Byte Sized Investments taking stock of 2016
As 2016 comes to an end, the tempo at work starts to slow, festive lights lit up from every corner of Singapore, it’s time to take stock of what we had done for the year and set our goals for the next.
We published a total of 25 articles spanning from personal finance to investments.
In the field of personal finance, we shared how a cash top up can help you to save about 24% of your tax, and how your CPF Special Account can be a powerful compounder for your retirement (now’s the best time to review your income and prepare for your tax filings by looking at CPF cash-top ups, SRS transfers, charity, etc). We also blogged on Rich Dad’s Cashflow Quadrant, one of the Personal Finance best sellers we have seen so far. The book speaks about the four quadrants where a person can earn his money from, and how shifting mindsets could result in the move from one quadrant to the other.
For investments, we kickstarted the year with First REITs EGM and continued our coverages on ARA, Vicom, DBS and ST Engineering.
First REIT (AW9U.SI)
2016 was a slow year for First REIT as it managed to successfully acquire 1 property: Siloam Hospital Labuan Bajo. However distribution per units increased due to contributions from previously acquired properties such as Siloam Hospital Kupang. It is currently still in the midst of acquiring Siloam Hospital Yogyakarta via a joint venture with Lippo Mall. Its asset enhancement initiatives on Siloam Hospital Surabaya were in progress as parts of the land had commenced re-development. First REIT had also successfully raised S$60 million from the sale of perpetual securities to pay off debts. With continued yield accretive acquisitions and the strengthening of balance sheet, First REIT’s year-to-date return, including dividends, was a decent 11%.
ARA Asset Management (D1R.SI)
We had better luck with ARA Asset Management. Following on from last year’s rights issue, management were not affected at the depressed stock price as they worked hard behind the scene. ARA continued acquiring new properties for their respective REITs under management, establishing new funds in new markets via the country desk model. As such, they had seen 20% growth in total revenue, recurrent management fee increase of 8% and net adjusted profits growth of 12% from their latest quarterly financial results. Recently, John Lim announced taking ARA private at $1.78 a share. This culminated into a 57% return year to date. If one were to take action after one of our blog posts where the price was hovering around $1.06, you would have had a 72% return!
Vicom Limited (V01.SI)
We were watching Vicom Limited cautiously as it is at a fundamental inflection due to 3 primary reasons; decline in vehicle inspection, decline in non-vehicle testing and inspection, and government’s car-lite policies. This was apparent from its consecutive quarters of profit decline. However, the decline should be temporal, and recovery could be seen in a couple of years, in line with economic activities. Its year to date return was almost 0%, as its $0.27 dividends were negated by its 4.8% share price decline. We believe Vicom is a fundamentally good company that is run by astute management. We will continue to monitor the company and capitalise on its next positive inflection.
DBS Group Holdings (D05.SI)
At the start of the year, we bought into DBS due to its seemingly good fundamentals despite sentimentally-driven depressed valuations (purchased in Feb with price less than $14) due to China’s massive plunge at the start of the year. However, due to our (lack of) competence, we were spooked by the potential non-performing loan and exposures from the shipping, oil and gas industry. We got overly-cautious and liquidated our holdings. Trump’s victory subsequently pushed DBS share price up to above $17. Its year to date return stands at 12.4% inclusive dividends. The lesson learnt is to probe deeper to understand how much was DBS exposed to the Oil and Gas industry before making any decisions.
ST Engineering (S63.SI)
ST Engineering has been working hard to build its book order, which stands at S$11.4 billion as of Sep 16. It’s 9 months results showed a 12% dropped in profits before tax, however if you looked closely, you would realised a $61.1 million one-time write-off of a Chinese subsidiary. Discounting the one-time write-off, 9 months profit before tax was down 1.7%. Management guided FY2016’s profit before tax to be slightly lower that of 2015. Having said that, year to date return on ST Engineering was about 16% inclusive of dividends.
Straits Times Index (ES3.SI)
Using SPDR ETF as a proxy, Straits Times Index’s year to date returned 5.6%. The table above showed how the basket of stocks mentioned above compares with the returns of STI. ARA trumped all stocks mentioned due to its privatization bid, followed by ST Engineering. First REIT and DBS returned comparably against the STI. Vicom lagged all stocks within this comparison.
Focus for 2017
We believe we managed to beat the Index this year, but acknowledged that we cannot rest our laurels as more work needs to be done.
For 2017, we would be looking at expanding our watchlist into the overseas market while continuing to monitor and update our readers on the local stocks in our watchlist. At the same time, we look forward to share more investment techniques and personal finance hacks.
Lastly, we would like to thank our loyal readers for their support, and friends from BTInvest, Singapore Investment Blogger, SG Young Investment and TheFinance.sg who helped us reach out to more readers, continuously supporting our mission to make successful retail investing achievable.
Merry Xmas and a Happy New Year!
Note: Byte Sized Investments has vested stakes in the companies mentioned above