Monthly Review- July 2010

This month is a month of recovery as expectations of good earning results for the quarter push the STI towards the 3,000 mark. This boost benefited some of my counters that are reporting good results. However, as share price rose back to their year highs, or even above their 52-week highs, I will need to do some serious evaluations on whether to continue to hold or sell.

As in previous post, FJ Benjamin has rose back near to its year high, and I realized my profits for the counter as my target price has been reached. This has increased my total realized profits by approximately 74%.

Furthermore, I have added my positions for UOB Kayhian to average down my buying price when the share price dip to $1.46. I believe UOB Kayhian is a strong counter and with its history in dividend payments, there are more pros than cons for me to add on my exposure for this counter.

In addition, the bidding war for Parkway has also benefited the share price of Parkwaylife Reit as the winning bid by Khazanah paved more opportunities for future acquisitions of properties in Malaysia which will boost Parkwaylife Reit's portfolio. This resulted in a rise of approximately 9% in the share price of Parkwaylife Reit for the month.

Consequently, Soup Restaurant also posted relatively good earnings for the quarter and declared an interim dividend of $0.0035 per share and a special dividend of $0.0065 per share. Suntec Reit has also declared a quarterly dividend of $0.02528 per share, which is a slight increase quarter-on-quarter, while Mapletree Logistic Trust declared a quarterly dividend of $0.015 per share, which is the same as the previous quarter. First Ship Lease Trust has also announced a dividend of US $0.0095 per share. With the proposed exchage rate of US $1: $1.3533, that equates to $0.01286 per share. This is above my expected payout and it boosted my confidence for the counter.

Other than Parkwaylife Reit, which will be announcing its earnings next month, my current counters have declared a total amount of approximately $550 worth of dividends for the quarter. This is a very encouraging amount as my goal of at least $1,200/ year of dividends has been attained.

However, not all is smooth sailing. Noble group announced that it will issue bonds to raise funds for general use. This caused its share price to plunge by 4% in one day as investors interpret this move with pessimism. I believe more information is required on this matter, but in the event it drop further to my target buy price, I will add positions to average down my buy price for this strong commodity counter. With my time horizon, I believe Noble is still a worthwhile investment and this dip pose a good buying opportunity.

Till now, two thirds of my counters are still in the red, but losses has minimized by approximately 95% compared to the previous month. I hope things will continue to improve with time and I believe my counters will prove their worth in time to come. As for now, my stand still remains and if my buy price is reached, I will add on more positions for Noble and Suntec Reit.

My Current Portfolio:

Lessons learnt: For my growth counters, I will stick to my plan to sell once the target price is reached or when the share price suddenly spike up in a short period of time, making valuations unattractive. For my dividend counters, I will continue to hold on to them till fundamentals changed.

FJ Benjamin (3rd Feb 10 to 15th Jul 10)

FJ Benjamin was bought based on the analysis that 2010 is going to be a year of economic recovery and the retail sector will benefit from this recovery story. Before the purchase, the earnings reports of FJ Benjamin showed lacklustre results and they were still posting losses. However, the extent of losses was narrowing and this is an encouraging sign that the recovery should be on track.

The stock was bought in Feb 2010 with the belief that its quarterly results will show their first profitable earnings report after the financial crisis. As reported previously, due to my limited funds at that point of time, I could only invested in limited number of FJ Benjamin shares. Nevertheless, with my faith in this counter, I added more positions soon after. I strongly believe that the first quarter results of 2010 will be excellent compared to the slumps during the first quarter result of 2009. Indeed, the earnings report was encouraging and profits were announced.
Soon share price rose and shot up to a high of $0.38 with the additional news that renowned investor Peter Lim is accumulating shares of FJ Benjamin. However due to a lack of knowledge on the signs to sell, I held on to this counter, believing that FJ Benjamin can be a long term play as recovery of the retail sector continues.

True enough, patience paid off and another wave of rise began for FJ Benjamin with the good expected quarterly earnings report just around the corner. This time round, I decided to grasp the opportunity to realize my gains. I fix my target price at $0.355 with a profit of 26%. From the charts, it can be seen that the technicals show limited upside as both RSI and stochastics are reaching the overbought region. However, the strong increase in share price accompanied with a strong volume indicates that further upside is possible and MACD also reflects no sign of weakness as yet.

I decided not to be greedy this time and firmly stick to my plan. A 26% profit is a great record for me and being able to stick to the plan is of even utmost importance as lessons learnt has keep emphasizing the significance of discipline. In addition, nothing beats having realized profits cashed in.

My thoughts at that time: I must start to be discipline and stick to my target. Cashing out gains at the 20% mark is a successful trade, let alone 26%. Hence, I made no hesitation and realized my profits before any unforeseeable circumstances strike out from nowhere again and wipe off my gains.

Lessons learnt: Discipline pays and it is always best to realize gains based on the planned target. In the event that any share experience a sudden spike in share price within a short period of time, a sell signal is triggered. Sell first, cash in gains, and the counter can always be bought back during corrections, which almost always occur.