-31.09%	SGX (PSBP)	CASH	39.22%
CSE GLOBAL	CASH	114.65%	ST ENGG	CASH	13.70%
FIBRECHEM	CASH	-88.71%	SWIBER	CASH	-55.04%
FRASERSCOMM	CASH	-44.25%	TAI SIN	CASH	-35.26%
FRASERSCT	CASH	-6.13%	TAT HONG	CASH	36.48%
FSL TRUST	CASH	-49.12%	UOB-KAY HIAN	CASH	-17.82%
GENTING SP	CASH	54.43%	VICOM	CASH	14.19%
JAYA HLDG	CASH	-65.58%	VANGUARD EMER MRKTS	CASH	-19.18%
KEPLAND	CASH	101.89%	iSHARES MSCI EAFE	CASH	13.28%
KEPPELCORP	CASH	96.69%	BH GLOBAL	CPF	-21.62%
KS ENERGY	CASH	-18.83%	COSCOCORP	CPF	-57.45%
MACQ INT INFRA	CASH	-63.94%	SIAENGG	CPF	-45.45%