Saturday, June 30, 2012

June 2012 Singapore Dividend Portfolio Update

S$143.42 dividends received.
(Cambridge Ind REIT: S$23.42;  AIMS AMP Ind REIT: S$108;  Lee Metal Group: S$12)


Bought 2 lots of Sakari @1.41 & @1.17 respectively.

Portfolio Snapshot:
No. Counter Cost
(S$)
Lots Avg Px
(S$)
% of
Port
Mkt Px
(S$)
Mkt Value
(S$)
P/L
(S$)
P/L
(%)
1 Sakari Resources 7,987.74 5 1.598 20.00% 1.365 6,825.00 (1,162.74) -14.56%
2 SMRT 5,669.62 3 1.890 14.19% 1.690 5,070.00 (599.62) -10.58%
3 AIMS AMP Ind REIT 4,186.95 4 1.047 10.48% 1.200 4,800.00 613.05 14.64%
4 Sabana REIT 3,745.36 4 0.936 9.38% 0.975 3,900.00 154.64 4.13%
5 StarHub 2,858.20 1 2.858 7.16% 3.420 3,420.00 561.80 19.66%
6 InnoTek 2,574.78 6 0.429 6.45% 0.390 2,340.00 (234.78) -9.12%
7 First REIT 2,497.25 4 0.624 6.25% 0.915 3,660.00 1,162.75 46.56%
8 GRP 2,364.68 12 0.197 5.92% 0.215 2,580.00 215.32 9.11%
9 Kingsmen Creative 1,679.22 3 0.560 4.20% 0.680 2,040.00 360.78 21.48%
10 UMS 1,467.48 3 0.489 3.67% 0.405 1,215.00 (252.48) -17.21%
11 Lee Metal Group 1,317.41 6 0.220 3.30% 0.215 1,290.00 (27.41) -2.08%
12 Tai Sin Electric 1,167.33 6 0.195 2.92% 0.200 1,200.00 32.67 2.80%
13 Memtech 1,062.00 12 0.089 2.66% 0.075 900.00 (162.00) -15.25%
14 Cambridge Ind REIT 825.93 2 0.413 2.07% 0.570 1,140.00 314.07 38.03%
15 Mapletree Log Trust 542.18 1.08 0.502 1.36% 0.980 1,058.40 516.22 95.21%
  39,946.13         41,438.40 1,492.27 3.74%

Saturday, June 16, 2012

Accounting games companies play

In The Edge Financial Daily Today 2012
Written by Goola Warden of The Edge Singapore
Thursday, 14 June 2012

Key article highlights:
  • It is possible for investors to identify the "accounting games" companies play by reconciling their revenues and earnings with their cash flow statement and balance sheet.
  • Reported revenue and earnings albeit easily manipulated, impacts figures on balance sheets.
  • Legitimate sales and real earnings booked results in increased cash on the balance sheet; unreal revenues and earnings however, inflates the accounts receivable figure.
  • An annual 10% revenue growth accompanied with 20% to 30% accounts receivable growth poses a big problem because the company will never get the cash.
  • This manipulation technique is likely to be used by companies whose business have a significant time lag between signing contracts and actual delivery of the product or service.
  • Companies with an unexpected surge in sales towards the end of a financial year should be looked out for.
  • 'Bill and hold' sales allowed Sunbeam to meet revenue and earnings expectations but was essentially fraudulent as their inventory of barbeque grills stockpiled.
  • Investors should read every line of a company's financial statements, check all the footnotes and try to understand the company's policy for recognising revenues, earnings, depreciation and accruals.
  • Artificially lowering reported expenses to achieve revenue boost results in telltale balance sheets.
  • America Online's floppy disks to get signups, an advertising expense that should have been in the income statement, ended up as deferred customer acquisition cost on the balance sheet.
  • Inventory consistently growing faster than sales could be a sign that the cost of goods sold on the income statement is understated thereby boosting reported earnings.
  • Investors ought to have a healthy skepticism of any move by a company to revalue assets on its balance sheet, especially commodity and agricultural companies.
  • Bre-X, a mining company, kept increasing the estimates of the size of its supposedly Indonesian gold deposit. Eventually, it met with a share collapse when earlier ore samples from its mine had been found salted with gold dust.
  • Ordinarily, cash should be coming from the operation of the business and going to investments for the future and repaying debt, that is, investing cash and financing cash flow.
  • Cash flow classification tricks, however, overstates the operating cash flow instead of the investing or financing cash flow (e.g. classifying tax expense as capital expenditure).
  • WorldCom's payment for use of third-party satellites expense was classified as an asset under property, plant and equipment on the balance sheet (instead of an expense in the income statement) and cash outflow as a result of investing activities (instead of operating cash outflow in the cash flow statement) resulted in overstated earnings, overstated operating cash flow and an increase in assets.
My view - an investor is essentially risking his money when buying any company's shares. While there is potential capital growth and cash flow from dividends, adequate pre-investment due diligence and post-investment monitoring must be conducted. Periodic review of financial statements can serve as a means to uncover any irregularities on the company's operating state of affairs.

Saturday, June 2, 2012

May 2012 Singapore Dividend Portfolio Update

S$854.97 dividends received.
(Memtech: S$48;  Sakari: S$72.81;  InnoTek: S$300;  UMS: S$90;  StarHub: S$50;  Lee Metal: S$60;  Kingsmen: S$75;  Sabana: S$90.40;  Mapletree Log: S$18.36;  First REIT: S$50.40)

Bought 6 lots of Memtech @0.08 and 2 lots of Sakari @1.74 & @1.53 respectively.

Portfolio Snapshot:
No. Counter Cost
(S$)
Lots Avg Px
(S$)
% of
Port
Mkt Px
(S$)
Mkt Value
(S$)
P/L
(S$)
P/L
(%)
1 SMRT 5,669.62 3 1.890 15.20% 1.620 4,860.00 (809.62) -14.28%
2 Sakari Resources 5,352.93 3 1.784 14.35% 1.450 4,350.00 (1,002.93) -18.74%
3 AIMS AMP Ind REIT 4,186.95 4 1.047 11.22% 1.140 4,560.00 373.05 8.91%
4 Sabana REIT 3,745.36 4 0.936 10.04% 0.950 3,800.00 54.64 1.46%
5 StarHub 2,858.20 1 2.858 7.66% 3.240 3,240.00 381.80 13.36%
6 InnoTek 2,574.78 6 0.429 6.90% 0.405 2,430.00 (144.78) -5.62%
7 First REIT 2,497.25 4 0.624 6.69% 0.880 3,520.00 1,022.75 40.96%
8 GRP 2,364.68 12 0.197 6.34% 0.215 2,580.00 215.32 9.11%
9 Kingsmen Creative 1,679.22 3 0.560 4.50% 0.650 1,950.00 270.78 16.13%
10 UMS 1,467.48 3 0.489 3.93% 0.400 1,200.00 (267.48) -18.23%
11 Lee Metal Group 1,317.41 6 0.220 3.53% 0.210 1,260.00 (57.41) -4.36%
12 Tai Sin Electric 1,167.33 6 0.195 3.13% 0.195 1,170.00 2.67 0.23%
13 Memtech 1,062.00 12 0.089 2.85% 0.080 960.00 (102.00) -9.60%
14 Cambridge Ind REIT 825.93 2 0.413 2.21% 0.540 1,080.00 254.07 30.76%
15 Mapletree Log Trust 542.18 1.08 0.502 1.45% 0.975 1,053.00 510.82 94.22%
  37,311.32         38,013.00 701.68 1.88%