(July 2022 Results) How i would invest in the singapore stock market if i had 100k of spare money

 

July 2022 Returns: 3.81%

Year to Date Returns: -11.55%

Since Inception (9 Sept 2020) Returns: 50.75%

The STI has rose by around 2.86% in July. Certain counters in the portfolio have rebounded. Meanwhile, as i only make changes at the end of the month, i did not manage to add Samudera in the middle of the month when i had a one in a million, twice eureka moment. Such things probably will not happen anytime soon especially when i want it to again.

On a more serious note, a couple of companies released their earnings or guidance.

iFast - In what is a depressed market conditions from April to June, it is not a surprise that earnings came in at a depressed level even if the impairment is not accounted for.

China Sunsine - Released a positive profit guidance on 29 July after trading hours, will be interesting to see how it trades next week although i don't think it will have a huge effect since there is the S-Chip Risk as always.

Trans China - Released a negative profit guidance stating that profit will be lower than 1H 2021. Can't say i am surprised since there is so many mini lockdowns in China in 1H 2022 and some peers such as Pang Da Automobile (SHA: 601258) recording losses in 1H 2022 while BetterLife Holdings Limited recording 35% drop in profit for 1H 2022.

The thesis remains the same, trades at a valuation that is cheaper than peers, demand for cars will come back, its not china property where you pay and you only get half the car or a car without 2 wheels. Besides showing off a car is much better than buying properties these days.

Now back to the questions to ask when i review the portfolio.

1) Is it time for Hotel Grand to make its grand appearance?

I have thought about it long hard and deep. I have decided to add Hotel Grand into the portfolio. This is on the back of an encouraging tourism numbers i have seen from Australia, New Zealand and Singapore.

Australia has the most amount of rooms for Hotel Grand, followed by Singapore then New Zealand.

Australia Tourism is up 730% in 2022 1st 5 Months compared to 2021 1st 5 Months

New Zealand is up close to 59% in 2022 1st 5 months compared to 2021 1st 5 Months.

Singapore Tourism Arrivals is up 1167% in 2022 1H compared to 2021 1H. With Revpar up 89% yoy and Occupancy Rates up 17.3% yoy.

All in all, with the privatization offer of Frasers H Trust at Close to Book Value, Hotel Grand looks like a steal with its low gearing and turning macro environment. Of course there is Covid and all but i have seen people around me starting to travel and to places including Australia, NZ as well.

I think we might be close to the stage where everyone just walks around with symptoms of Covid having caught Covid and only testing if travelling requires it or they need to see the doctor.

A slight concern would be the strengthening of SGD against NZD.

2) Am I adding any materials / commodities and inflation riders ?

In SGX, we are quite restrictive in choices. Oil intermediaries are not exactly best hedgers. Coal companies have had a weird run up and down then slightly up again. As for the oil producers, they are not exactly well known names that have been consistently pumping for many years like companies listed elsewhere. As for shipping i have mentioned previously so do check my previous posts.

There is some interest in adding some cement stocks etc such as Pan United but its valuations does not match my buy thoughts. Engro Corporation is another cement play but it has other businesses that makes it too complicated to break it down at times.

I feel that TC Auto, Powermatic Data, China Sunsine all are somewhat hedgers against inflation in their ways.

With that, the portfolio now looks like this as iFast is removed (i might come back to this again or take a look at its results time to time and comment on it) but a good analysis on iFast can be found on Kyith's post

In Conclusion, i feel fairly ok with the portfolio although there are a few stocks that are in the portfolio not just because of the immediate results but rather a bit of both immediate and long term thoughts while some are still mid to long thoughts.

(Realizing Losses) Full Divestment of Johnson Holdings 1955 Hkex

Perhaps taking realized losses is something that is difficult and sad to do, but having done my research and reviewing various factors which i will explain later on, i have decided to realized my losses which amount to around 17-20%.

To recap, Johnson Holdings is a cleaning company in Hong Kong that derives majority of revenue from government related cleaning projects such as sweeping roads, putting poison for rodents and cleaning of facilities etc. In FY 20/21  77.7% of revenue is from Government Related Tenders

At its latest financial year, it has generated 25.9 cents hkd of profit which translates to a PE of less than 4 as of the trading price of 0.98 as at 22 July 

Divestment Reason 1: Shaky 2nd half results

Johnson Holdings generated 13.5 cents in 1H 2022 and 12.4 cents in 2H 2022. On surface it looks ok, However if i were to break up the results, the gross profit margins is actually lower in 2H 2022.

