INVESTMENT Method & Strategy

Below is the investment method./strategy that has worked well for me so far. I will only add to my position if the share price has dropped about 10% lower than my average holding price or recently added price. If the fall is less than that usually I will just sit on the shares and do nothing. This is assuming the fundamentals of the underlying business has not changed.

Value Investment - which is the Best method that works well for you?

I practise this add to position only when it drops 10% lower than my average holding price or recently added price of a particular stock for my leveraged CFD portfolio. Of course, I will factor in whether the market sentiments have changed to a bear market direction. If I feel that it has changed, I will not add any more long positions and would instead convert all my long positions to short positions. This conversion from longs to shorts is based on the market which has convincingly changed direction to a bear market. If it is only a temporary negative sentiments due to certain news which may not have wide ranging impact on global economy, then I will continue to hold my long positions and only add if price drops by 10%.

For others , you may also consider to have a bigger percentage of more than 10%, may be 15-20% if this works well for you.

I suppose this kind of disciplined approach also works for a non-leveraged portfolio. A 10% drop before adding on to position is reasonable especially if the shares were recently bought in and the value investor has already done his due diligence to buy in at a sensible fair price. 

Usually, it is difficult for share prices of a fundamentally good business with strong growth prospects to drop by too large a magnitude.

If share price drops more than 10% from one's average holding price, then the investor must really ask the critical question whether his average holding price was bought too high due to him making a wrong assessment of the business's fair share price he has entered? Or is it suggestive that a bear market is coming and a lot of other shares have also fallen by at least 10% off their recent highest price reached and prices seem to display even more falling momentum? Or is there something inherently wrong with the fundamentals of the business that the investor did not pick up in his initial assessment before he entered the stock? Or is it a temporary issue that the business is facing which will cause a temporary deterioration in business fundamentals but it should recover in due time?

Weightings of the individual stocks in one's portfolio is important or as one calls it position sizing. The highest weighting is always given to the most promising stock among the other stocks in one's portfolio. Then, we scale down accordingly until the lowest weighting goes to the least promising stock in one's portfolio. Sometimes, recently bought in stocks may become the least weighting in the portfolio. It is alright to be if the investor still needs time to monitor the progress of the recently bought stocks in his portfolio before adding to his position in it and thus increase it's weighting against other existing stocks in his portfolio.

My suggestion is to have a core portion of one's portfolio into 2 to 4 stocks which takes up about 50% of invested capital in one's portfolio. This core portion must be really the best of the best stocks the investor can possibly stock pick. Then the rest of the 50% of invested capital can be held in 5 to 11 stocks which makes up the satellite portion of his portfolio. Then, just add to or subtract from positions of individual stocks as and when necessary to readjust portfolio when fundamentals of individual stocks and their future prospects have changed. Or if there are even better stocks outside of one's portfolio to consider, one may exit certain stocks in one's portfolio and enter the new better stocks.

In any case, try not to invest in too many stocks. I find that anywhere from 7 to 15 stocks in one's portfolio is good enough. If the investor is very confident and experienced with proven track record, even concentrating his funds in 7 stocks is alright. 15 stocks I feel is about maximum as it is tough to manage more than 15 stocks in a portfolio to have to keep track of their announcements, news, financial reports and so on. Imagine reading 15 annual reports every year and thinking upon 15 stocks. It consumes a lot of time and effort and many of us are working adults with families to take care off. Unless one is a full-time investor. If not, do not try to be a superman managing more than 15 stocks. quote from jeremyowtaip.

If really want to gain diversification without much time and effort to monitor the investment, investing in one or few good low cost index funds which track S&P 500, DJIA, NASDAQ, Russell 3000, HSI, China A50, CSI 300 will be good enough. 

These are good market indices of the world two largest economies which should continue to do well over the next decade (barring any bear market coming). But if we stretch it longer to more than a decade, then "yes", these indices will still likely do well over the long term.

The amount I average down each time can vary. There are no fixed rules I stick to.

 It is based on my experience and also how much I understand about the particular business. In my mind, I would already have ranked the various stocks in my portfolio from the best to the least. If the stock that belongs to a good ranking drops in price such as those in the core portfolio portion, I may add on a greater position each time it's price drops. However, if the stock belongs to the not the best stocks in the satellite portion of the portfolio, I may add lesser to their position each time their share price drops. This is just a general guideline.

