Lunch Talk with Declout CEO - 15 May 2013

Today I just had a group lunch session with Declout CEO, Vesmond Wong Kok Khun. To recap, Declout is a catalyst counter which listed on SGX last year. He is a relatively young CEO, as we know that this is quite common in IT industry. He explained to us about his company and what his business strategy to further grow his business.

He categorize his businesses into 3 parts:

1. IT Infrastructure Services
2. Cloud Computing - SaaS, PaaS, etc
3. VDC - Vertical Domain Clouds such as Games Clouds Infrastructure that includes Games Cloud Infrastructure (GCI), Unified Payment Infrastructure (UPI) and Gamers Community Portal.

He mentioned to us that VDC could be the next engine of growth to his company and IT Infrastructure Services may experience negative growth in future. So his focus now is to working hard to launch the Games Cloud Ecosystem. To make it success, he needs a group of participants in South East Asia as well as the "killer apps" which can generate more monies to the company.

While there is no regulators to working on the virtual money cash flow in South East Asia, the CEO mentioned to us that the currency risk is minimum as the company has inked the agreement with those participants on the currency settlement procedures.

Going forward, his plan is to spin off those mature subsidiaries. In my opinion, this is a good strategy to generate more cash flow from existing companies and move on to involved in new sector. Although I am with IT background, however I do not really know how to calculate an IT company. Anyway I will put this counter in my watch list for further investigation and see whether his plan would be success or not.

Disclosure:  Catalyst Counters are among relatively young companies to seek fund to further grow their business. You have to bear higher risk in investing in those counters. 

Investment Can Make Your Life Better

While a small portion of people who are so lucky to inherit wealth from their parents, majority of us were born with nothing. To most of us, our parents are working as an employees for 20 - 30 years in the same company and enjoy a stable life after setting up a family. Some of them may enjoy pension funds or the EPF/CPF money after retired. But to be frank, I think that the EPF / CPF money taken out from the government can only last for a few more years due to certain reasons:

1. Medical Expenses: Medical Expenses has risen faster than inflation rate in general. Without a proper plan to keep yourself healthy, it will incur a huge medical bills for you when you grow older. 
2. Travel Expenses: Some retirees enjoy traveling after retired. They are still in healthy shape in their 50s / 60s. It is not a small amount to travel oversea, and many will go shopping for their relatives while traveling. 
3. Kid's Education Fees: Few still need to spend money on their young kid's education fees. It is very expensive studying oversea. 
4. Daily Expenses: While many stop working after retired, they still need to spend money on food & other daily expenses. 

I have met with many friends who are employees but at the same time are investors as well. They try to create many sources of income to reduce the dependency of the salary income. To me, investment is another way for you to better manage your money from being hurt by the inflation. It is unwise if you just keep all your excess cash in bank for a long time. 

Investment can change your life, especially after you retired from your long term careers. You can choose to put your money in bank to enjoy little fix deposit, or to put your money in any other investment tools to enjoy a stable income. For those who are in their retirement life, it is wise to park more money in fixed income assets, and allocate some in equities to enjoy capital growth. For those youngsters or young couples, I believe you have made your own choice, that may change your life some 30 years later.

Singapore Shares Market Daily Update - 7 May 2013

Stocks in Focus: OUE, CH Offshore, Hutchison Port, Intraco, MTQ, Oceanus, Foreland Fabrictech, GLP, Cambridge REITs, Super Group, Hiap Seng, Elektromotive, XinRen Aluminium, China Sports

OUE: 1Q13 net profit - 92% y/y to $1.8M despite 8% revenue increase to $105.4m on higher property development sales offset by lower hotel revenue. While gross profit slid 6% due to lower rentals from 6 Shenton Way Tower 1, bottom line was hit by jump in admin expenses (+62%) and surge in finance expense to $33.5M (+80%) on more borrowings, forex loss arising from translation of a USD loan and fair value loss on USD/SGD currency swap. Book value stayed at $3.49.

CH Offshore: 3QFY13 net profit sank 57% y/y to US$4.8M due to absence of gain from sale of vessel (3Q12: US$3.9M) and lower revenue (-25%) as 2 vessels completed their contracts in Jan 13 and were subsequently docked in Mar for mandatory overhaul and inspection.

Hutchison Port: Dock workers at its HK Int’l Terminals (HIT) ended their 40-day strike, accepting a 9.8% wage increase. The workers had earlier demanded a 23% gain, while employers offered a 7% increase. HIT had highlighted that daily loss narrowed to HK$2.4M on 5 Apr after some strikers returned to work from HK$5.0M earlier.

Intraco: Acquires an additional 9.6% stake in packaging and resin firm Dynamic Colours, taking its total interest in the packaging and resin firm to 39.5% and triggering a mandatory conditional cash offer at $0.185 per share.

MTQ: 4Q13 net profit soared 94% y/y to $7.7M on 179% spike in revenue to $93.7M, boosted by maiden contributions from newly acquired oilfield engineering subsidiary Neptune Marine Services and organic growth in all segments. Maintained final DPS of 2¢, taking full year tally to 4¢.

Oceanus: Widened 1Q13 net loss to RMB45.2M versus RMB39.1M a year ago. This came from a 69% fall in revenue to RMB14.8M due to poor demand for abalone that had not yet reached maturity as well as a frugality drive by the new government in China, which dampened conspicuous spending, especially high end consumption.

Foreland Fabrictech: Incurred net loss of RMB9.5M in 1Q13 vs Rmb29.6m profit a year earlier as revenue collapsed 99% from RMB161.9M to RMB1M due to relocation of existing production facilities to a new factory site, expected to be fully operational by end of 2Q13. The group maintained its net cash position with NAV of RMB1.22.

GLP: Leased 108,000 sf of logistics space at GLP Park Beijing to a leading 3rd party logistics provider, achieving 91% occupancy.

Cambridge REITs: Trust manager and trustee are being sued by 2 tenants of an $18.5M industrial property owned by the trust. The tenants claim that both had reneged on deal to sell the HDB leasehold property with site area of 4,564 sqm and GFA of 8,997 sqm to them. The case would go to trial on 2-5 July 2013.

Super Group: Disposed 35.3% associate Sun Resources for $26m, including shareholder loan of $9.3m, reaping a one-off gain of $16m for FY13.

Hiap Seng: Awarded a 3-year refinery maintenance contract by S’pore Refining Company on a cost-plus basis, effective 1 Apr 2013.

Elektromotive: Signs MoU with Renshou county in Sichuan, China to set up a public transportation electric vehicle fleet and recharging network for public transportation in Shigao Industrial Zone. The investment for first phase is estimated to cost Rmb30-50m with future phases targeting 60 other towns and industrial parks.

XinRen Aluminium: Group expects to report a marginal net loss for 1Q13 due to weaker selling prices of aluminium products.

China Sports: Issued a profit warning that 1Q13 results are expected to be worse than the Rmb4.2m loss suffered in 4Q12.