1H 21/22 (9.61% Gross Profit Margin)

FY 21/22 (9.6% Gross Profit Margin)

Also another trend that can be seen is the revenue which has shown a slight decrease of less than 10% from 1H 21/22 to 2H 21/22.

Lastly, the receivables came in at an above normal level as it has increased more than revenue. Not by a lot to an alarming level but just one of those you see and sighs.

(Receivables +14.74%, Revenue +7.6%)

Divestment Reason 2: Inability to secure big contracts in 2022

One of Johnson Holding's reasons for its decent financials in this year and excellent financials last year was that it managed to secure 3.9 billion HKD worth of cleaning contracts in 2020 and 1.5 billion in 2019.

2021 was decent as well with 1 billion HKD as a follow up. However, 2022 has been close to lying flat as they managed to secure only 51 million HKD in the first 5 months of 2022.

To top it off, they have failed to renew 5 projects which was won in 2020 and 2019 which was worth 930 million HKD.

To make things worst, their rivals have just confirmed that they lost even more

(Rival won projects in Sha Tin, Yuen Long, Western and Tai Po)

(Green being ones lost pre announcement. Orange one being lost via the announcement)

The orange ones sum up to a total of 593 million HKD. It also meant that Johnson has been unable to secure contracts in other regions mentioned by its competitors.

Divestment Reason 3: Poor Public Perception and PR Response

In 2022, Johnson has been in the eyes of the public for bad reasons.

(A resident taking to facebook to ask if Johnson has done its job in preventing rats.)

(Tested for Covid, can't work but does not classify quarantine order by authorities as MC)

(An account from another worker, which said that they were not reimbursed for testing and the quarantine order as well)

(A rant from the same facebook user)

To make things worst, their PR / IR firm reply to my email was pretty bad.

In essence it did not answer a simple question of whether Johnson participated in renewing its current projects or any new projects. I had to look back at its announcements to realize they did not mention anything about whether they bidded for projects or not.

Therefore after considering the various factors

Poor Financials ahead

Poor Public Perception

Poor record of winning tenders this year and the momentum has followed through

Poor response from PR Team

I have decided to make the decision to fully divest it. I apologize once again for my sub standard in research.

On a more happy thing, i have finally collected the full set of my photocards 

(In my previous post, i was lacking 1)

My Newest Conviction Purchase

I pondered a bit whether i should share about this. Initially i did not want to post about it but i have decided to.

After sourcing the Asia markets which included Hong Kong, Indonesia, Malaysia and Korea, i have finally made my conviction purchase.

Yup its photocards, after missing out on a purchase from a website as i was missed the purchasing window, i had to source for it from various countries such as Indonesia, Hong Kong and Korea. I still have 1 more coming in from Malaysia (hopefully soon as it has been close to 1 week since it left the International Hub in KL.

Although the purchases were above book value and some were 3-4 times above the book value, i really wanted them and hence i did not really think that much into purchasing it.

On a slightly serious note, folks might remember that i made my single largest purchase last year in November.

Fundamentally, i have not seen any thing alarming apart from its financial results whereby 

• GRP recorded losses (expected)
• Luminor recorded losses on its penalty from illegal forex transaction in China (expected)
• Luminor remains strong as it is profitable without penalty
• It has placed shares at 0.30 to acquire Malaysia Financing Business
• It has not recognized the gains from its relocation yet
• GRP's affordable housing is making traction in sales
  

  (Orange denotes reserved. Out of 465 units, around 400 units have been reserved)
  

  

  (300 units sold, out of 465 units that is 64%. A very welcoming figure)

But how has GRP Share Price performed?

Purchase Price : 0.173

Since then it has distributed 2/3 Shares of Luminor for every GRP

Current Price of GRP: 0.061

Luminor Price: 0.135

Total = 0.061 + (0.135*2/3)

= 0.151

Currently sitting on a 12% loss. With that i can only say.........

Perhaps sticking to buying photocards would have been better as there is no reason for others to participate and get involved with such losses.

While i am sorry, i think it will take some time for the company to show its true value. I think Luminor will likely show a higher valuation sooner than GRP.

