Sunday, 10 September 2017

AUGUST TRANSACTIONS

1) Divested NetLink Trust at $0.805, because I expected the cessation of the stabilising purchases to have an adverse impact on the share price, similar to HRnetGroup two months ago. However, on hindsight, this was a speculative decision and probably shouldn't have been a strong reason to exit, given that the fundamentals haven't changed and NetLink's dominant position in the fibre broadband market. 

Since my divestment, NetLink's share price has risen by around 4-5%. The strong performance recently can probably be attributed to expectations that the pace of rate hikes will be slowed, which benefits high dividend yielding stocks, as well as recent tensions around the Korean Peninsula encouraging investors to rotate into less 'cyclical' stocks.  

Thankfully, my loss was a rather insignificant, given that I bought the shares during IPO. This was probably a good learning experience to resist the urge to make speculative trades, and focus on the fundamentals of the company.

2) Redeployed some of my available capital by initiating a small position in Far East Orchard at $1.52. FEO's property development segment may be small relative to the more established property developers in Singapore, but I expect the recovery of the local property market, as evident from the increasing number of en bloc sales, to benefit FEO. The en bloc market here is heating up, with the Tampines Court transaction completed and more developments being put up for collective sale. These are signs that developers expect the property market to pick up, and private home sales has rebounded to a 4-year high.

FEO has been a laggard among the developers, with Capitaland and CityDev showing strong performance this year, and more recently GuccoLand and Frasers Centerpoint too. FEO has been consolidating around the $1.50 level for more than a year already, and I expect FEO to follow the property market to emerge from its lengthy slump.

Furthermore, with the hospitality segment picking up and supply tapering off in 2018, these factors will also benefit FEO's hospitality management segment. With the combined recovery of the property and hospitality segments, it should only be a matter of time before FEO retests the $2.00 level.

3) With the recent correction due to North Korean provocations, some stocks on my watchlist include SATS, Raffles Medical, Jumbo, SingTel, QAF, Sheng Siong, ComfortDelGro and Mapletree Commercial Trust. With the exception of MCT, these stocks are trading close to their 52-week lows, which may present some opportunity. I will post more detailed reports of them if I have the time, as I have been quite busy with school work. 

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