I also use a lot of my own experience which have been built up over time when it comes to averaging down as I will have many points of consideration before I add to and how much I add to my position in a stock. The whole idea is that eventually the better stocks will end up with higher weight-age than others. This process of portfolio management is for my non-leveraged portfolio. 

For a sound fundamental counters , I would usually stick to blue chips stock such as the follow listed counter:

1. ST Engineering.

2. SingTel

3. Wilmar

4.Kepcorp

5. DBS

6. OCBC

7. SATS

8. Genting Sing

9. Haw Par

10. Ascendas Reit

11. Sembcorp Ind

12. CMT

13. ComfortDelgro
14. STI ETF

Not a call to buy or sell.

please do you own due diligence.

Safe & low risks stock

Safe heavenly and low risks stock counter that may be able to withstand the stock market volatility or any major market crash.

I think below listed counters may provide stable fixed yield and super low risk investment :

 1. Citydev NCCPS - 3.9% interest perf share .issue by CityDev.

 2. OCC 5.1% NCPS - 5.1% OCBC Bank prefer share. Issue by OCbc bank.

 3. DBS bk 4.7% NCPS - 4.7% pref share . Issue by DBS Bank.

 4. FCLTrea 3.65%b220522 - 3.65% bond. Issue by Frasers.

 5. CapMallTrb3.08%210220 - 3.08% bond.

  6. Singapore Saving Bond - 1.65% to 3% ( 1 - 10 Years).

Not a call to buy or sell.
Pls do your own due diligence.

Comfortdelgro

Comfortdelgro - From TA point of view, the current price of $2 08 is staying above it's 20 days MA, 50 & 100. Seem not bad! It is stucked in a consolidation mode and will need to cross over $2.10 which is also coincide with 200 days MA in order to rise up the channel. Breaking out of $2.10 with ease & couple with good volume that may drive the price higher towards $2.20

 Not a call to buy or sell. Please do your own due diligence.

Looking through their financial numbers for past 5 years we can notice the Net income margin is hovering around a single digits growth of 7% which is considered not too bad for a mature business environment.


Dividend has been generally rising from 7 cents in 2013 to 10.4 cents in 2017. Yield is about 5% base on current price of $2.08

Their cash flow level seems decreasing as reflected on the past financial figures. Kindly refer to below screenshot for your reference:

Investor may want to take note of this declining cash flow nos.

I have roughly workout the fair value which is about $1.82 to $2.00.

The current price is trading at $2.08.

Not a call to buy or sell.
Trade/ invest base on your own decision.

ComfortDelGCorporation Limited, an investment holding company, operates as a land transportation company. It offers public bus and charter bus services; rail services; motor vehicle evaluation and other related services; public taxi services through the rental of taxis to hirers; car rental, car care, and leasing services; outdoor advertising services; and taxi booking management services. The company also provides vehicle inspection and other related services; non-vehicle testing, inspection, and consultancy services; automotive engineering services; coach services; private hire services; crash repair services; bus station services; and charter, coach, and terminal services. In addition, it operates driving schools; and workshops for repairing, servicing, and general maintenance of motor vehicles, as well as acts as a dealer in diesel for motor vehicles. Further, the company rents buses to hirers and provides related services; and constructs specialized vehicles and assembles bus bodies. It operates a fleet of 42,500 buses, taxis, and rental vehicles. The company has operations in Singapore, the United Kingdom, Ireland, Australia, China, Vietnam, and Malaysia. ComfortDelGro Corporation Limited

Soilbuild Reit

Soilbuild Reit - from TA point of view, the current price of 68.5 cents is hovering above all the SMA lines such as 20 days MA, 50,100 & 200 . Looks bullish.

MACD is also showing a positive divergence. Looks positive.

Short term wise, we may likely see the price heading higher towards 70 then 72 cents.

Not a call to buy or sell.
Please do you own due diligence.

I have roughly glanced through their financial nos for the past 4 years and below is my observation:

Total revenue has seen generally increasing from 68.14m in 2014 to 81.84m in 2017.

