I just want to fill in quickly an update I just made since I just made a portfolio update not too long ago for the month.

I divested all my position at Comfortdelgro at a price of $2.09 today for an overall -9.1% loss (inclusive of dividend). Year to date however, this divestment has returned me a positive 5% gains since the start of the year.

I've been reading and following the development about Grab and Uber since last year and to be honest there are structural issues which I was slow to act upon. With the advent of these technology low capex disruptor, it is a cut throat industry to be in right now, with margins coming in at multi years low. Even Chairman Lim has acknowledged this when he mentioned in the recent interview that they are expecting the vehicle margins to erode further and that they would be looking to new business to supplement their income stream.

The latest news being an acquisition of S$30.2m on the patient transport in Australia and the bus charter in Aussie.

CDG continues to make acquisitions their main priority and to be frank it is difficult to gauge the internal returns they were expecting based on the number of their many small acquisitions.

Even with the uber saga out of the way, the company will continue to face an overhang with their continuously high capex intensive nature and I don't know if this is still the way forward 10 years later. I think if new technologies can come in and attack the private vehicle, they will soon do it with the buses and conquer other areas too.

Being a strong blue chip in the region, and backed by strong institutionals, I think it'll continue to do fine, generating profits year after year and distributing dividends to their shareholders. The only worry from here is probably how the management is bringing the company forward on this. I have so far remained a shareholder almost only in the hope of their 5% dividend yield and am not expecting anything much more from the growth part.

Since the start of the year, the selling has somewhat abated and is one of my top performer in the portfolio. It's a bit ironic that I decide to divest at this point in time but I thought it was a somewhat decent exit and lessons learnt from there.

I documented in my 2017 end of year portfolio that I was slow to act upon the development of the incoming news and I was somewhat forced to average down thinking that the market has mispriced them irrationally. I still think though that anything at $2 and below represents a good deal for a 5% yield and a good trade range, this has somewhat becomes my trading stocks like ST Eng and Singtel which I have continuously enter and exit at multiple various prices.

With this out of the way and with the proceeds, I went to buy 2 counters which I think is more defensives, higher dividend yield (and payout) and better outlook certainty I can forecast.

The first company is Vicom (I will blog about the second company in the next post)

Vicom is an existing position that I already have and I have accumulated more at a price of $6.05.

This is in line with my personal strategy of accumulating a stock with a higher than 5% yield.

FY2017 was a challenging year for the company as it saw a 4% decline in their inspected vehicles which dropped from 488,186 to 468,807 vehicles. In the recent annual report, Chairman Lim commented that de-registration is expected to slow down in the next few years ahead which likely means that we would see a bottoming in progress for FY17. 

We should see a better FY18 numbers with de-registration slowing down and inspection numbers to slowly go up.

While earnings per share for FY17 came in at 29.90 cents, free cash flow came in at $28.9m which translates into 32.6 cents/share. This is mostly due to the depreciation of assets which was added back into cashflow. The company paid a full year dividends worth of 36 cents/share for FY17 which was higher than their free cash flow but I think with the strength of their balance sheets and organic growth returning, I am expecting FY18 payout to be the same. This equates to a 6% yield based on my current price.

I'll blog about my other company buy tomorrow which has an equally high yield and payout.

Thanks for reading.