But what if i am interested in the latest 2022 conviction purchase for stocks?

                         

You can consider the stock above. Of course just by looking at the chart, if you can tell what company it is then you do not need to read any further.

(I just wanted to lalalilala...nothing else)

In terms of risk level, this company definitely has a very big risk, even larger than GRP.  Why so?

As you can see from the chart , it is definitely bad if one bought into it at the higher levels and see it drop to the current levels if they held on to it.

However, if you consider its rise since the start of the year in what is a down market for many countries, it is not bottom fishing as well.

For myself, i thought about it a lot into the purchase. Had this been any previous years, i will not commit to this purchase. But this year, i intend to do something different / funny / weird / lol / idk hence i did it.

(Mood Literally)

Alright. Serious Time. The stock i purchased is Samudera Shipping (SGX: S56)

3 Main Reasons why i decided to purchase this company

1) Recent Guidance given by other container shipping companies have affirmed a trend where by Q2 is better than Q1 and 1H 2022 is better than 1H 2021. This can be seen in companies like Cosco Shipping listed in Hong Kong as well as Evergreen

With that we can affirm that 1H results for Samudera should not be bad

2) Guidance given by Samudera Indonesia. Raised revenue target and affirmed the profit growth trend in 1st 5 months. Samudera Shipping is a big contributor to Samudera Indonesia. 

1Q 2022, Samudera Indonesia recorded 250 million USD in revenue. Hence its an estimate that the 4 quarters will be largely stable in terms of revenue. 

3) Attractive Valuations. Based on my ballpark estimations, Samudera Shipping earned 68% of its 2021 full year profits in 1Q. As such, its half year results should beat its full year 2021 results. Assuming a similar market in 2H 2022, this gives an earnings of 65 usd cents for full year and it is trading at a PE of less than 1 currently.

A look at the PE And BV of its Peers

Cosco Intl PE of 1.6 BV of 1.18

Evergeen PE of 1.59 BV of 1.09

Yang Ming PE of 1.51 BV of 1.03

Samudera looks undervalued currently as its Book Value after adding the 1Q results should be below 1 as well.

If we look at it on a long term horizon track record, from 2011 to 2021, it has only been unprofitable for 2 years.

Excluding 2021, from 2011 to 2020 the consolidated profits is 56 million. While not a huge amount, it shows that the company has a track record of being profitable. Even if suddenly container rates go back to pre-covid era and the world suddenly found a cure for Covid and Covid has been exterminated, the company is still likely to be profitable.

Of course there are many risks. For example, if the expected recession comes then container rates might not hold in 2H. It is important to see what the estimates/guidances are for the major players such as Maersk, Evergreen and Cosco Intl. It is also a very volatile market that requires monitoring on a more regular scale.

To sum off the key risk and opportunities. I would use the post below found on a forum. In fact i copied most of what is mentioned from this post.

(Non Investing Related) Divergence

Disclaimer: This post is not investing related but just some of my views towards life in general. 

Just need to let off some thoughts that occurred to me for some time. 

Since young, i probably make decisions that is somewhat the minority or decisions that probably only i would make. Well everyone has a lot of choices and most might make a certain decision, i end up making the 'less walked path'

Cite a few examples

I used to play trading cards and i would usually enter tournaments playing 'Anti-meta' decks which is the minority

(Playing Yugioh in 2015)

When people were supporting various groups in Kpop back when i was way younger say 2013, i would be supporting the lesser known groups.

(A K-pop group i supported back in 2012,2013)

(I still keep the album up till today)

And then came the part where i started going to AGMs / Results Briefings if possible, probably its a minority / rarity for someone in 20s to be attending.

(Bund Centre in 2017)

(Uni Asia 2018 1H Results Briefing)

(Mainland Headwear AGM at Hong Kong in 2019)

Unfortunately this divergence has grown even more in me. I became more quiet as i grow up such that even some who are close to me will say that i used to talk a lot but i don't talk much these days

Probably that is attributed to me not having much of common interest with various groups of people. 

If i known the person through investing, then all is fine as usually the chit chat will be about Investing. 

However, for my personal small circle of friends that i know not via investing, i don't have much to chit chat about as my main interest is in K-Pop. 

Which is why i was glad i had some chit chat with a few solo travelers that were Singaporean as well during my trip to Korea. It was the most i had chat about K-Pop for a very long time.

