Recent Stock Actions: CSE Global

I recently just added on to my holdings in CSE Global. Basically nothing much has changed since my previous post where I initiated the position in the counter.

I think it's a company with good fundamentals and the dividend yield right now is fairly attractive at around 5+%. I do hope to see the company continuing to lower the debt in the coming year.

With the recent decline is stocks, I am on the look out for attractively priced stocks to add to my portfolio.

Dividends in Aug / Sept 2013

Dividends to be collected in Sept 2013

Boustead - $750 (23 Sept)

Total - $750

Refined Rules in Investing: Rules for Selling

When I first started out in my investment journey, I looked at companies and made investments in those that I felt were undervalued. Some turned out ok, others did not fare as well. After a couple of hits and misses, I figured that I should place greater emphasis on dividend yields for more consistent and predictable returns. That was when I started to define rules on how I should go about selecting companies for inclusion in my portfolio. You can read more about the article here.

Since then, I have been following the rules set in 2011 and have been quite satisfied with my portfolio performance and returns so far. It also gives me a more structured and systematic approach towards analysing and selecting stocks.

Back then, I was thinking about setting some rules for divestments as well. These rules would help me to identify overvalued stocks that I should probably sell to switch to better valued stocks. 2 years on, I finally decided to set some of these rules. The rules are again tied to dividend yields to allow more predictable returns on my portfolio. 

Stocks

• Dividend yield of less than 2%

Reits

• Dividend yield of less than 4%
• Gearing ratio of >50%

Again, I expect a higher yield from reits as their payout ratio is usually much higher than stocks. Using the benchmark yields above, I also hope to avoid a situation of frequent buying and selling as that is not the intent of my portfolio. I will only sell if a particular stock or reit has appreciated substantially beyond what I view as acceptable dividend yield. The gearing ratio for reits is taken into consideration as the gearing generally determines the potential for yield accretive acquisitions without issuing more equity. I will use these rules as guidelines and refine them as I go along.

Recent Stock Actions: CSE Global

I recently just started a position in CSE Global. The group is an integrated solutions provider in the area of automation, telecommunications, healthcare and environmental sectors. The group was hit by a rather major operational setback in their telecommunications division in 2011, resulting in earnings almost halved in that year. But since then, the group seems to have gotten back on track and earnings are returning to 2010 levels.  The profile of the group reminds me of ST Engineering, where they tend to make acquisitions to grow in their key areas of focus. In fact, the company is a spin-off from ST Engineering in the mid 80s. Some of the key points regarding the investment is detailed below.

Positives

• Strong fundamentals with order book at close to $400 million
• Decent dividend yield of about 5% at current price with payout ratio of about 40%
• Good profit margins at over 30%

Negatives

• Quite high gearing at about 19.2%. Although management has given guidance that they will try to lower gearing to about 10% in the longer term

Dividends in May / June 2013

Dividends to be collected in May 2013

ST Engineering - $414 (17 May)
Capitaland - $210 (17 May)
Capitamalls Asia - $81 (20 May)
CSE Global - $$82 (20 May)
OKP - $225 (27 May)
Riverstone - $76 (28 May)
AIT - $322 (28 May)
Kingsmen - $375 (12 June)

Total - $1785