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The mystical art of wealth accumulation!

Monday, May 27, 2013

The wall next to my desk doesn't need a fresh coat of paint because it is pasted over with notes, cards and newspaper cuttings! 

Someone told me that if everyone was like me, the wallpaper companies would go out of business.

Today, I took down some of the "wallpaper" and I found a newspaper article I cut out in the year 2003. 

It was about ST Engineering, a company which I have been a shareholder of for more than 10 years by now.

Here is the article in question:

Today, ST Engineering's stock trades at $4.17 a share and it has been paying out dividends annually without fail since I first became a shareholder. 

I cannot remember how much exactly from year to year but, off the top of my head, an average of 15c annually in dividend per share cannot be too wrong.

This is one investment I have fond memories of and not only because the dividends it paid funded my annual holidays in Japan and Korea for many years in a row.

In case you are wondering, yes, I am still holding on to those shares I bought at $1.55 a piece more than 10 years ago.

What would have happened if I had decided to spend all that money all those years ago on a brand new luxury watch instead of investing in ST Engineering? 

Isn't there something to be said about delaying gratifications and investing for income?

Many times, people are sceptical about what I have achieved. 

Well, they can be sceptical all they want but once they are determined to make an improvement to their personal finances, once they try out some of the ideas I have blogged about, they will see for themselves that the magic that AK has, they have it in them too. 

Suddenly, it isn't so mystical after all.

Remember that AK has done it and you can do it too!

Related posts:
1. The very first step to becoming richer.
2. Do not love unless it is worth the loving.
3. Why a wealthy nation cannot afford to retire?
4. 7 steps to passive income from the stock market.
5. Create more passive income with limited capital.


The Sun said...

Congrats on your prudent investment! Certainly agree with your belief in delayed gratification. I also invested in ST Engg 10 years ago at $1.67 (cum 18 cents dividend) and have been collecting its more than 10 cents yearly dividends.

Do continue to share your investment experience on your blog so that many more could learn from you.

AK71 said...

Hi Sun,

A warm hello to a fellow shareholder! :)

I know some people don't think much about ST Engineering as an investment as it is not a multi-bagger but I feel that it has been good to me. That is what matters. ;)

INVS 2.0 said...

Hi Ak71,

I maybe invested at a high price for now but who knows 10 yrs later stocks like AIMS might be $3 - $4? That makes my purchase at $1.73 quite cheap. :)

Ray said...

Well AK,

The thing about some people had done it before so we can do it tomorrow is not necessary always true. Alot of things don't happen in cycles or at least situations have changed by the time something remotely similar come about.
That's why the old adage opportunity does not knock twice.

A parallel would be for those about 10 years older than me, if they have a IT degree, they would likely to have rode on the Dot Com wave and made alot of money. However, we being 10 years too late, never had that chance. Back then, it is also easier for IT people to get good jobs in big companies because IT was in hot demand. Sure, there are alot of successful IT people (or techie enough) to have founded,, Tumblr. etc and made alot of money after the dot com wave (and crash) happened but the wave itself never came about the second time.

So I guess what i'm trying to say here is sometimes the perfect storm will only happen once in a lifetime.

AK71 said...

Hi INVS 2.0,

It could happen, of course. Look at A-REIT. ;)

However, you want to make a distinction between price and value in your efforts.

Buying ST Engineering at $1.55 was a steal. Dividend was 15c a share and sometimes higher.

Buying AIMS AMP Capital Industrial REIT at $1 was also a steal. Distribution yield was 10% then. Strangely, I had to suffer so much scepticism from some quarters back then. It wasn't so long ago. :)

AK71 said...

Hi Ray,

The most important thing I am sharing here is my philosophy and how it has worked for me. This should be timeless.

The investment in ST Engineering mentioned in the blog post exemplifies a method built on this philosophy.

We have our own unique situations and life experience but we can share the same philosophy which will guide us to similar outcomes differing only in magnitude. :)

AK71 said...

ST Engineering rose 2.6% and topped gainers on the benchmark index after DBS Vickers Securities said the stock’s recent decline was unjustified as it offered upside from a recovery in the United States.

“Visible growth drivers are in place at Aerospace and Marine divisions, and also in Asia as well as in the US. With its strong balance sheet and net cash position, the group is well positioned to source for M&A for longer term growth,” DBS Vickers said and maintained its “buy” rating with a target price of $4.80.