I have a few personal friends who are into K-Pop but unfortunately they are only into the 'meta' as usual. Not gonna name them but yea its the standard few that has color in the name or numbers or they are from the more famous companies. Also with Covid, they have kinda developed less interest for K-Pop in general as well as due to lack of events in Singapore. As such, sometimes talking to them about K-Pop is not really interesting as well as they like to ask 'Who you went to watch?' then i replied them the idol name they just went oh.

Yup that classical 'Oh' i have heard too many times which stands for oh ok thanks for info but i dun want to know anything more cause i dunno the person. 

Well nothing wrong with supporting the lesser known groups but as mentioned earlier 'the path less travelled' and 'divergence'

This has probably extended into my investing as well. I tend to do it alone (introverted me in nature) also the stocks that i probably pick and the reasoning behind it tends to be very not common either. Its not something that you would see in most people's portfolios. In fact its weird if they are in many people's portfolios.

To me i don't see anything wrong with Divergence, its just a way of life and the most important thing is to be happy with one's life via one actions.

In terms of travelling, my previous 3 trips by air has been solo trips. I have gotten used to travelling alone that i do not really like to travel with others. To cite an example, my friend was actually discussing the itinerary with his other friends for a trip to JB 2 weeks ahead of time.

 My first instinct was that its quite fortunate that i am not travelling along because i don't like to plan and stick to a plan. In fact i had travelled with my friend b4 and i ended up not sticking to the plan and sometimes things go sour. I prefer to not be the sour grapes to anyone's plans and therefore it would be better that i travel alone and probably if that person wants to travel along he can travel by his own plans and we can have some meals but not stick together for most of the trip. Of course, my introvert nature also plays a part in travelling.

Of course we can never not mention the Singapore Dream which is something that is happening to most of my peers. I feel truly happy for them as they have made decisions and are edging towards various milestones that they have chosen to achieve.

Unfortunately, that is not something i have in mind currently and unlikely any time soon although the door is not completely shut but its probably less than 1% open.

I feel that by pursuing the Singapore Dream, i probably have to sacrifice a lot of things that i want to do in life and also it takes a lot of commitment and effort.  If i am not committed then its better off not doing it or giving a lousy effort at it as it affects all various stakeholders involved.

Furthermore, i have a few friends that are way better quality than me in terms of physical, character, career, prospects, commitment etc. I do feel that its weird they are still single as they are on the lookout for a partner and i think they deserve to get attached soon and i would feel happy for them.

With that said, i think divergence is probably a big part of me, just that i happen to divert at a lot of decisions / interests and hobbies. I probably will feel happier if i can find like-minded groups at various things individually as well as listen to myself on what i really want and doing it.

Story Time

Just want to say a simple story using some pictures.

(This idol group was on stage and ready to perform as soon as the mc finished their lines. They felt raindrops coming down as it has started raining)

(It did not stop them from waving to the crowd, who i am pretty sure at least 75% of them do not know them but at least some took the effort to appreciate and say wave to them)

(Showing real friendliness and professionalism, the idol could have done away with waving but continued to wave to the few that were waving in the audience despite the rain)

(Continued to wave as well)

(Another idol from the group waves as well)

(Its raining, umbrellas are out in the audience but the group continues to dance)

(Could have simply bowed and walk away but still waved at the end despite the rain)

This group gained my respect for their professionalism and friendliness, performing in the rain and still waving to the crowd and all. Of course the rain wasn't 'huge' but it was good enough to get some to put on the raincoat or open up the umbrellas.

If anything i learn from this is that, sometimes things just don't go your way but you will still have to embrace the small obstacles and overcome it. Also sometimes luck is just bad to you, there is no reason needed (just like the rain that happened only for this group and for others there was no rain). Just have to embrace it and still do your best. 

Just like idols training thousands of hours for a few minutes on the stage ( its like one's knowledge, experience, emotions and thought process in investing), has to be built up with time as well so that you can overcome obstacles (in this case its rain / slippery floor/ obstructed vision due to rain) and still put up a good portfolio performance(in this case its good stage performance).

While i am not sure if this performance would catch the eye of a few and gain them some reputation, i have begun to listen to their songs more often because I liked their professionalism and performance.

You can catch the performance that day via this youtube link (https://www.youtube.com/watch?v=jIAIUnX2zOs)