Falcon Energy (5FL.SI)

Falcon Energy (5FL.SI) - One of the forefront in offshore marine and also O&G sector. It is divided into 5 business sectors namely, Marine, Oilfield Services, Drilling Services, Resources Division and one more that I couldn't find (LOL!). All this, you can read from their company website. Essentially, Falcon Energy feels like Nordic Group which provides O&G support services yet has a more direct exposure to oil prices through the Drilling Services and Resources Divisions.

I started searching for an O&G company as I wanted to gain some exposure to the potential oil price movements. Truthfully speaking, I did not do any deep research into oil prices. But seeing how far it has come down and the relative stability now, I wanted to capture some gains when the industry move into the up-cycle again. And I chanced upon this stock - a rare profit-making O&G company amidst the gloom and doom. Below are some of the points I like about this company:

1. Financial Metrics

Easiest go-to method to valuate a company from the surface. Was really too lazy to predict cash flows with expected oil prices etc. The ratios I calculated were really impressive till I started to doubt the going concerns of the company (the ratios were like that of a distressed company)!

Based on the time I did my calculations, where the price was at 17.2 cents and data obtained from the latest FY report,
EPS: 6.45 US cents
P/E: 1.975
P/B: 0.348
Debt/Equity: 0.9854
Dividend: $S 0.005 (2.9% yield interim)

In this set of data, it only seem that debt-to-equity ratio is high. I give it leeway as it is expected for O&G company to have significant debt, especially in these trying times. In addition, this 2016 figure is actually lower than 2014 and 2015, having paid off a sum of debt in the latest quarter. P/E and P/B is super impressive and actually needs no explanation. In the final dividend, I will guess that another half cent of dividend will be given out, ending with a near 6% yield. Warren Buffet had always like to buy stocks with significant higher book value and I actually think Falcon Energy fits the criteria.

2. Stake in CH Offshore

Falcon Energy actually owns 86.7% stake in CH Offshore, another listed firm on SGX. When I was doing this research on Falcon Energy, the market cap of the company was 139.2M while that of CH Offshore was 282M (sitting at 275M as of 06/07/16). This means the stake Falcon Energy has in CH Offshore is worth at least 244.5M! That's right, the market is selling the core operations of Falcon Energy for nothing and its stake in CH Offshore is valued at discount! This is the singular most blatant mispricing of Falcon Energy which I didn't believe. And if I calculated wrongly anywhere, please let me know to save me the money and embarrassment.

3. Share Repurchases

The company is aggressively doing stock buyback since 17 June 2016. The volume of the stock traded is not high, hence by aggressive, I meant as a percentage of the transacted volume that day. I suspect the company is doing so to meet the minimum trading price of 20 cents and since the volume is so thin, the company is able to do so easily - since there is little sellers blocking the queue. This is an situation that can be taken advantage of as the company is essentially being a guarantor of your entry price. It started doing buying back at ~16.8 cents till 19.5 cents today. In the last 2 days, it seems that there were some public support. As of now, still monitoring closely to see if the company is still going to support at current price.

 4. Conclusion

I had actually bought in at 17.7 cents on 27 June 2016, which I vaguely remember as the day Brexit occurred. I figured if it did not drop at such a dramatic event, surely it will grow when things got better. As my buy-in capital is small, I am not very tempted to take profit at current price. I hate to write this post as I do not want to jinx it (things are still going well) but in the spirit of sharing and also in the spirit of not being accused of hindsight-predicting, I have decided to write this post in the end.

NOTE: This post is not to comply you to buy the above-mentioned stock. Notice the price has actually gone up. Do your own due diligence before you take any action. To make sure you do indeed do your homework.... yes if you buy, you are helping me to prop up the share price!!


Cheers

My Stock Holdings (March 2016)

After a long wait, I can finally sit down and count my gains for the month of March! With the Singapore stock market in the doldrums for the first two months, there were finally some rebound even though I did not enter anything prior to it. However, as I also did not let go of any stock, it meant my portfolio clawed back some gains.

