Bienvenida SK Petro, adious SunREIT

The past few weeks were disaster for the market. Luckily the local funds managed to prop up the market and stop the slide. As I said in the last post, the market will continue to be volatile for the next one or two years. So cash will be handy soon. I think the oil price has sort of stabilized at 50-60 USD level and will not drop any further because if it drops further, even the Saudis will be hurt badly.

During this month, I have actually done some transactions. However, due to the activities at the new company, I did not have time to update till today. Last week I sold off the 5000 units of SunREIT @ RM1.50 and then added 2000 units of SK Petro @ RM 2.25 into Huat Fund.

This is an opportunistic (aka risky) buy and I did not do much research beforehand. All I know about SK Petro is that it is one of the biggest integrated oil & gas services and solution provider. Yes, the oil price has halved in this year but the share price has plunged from RM4.96 to the RM2.00 at one point. See picture below. I suspect the gigantic slide in SK Petro share price is due to the high foreign shareholding too. I see some rebound in SK Petro soon=).

Huat Fund looks like this as of today:

All in - Huat Fund fully invested~~

I am jobless for this week due to my second job-hopping for the year. Thus, I have some free time to do some readings, analyzing works and market watching.

So firstly some market comments: In my honest opinion (IMHO), the market will be increasingly volatile for the next one or two years but overall the market will keep on rising as long as the interest rate is kept low. A 20% to 30% annual return will continue to attract more newcomers like me into the market to earn "quick money". As more newcomers come into the picture, the arrogance and greed in the market grow. Then we will see another severe market correction in maybe 2-3 years time.

Based on this hypothesis, I have decided to tinker abit with Huat Fund and insert more stable and mature stocks and make Huat Fund to be more dividend yield orientated. That means I will only invest in growth stock IF there is a gem out there. Ideally I would like to do these changes slowly. However, I had to move faster since one of my favourite stable stocks Westport is having a run for the past two days.

I reckon this is due to a 67pages research report from CIMB with a Target Price of RM4.57. FYI, I still have not read through this report. A summary of the report in TheStar can be found here. Knowing that CIMB has joined the bandwagon, I got excited and bought another 1000 units of Westport @ RM 3.40. Well, this is the side effect of intensive market watching. Your hand tends to get itchy after a few minutes in front of the screen. Anyway, Westport is a stock that is worth investing for a simple fact that it would certainly earn more in 5 years time down the road compared to today's earnings.

After this transaction, Huat Fund is cashless and fully invested. I have to sell off something to increase the cash level soon. Guess which stock will be axed soon. The fund looks like this as of today:

Averaging down - Jaya tiasa

Last week I bought additional 2000 units of Jaya Tiasa. This is in anticipation of the stronger demand for palm oil from developing countries like China and India next year and the implementation of B7-Biodiesel in Malaysia.

After this purchase, the cash level of Huat Fund is low again. I might need to sell some stocks when the rights issue for Inari comes. The Huat Fund has recovered from the stock slump for the last few weeks. Huat Fund looks like this as of today:

First annual review FY2014

Today Huat Fund turns one year old.

When Huat Fund first started last year, the stockmarket was having a run and it was not easy to pick a stock. Smallcap stocks were pricey, relative to pre-GE13. I mostly focus on smallcap stocks as their potential capital gain are higher than those blue chip companies. It took some intensive fundamental research and sleepless nights before I took the first step to invest using the fund money. Boy, it did turn out well after all. Today, Huat Fund celebrate it's first year. Fortunately, Huat Fund is able to fulfill it's minimum return rate of 10%.

The capital amount in the fund has also grown. The starting capital of this fund is RM50k. In July 15th, the fund received an RM20k injection from Sis Ying. So now the fund capital is RM70k.

The past year has been a very good year with the fund size reaching just over RM100k in middle of August. The recent market correction has seriously affected Huat Fund and as of today, the fund size has shrinked to RM84k. In a new twist, the major shareholder has requested to cash in the 10% return or RM5k. So the fund size will dwindle to RM79k after this payout.

Fund Portfolio at 15.10.2014
	Name	Purchase Date	Average Purchase Price	Current Price	Unit	Current Value (RM)	P/L ex Dividend (%)	Dividend (RM)	P/L inc Dividend (%)
Cash	Hle-Broking			7261.04
Stocks	Sunreit	04/10/13	1.40	1.510	5000	7550	8.1	373.85	13.4
	Inari	24/02/14	2.45	2.220	12000	26640	-9.3	270	-8.4
	Jaya Tiasa	24/04/14	2.74	1.990	2000	3980	-27.5		-27.5
	Hovid	14/04/14	0.38	0.355	40000	14200	-7.7	197.50	-6.4
	Westport	09/05/14	2.75	2.930	2000	5860	6.4	97.5	8.2
	QL	07/07/14	3.60	3.300	3000	9900	-8.3	172.50	-6.7
	Pestech	20/08/14	4.04	3.800	1000	3800	-6.0		-6.0
Total value of current Stocks				71930.00	90.8	%		1111.35
Total cash in Hlebroking				7261.04	9.2	%
Total Fund Value				79191.04
Payout from Huat Fund				5000.00
Original Capital				50000.00
Addition to original capital				20000.00
Total Fund Capital				70000.00
Current paper gain from stocks				-5648.22
Total dividend from stocks				1700.93
Realised gain				18138.33
Total profit including current paper gain				14191.04	20.3	%

For the past year, Huat Fund yields an a return of RM14k, equivalent to a 20% return rate. The current paper loss is at RM5.6k. This huge drop is mainly contributed due to Inari share price drop these few days. The realised stock profit and stock dividend amount to RM18k and RM1.7k. Below is a summary of the realised stock profit. I personally expected myself to be a more active seller but hey, I turn out to have more patience and not "tangan gatal" afterall.

Sold Stocks	18138.33
Date sold	Date bought	Name	Unit	Initial amount	Amount sold	P/L	%
28/2/2014	19/11/13	Datasonic	7500	12724.91	26862.3	14137.39	111.10
21/4/2014	27/12/13	OCK	5000	3919.99	6316.96	2396.97	61.15
1/8/2014	22/10/13	Cypark	3000	6513.57	8117.54	1603.97	24.63

As for the year ahead, the market outlook is expected to be tough and volatile. Bursa Malaysia is still trading at a pricey valuation.

Come April 2015, GST comes into effect and will practically depress the local investing mood, judging from the experience of Australia. I reckon defensive retail stocks will be also affected. Besides, Bank Negara would be raising the interest rate for another one or two times in the coming year to further tame the inflation and the property market. REITs will be one of the victims, IF they do not improve their dividend yield. So, stock picking will be ever more critical. I hope that during my research, I will discover some "Presbhd", "Myeg", "Datasonic" and "OCK". Opportunities like Datasonic will not come so often. For the next twelve months, my focus will be on stocks with good dividend yield and some capital appreciation as well. HUAT ar!