My Portfolio Dec21

 

Summary For December 2021

Portfolio @ End of Dec21

Finally a difficult year 2021 was over. My portfolio was flat in December and ended the year with a small gain of 2.32%.

This result is almost similar to year 2016 when my portfolio registered a 3.2% loss but I felt that 2021 was worse than 2016.

This is because I started year 2016 badly with a 10% loss in the first month. However, it improved from the second half and ended the year with the least loss.

In 2021, it was the opposite of 2016 as my portfolio started the year with a bang with 35% gain in the first month only to see the gain evaporated to just 2.3% by the end of the year.

Generally I feel relieved that I'm still able to stay in positive territory in year 2021 but at the same time also feel disappointed.

Last month was a "buy" month in which I bought in 4 companies' shares but this month is a "sell" month in which I sold the shares of 4 other companies.

With this move, I have reduced the total number of stocks in my portfolio to 14. There are still 4 stocks that I planned earlier to dispose in year 2021 but failed to do so.

My Portfolio Oct21

 

Summary for October 2021

Portfolio @ End of Oct21

October 2021 was a good month for KLCI which advanced 1.6%. My portfolio has done quite well too with a gain of 6.6%, lifting year-to-date gain to 15%.

Major event in October should be Budget 2022 which was announced on 29 Oct21. Again, it's a budget of distributing money which does not benefit me directly.

The government has increased the stamp duty of share trading from 0.1% to 0.15%. If a trader or investor buy RM10,000 worth of shares, he/she has to pay RM15 stamp duty instead of RM10.

Luckily there was no capital gain tax on profit from stock market trading.

"Prosperity Tax" or "Cukai Makmur" is introduced in which listed companies who earn in excess of RM100mil in year 2022 has to pay 33% tax for profit above RM100mil. Profit below RM100mil will be taxed as usual at 24%.

In my current portfolio, I think only Hibiscus, Jaks, MFCB, Scientex & Supermax fall into this category. It's an one-off tax anyway.

Meanwhile, SST exemption of new vehicles has been extended to the end of June 2022 but House Ownership Campaign (HOC) was not extended beyond 2021.

This is rather a bad news to property sector. Could we see a rush in property purchase before the end of this year? I guess so.

Anyway, RPGT was abolished for the sale of property after 5 years of ownership.

These are the items that are more relevant to me in Budget 2022.

My Portfolio Sep21

 

Summary For September 2021

My Portfolio @ End of Sep21

The performance of the stocks in my portfolio in September is mixed, with nine gains and nine losses.

Overall my portfolio lost 1.2% in this month.

The worst performer is Supermax which suffered a 27.5% drop. I didn't follow its share price closely and was actually quite shocked to realize how low it has gone.

Nevertheless Supermax has a 15-sen dividend ex-ed in Sep21.

Even though I don't have a lot of Supermax shares, it's still a disappointment to me. 

On the other hand, the best performer is DKSH which gains 19% but I also do not own a lot of its shares.

My Portfolio Apr21

Summary For April 2021

Stock Portfolio @ End of Apr21

Time flies and we are almost half way through the "recovery year" of 2021.

In the final quarter of year 2020, I was optimistic about recovery from the pandemic in 2021. I visualized that in the middle of 2021, we would lead an almost "normal" life.

However, the reality is far from that. Daily new Covid-19 cases soar pass 3000 now, from 1000+ cases in March.

Perhaps due to the start of vaccination program since February and significant drop in new cases in March, people are getting more slack in adhering to the SOP.

Anyway, the pandemic will be over one day. Year 2021 might be a transition year while 2022 will be a real recovery year in term of our daily activities.

Stock portfolio performance wise, it's a "not bad" month for me in April, as overall portfolio gains 4.56% in a month.

Coastal: Navigates On Rough Sea

Coastal Contracts is one of the company that I like.

Its business is relatively simple and is easier to understand. 

Although it has 2 divisions namely shipbuilding and vessels chartering, contribution from the latter is negligible.

So, Coastal builds and sells boats/ships, it's that simple.

The performance of Coastal (and its stock price) will depend on how many orders it can get and how well it can grow/protect the profit margin.

The vessels that Coastal build can be used in various fields including Oil & Gas, logistics etc. 

However, since a big chunk of its orders and profit come from customers in O&G sector, Coastal is usually "classified" as an O&G stock.

Thus, it can't escape recent sell-down in O&G stocks amid low crude oil price.

Table below shows Coastal's past financial performance.

Coastal has a great track record, and I think its management team is brilliant.

Since listed in 2003, Coastal produces uninterrupted revenue growth for 11 consecutive years til 2014 apart from a slight RM1.8mil revenue drop in 2013.

However, net profit reached a peak at RM200mil in year 2010 and this record remains to be broken until now.

Why is it so?

