Wednesday, May 3, 2017

2017 Portfolio Changes: Added Keong Hong (3 May)

It has been almost 3 months since I did anything to my portfolio. During these 3 months, the market has been in a bullish mood, especially in the manufacturing industry with stocks like Micro-Mechanics and UMS near their all-time high. In such times, stock picking becomes increasing challenging.

After going through my shortlist of stocks, I finally added Keong Hong Holdings today @ $0.5.



The financials summary are as follows:



EPS in 2016 was at $0.1508, down by about 6% from the previous year. But if we look at 2 years before, it's actually growing. Based on my entry price and FY2016 DPS of $0.035, dividend yield is 7%. Based on the numbers, dividends are easily sustainable as the payout ratio is only about 23%. P/E ratio is low at about 3.3, compared to its peers.

I think Keong Hong's strength is in its ability to work with well-known developers for projects through joint ventures. The recent JV for Seaside Residences with Frasers Centrepoint proved to be well-received.

While the thing about Keong Hong that I dislike is that its business is project-based, its order book is still healthy and stands at about $350M, based on its 2016 Annual Report. The company also announced recently that it is acquiring 60% of Hansin Timber Specialist as part of its long-term strategy to provide more diversified and recurring income for shareholders.

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