Net Income had suffered a fall from 42.43m in 2014 to a negative (loss) of (28.29m).
I think investor might want to take note of this and check further into their latest financial report.

Gearing seems quite high above 40% , at 43.3% - Total Assets divided by Total Liabilities ( 512.965/1181.603). Usually, for Reit counter, we would prefer below 40% ideally would be good to have it in the range of 30-36%..

DPU has been generally declining from 6.2 cents in 2014 to 5.7 cents in 2017. A decrease of 8% of which is not so rosy for a Reit counter which ideally would prefer it to maintain or increasing.

Soilbuild REIT announces distributable income of S$14.6 million and S$59.9 million for 4Q and full year FY2017 respectively Highlights

• 4Q & FY2017 DPU was 1.383 cents and 5.712 cents respectively

• Proposed divestment of 61 and 71 Tuas Bay Drive for S$55.0 million

• More than 920,000 sq ft of renewals, forward renewals and new leases signed in FY2017

• Portfolio occupancy stands at 92.7%

NAV of 63.4 cents.
P/B 1.03

The current price of 68.5 cents is trading above its NAV of 63.4 cents. It is trading at a premium level  of which you may want to take note .

DPU of 5.7 cents which translate to a yield of 8.7% looks rather attractive .

I think the fair value is around 69 - 70 cents.

Trade/invest base on your own decision.



Prudent and Pro-active Capital Management :
On 19 October 2017, Soilbuild REIT entered into a S$200 million, 4.5-year secured facility agreement with OCBC and RHB for the refinancing of a S$185 million secured loan with a balance of S$15 million available for draw down up to October 2018 (“Refinancing”). Post Refinancing, Solaris remains the single encumbered property in Soilbuild REIT’s portfolio.

The Refinancing ahead of the original debt expiry enabled Soilbuild REIT to extend its weighted average debt maturity and enjoy some interest expense savings. In November 2017, Soilbuild REIT emerged as a highly commended winner at the Adam Smiths Awards Asia 2017 (best funding solution category) for the second year running.

In 4Q FY2017 and FY2017, Soilbuild REIT’s weighted average borrowing cost was 3.20% p.a. and 3.31% p.a. respectively.

As at 31 December 2017, its weighted average debt expiry stood at 2.7 years and interest rate exposure was 70.1% fixed for the next 1.4 years. Soilbuild REIT’s unencumbered investment properties were in excess of S$803 million, representing

http://infopub.sgx.com/FileOpen/SB%20REIT%20media%20release.ashx?App=Announcement&FileID=485550

Rentals of all industrial properties fell by 3.0% and 1.1% in 3Q 2017 y-o-y and quarter-onquarter respectively.

The multi-user factories, single-user factories and warehouse rental indices have receded 3.0%, 2.7% and 4.5% y-o-y respectively, whilst business park rentals expanded 2.6% y-o-y.

Mr Roy Teo, CEO of the Manager, said: “We are pleased to report that amid the subdued industrial market, Soilbuild REIT has maintained its DPU q-o-q. The portfolio continues to face headwinds from the oversupply of industrial space in Singapore.

In the short term, our focus is to maintain the portfolio occupancy level which may require us to compromise on rental rates. In line with our proactive portfolio management strategy, we are also pleased to propose the divestment of KTL.

The divestment will free up capital and provides greater financial flexibility for our pursuit of other growth drivers when opportunities arise in 2018.”

Soilbuild REIT is a Singapore-focused real estate investment trust (“REIT”) with a portfolio of business parks and industrial properties used by industries engaging in manufacturing, engineering, logistic, warehousing, electronics, marine, oil & gas, research and development and value-added knowledge-based activities. Its portfolio of properties includes Solaris, a landmark development in one-north, Eightrium @ Changi Business Park, Tuas Connection, West Park BizCentral and Bukit Batok Connection. Soilbuild REIT’s portfolio has a net lettable area of 3.90 million square feet and an occupancy rate of 92.7% as at 31 December 2017.

AEM Holdings

AEM Holdings - From TA point of view, it is rather bearish as the current price of $6.03 is staying below its 20 day MA & also the 50 days MA.

MACD & RSI has been trending down, which may likely indicate the price may continue to see further weakness.

