January 2019 – Portfolio Updates (and Some AEM Holdings Stuff)

It’s already mid February, and thus a very late portfolio update. But I was kinda enjoying myself during the CNY holidays that I placed blogging at the back of my mind, as with my laptop from work, for a deserving break. 😁

There’s so much that can change within a month when the stock market is concerned.

In January alone, the STI has recovered to a gain of 2.60% as compared to its drop of -6.63% in 2018. It might be time to start stock hunting again for good deals, and I’m glad that I did manage to get one with Micron Tech, or so I hope I did.

Portfolio Performance

The main movers in my portfolio this month were Micron and AEM in particular. They brought my portfolio a few steps forward from the STI ETF.

See more of my portfolio here.

Time weighted returns: 12.47% against 2.60% (STI ETF)

XIRR: 11.70% overall. (2019 numbers are very high probably because it’s still the beginning of the year and it’s attributed to the high P/L in the past 1+ month of my portfolio)

Micron is surprisingly moving at a rate much faster than I have anticipated it to be. The US market is definitely more volatile, since the minimum buy is 1 share and the volume is much bigger than the kachang putih (peanuts) stocks that we can find in the SGX. I have experienced the stock moving up or down by 5-10% within a day of trading. Nevertheless, as a long term investor, I have to remind myself that volatility is not a reason to become a short term one. I’m glad that I had some emotional training in the SGX for the past 1+ year in this aspect.

Thoughts on AEM Holdings

AEM’s share price also moved up significantly due to rather positive response from the market. It would seem that as the price inches closer and closer to my target price, I should be more eager to sell the stock, yet I feel a small tingling in my nerves that is keeping me from actually doing it. There are a few reasons why.

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1) A Growing Business

When I bought AEM shares, it was more of a value play rather than a qualitative decision. Based on the numbers, there was quite a good margin to get vested at $0.751 per share. I had predicted that the business was probably worth ~$1 then, and it was followed by my decision with a string of unexpectedly great announcements from the company that constantly encourage their shareholders to keep holding on.

In their profit guidance for Q3 Y2018, they have made a prediction of at least SGD 255 million in revenue and SGD 42 million in operating profit before tax. Using these numbers again to value the business, assuming that the share price is now $1, I would say that the business has reached a rather fair valuation.

2) Decent dividend payout

Holding on to this stock long term might reward me in another way – income.

At my buying price of $0.751 per share, the dividend yield hovers in the range of 3.5% to 6%, which is equivalent to a dividend payout of ~13% to 53%. I am sure that with their current balance sheet, they have no reason whatsoever to reduce this as long as they can churn out the same amount of profit. The thing here is that this religious dividend policy was only implemented just 2 years ago, and it is aligned with Point 1 to commit a confidence to shareholders on their earning capabilities in the future.

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The question now I should really ask before I sell the stock now would have to be whether I can foresee the company growing bigger, better and stronger in their fundamentals. Unfortunately, the answer is vague to me at this moment. One thing for sure is that for the past few years, they have became profitable and tried to make a change in their management to create value for their shareholders and gain a competitive edge for their products.

Anyway, AEM Holdings will be releasing their earnings for FY2018 in end of February. I’ll be monitoring closely and then decide what to do next.

Dividends

Nothing too fancy for January except for G3B going XD. Expecting more in February. ^_^

Thanks for reading, and wishing you and your loved ones a lovely “Zhu” year ahead!

Miss Niao xoxo