HL Tiong says he is an average Singaporean in his early 30s, has a full-time job, is happily married and caught within the sandwich class. He lives in an executive condominium with a "mountain-like mortgage". "My goal is to achieve financial freedom as early as I can. My target is 45 years old. I don't mind working but I hope to provide my wife an option not to work." The following article was recently published on his blog and is republished with permission.


LAST MONDAY (20 Jan), after much consideration, I decided to close my position on NSL Ltd.

NSL is one of Singapore’s largest industrial group, and it is focused on 4 industrial businesses - construction products, environmental services, engineering and chemicals.

I had first identified NSL in one post on stocks that have hit 52-week lows back in October 2013, trading at $1.43 then.

The price had since ballooned to $1.75 and I decided to lock in my profits.

NSL_chart2.14NSL ($1.71) trades at a trailing PE of 16X and dividend yield of 5.8%, and has a market cap of S$643 million. Chart: Bloomberg.

It's a 22% profit but somehow it left a bad taste in the mouth. There is room for regrets.  

Regrets at a 22% gain? Possible, let me explain.  

The investment thesis for NSL was very simple.

It was a high dividend yielding (7%), conservatively financed issue that was trading near a 52-week-low plus it wsa a discount to its book value.

The reason for its price rise is news of a disposal of its subsidiary, NSL Chemicals (Thailand).

The transaction is expected to add another 30 cents to NSL's net book value.

I certainly did not predict this.


Killed the golden goose


All I did was to take a position based on a back-of-the-envelope calculation, minimising potential downside while positioned for possible upside. 


Upside in what form I do not pretend to know. But minimally, I know the dividend of 7% looks relatively safe. The low gearing level helps too.

By closing my position in NSL, effectively I killed off the golden goose that would have continued to lay the 10-cent dividend year after year. 

But the gut feeling in me says that even if a special dividend is to be declared and paid, likely I am able to collect NSL ex-dividend at a good price once more.

Currently, NSL's price suggests a rush into the stock in anticipation of good things to come. 

When expectations are high, reality could disappoint.   

Does the current price reflect expectations of a special dividend or will there be further upward climb in price?

Your guess is as good as mine.  But I will wait.  

Perhaps I will be proven wrong. NSL's price may continue to rise and not return to attractive levels, but living a life with regrets is too sad. 

Will keep looking around the forest floor for the next cigar butt.




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Comments  

-1 #2 Cash-richie 2014-02-09 16:19
There is plenty of value -- I learnt about NSL for the first time, I learnt they pay 10-c dividend every year = 7% yield, etc.

How come you don't learn anything and you gripe about HL Tiong on a personal level?

His 'regret' at selling out is something we investors experience from time to time when we discover new info that the stock has stronger outlook than we thought when we sold.

kohpohseng : Are you an investor?
-1 #1 kohpohseng 2014-02-09 10:04
what's the point of publishing this article.

no value at all.

hl tiong is nothing but a sore punter
 

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