Portfolio Review 2015: Portfolio - 22.7% vs STI - 14.1%

After peaking in April, the Straits Times Index fell sharply in two distinct phases (Apr-Jul, Aug-Oct), ending the year at slightly below the 2,900 level, or 14.2% lower than where it started the year. There were many reasons offered for the weak markets ranging from weak oil price, terrorist threats, the end of quantitative easing and the hike in interest rates.

The portfolio lost a staggering 22.7%, making it the third year in a row that I have underperformed the STI. Excluding dividends, it would have lost 24.7%. The biggest percentage loser was KrisEnergy. The stock lost two-thirds of my purchase value because of the oil rout as well as my not subscribing to their rights. The biggest dollar loser was PetraFoods, shedding close to 12K. This favourite of mine is said to be affected by the weakness in sales to its key Indonesia market.

Colex was the only stock to register positive gains given the flight to safety. The garbage collector gained 15.4% the whole year or 3.2K in value. Smallest loser was Hong Leong Finance, losing 11.1% or 2K in value.

There were only 7 transactions for the whole of 2015, mostly at the start of the year. Auric Pacific, Etika and UOB-KayHian were offloaded. Hong Leong Finance and KrisEnergy were new stocks to the portfolio. In December, I added some more PetraFood to my portfolio.

HLFinance, Petra and Super Group financial results

Hong Leong Finance

Interest on loans increased 7.7% to SGD 197 million but earnings to shareholder fell 10.4% to SGD 63 million. This is due to an increase in general provision made on its loan portfolio. 

PE ratio remains stable year-on-year at around 17-18.5 times. PB fell slightly to 0.7 times from 0.72 times in 2013. Yield has however fallen to 1.9% from about 3.0% a year ago.

The softening Singapore property market as well as the Singapore economy will weigh heavily on the future prospects of the company. While the stock is priced right, I am placing Hong Leong Finance on my watchlist of stocks to dispose.

Petra Foods

Revenue fell 0.9% to USD 504 million due largely to weaker sales in the regional markets (ex Indonesia). earnings and profit from continuing operations fell 17.8% due to the weakness of local currencies against the US dollar.

PE ratio improved to 38 times from an astronomical 87 in 2013. PB remained almost unchanged at 6.2 times. Yield fell from 2.2% to 1.9%.

The sale of its ingredients division has entered into arbitration as the buyer has sought price reductions. I like the company because it is in the basic foods segment with exposure to the Indonesian market. I will hold on to this stock until there is a big special dividend.

Financial results out for Colex, GMG Global, Hong Leong Finance, Petra Foods and Super Group

Collected my first dividend worth SGD 210 from F&N in February.

By the end of February, most of the Singapore listed-company's 2014 full-year results were out and I will review two of them quickly below.

Colex Holdings

Revenue for this waste disposal and cleaning services company increased 11.5% to SGD 58.7 million due to rollover effects of existing contracts at a higher value and new contracts secured. As a result, earnings less minority interest increased 56% to SGD 4.3 million. The improvement in net profit margins. 

Working on the recent last done price as well as a year ago, PE ratio remains stable year-on-year at around 8.2-8.3 times. PB increased to 1.4 times from 1.1 times in 2013. Yield has however fallen to 1.9% from about 3.0% a year ago.

The company cited manpower costs as the main challenge going forward. I will need to do more research how the various government incentives will impact the compact. Based on the results and ratios, I will say that the company is priced with almost no further upside unless dividend payout increases.