Maybank Kim Eng Feb stock portfolio update

The STI got off to a strong start in 2018 with a Jan gain of 3.9%, buoyed by broad-based rally mainly across industrial conglomerates (Keppel Corp, SCI), tech manufacturers (Venture Corp), property (CapitaLand, City Dev) and financials (SGX, DBS).

Against this backdrop, our Growth, Value, Yield (GVY) basket of stocks achieved a handsome average return of 8.9%. Excluding the outperforming outlier, AEM Holdings (+48.4%), the portfolio still returned 6.2%, beating the benchmark index by a good margin.

Growth Portfolio / YTD returns
AEM Holdings / +48.4%
China Sunsine / +24.4%
Venture Corp / +12.7%
Hi-P / +5.3%
S’pore Medical Group / +5.2%
Valuetronics / +4.4%
Health Management Int’l / +2.3%
Best World / +2.3%
Average return: +13.1%

The Growth portfolio was boosted mainly by the stellar performance of AEM following its positive profit guidance, backed by growing order book, higher sales, better product mix and operational efficiency.

China Sunsine also chalked up double-digit gains due to improved visibility and better valuations, following coverage from two local brokers in Jan.

Hi-P was included in the portfolio last month as we believe the ODM and EMS solutions provider is set to continue its earnings trajectory in 2018.

Value Portfolio / YTD returns
SIIC Environment / +4.9%
Bukit Sembawang / +3.5%
GuocoLand / +0.9%
Average return: +3.1%

Water treatment player SIIC Environment led the performance for the Value portfolio after it successfully obtained shareholders’ approval for its proposed dual primary listing in HK. This is anticipated to improve valuations given higher relative pricing in HK.

Yield Portfolio / YTD returns
Manulife US REIT / +8.3%
UMS Holdings / +4.9%
Viva Industrial Trust / +3.2%
Asian Pay Television Trust / -1.7%
Micro-Mechanics (exited)/ +12.8%
Average return: +5.5%

We exited Micro-Mechanics from the Yield basket last month following release of below-par 2QFY18 results. While earnings momentum remains strong (1HFY18: +34.6%, FY18E: +18.7%), rising headwinds stemming from the depreciating USD, which accounts for half its revenue, could be a drag going forward. Following its recent share price run-up, dividend yield has dropped below 4%, making its valuation no longer compelling.