Local Portfolio Log (Nov 2014)

Hello there,

Halfway through yet another month, and as always, new surprises abound.

There was just news today that Japan has unexpectedly slipped into recession, some say due to the increase in sales taxes.

In addition, my local portfolio has taking another pretty good beating. Low oil prices continue to depress Keppel Corporation as well as Sembcorp Industries, as investors predict that deep sea drilling activity will be reduced due to it being unprofitable if oil prices remain at this level for extended periods of time, and consequentially, reduced rig orders from these 2 companies.

A slump in regional as well as European aviation activity has caused earnings for SIA Engineering, SATS as well as ST Engineering's aerospace arm to fall. It was also SIAEC's worst quarter in a decade, with rising subcontract costs as well as a decline in contributions from its many joint ventures causing the company to post a 41% decline in profits compared to the same quarter last year.

ComfortDelgro and SingPost have continued to show increasing profits, and I wish I could increase my stake in them. However at current valuations, I think they are overvalued and unfortunately, would currently remain as a small stake in my portfolio.

REITs have been performing better than I expected, and over the past year I have successfully brought down the percentage of REITs in my portfolio from 35% to less than 25%. I looked to reduce my exposure to REITs (as a percentage of my portfolio), as I expect them to underperform when interest rates begin to rise. As for now, they are still providing a steady and reliable yield in the current low interest rate environment.

Although my largest holdings have taken a pretty big hit, I still hold on to them for various reasons. For Keppel and Sembcorp, I take the view that oil prices will not stay at current levels for a long time, and even if they do, both companies are very diversified across sectors as well as geographically, and would remain profitable. I have used some spare cash to purchase another lot of Keppel Corporation.

For the aviation companies, I am holding on to them as a long-term play in regional as well as Asian aviation growth, and the current 'downturn' is a cyclical trough that might be a good time to pick up additional shares of these companies. However I think that SIAEC, SATS and ST Engineering are all trading at pretty high valuations of around 20x trailing PE, and for myself, they already make up a large part of my portfolio, so I elected to just leave them as they are.

On the happy side, November brings me almost $900 of dividends, with more to come all the way until February next year :)

For my portfolio:

Stock	Shares	Market Value (S$)	%
SingTel	5000	19,650.00	14.42%
Keppel Corp	2000	18,320.00	13.44%
SIA Engineering	4000	16,320.00	11.97%
SATS	4000	11,840.00	8.69%
Boustead	6000	11,250.00	8.25%
Ascendas Reit	4000	9,120.00	6.69%
CapitaMall Trust	4000	7,880.00	5.78%
SingPost	3000	5,760.00	4.23%
Suntec Reit	3000	5,565.00	4.08%
ComfortDelGro	2000	5,220.00	3.83%
CapitaCom Trust	3000	4,995.00	3.66%
Cache Log Trust	4000	4,680.00	3.43%
Sembcorp Ind	1000	4,550.00	3.34%
Keppel Reit	3000	3,690.00	2.71%
ST Engineering	1000	3,410.00	2.50%

Portfolio Value	$132,280
Dividends (November)	$886.84
Average Monthly Dividends	$491

Until next time!