Actually it is a good reminder for everyone to pick only cash rich, low debt and preferably blue chip stocks especially during credit crunch. Of course smaller capitalization and penny stocks may give potentially higher returns when economic outlook turns positive again. But the higher returns come with higher risks. You may possibly lose your capital if the company does not survive the crisis and folds up.
There were two transactions for the month of October 2008.
Bought Tat Hong, price at $1.107
Bought SAT Services, price at $1.688
There are a few sectors that I have yet to include in my portfolio. I don’t have stocks that are exposed to the construction and public services sectors. As time goes by, I hope to fill up the other missing sectors into my portfolio. My plan is to pick up those stocks that are beaten down after completing the bull cycle of their respective sector.
Just to share for example, I got caught with some shipping stocks. See what happened when shipping demand drops, Baltic Dry Index (BDI) went crashing all the way down to previous lows. So I don’t wish to commit the same mistake again. Even though I plan to keep the stocks for long term, it is better to buy when the sector is most feared and not favorite yet!
Tat Hong which is from the construction sector was one of the counters that I purchased this month. Tat Hong had already fallen by 68% from the previous peak based on my purchased price. It was trading at a PE ratio of 4 at that time. To my surprise, it fell further few days after I bought. In all, it had fallen by almost 90% from the previous peak. I believe the negative sentiment is already fully factored in. Therefore I will take my time to add some more into Tat Hong soon.
Tat Hong is one of the biggest companies in the world in supplying and renting out heavy equipments and cranes to a wide range of heavy industries. If you check their track record, the company has been around since 1970s. They have weathered through multiple bear market cycles and I am confident that they can overcome this crisis again. Below I posted a long term snapshot of Tat Hong financial statements in brief.
Currently Tat Hong is trading at a low PE ratio of just 2. I don’t have a crystal ball to predict their future earnings. But assuming a reduction of earnings by 50% and if price stays at same level, the forward PE ratio still remains attractive at 4. If you believe Tat Hong can survive this crisis and pick up again in future, this is the best time to buy and hold.
Singapore Airport Terminal Services was the other stock that I bought this month. The company has been around for more than 60 years and has presence in more than 40 airports in the Asia Pacific region. It gives dividend payout every year without fail since year 2000. At current share price, the dividend yield stands at 9%. Again to be conservative, future yield may be 4.5% if I factor a 50% drop in payout and assuming share price remains the same. SAT Services is a solid example of a cash rich, low debt but medium capitalization stock. You can see at its long term snapshot of financial statements in brief below.
I did not receive any dividend for the month of October 2008.
| No | Stock | Mode | Unrealised P/L (SGD) |
| 1 | ARA | CASH | -66.05% |
| 2 | CAPITACOMM | CASH | -51.20% |
| 3 | CHINA HONGXING | CASH | -69.23% |
| 4 | CHINA MILK | CASH | -57.66% |
| 5 | COSCOCORP | CASH | -77.04% |
| 6 | COURAGE MAR | CASH | -68.00% |
| 7 | FIBRECHEM | CASH | -70.43% |
| 8 | FRASERSCOMM | CASH | -76.76% |
| 9 | FSL TRUST | CASH | -58.30% |
| 10 | GEN INT | CASH | -44.95% |
| 11 | JAYA HLDG | CASH | -70.76% |
| 12 | KS ENERGY | CASH | -72.11% |
| 13 | MACQ INT INFRA | CASH | -58.02% |
| 14 | PAC ANDES | CASH | -25.12% |
| 15 | RAFFLES EDUCATION | CASH | -33.45% |
| 16 | ROTARY ENGRG LTD | CASH | -82.42% |
| 17 | SATS | CASH | -12.91% |
| 18 | SWIBER | CASH | -78.70% |
| 19 | TAI SIN | CASH | -71.52% |
| 20 | TAT HONG | CASH | -61.61% |
| 21 | UOB-KAY HIAN | CASH | -61.54% |
| 22 | VICOM | CASH | -22.39% |
| 23 | VANGUARD EMER MRKTS | CASH | -40.14% |
| 24 | BH GLOBAL | CPF | -59.46% |
| 25 | COSCOCORP | CPF | -73.62% |
| 26 | SIAENGG | CPF | -59.56% |
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