Wednesday, March 5, 2014

2014 Portfolio Component Change (5 Mar)

Last week, Select Group has announced disappointing results for FY2013. Profit fell more than 60% on the back of 13.2% increase in revenue due to higher administrative and operating expenses. EPS dropped to $0.0114 from $0.0293 in the previous year. A final dividend of $0.002 is proposed for FY2013 (a reduction of 90% compared to $0.02 for the same period on the previous year). I have added Select Group earlier this year with the expectation that the dividend yield can be maintained. As the expectation is unable to be met, I have divested Select.

With the proceeds from Select Group, I have added positions in Hock Lian Seng and Singapore Reinsurance Corp.

Hock Lian Seng is an investment holding company with core business in civil engineering, participating in government-related project tenders for building of bridges, expressways, MRT and other infrastructral works, and property development. HLS has a consistent dividend history and yield is 6.67% based on the entry price of $0.27.

Singapore Reinsurance is the only reinsurance company listed in SGX and has been in business for more than 40 years. Share price has improved from $0.145 at the start of 2009 to $0.28 today, and is currently trading at about 0.75x book value. At my entry price of $0.28, yield is more than 5%.


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