In mid-2008, crude oil price fell sharply from its peak of USD140 to below USD50 in just a few months time. Isn't it almost similar to current situation?

Though I rarely read any financial news that time, it's not hard to guess that O&G sector was in deep shxt then.

How did it affect Coastal?

In 2008, Coastal's outstanding orders (unbilled orders) in shipbuilding stood at RM1.7bil, which was even higher than recent high of RM1.5bil.

This showed how robust O&G industry was before it crashed in 2008.

Coastal still manage to secure RM698mil new orders in 2008 but they were mainly in the first 3 quarters.

After that, new orders plunged substantially in which it could only get RM119mil new order in 2009 and then ZERO order in 2010.

The bar chart below shows Coastal's new orders and approximate unbilled orders since FY08 to first half of FY15.

Just like a property developer, if the sales is poor in this year, then we can expect poor financial results in about 2 years time.

Furthermore, competition to fight for orders among shipbuilders was intense at that time thus profit margin was eroded.

This may explain why the revenue still grew but in slower pace and net profit fell from 2010 to 2012.

Crude oil price recovered quite swiftly since 2010 and new orders started to flow in again from year 2011 and peaked in year 2013 with RM1.495bil of new orders in year 2013 alone.

Profit margin also increases due to more orders for higher margin & high-specification offshore support vessels (OSV) used in O&G industry.

Since new order of RM197mil secured from a new Mexico customer in Q1 of FY15, there is still no news of further orders until mid-July 2015.

Though it is good that Coastal can get a new customer, further new orders seem hard to come by as crude oil hit new recent low after news of Iran sanction lift.

Unbilled order has dropped to RM1.01bil and surely it will drop further to around RM700-800mil when Q2 result is announced next month.

Nevertheless, Coastal will have a new stream of income starting from second half of FY15.

I view it positively when Coastal started to venture upstream in O&G sector a couple of years ago.

In Feb 2014, Coastal has secured a charter contract for a Jack-Up Gas Compression Service Unit (JUGCSU) worth RM1.24bil for 8+4 years from a Mexican customer.

Construction of the JUGCSU is on track and set to be delivered in Q3 of 2015.

It is reported that this contract is estimated to deliver profit (pre/post-tax?) of RM30-40mil a year to Coastal.

It will still be a good recurring profit even though it is not that much if compared to FY14's net profit of RM190mil from shipbuilding.

Meanwhile, Coastal is also building 2 Jack-Up Rigs in which it targets to charter to other O&G companies.

However, it can't find a suitor thus the first JU Rig which is to be completed in Q3 of 2015, was sold in April 2015 for RM807mil. Net profit from this sale is not expected to be too significant from RM10mil (Alliance) to RM30mil (Kenanga).

Coastal still intends to secure a charter contract for its second JU Rig pending completion in end of 2015 but it may still sell it like the first rig.

If the rig is kept without generating income, there will be a sum of maintenance and depreciation charge involved which will harm its financial results.

Despite poor sentiment in O&G industry, Coastal's plan is clear.

First, it has a mission to reach RM5bil in market capitalization in medium term. For this to happen, its share price need to be at least RM8.50!

Its current share price and market cap stand at RM2.51 and RM1.35bil respectively.

Secondly, it will continue to look for more opportunities in O&G upstream activities, such as to own and operate jack up drilling rig, mobile offshore production unit or floating production unit/rig.

Coastal has already owned one upstream O&G asset. Can it get another contract for its JU rig by year end?

It is recently reported that it is in talks with several parties for potential merger & acquisition to grow the company inorganically.

Is it the right time to invest in Coastal? I think no one can answer this question confidently.

I learned that crude oil price is deliberately depressed by OPEC to gain more market share by forcing out less efficient US shale oil producers. Can it be done in such a short period of time?

Iran sanction on oil export is going to be lifted. How low the oil price can go after this and how long will it stay low?

Coastal does not pay attractive dividends. It paid 7.2sen dividend for FY14 which is 20% of its net profit.

Even though its share price has dropped to RM2.50 level again, dividend yield is still not that great at 2.8%.

It posted a superb result in FY15Q1, in which both quarterly revenue and net profit hit record high by a huge margin.

This is mainly due to more high margin OSVs (5) delivered in the quarter. Subsequent quarters are not expected to match FY15Q1 performance.

Balance sheet is healthy with plenty of net cash after getting RM207.8mil from private placement in Mac14.

Coastal's share price has fallen more than 50% from its high of RM5.40 in Aug last year to RM2.51 at the moment.

With FY14 EPS of 36.7sen, Coastal is currently traded at PE of merely 6.8x base on share price of RM2.51.

Fair PE for O&G sector should be at least 15x, isn't it?

Anyway, history has told us that Coastal will bounce back along with crude oil price.

It may come back stronger with its ambitious expansion plan.

The question is: When?