Hong Leong Finance

Before KeppelCorp, I have bought 10 lots of Hong Leong Finance (HLF) using my CPF OA monies. This was in 2015.

My reason for buying HLF is because of the dividends. The dividend was 12 cents for many years when it dropped to 10 cents for 2015 and 2016.

Nonetheless, at an entry price of 2.28 a share, 0.10 dividend is around 4.39%. This is higher than  the 3.5% (2.5% base interest and 1% extra interest on the 1st 20k in OA) that CPF could offer. I am positive HLF can maintain this yield.

2nd reason for buying HLF - I can't afford to buy local banks' shares. This is the closest to a bank (actually it is a finance company). It is sitting on a billion dollar cash. This is definitely enough for the company to weather through many years of tough times.

3rd reason: The share is hovering below its NAV. This provides me with a margin of safety.

4th reason: It has been around in SG for many years and has weathered through many economic downturns and recessions. It has an established track record.

In recent years, the revenue and profits of the company have declined as interest rates remain low sonce 2008. But as interest is set to rise, the company is expected to reap higher revenue and profits.

Keppelcorp

Why I bought this company's share?

Using the criterion I shared in my earlier post;

1) It is a well established company that has weathered econmic slowdowns and one of SG largest blue chips

2) In SG, it is a conglomerate with business in properties (it acquire keppeland in 2014 as oil and gas sector began to go downhill), oil and gas and others. Other close competitors are Sembcorp, Sembcorp Marine

3) Revenue - revenue was on upward trend until when it has taken a beating in recent years

4) Profit - Profits were stable. Ever since oil price startes dropping, Keppelcorp managed to maintain positive earnings despite trying times. 

4) Cash - before buying keppeland, keppelcorp was sitting on lots of cash. After buying Keppeland, its cash has dropped to 2 billion, enough to tide it through the rough times as oil prices hovers around the price 50-60.

5) Stock price - it reaches one of its lowest price - 5 dollars in Feb 2016 (lowest since 2009). Although $5 a share is not the lowest price that Keppelcorp has ever dropped.

6) Dividends - strong dividend yields in the past few years. Even though the dividend for the stock is not likely to be maintained at past levels, it was still decent enough.

I bought keppelcorp at average of 5 dollars each in Feb-16 and it is at 6.20 @ 14 Dec 2016.

I believe the company stock has more upside than downside. Noted that oil price remains violatile but oil price will go up one day. I am not an expert on oil price trends, but it seems like oil price is set to remain low for quite some time. When I invested in KeppelCorp, my goal is not to sell it in the short term. I intend to hold on to this stock for 10 years or more. 

My approach is long term investment. Hence the monies that I used to invest, are monies that I do not need. This way, I will not be pressed to sell my stocks for luquidity at low prices if an emergency arises.

I kept more than 6 months worth of my pay on hand in case of emergency (retrenchment, medical conditions etc).