Likely to go down to retest the recent low of $5.21.
Breaking down of $5.21 with high volume , that may likely go down to test $4.72-$4.75 price level which is also coincide with the 100 days MA.
Breaking down of this price level, may see it slide further down towards $4.10 ( 200 days MA).


After hitting the all-time-high of $7.77 on 13th Mar 2018, it has since revered and continued to trend lower. Also can be seen from sgx announcement page, dir has been selling some of their share. This may indicate that the share price could have reached the Peak level.
Share holder /investor may want to take note of this.


Not a call to sell or buy.
pls do you own due diligence.

Looking through the Financial nos for AEM Holdings, it has generally quite impressive with the greater magnitude of  boosting their total net income.

Total net income has increased from $6.4m ( 2016) to $29.5m (2017) , an increase of 360%.

EPS has also been generally rising for the past 4 years from 2013 to 2017.

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Closely related to leveraging, the ratio is also known as risk, gearing or leverage.

Borrowing money for business all along to me is a double edge sword. If use well you grow fast and prosper. Some industries are highly capital intensive so borrowing lots of money is the only way to be in business or for expansion.

Debt/Equity ratio has seen a great improvement from 2.46% in 2013 to 0.012% in 2017.

Lower values of debt-to-equity ratio are favorable indicating less risk. Higher debt-to-equity ratio is unfavorable because it means that the business relies more on external lenders thus it is at higher risk, especially at higher interest rates. A debt-to-equity ratio of 1.00 means that half of the assets of a business are financed by debts and half by shareholders' equity. A value higher than 1.00 means that more assets are financed by debt that those financed by money of shareholders' and vice versa.

An increasing trend in of debt-to-equity ratio is also alarming because it means that the percentage of assets of a business which are financed by the debts is increasing.

Total Revenue - is the sum of cash inflows, increase in operating accounts such as receivables and occasionally, unrealized gains generated in the course of Company's Business activities.

Total Revenue has greatly increased from $47m in 2013 to $221.87m (2017)

Current ratio = 2.18 (2013) vs 1.81 (2017) . It measures the company's ability to cover current debts with current assets.It it calculated by dividing total current assets by total current liabilities.

It seems to be able to maintain at a healthy level.

The company is in a total Net Net Position as can be seen the total current Assets $105.45m is greater than the total Liabilities $58.85m.

Final dividend of 6.5 cents (XD 18 May 2018) + interim dividend of 2.5 cents, total dividend of 9 cents which is only translate into a yield of 1.5% does not looks so attractive for an investor looking for a higher yield counter. 

I have roughly workout the EPS intrinsic value using the CAGR of 40% for past 4 years, discount factor of 25% and the fair value came up to be about $7.00.


Let us factor in another discount of 5% , $7.00 x 0.95 = $ 6.65.

The normal EPS of 47.85 cents, PE of 12.6 times base on current price of $6.03. The upwards potential of  62 cents which may translate to a gain of 10%

Let say we are going to workout the target price base on average PE of 14 times, that may give us a TP of $6.70.

Not a call to buy or sell.

Trade/invest base on your own decision.




AEM Holdings Ltd, an investment holding company, provides solutions in equipment systems; and precision components and related manufacturing services for various industries. The company operates through Equipment Systems Solutions and Precision Component Solutions segments. It provides high density modular test handlers, wafer handling systems, hot spot testers, and smartcard backend handlers for use in semiconductor, solar cell, and smartcard manufacturing facilities, as well as related tooling parts; and designs, develops, and manufactures precision engineering products, such as test sockets, device change kits, stiffeners, golden units, holding jigs, preventive maintenance kits, and precision mechanical assembly modules for use in the electronic, life science, instrumentation, and aerospace industries, as well as offers engineering services. The company offers its products through a network of sales offices, associates, and distributors in Asia, Europe, and the United States. AEM Holdings Ltd is headquartered in Singapore.

Ascendas Hospitality Trust

A-HTrust : from TA point of view, it is looking rather bearish!
After hitting the high of 90.5 cents on 1st Feb 2018, it has since retreated sharply and continue to go on a down hill to touch the current low price of 78.5 cents.

The price is hovering below most of the SMA lines such as 20,50,100 & 200 days MA.Doesn't look rosy as it has broken down again the recent low of 79 cents.

