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Sunday, 30 March 2014

Cash - Closing Status 28 March

Divested away SingPost 5 lots in this week from my Cash portfolio for a nett gain of $65 as part of regular portfolio re-balancing.  In its 3Q2014 results, revenue +30.2%, Profit +0.7%.  Higher revenue because of contributions from acquisitions and growth in e-Commerce related activities across the business segments.  Total expenses +36.6% mainly attributable to the change in business model to a diversified group and growth in lower margin businesses.   It has been taking proactive measures to manage costs including the implementation of shared services and productivity improvements to achieve considerable savings and be more efficient, although rising manpower costs continue to be a challenge.  Finance expenses -43.0%  as it had repaid the $300 mil bond in Apr'13.  Its focus is on building end-to-end e-Commerce logistics solutions in the region - freight, warehousing & fulfillment, last mile delivery & returns and front-end web solutions.  Several other major customers have come on board to leverage its e-Commerce solutions including Canon, Philips and Toshiba.  It expects good growth potential in this space and is ready to tap the opportunities.  In a recent Standard & Poor's announcement, SingPost rating got lowered to 'A' from 'A+' on continuing business risks; and outlook Stable.  The stable (previously, negative) outlook reflects S&P's expectation that ongoing business transformation will prevent a material decline in SingPost's profitability over the next 12-24 months.

Divested away AIMS AMP Industrial Reit 1 lot in this week for $28 nett gain as part of usual portoflio re-balancing.  In its 3Q2014 financial results, NPI +26.6%; available distributable income +29.6%.  DPU +7.4%.  Its NAV as of end Dec'13 was at $1.5183 and its last done share price on this Friday is already at a discount at $1.36 (partly due to recent Rights Issue effect).  Portfolio occupancy rate at 98.2% as of end Dec'13.  Only 2.6% of NLA expiring in 2014.  Redevelopment of its Defu Lane 10 property on schedule and within budget and TOP is expected in May'14; expect income contribution in Sept 2014 quarter.   For the development of phase 2e and 3 of its Gul Way property which upon completion will likely resulting 8.17% NPI yield on cost. 

Reduced HPH Trust 2 lots in this week as part of usual portfolio re-balancing for $52 nett gain; total holding in it now at 4 lots.  Attractive valuation after recent share price correction.  In its 4Q2013 revenue -0.8% and profit -34.2% versus last year.   The average revenue per TEU for Hong Kong came in lower due to one-off concession granted to liners after industrial action in HIT port;  also came in lower for China due to adverse throughput mix of containers from liners.  Cost of services rendered +10.3% and Staff costs +12.5% due to RMB appreciation, inflationary pressure, higher container throughput and ACT's staff costs after the acquisition.  Its end of Dec'13 NAV at HKD 7.26 (approx. SGD 1.19); last done share price on this Friday at $0.835.  Growth in the US and Europe is a major factor in determining the total volume of containers handled by HPH Trust.  Consensus outlook for both is favourable in 2014.  Recently it has established a joint venture and strategic alliance with COSCO Ports (ACT) Limited (a subsidiary of COSCO Pacific Limited) and China Shipping Terminal Development (Hong Kong) Company Limited (a subsidiary of China Shipping  (Group) Company) respectively through their investments of 40% and 20% in HPH Trust’s wholly-owned subsidiary, Asia Container Terminals Holdings Limited, and their acquisition of corresponding proportions of existing loans owing to a subsidiary of HPH Trust by the ACT Holdings group for an aggregate consideration of HK$2,472,000,000 (equivalent to approximately S$403 million).  The JV Alliance, has resulted in a reduction of HPH Trust’s effective interests in ACT Holdings from 100% to 40.0%.  The establishment of the JV Alliance is an important and significant milestone achievement for both HPH Trust and the Hong Kong container port industry as a whole in that (i) not only does it yield a disposal gain of approximately HK$125 million (equivalent to approximately S$20 million) for HPH Trust, (ii) by securing this collaborative and strategically beneficial relationship with both COSCO Pacific and China Shipping, it allows all four berths located at the COSCO-HIT Terminals and the Asia Container Terminals to be operated as one contiguous 1,380 metre long berth, thereby enhancing Hong Kong’s position as a long term transshipment hub within the Pearl River Delta region compensating for the stagnant growth in South China’s transshipment and export volumes in 2013, (iii) servicing multiple mega vessels at this contiguous berth simultaneously is now possible, and (iv) the operational flexibility, efficiencies, synergies, competitiveness, and ultimately profitability of all relevant Hong Kong port operators are expected to be substantively bolstered. 

Portfolio walk since previous posting :-

+$2,360 Total Returns as of 21 March

+$145 Nett gain on sales of HPH Trust, AIMS AMP Ind Reit, SingPost

+$771 Unrealised positions improved

+$3,276 Total Returns as of 28 March

Previous posting :- Cash - Closing Status 21 Mar

Remarks :- Profits locked in to-date $12,954 / year 2014 $1,462

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