Friday, October 28, 2016

[SGX Portfolio] Goodbye PEC

Okay guys, don't laugh, it's only 200 shares. I know I'm just a small, small fish.

When I bought PEC in July 2015 at $0.41, NAV was $0.83 and EPS for the quarter was negative and for the previous 9m was just $0.004. Essentially this company was trading at 50% off book value and it had zero earnings. 

What I liked about the company was that debt was only 38%, which is not much different from the 42% now. The debt is also mostly made up of payables, and that is good debt to have. Borrowings and loans make up only 16.5% of liabilities then and has dropped to 10.8% now.

In fact, cash holdings has gone up from 22% of total assets to a very nice 38% of total assets.


So where are we at now? The P/B has moved up from 0.50 to 0.74 which is a nice increase. The increased valuation of its assets is probably due to the increase in its cash reserves which don't require haircuts for conservative valuations.

EPS is now positive at 3.2c for the quarter for 7.4c for the year. Based on the quarter, PE ratio is 5, which is definitely cheap if earnings are sustainable. Based on the year, PE ratio is 8.6, which seems like a plausible PE ratio for a company in the O&G sector.

I've sat on this bad boy and I've gotten paid $2 in dividends last year and they have declared the same amount due in late Nov.

I've decided to cash out. This was just a nibble and a play on a company with a very nice balance sheet that seemed to be dragged down because of it's industry. It was a tiny part of my portfolio, but it was nice having it around. 

Sold it on Monday at $0.645 (could have sold at $0.65 but I hesitated a little), which is a nice capital gain of 57.3% (which includes the 7.3% dividend that I am forfeiting by selling before the ex-date). Adding in the dividend collected last year boosts returns by 2.4%. Now take into the account the brokerage charges for buying and selling...

(BTW, I get the preferential brokerage fees with SCB... because I'm a baller, hence no $10 min charge.

The final profit for this investment is $48.50, which is 59.0% total returns on an initial capital of $82.20 over the course of roughly 1 year and 3 months.

That's not too shabby. Enough to drink coffee for the next month and a half. This is my second best trade after my 69% profit with Valuetronics.

But yes, I know, I'm a small player.

I'll probably be doing a review of my performance one of these days when I'm not so busy. As much as I have talked about my winners, I do have losers too and it's probably about time that I take stock of my bad apples and decide what I want to do with them. Maybe in December, so it'll be just in time for January spring cleaning!

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