I have been quiet in the market. Zero buy and sell for the first month of 2024. Towards the end of last year and maybe even in the first week, I did contemplate to take some money off the market. However, as portfolio did not hit the targetted figure, and my exposure to equities is really not a lot, I did not do so.
Mixed Performance for January
It’s a mixed start to the year. Despite the steep drop in the US market on the last day of January, US portfolio started strong, returning 8.2% thus far. On the other hand, SG portfolio continues to struggle and ends the month down 4.0%. As mentioned in the post Beauty of Income Investing, I am not really concern about my SG portfolio’s performance as it is mainly built for income. With the exception of iFAST and Raffles Medical, the rest of the counters are invested to generate cash flow.
It’s early days, so to expect everything to be different by the end of the year.
First Dividend for 2024
Speaking of income, the first dividend for the year will be in tomorrow! While it’s not Li Chun yet, I really don’t mind having the money in earlier. This is also the first dividend that I received from NikkoAM-StraitsTrading Asia ex Japan REIT ETF. Together with the rest of the REITs, its price has weakened this month and I was tempted to add more!
In the end, I didn’t as I am still very new to it and had bought quite a bit in the past two months. I should just observe how sustainable their payout is going to be, especially when some of their top holdings have just declared lower dividend in the latest quarter. At the same time, I should also go learn a bit more about LINK and Embassy Office Park REITs.
Micro-Mechanics 2024 Q2 Results
Q2 performance is definitely below my expectation. I was disappointed as I was expecting a similar performance as Q1. With the lower revenue and earning, interim dividend also decreases to 3 cents. While that’s a 50% drop from last year’s 6 cents, I really can’t expect more from the management as that’s 101% of their earning for the first half.
The immediate thought is to annualise their dividend for the year, but that will be assuming a similar second half performance as the first. While that is a possible scenario but if the semiconductor sales really improves as forecasted by WSTS, then we might see a better second half performance. And that should lead to a higher final dividend than 3 cents.
Which scenario would it be?
I do not know but I do think that the chance of an upturn is probably higher. With expenses likely to stay at a similar level for the next half, we just need to an increase in demand to have a better second half.
Micro-mechanics is a very small contract manufacturer, producing precision tools and parts in the semiconductor industry. Despite that, I think its business is resilient as it has no debt and requires only about 40% capacity utilisation to generate a profit.
I sold half my holdings last May and am comfortable to hold on to the remaining stake.