This also highlighted how investing is actually advantageous to constant trading. According to this article, missing just the best ten days of S&P in the period between 1993-2013 will cost the investor a 3.8% drop in annualized returns. While many will argue that trading is better as one can let go of stocks at the highest and buyback at a lower point, I can assuredly say that I neither have the skills nor the time. Hence, as a student and eventually a working adult, passive investing will still be the way to go.

On the matter of dividends, I received a total of $227.42 for the month of March. This amount was disbursed from HPH Trust, SingPost and Karin Tech. Hence for the first three months, the total dividends received comes up to $261.57, a little over a quarter of my dividend goal this year.

Also, I had bought GLP on 31 Mar 2016 for a cost of $1.955. A little high, but through the average of valuation methods which I may subsequently write about,  the fair value price of GLP I came up with was actually $2.42. Coupled with GIC being the majority shareholder, I feel that there is some merit to the purchase of GLP. With the addition of GLP, the breakdown of my portfolio is shown below. Let's hope 2016 is a good year for all in the stock market =)

My Stock Holdings (February 2016)

Whew, busy month with Design Project, FYP Presentation, projects, tutorials, midterms. For record sake's, I have come online to record this short entry of my stock holdings in February. Whilst the market condition is still bad, there is a restoration of stability and hence marginal growth.

In the month of February, Keppel Reit has declared a dividend of $0.0168 per share. I chose to reinvest this dividend through the DRP. While filling up the form, I realised that I can allocate the shares I own to either 1) Receive the cash dividend OR 2) Receive new shares. Knowing this, I can allocate some of my share to receive cash dividend while still receiving the same number of new shares. This is possible because there can be no shares lower than 1 and is thus rounded down. Might as well use this spare shares to receive the cash dividend! The amount is not huge, but I hate to give away free money.

Therefore, the first dividend I received this year will be $34.15. The start to my $1000 dividend aim for this year. Below is my stock holdings at the end of February. Noticeably, HPH Trust has fallen in overall value to stand below Keppel Reit.

PS: I finally found a job!

My Stock Holdings (January 2016)

Below is my portfolio distribution for the first month of 2016. Here's to a better investing future for the rest of the year! 

From the start of this year till end of January, the main movement was me selling Bank of Ireland in favor of Karin Tech. The sale of Bank of Ireland was triggered by the disappointing lack of positive push to the stock. Though the economy for Ireland and Europe had been improving for a while now, with stable dividend on the way, it had not translated into positive movement for the stock. The premise of me buying Bank of Ireland back in 2014 was based on the improving economy in Ireland as well as the improving of the bank's balance sheet. Both events happened without any significant price increase. Hence by referring to my buying motivation, I had realised holding the stock by this point, meaningless. This also serves as a good lesson for readers out there that when buying stocks, remember to write down your reasons for writing it. Periodically review it to see that the reasons are still valid and if the reasons are not valid anymore, consider selling it. 

Following the previous post about Karin Tech, I have decided to add the stock into my portfolio for the strength of management, resilient earning power, advantageous foreign exchange and good dividend. However, from the announcement from the company on Wednesday, I might have misjudged the strength of the business itself. Profits from Karin Tech plunged approximately 80% due to softening consumer electronics product. I had reservations about that section of business due to the low economic moat, but I did not expect it to drop so much. Nevertheless, a dividend of 0.05 HKD translate to a half year dividend yield of 3%. This is sufficient for me to consider holding it for longer periods of time. A warning to any investors though, the stock had fallen below the 3-year low of $0.285. Hence, a short term investor may have problem holding it. 

HPH Trust has also announced their results recently with a drop of dividend. A constant worry of mine is the huge debt of HPH Trust. Though HPH Trust has good dividends in the past years, the stock price drops along with the dividend and I wonder if the dividends/business is sustainable in the long year. I will be reviewing this stock with more spare time. 

SingPost announced marginal growth in profit despite higher revenue. It is really frustrating that profit does not grow proportionally with revenue. Logistics can be a lower margin business. However, having waited over 2 years for profit catch up, it does not appear to be happening. Management guided that "transformation" is finalizing and it is time to reap its fruits of labor. With the departure of Wolfgang Baier, I really wonder how the company is going to fare in the future. If not for my wonderful entry price, I may have sold this stock already. Perhaps I sound salty, but the downgrade from OCBC is infuriating. Within a quarter, the bank has conveniently slashed $0.82 off the target price of SingPost. While details has been lacking for the justification of the new TP, I find it unbelievable that the cut is so much within a quarter. Makes me wonder do the research house just see.... "heyyyy, the current trades so far from our TP. I think it's time to cut it nearer to current price to stay relevant." Also, I don't see eye to eye with people stating that dividend has increased from 1.25 cents to 1.5 cents. This is because it had been declared by SingPost since 1 year ago and should have been factored into stock price long ago. Don't mislead potential investors.

-End of whinings-

With the removal of Bank of Ireland, my portfolio has transformed into a full dividend machine and I hope I can meet my dividend target this year. The Year of Monkey should be good to people born in the Year of Goat and I hope it is true! So Happy Chinese New Year all! Have a prosperous year ahead!!

My Stock Holdings (June)

June has been a busy period for me as I was busy packing stuff to go back to Singapore. It seemed that this month has been a volatile month due to the effect of Greece flirtation with the possibility of default.

ST Eng's price was pushed to a low of 3.24 before recovering recently to above 3.3, which is my average buy-in price. Many people in forums have expressed the opinions that ST Eng is richly valued in terms of P/E and P/B. I had see that the valuations are rich but dividend yield remains good. Given time, perhaps I'll see whether its dividend policy is sustainable and whether cash holdings is decreasing. 

Singpost also recovered its price dip to above 1.90. This can be attributed to annual dividends increasing to 7c from 6.25c previously. Also, it divested some of its traditional business for a profit and that might also had lead to price increase. There's some points I'd like to read up on Singpost given time and they are listed as follows: 

• Sustainability of dividend
• Debt obligations and dividends against earnings
• P/E and P/B valuations (Benjamin Graham had advocated sale of share when it reaches overvaluation state. Therefore, I want to see if Singpost is grossly overvalued and warrant a sale. It is unlikely though, as I regard Singpost as my crown jewel. I know falling in love with stock is no good..)
• Review growth of earnings (can be quite hard as Singpost recently changed its accounting practice)

Lastly, HPH Trust has been slowly dipping through the month of June while Bank of Ireland closed pretty high at the end of June amidst signs of Greece coming out of the talks with a solution. 

There was no dividend issued for the month of June. Hence, dividend received remains at $278.25


**Edit: Chart removed because I set it to update with latest information -- not accurate info

My Stock Holdings (May)

Many companies are reporting their financial results this month and this lead to some price fluctuations. In my portfolio, all had reported their results with the exception of Bank of Ireland. As of now, I have no intention to sell any stock in my holding based on the results. Hence barely any change in the composition of my holding.

Also, I'm scouting for good stock to add to the portfolio and will buy in when I return to Singapore from my exchange.

One of my criteria for buying a stock is that it must give out dividend. Singpost, ST Eng and HPH Trust gives out dividend in my portfolio. Bank of Ireland is an exception as I recognise that it is a high growth stock and does not necessarily need to give out dividend.

As of May 2015, I received a total dividend of $278.25

**Edit 1: Revised dividend amount to a lower value as I accidentally calculated dividends I haven't receive.

**Edit 2: Chart removed because I set it to update with latest information -- not accurate info

My Stock Holdings (April)

Starting this month, I will try to show my monthly portfolio in this blog.

Whenever I buy or sell a stock, I will try to justify the cause. My investing mantra lies between an investor and a trader. Therefore, you'll see quick transactions on some stocks while others may be there for years. So here's my portfolio for this month!

**Edit: Chart removed because I set it to update with latest information -- not accurate info