ST Engineering earned 26% of its revenue from the U.S. in 2012. After a record high in late April, the shares fell as much as 22% to the year’s low last week, but have risen 12% from the lows. So far this year, the stock is up 4% at $3.98, outperforming the Straits Times index. The index gained 1% on Tuesday.

REUTERS, 18 June 2013

AK71 said...

ST Engineering today announced that its aerospace arm, Singapore Technologies Aerospace, has signed new contracts worth about $430 million in the second quarter of 2013. The contracts are for airframe, component and engine maintenance, as well as VIP interior modifications.

The Edge
Thursday, 11 July 2013

AK71 said...

ST Engineering announced that its aerospace arm, ST Aerospace has won new orders worth about $600 million in the third quarter of 2013.

AK71 said...

From my FB wall:

I'm looking at st eng with interest as price has fallen ... can share your views on whether it's wise to buy at the current px?

My usual answer:
Question your motivation and whether the investment does the job you want it to do. If it does, buy some. If it doesn't, avoid.

Something I like to tell myself:
We want to buy at prices we will not sell at and sell at prices we will not buy at.

Talking to myself:
I have been a shareholder of ST Engg since the days it was $1.55 a share. I invest for income and it makes sense. Net cash company. Pays out big portion of its earnings. Sustainable business. Over time, I kept adding to my long position, occasionally selling.

I bought some on Monday using funds in my SRS account because:

1. $3.76 a share means a yield of about 4%.
2. Technically, it looks like the selling was almost done.
3. I won't be able to touch my SRS funds for another 20 years.

As an investment for income, $3.76 isn't a mouth watering deal but fair enough, given current day realities.

Technically, I recognise that price is in a downtrend. So, this could turn out to be a trade if it is not able to overcome resistance provided by the declining 200d Moving Average.

Anonymous said...

Hello! I just recently chanced upon your blog from
Wa u seem like a lao jiao in investing! And boasts such an awesome passive income amount. Thanks for inspiring!

I also hope to buy and hold stocks like you, wait for it to appreciate! Much to learn from you!

Btw, since you are heavily invested in S-Reits, how come you are not interested in Capitaland?

AK71 said...

Hi capri,

Welcome to my blog. :)

Oh, why should I be interested in CapitaLand because I have investments in S-REITs? ;p

I was a shareholder of CapitaMalls Asia though. Pity it was delisted. :(

Solace said...

Hi AK,

I am building a position on ST engineering. Will accumulate more at key junctions.

I like the defensive nature of this stock and has done the necessary fundamental and valuation studies. Good order books for the next couple of years is good too.

Strictly speaking, the valuation and yield has not reached a level where I will plunge right in. But this defensive stock and falling price has send alerts which I can't ignore.

AK71 said...

Hi Solace,

This is an old friend. :)

Long ago, it used to pay out 100% of its earnings as dividends. It was a yield play and purely an investment for income.

Then, the payout ratio reduced to 90%, then 80% and it is going to be 75% next year. All the while, the DPS has been quite consistent. This tells me that the company is growing.

Retaining earnings for growth means that ST Engineering is no longer a yield play it once was. It has become an investment for income and growth. :)

AK71 said...

...contract wins of $464m coupled with yesterday’s announcement of ST Aerospace contract wins totalling $1.11bln would add to the end 2016 strong order books of $11.6bln to $13.2bln. This would help the company register close to $7bln of sales this year, surpassing last year’s $6.68bln, enabling the company to grow profits by close to 8% this year to $540mln.

Source: Lim & Tan

AK71 said...

AK. Which do you prefer? ST Engg or SIA Engg?

ST Engg.
SIA Engg's fortunes closely tied to SIA.
There is speculation about merger.
Dunno if it is going to happen but it would make sense.
Dunno if it is happening. I just invest in what I feel is a better choice.
Anyway, I could be bias because I have been a shareholder of ST Engg for almost 20 years. So, I know it a bit better. First purchase $1.55.

Wow 20 years.
Lol. based on dividends. Should be free stocks by now?

Yes, I have quite a few investments which are "free" 😛

AK71 said...

Jackson Yang says...
ST engineering?
Good for income too.

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