Short term wise, I think it may likely go down to test 73.5 cents with extension to 70 cents.


Not a call to buy or sell.
Pls do you own due diligence.

Looking through the Financial results for past few years, the Total Revenue seems to be generally increasing from 214.28m (2013) to 224.43m in 2017.

Net income is not consistence as in 2013 it was generating  16.68m and has been drifted lower to 8.10m in 2017.You may want to look further into the detail for this declining net income figure.

Gearing looks fine which is below 35%.

Cash flow has also been generally declining .

Average dividend of 5.48 cents.
Yield is about 6.5%

NAV of 85.6 cents.

I have roughly workout the fair value using DDM and derive the value of about 87 cents.

Trade/Invest base on your own decision.

Quote : Jeremyowtaip -

1. Recent sale of China hotel properties at good premium to unlock value for unitholders.

2. NAV per share after divestment of China properties is increased thus leading to an attractive P/B ratio below 1.

3. Some possible ways the trust may utilise the divestment proceeds include paying higher distributions or a one-off special distribution seen as a return of capital to unitholders. Also, the trust may utilise the proceeds to pare down debts and decrease gearing. The trust may also utilise the proceeds for AEIs of existing properties and/or for new acquisitions. Or can channel the proceeds into all of the above mentioned with different weightings for each depending on the manager.

My take is that no matter which ways the divestment proceeds are utilised, the manager should provide a sound basis to their unitholders why it chooses certain way to use the proceeds.

For example, if it chooses to do a new acquisition that is not so attractive as compared to previous China hotel properties it has divested paying too high a price for the new property which has less attractiveness. Then, we ask ourselves this question. Why exit the China hotel properties at a premium only to re-enter another new property with less attractive future prospects? This would be doing one good decision followed by one bad decision to negate the previous good effect.

If it chooses to pare down strategically some of the existing debts to increase the average weighted length of time to debt expiry in view of potential rise in interest rates. Maybe this is a good decision.

If it chooses to reward unitholders with higher one-off distributions, it is a neutral option depending how they do it. If most of the proceeds are used towards rewarding unitholders, it may help to boost their unit price higher on a short term basis when a higher distribution attracts investors to this trust. But when the buffett has already ended, what comes after next? Any more growth? If not, then it is just a short term fever with no longer term positive effects of increasing distribution on a one-off basis.

Do not get me wrong. I am not saying rewarding unitholders is always wrong. But overdoing it just to boost up the unit price on a shorter term basis may not be as optimal compared to growing the trust on a long term basis providing sustainable increase in distributions over time. Unitholders will be happy only for a short while with a buffett treat as compared to a trust or REIT which really can sustain their growth in distributable income for a very long time to come giving out better and better treats (which may not be buffett standard but still relatively good standard treats).

In conclusion, AHT has done an impressive job with the divestment of the China hotel properties at good premium gains. Let's see how they use the divestment proceeds. I believe this is more important to watch for than the ongoing price movements of this trust. Of course, if the trust proves it can use the proceeds in a very good and sound way, then buying it at the current price now is good. If otherwise, even if one can supposedly get it cheap at less than P/B ratio of 1, think again is it really a great wonderful catch.

Dyodd

Ascendas Hospitality Trust (“A-HTRUST”) was listed in July 2012 as a stapled group comprising Ascendas Hospitality Real Estate Investment Trust (“A-HREIT”) and Ascendas Hospitality Business Trust (“A-HBT”), established with the principal investment strategy of investing, directly or indirectly, in a diversified portfolio of income-producing real estate used predominantly for hospitality purposes, as well as real estate related assets in connection with the foregoing. The asset portfolio comprises 11 quality hotels with over 4,000 rooms geographically diversified across key cities in Australia, China, Japan and Singapore; and located close proximity to central business districts, business precincts, suburban centres, transportation nodes and iconic tourist landmarks. A-HTRUST is managed by Ascendas Hospitality Fund Management Pte. Ltd., the manager of A-HREIT, and Ascendas Hospitality Trust Management Pte. Ltd., the trustee-manager of A-HBT. A-HTRUST is sponsored by Ascendas Land International Pte Ltd, a wholly-owned subsidiary of Ascendas Pte Ltd.