Wednesday, 20 July 2016

Portfolio Update: Purchased Frasers Centrepoint Limited

Since after almost 2 months from the last post about my observations on Waterway Point, 穷小子 finally managed to get a small position today.

The current book value is about $2.66. With based on today closing price of $1.52, I am quite comfortable with the 0.57 of the book value.

As mentioned in the previous post, there are 2 minor concerns which need to be considered before making the buy call. Low liquidity and High Debt.

Low liquidity
The low liquidity is not much of a concern to me. Having an intention to hold it for long-term, and since is a small position only, quite confident that I will be able to sell it at my target price in the far future.

High Debt
Based on the latest quarter report, the Net Debt/Equity is 87.5%, an increased from the previous quarter of 83.8%. 穷小子 is not that good in his fundamental analysis, but this seems to be a minor red flag. Looking forward to see a lower ratio in the next report with the recent IPO of Frasers Logistics & Industrial. Of course this shouldn't be the only measurement to gauge a company, will check on their upcoming report and keep track of it.

On the side track, notice that the 2-year low price is actually at $1.40 only. Did a simple maths calculations.
If the price really came down to this price (*touch wood*), it will be a 7.9% drop. With today closing price at $1.52, it will have a dividend yield of 5.66%. Hence, 2 years of dividend will be sufficient to cover it.
This purchased is about 4.5% of 穷小子's total portfolio only. Shall understand further on the upcoming report before adding any new positions.

Not to confused, its with the symbol TQ5

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