Is it time to sell and take some profit?

The Singapore market has done well for the first half of the year. Including dividend, STI ETF has returned about 14%. Till date, my cash portfolio has returned about 41%. The bulk of the return is contributed by the following four counters:

Best World - 143%

Valuetronics - 70%

Food Empire - 46%

Micro-Mechanics - 41%

In general, I use the following as a guide to determine my sell decision. Hence, I will run through them for the four counters.

a. The fundamentals of the company has deteriorate

b. The company is overvalue at the current price

c. To raise cash for a better buying idea

d. To raise cash for other reasons

Fundamentals of the company

All the four companies reported stronger revenue and net profit for the latest quarter. Hence, fundamentals stay strong and unless there is unforeseen circumstances, they should continue to do well for the remaining year.

Valuation of the company

All the price has run up quite a bit, hence valuation is definitely not cheap but are they overvalue?

Best World is trading at a historical PE of 24.9 but assuming a 30% growth this year (net profit grew by 63% in 20171Q), the assumed forward PE will be 19.1 with a PEG of 0.83. It is becoming more expensive but if it can maintain its growth, then the price is still reasonable. I would continue to monitor its quarterly report.

Valuetronics is trading at a historical PE of 12.9 and PE (cash) of 8.0. Again, assuming a 30% growth this year (net profit grew 70% in 2017Q3 and 47% in 2017Q4), the assumed forward PE will be only 9.2 and PE (cash) of 6.2. Current dividend yield is 4.2%. Definitely not overvalue.

Food Empire is trading at a historical PE of 19.5. If company grows by 30% (net profit grew 57% in 20171Q), the assumed forward PE will be 15.0 with a PEG of 0.65. Not cheap but definitely not overvalue especially when the growth potential is high.

Micro-Mechanics is trading at a historical PE of 14.6. Assuming net profit grow by 12% for the year (net profit grew by 23.5% in Q2 and 26.6% in Q3), PE would drop to 13.1. With the increase of its interim dividend to 3 cents in 1H, I expect similar dividend of 4 cents for the full year, which gives a dividend yield of 5.5% at current price. Definitely not overvalue.

To raise cash for a better idea

Currently, do not have any solid new idea. Even if I have, I would sell my other holdings.

To raise cash for other reasons

Currently, do not require cash for other expenses. Hence, not necessary.

Conclusion

While the four counters have given me very good return, their fundamentals remain sound and are not overvalue. With no new idea and I do not need cash currently, I will continue to hold on to them.