Yongnam holdings limited (Evaluation & Marina One Subcontract)

Yongnam is a well-established structural steel contractor and specialist civil engineering solutions provider with operations and projects in Singapore, Malaysia, Thailand, Indonesia, Hong Kong and Middle East.

Last Friday I managed to snap up some lots of Yongnam at my target price of $0.240 after a few failed attempts the previous days. I bought on weakness after Yongnam reported their disappointing third-quarter results. Yongnam reported an increased in revenue but their gross profit was down 55.2% due to cost overrun of 3 existing projects and a one time off disposal of fixed assets (pipe piles) which set them back $8.1mil. In short, they suffered a $3.4mil loss which put them in the red. However, Yongnam's gearing remained healthy at 0.48 times. Its cash and cash equivalents also increased from S$13.51mil to S$16.33mil in the corresponding quarter last year, albeit due to lower capital expenditure and higher borrowings.

Yongnam carries a dividend yield of around 4.1%. Its NAV is about S$0.2585 so I'm happy to buy it at a discount and I'm confident its price will only pick up from here as regional infrastructural developments and projects continue to have a strong demand in 2014 and beyond. Yongnam's financial fundamentals remain sound and I feel they still have lots of room for growth and expansion hence, my decision to buy into this company.

Just yesterday, Yongnam announced that they secured a structural steel subcontract worth S$168mil at Marina One, a mixed-use development located at Marina South, Singapore’s new Central Business District. This subcontract is a record win for Yongnam bringing their order book to S$397mil. After the news was released, Yongnam share price increased by 6.25% and closed at $0.255.

Sabana REIT (September 2013 Private Placement)

Approximately 2 weeks ago, Sabana REIT (Industrial REIT) announced a private placement of 40,000 000 units each at $1.00 to raise money to acquire a new property (508 Chai Chee Lane) which means that their DPU will increase in future. The market over-reacted a little & Sabana fell to a 52-week low of $1.055 declining roughly 6% of its previous closing price of $1.125. Personally, i view this announcement as a positive one as they are raising funds to acquire a new property which means that its yield & rental collection will increase in future. However, investors tend to dislike introduction of new units as it make the stock more diluted. Investors will very likely witness positive rental reversions soon in November 2013 which is why at its current price, i feel that Sabana REIT seem to be a pretty good investment for passive income. At a unit price of less than $1.100, it's yield is around 8%.

Recently, the FED decided not to cut down its stimulation & some people are getting jitters whether it's the right time to invest in REITs or not as it's only a matter of time that the FED will stop its intervention completely. Personally, any dip in market price is an opportunity to invest. Warren Buffet mentioned that whatever decisions the FED makes, he is unlikely to get affected as he believes that as long as an individual invests in a strong & sound company, short term fluctuations should be the least of any long term investors' worry.

My current holdings as of 28 Sept '13: