28 December 2011

Things to take note when Investing in Shares using CPF monies

For those who are working in Singapore and with citizen/PR status, you will probably have to contribute at least 20% of your salary income to CPF (equivalent to EPF in Malaysia). Once your CPF-OA (Ordinary Account) reach more than S$20K, then you are eligible to use the excess money to invest in various financial products such as Unit Trust, Shares, Gold and others.

To invest in Singapore Listed Shares using CPF monies, you can only take out up to 30% of the CPF OA. Let us do the simple calculation here:

Scenario 1: Let's say you have S$15K in CPF-OA.

The maximum % to invest in Shares is 35%, so 35% * S15K = $5.25K. But because you got only $15K in CPF-OA and does not meet the minimum S$20K, so you cannot invest in shares.

Scenario 2: Let's say you have S$30K in CPF-OA.

Maximum Investment Amount is 35% * S$30K = $10.5K, but because you need to keep aside S$20K in your CPF-OA, so the amount that you can invest in shares is $10K.

Scenario 3: Let's say you have $100K in CPF-OA

Maximum Investment amount is 35% * S$100K = $35K, so you can invest S$35K in shares fully as you fulfill the requirement to keep first S$20K in CPF.


So once you decided to invest in financial products, you can go to any of the 3 Singapore Local Banks (UOB, OCBC, DBS/POSB) to open an CPF investment account. Things to take note when you invest using CPF monies:

1. Agent Bank Charges - Normally there is transaction/admin fees per lot per trade done for each shares. For example, if you buy 5 lots of Singtel shares, then you have to pay 5 * per lot per trade fees.  There is a cap of approcimately S$20 per transaction there. Another agent bank charges is custodian fees which is per lot per shares. So if you are using CPF monies to purchase shares, make sure that your portfolio return is better than those agent bank charges + 2.5% CPF OA return. 

2. Processing Time - Normally it takes about 1 week to open the CPF Investment Account. You can contact the stock broking firm to update your CPF investment account with them.

3. Shares that can be transacted - Please take note that only certain Singapore Listed shares can be transacted using CPF monies. Make sure that you select the CPF approved Shares before you buy, else the transaction would be settled by using cash.

I have a lot of friends who are using CPF monies to purchase financial products in the bid of beating the 2.5% returns in long run. However, I think CPF monies can only be invested in long term basis, as you cannot take out the profit immediately even if you make the profit from the stock market. So my suggestion is to use the CPF money to purchase stock when there is really a market crash. Then you would probably earn better than 2.5% after deducting all the transaction/admin fees involved in your shares investment.

23 December 2011

Client Account Review (CAR) - New Measure to Invest in Shares

SGX recently announced a new mesaure to invest in SIP (Special Investment Products) such as Foreign Shares, ETFs, and Structured Warrents etc. To fulfil the requirement, you must either obtain finance/business/accounting related diploma or above certification or profession certificate such as ChFC, CAIA, CFA etc.  You may pass the online quiz provided by SGX too.

So, what is the impact on Singapore Stock Market? I can foresee that there will be lesser speculators to trade in Highly Speculated Products. But it will not defer those who really wants to speculate to trade in the market.

My advice to you is to quickly pass the quiz online (https://onlineeducation.sgx.com/specifiedinvestmentproducts/) and so you can still able to trade in Special Investment Products.

22 December 2011

Technical Analysis - Good technique to use?

Technical analysis is used by a lot of stock traders and investors to determine the timing to enter or exit the market. I am not so good in this, as I know that I have little time to learn about this. In fact, I would like to focus more on the stock that I invest in.

For example, if I know that the company that I invest can give me a return of 1000% in 10 years time, there is no point for me to keep on buy and sell the shares. But if I cannot find out the shares that can guarantee me the return, then I may use some of the indicators to find out the shares that I can invest in.

Majority of the investors would choose to select a stock just based on few minutes from the chart search. I think it is quite similar to a gambling. (But If you are good in technical analysis, then you can teach me on that, because I really have no clue on that). I am going to join the TA courses conducted by my company and hopefully I can get more clues from there and share with you here. :)

Last but not least, Merry Christmas and Happy New Year.

13 December 2011

Some Guidelines on Constructing a Stock Portfolio

From my previous post - Why do we construct a stock portfolio, now I would like to share with you on how to construct a stock portfolio.

Based on my previous experience, I found out that constantly performing a portfolio rebalancing at least once a year would beat the 'Buy and Hold' strategy unless you can find some extraordinary shares that can beat others in long run. So, with portfolio rebalancing in place (e.g. Buy and Sell to maintain a Strategic Asset Allocation ratio is crucial to stay through the up & down of the market).

In Singapore/Malaysia, you do not need to pay for the capital gain. So it really depends on you on how to take profit and cut loss depends on the market condition. The Thumb of Rules on constructing a stock portfolio is shown as below:

Maximum % of Stock in your Portfolio = 100 - Your Age

For example, if you are a newbie investor, then above rule is quite good for you. This is based on the assumption that your potential Total earnings will be reduced over time and you need more cash flow when you are reaching retirement age.

However, this is based on your 'mentality' and 'risk-adversion attitude' towards 'unrealized gain/losses'. I was once near to 100% invested all my cash in stock portfolio. I also borrowed money from my parents to buy shares and able to return money to them after few months later. Why was I able to do so? This was because I invested in shares since I was very young and at that time I lost a big portion of money in the stock market. However, as I started to work and able to get more cash flows, I used it to put it in the stock market and treat it as a long term investment. Once you started to invest with a smaller amount, the amount that you lose in the stock market will not be much. Then you can start investing like 'Monthly-Investment-Plan', which allow you to continuously put in the money in the stock market as and when you have the extra money after deducting the daily expenses budget.

Next, once you started to invest in monthly basis, then you would be able to keep on monitoring the market movement and decide whether to sell or buy. Normally I would encourage you to do homework on the stocks you buy before you invest into it. This is because stock portfolio is different from Unit Trust, as you will be facing concentration risk. However, you can reduce those risk by investigating in details on the stocks that you are interested. The first rule would be 'Make sure the company will not go bankrupt or delisted'. You can only buy the 'Good Quality' stock. How to know whether this stock is in a good quality?

1. Consistently higher ROE compared to the peers.
2. Able to generate cash flows / dividends in consistent matters.
3. Able to grow sustainably in long run.
4. The management focus on their core business for quite a long period.
5. The management has the integrity and responsible to the small shareholders.

Once you get the 'Good Quality' stock, then you can start accumulating the stocks in a portfolio. Normally I would suggest you not to hold more than 35% for a stock in a portfolio when you just started to investing, even if you look very good on this business, but the good thing of being a shareholder is to know to sell your shares when market condition changes.

Try not to concentrate on one sector for your whole portfolio, as you may experience a huge volatility of the portfolio value. What you need to do is to pick the best stock in that sector and select another best stock in other sector. You will then be more comfortable on investing in long run.

Cash - Stock Percentage in the Portfolio is crucial, as you can reduce the risk of not able to 'Buy in Bear Market' or not able to 'Sell in Bull Market'. I would encourage you to manage a Cash - Stock percentage in 25:75 to 75:25 ratio, so you will not be too over confident or too over pessimitive to the current market.

If you ask me, why would I risk myself to invest in a downturn? My answer is - I cannot tell when is the best time to buy / sell. But I believe that the revenue and net profit will be growing in long run (say, 10 years) and if you have a long term investment horizon, then you should be able to Buy at Low Prices and Sell at High Prices.

Welcome for your feedback. Have a nice day. :)

12 December 2011

Iskandar Malaysia News - 12 Dec 2011

JPO planned to increase their stores from 70 currently to 130 through RM100M in investments expected to be completed by next year with a water theme park, convention centre and a 2,000-room hotel setup there.
Legoland Theme Park will be opened to the public by end of 2012. I believe that the income from tourism will be increasing significantly especially now people can have more choices to stay longer period in South East Asia. They can choose to go to Johor Bahru after visiting Singapore and take a flight from Senai Airport to another destination or vise verse.


Below are the part of the news source from Bernama.

Source from Bernama:

Iskandar Malaysia that receiving RM78B investment can now creating thousand of jobs to employment seekers, said Johor Human Resources, Science, Technology and Innovation Committee chairman M. Asojan.

He said since its launch at the end of 2006, over 50k job vacancies in various sectors of the industry were created in the development corridor.

"We expect 800K more jobs to be created in Iskandar Malaysia throughout the development period from end of 2006 until 2025," he told reporter after attending the Johor Skills Development Centre (Puspatri) convocation cermony at the Persada Johor Convention Centre, here today.

Why We need to Construct a Stock Portfolio?

Yesterday I happened to saw that Kim Eng Investor Club was having a 1 day course with regards to constructing a stock portfolio. It is a $50 dollar course that I think it can benefit you on constructing a stock portfolio.

Back to the title, first of all we must understand why do we need to construct a stock portfolio before we gotta know how to construct a stock portfolio. According to a modern portfolio theory, that diversification tends to reduce the individual risk. For me, I would like to diversify the portfolio by 3-5 stocks in a portfolio. Let me explain to the reasons why we need to have a stock portfolio to you first:

Reason 1

I am using Cash & Stocks in my Total Portfolio. As the cash can minimum earn about 4% - 5%, hence I would only invest into the stock market if the stocks that I invest can let me to earn more than 5% per year.

Reason 2

I have limited time and energy to monitor all the stocks in the stock exchange. Although I do access to the information in the stock market, but it tends to make over fed by the information in the market.

Reason 3

I would take a longer time to find out which stock that fulfill my stock selecting criteria, such as PE Ratio, ROE, Dividend Yield, Current Ratio, Debt-To-Equity Ratio, Growing Propect etc. It is unwise if we just want to diversify the stocks to those that not fulfilling the searching criteria.

Reason 4

You may experience a higher volatility of the portfolio value in short run. But if you can take time to do your own homework, and find out the stocks that worth to be invested and set your buy price and sell price target, I believe that you can still able to beat the market. This is based on the theory -

Reason 5

Over a longer term of investing, I found that performing a portfolio re-balancing on timely basis for portfolio that I hold, I could actually achieve a better result compared to just buy and hold strategy. This happened because the particular stocks may react more or less on the market news, and we could actually make use of the information and access whether we add or reduce our position in Equities. If you already construct a stock portfolio, you may actually Buy 'Undervalued' stock and Sell 'Overvalued' stock. It is hard to define whether the stock is 'Undervalued' or 'Overvalued' as we tend to not to buy the shares when the market is dropping and tend not to sell the shares when the market is rising.

Okay, now you may say - "I understand the reasons behind now and want to learn how to construct a portfolio, please tell me more". I shall share with you on next few articles here. So, please stay tuned.

09 December 2011

Singapore Property - Another New Measures that Hurts It

The government's latest round of property market cooling measures - imposing a range of additional buyer's stamp duties on private home purchases - helps most genuine owner-occupier buyers, specifically citizens and permanent residents who may be affected by affordability issues.

Wednesday's announcement of an additional buyer's stamp duty of 10 percent for foreigners and 3 percent for Permanent Residents already owning one or more properties and for Singaporeans already owning two or more properties caught the market by surprise.

In my own opinion, this will give a negative impact to Singapore private property market, as well as its HDB resale market. Developers with many unsold units would have to spend more years to clear out it stocks. And to answer whether it is a good time to start accumulating stocks now, I can't give a clear answer but we will see the impact by another next few more quarters.

"Cash Is King" is always a good choice when we can foresee that the market is dropping. Let's wait for the bad time to come and buy it at cheap price. :)

05 December 2011

Cyclical Stock VS Defensive Stock

Today I would like to share with you more on the concept of investing in cyclical stock vs defensive stock.

Defensive stocks means that the share performance is not impacted much by the macro-economy environment as their revenue actually not really affected by the market. For example, people still need to eat when the market is in the downturn. Normally defensive stock fulfill some of the criteria:


  • The revenue and earning growth is growing even if the market is not performing well. 
  • Cash Cow Company - Those companies normally is having a lot of cash flows since they do not require high CAPEX (Capital Expenditure to purchase a lot of Fixed Asset)
  • High Current Asset Ratio - As they do not require a lot of debt to grow their business, hence they do not really go for low Current Asset Ratio. 
  • High Interest Coverage Ratio - As they do not borrow much money from bank, hence they also do not need to pay more to bank for loan. 
Cyclical stock normally react more than what market reacts when the market turns better or worse. Normally you can see some patterns there: 
  • High Debt to Asset Ratio - Normally those company will borrow a lot of money when the time is good and prevent it from having cash flow problem when the market turns worse. 
  • Inconsistent Growth in Revenue and Earning as well as Cash Flow - As the cyclical stock will face difficulty during downturn and enjoy a very fantastic growth when the market turns better, hence it is showing inconsistent growth in revenue and earnings. 
  • Normally you will see some industry is experiencing this - for example Coal / Iron / Palm Oil / Exports / Construction etc. They require a lot of cash flow to strive through. 


Different investors will have different required return and risk appetite. If your risk appetite is low (for example, if you do not like to experience 50% losses in a year), then my advice to you is to avoid those cyclical stocks. If you are OK to experience 50% temporary loses, then you may go for the cyclical stocks. Be make sure that you fully understand that industry and also the company's management's ability in fighting through the hard time (at least not having problem on cash flows).  

You can drop me an email to share about your views on my opinions on this topic. Have a nice day. :)

02 December 2011

Iskandar Malaysia Progress (Dec 2011)

Johor Premium Outlet is launching soon at the Indahpura City, Kulai which is about 1 hour drive from JB downtown. Legoland is also targeted to be completed and launched next September 2012 and boost the tourism industry in Southern Johore area. With few University starting at Nusajaya and more foreign direct investment flow into this area, I believe that Iskandar Malaysia is definitely another growing engine for Malaysia.

01 December 2011

My Portfolio Update + Opinion on Current Market Movement

My Cash + Stock Portfolio Update (1 Dec 2011)

Stock - 52.78% - MSIA - 40.76%, SG - 12.02%

Cash - 47.22%

Long term Investment strategy would be at least 50% in Equity and can be Up to 90%. The bear market (Or so called 'weak market sentiment') started since August 2011 and I would foresee another few more months to go. It takes time for a government / countries to have a critical decision be made to stabilize the economy as well as its socio-political issues.

EUROPE - Euro is still at the weak side compared to USD. As more governments are taking efforts to discuss and solve the problem together, I do not see a further deterioration of Europe economy. It can only be better after it becomes worst.

US - If we can see a better decision made in between the two parties to solve domestic problem in USA, we would see a better economy in 2H 2012. Of course you can be patience enough to wait for economy recovery which we can only see the impact by 2H 2012.

CHINA - China govn. nonetheless is still battling for the inflation as well as its export directed economy. For my humble opinion, I believe China govn. can still cope with its economy as it is controlled by one party and the policy change made can be faster than Europe / US.

SG - Singapore Economy will slow down to expected 1-3% growth according to Sg. Govn. Forecast. In my own opinion, I hope that SG economy can return to its normal growing speed at 3-5% per annum after 2H2012. So far I still cannot foresee a long recession in Singapore thanks to its government efforts on monetary policy as well as "Open Economy Policy".

MY - Msia will be undergoing an election next year. Normally we will see a better economy environment on the election year (in general). Nonetheless, I do hope that Msia Economy can be better than last year due to its export sector (e.g. Palm Oil & other commodities, Tourism, Export sectors etc.). With labor cost rising in China and disaster at Japan/Thailand, I hope that there will be more FDI coming in to Msia.

29 November 2011

PEG Ratio - Concerns

PEG Ratio - A ratio with the formula PE Ratio divided by EPS Growth Percentage. The lower the ratio the better it is for investment. In traditional finance theory, if we look at low PEG ratio, it can be either the PE ratio is low or the EPS Growth Percentage is high. In either way, it consists of several risk that you cannot see from this formula:

1. High EPS Growth - If a company would like to sustain a ultra high earning growth, the company must also  need to sustain its revenue growth as well as Cash in Operation growth. Normally a growing co. will experience two stage of growth, an short term growth as well as long term growth. Short Term growth can be due to the co. is having a new range of products / services / market by having a lot of advertising campaign or promotion to its customers. So we can see that the A&P expenses will go up first before the revenue growth comes in eventually. While we cannot determine whether the revenue growth can be sustainable, we must also look at the company's Balance Sheet as well as Cash Flow Statement. A strong BS (e.g. Good Current Ratio, Liquidity Ratio, Debt-To-Equity Ratio, Positive FCF etc) indicating a company is growing within a healthy condition.

2. Low PE Ratio - Normally a Low PE Ratio indicates that the investors do not have a very good confidence level to the company's near future or because the company requires some discount (e.g. Liquidity Issues as the company outstanding shares is not liquid, or Market Cap Issues as the company market cap size is smaller). An Institutional Investor normally buy the blue chip  stock first before they look into a smaller market cap stock as they always want to reduce the execution cost (e.g. they can easily buy and sell at one shot without waiting for few days to complete one transaction).

With above concerns, we must have to study more after we filter out a group of stock that fulfill the PEG ratio

  • Whether the Company still can sustain the growth Rate in near future
  • Whether the Company maintain a strong Balance Sheet to sustain its revenue growth rate
  • Whether the Company able to cope with the business/finance difficulty when the downturn of the economy
  • Whether Company will get a re-catalyst in near future (e.g. Market Cap can grow to a bigger size after the revenue can grow for a long period etc)

Welcome to share with me your thought on it too. Have a nice day.

25 November 2011

Tips on Investing in Stock Market while it is very volatile

In my own opinion, there are some ways to invest in Stock Market while the market is very volatile (means that the stock price can swing very sifinicantly).

1. Try to Buy a Blue Chip Stock. The definition of Blue Chip Stock here means:
  • Has a very good track record that can go through the downturn of the economy. For example, you can find the largest market cap Stock in the stock exchange. 
  • Has proven and consistent dividend policy to the shareholders. It is unwise to sell the shares at the bottom of the market. So dividend can give you some recurring income to survive while waiting for the market to bounce back
  • Less risk on the exposure of the financial / debt. With a strong Balance Sheet (e.g. Good Interest Coverage Ratio, Good Current Ratio, Low Debt to Equity Ratio, Good Cash Flow etc)
  • "Near to Monopoly" Status due to its "Branding" Power. Normally Blue Chip Stocks enjoy a higher shares premium among its peers as they have bargaining power against their suppliers as well as Customers. 
2. Dollar Cost Averaging.
  • It is very good to apply Dollar Cost Averaging during the volatile market, as you can purchase stocks at different timing so that you can average down your buy price and enjoy higher return if you have enough holding power as well as the belief that your company can perform better than this year few years later. 
3. Diversify your asset classes
  • A good portfolio managment means that you invest into a different asset classes so that the market volatility will give you a lesser impact. For example, you can set aside certain amount of the investable fund into Fixed Deposit, Commodities, Bonds, Equity, Property and Private Equity etc. As long as you know how the optimal asset class allocation, then you will be able to meet your short term goal and long term goal. 
4. Keep on doing Homework
  • When the market is quiet, it is good to do more homework and find out a good stock that worth to be invested. Try to set your long term goal (for example, to achieve 100% within 3 years) and short term goal (for example, the dividend you need to survive in your daily activities). Once you set your goal, then you can put the stocks in your watch list and action when it dropped below your buy target or rise above your sell target. A self-discipline is important for you to stay through the market volatility. 
Let me know how can I help on your stock investment. I can be contacted via jackphang@jackphanginvestment.com. Have a nice day.

23 November 2011

Chip Eng Seng, Worth to Invest?

As everyone knows that Singapore is experiencing economy slow down, the government just issued out a projection of economy growth for the year 2012 that the economy growth can only in between 1%-3% growth. While we cannot deny that Singapore is an open economy entity that to be impacted by the global economy circle, we also should look at it in long term whether Singapore can still be in a good position to fight with it.

CES is a company leaded by Raymond Chia. As far as I know, it is undergoing a transition period where the Property Development division start providing greater net profits compared to its construction division. As of current, its order book is having around SGD300++M, which has about 2-3 years profit visibility.

Means while, its property development division is having a slowing down impact due to the recent government efforts to lower down the speed of rising of the private property. Let us read through CES property development division:

- HDB - EC / DBSS: Less Impact on the slowdown as there are still a lot of Singaporean waiting for the opportunity to upgrade their flat to a better condo.

- Private Property: Impact is high. However, we should also look at the execution power of particular property developer on how they can promote and able to sell off the property they have on hand. So far, the take up rate on Simei Property is around 35% which I think is not very encouraging. Nonetheless, it is worth for us to wait through the whole circle to be up again as in my opinion, I like to buy cheap value stock and wait another property circle to peak again. 

- Oversea Property: Australia (Australia is a growing population country). Hence in long run, it is still worth to build more properties there within strategic location such as Melbourne / Perth / Sydney / Brisbane etc. 

In conclusion, if your investment time horizon is long enough (3-5 years), my suggestion is to average down whenever the price is going down, and wait for another property circle to peak again. This advice is for long term investors. 

21 November 2011

Mah Sing 3Q 2011 Result Summary

My own opinion:

Mah Sing is most likely to achieve more than 20c EPS this year and at least 25c EPS next year. The forward PE should be at least 7.76X, which is quite low in my memory. If I would like to hold for more than 3 years, Mah Sing definitely is one of my preferred stock. :) By the way, we can see a dilution effect from its ESOS and Convertible Bond. So, if we wish to include them in the dilution effect, the PE may be at a higher range. Nonetheless, as long as shares price is at lower range, then we will see a lower possibility the bond holder convert it to equity. :) 
 

Source from: Bursa Malaysia

The Group recorded strong revenue and net profit of RM1.1billion and RM127.5million for the current yearto-date. This represents 42% improvement for revenue and 47% improvement for net profit over the corresponding period in the previous year. The current quarter revenue and net profit of RM420.7million and RM43.2 million represents 48% and 46% improvement respectively over same quarter last year. Revenue and profit for the financial period is attributable to property development activities carried out in Kuala Lumpur, Klang Valley,Penang Island and Johor Bahru.

Ongoing projects that contributed to revenue and profit include Garden Residence in Cyberjaya, Kinrara Residence in Puchong, Perdana Residence2 in Selayang, M-Suites in Jalan Ampang, One Legenda and Hijauan Residence in Cheras, Icon Residence in Mont'Kiara, Kemuning Residence in Shah Alam and Aman Perdana in Meru-ShahAlam. Also contributing are commercial projects such as Southgate Commercial Centre in Sungai Besi, StarParc Point in Setapak and industrial projects, i-Parc 1 and i-Parc 3 in BukitJelutong as well as i-Parc 2 in Shah Alam. Projects in Penang Island, Residence@Southbay and Legenda@Southbay and in Johor Bahru, Sierra Perdana, Sri Pulai Perdana 2 and Austin Perdana also contributed to revenue and profit. The Plastics division continued to contribute positively to the Group's performance. With prime sites secured, the Group continuously seek to value-add on its projects through innovative marketing strategies,award winning concepts, and timely execution.

The recently announced MOU with Central Pattana, Thailand’s largest retail developer for potential joint development and management of a shopping mall within Icon City, Petaling Jaya is one example of the Group’s ability to enhance the development appeal of its projects, for greater returns to the Group and buyers of its properties.
There were no material changes to the Group’s profit before taxation for the quarter as compared to the preceding quarter ended 30 June 2011.

Explanatory Notes Pursuant to Appendix 9B of the Listing Requirements of Bursa Malaysia Securities Berhad

The Group has laid strong foundation for longer term momentum and sustainable growth, achieved via its aggressive landbanking exercises in recent years.

The proposed acquisition of 225.7acres of M Residence@Rawang freehold land in October2011 is the latest addition that will boost the Group’slandbank by a further RM948million in estimated gross development value(GDV). With 36 projects in its portfolio, the Group's unbilled locked in sales and remaining GDV is estimated at more than RM15 billion.

The remarkable sales achieved and timely execution provided steady cashflows and liquidity. The Group’s balance sheets remain healthy with net gearing ratio at 0.38 as at 30 September 2011.

17 November 2011

Guideline on Constructing a Stock Portfolio

Today I would like to share with you on some of the guidelines to construct a stock portfolio.

First of all, you have to understand the underlying risk and potential return on stock investment. It is unlike Unit Trust, where you could diversify away the unsystematic risk that happen on single stock. Nonetheless, you may able to find a good stock and put it under your own stock portfolio for long term investment purpose.

In my own opinion, you must have at least 3 years investment time horizon (means that you MUST invest with the money that NOT to be used within 3 years). This is a crucial part especially for those investors that lack of investment experience, and protect you from doing some silly thing by selling a very cheap stock just because of the emergency use purpose.

If you do not have a lot of investment experience, you may diversify or construct a stock portfolio with below objectives:

1. Earn the Dividend during the bear market
2. Enjoy the capital growth during the bear - bull market circle
3. Sell the stock during the bull market or switch it to high dividend yield stock during bull - bear market. 

Below are the classification of the stocks
----------------------------------------------------------------
  1. Defensive stocks - Normally we refer to consumer stocks such as F&N, APB, ShengSiong etc. The stock movement is slightly different from the overall market (means that the beta is normally lower than the overall market). We also can easily determine the future revenue movement as the growth factor normally is quite low as compared to other sector.
  2. Growing stocks - Normally this category suitable to those investors who like to enjoy capital growth instead of dividend. They would risk themselves by investing the stock in early growth stage and wait for it to grow to a certain level before they slowing down the growing speed. It require patience and insight from investors to determine which co. is really can be a 'superstar' stock in future.
  3. ETF - ETF is more on the Top Down Approach (Macroeconomic). If you are good in macro-economy, it could serve as a compliment in your stock portfolio.
On top of the above mentioned items, I would like to share with you on the asset allocation. Normally during the bear market, it is unwise if we hold too much cash on hand. Same goes to bull market, it is also unwise if we hold too much stocks on hand too. As currently the market is more towards bear market, hence in my opinion, we can start investing a little bit cash on the market. Do not risk yourself into invest whole your money into just a single stock, while you do not have a thorough homework into this company. Try to treat your stock portfolio as part of your business. The more homework you put into it, the better result you will get in your stock portfolio.

Good luck in your investment.

16 November 2011

Things to Take Note when Investing Auction Properties

I believe that many people like to buy an assset with lower price, regardless whether it is stock or property. There are higher chances to buy a property with lower price through auction. According to my dear net friend, there is something to take note when you wish to invest in auction properties:

Let say you had successfully tendered the auction unit:
  1. You need to settle the balance with bank within 3months
  2. You need to pay the fee to aunctioner
  3. You need to bear the stamp duty and so on
  4. If there is any caveat issue, you need to settle it yoursel
  5. If there's any outstanding fee payable to authority you also need to settle
  6. Even after u fully setlle the balance, if the occupant not willing to moveout you need to go through legal application.You can apply court order, but if he still unwilling to move, you can then apply police assistant (Make sure the occupant does not burn your house later, hahaha)
What I learnt from my friends through gathering is that, if you wish to buy an acution property, you can go through several ways - Property Agents, Bankers, Lawyers and other networking. Normally a good property could be sold off before an auction, so the more people you know, the higher chance you will get the property you want to invest.

Another thing to consider is the time horizon. One of my friends who bought a land near Tampoi at the price of RM180K 15 years ago now could be sold off at near to RM2.0M. He prefers to invest in long term (Capital Appreciation) instead of Rental Yield as his invested capital is huge compared to the normal retail investor. For retail investors, they would normally opt to buy property with high ROI (the ROI could be counted as (yearly dividend - yearly expenses / invested capital)). Make sure you know your risk and return profile before entering investment so that it would not cost you million of dollar just to buy a lesson from that.

15 November 2011

Do a Due Diligence on Top Management before You Decide to Invest in Long Term with Them

Frankly, I own 3 S-Chip stocks due to the the reason that I love fast growing company with potential exponential earning growth. Without a second thought, I believe that the company that fulfill my searching criteria would be under my watchlist and I would action when neccesary.

The fact is that, before you invest in a company, you should also know about the entire background of the management, the country itself as well as the culture of doing business there too. I heard from my friend that, those aggresive businessmen would risk themselves by getting so called 'Private Loan' from the underground money lender and grow their business until big enough to cover the interest paid to the money lender, and of course, the interest could be as high as 20% per annum or per month!

As China is approaching a soft landing in its economy, there is no doubt that the banks are tighening the borrowing policy and reduce the loan amount. As what I said, bank always approach you to sell you an 'umbrella' when the day is shinny and get back the 'umbrella' when the day is cloudy and start raining.

So my advice to you is that, before you invest in a company, please make sure to do a due-dilligence on the Top Management and find out their risk appettite as well as the character. If you want to find a business partner (long term partnership), make sure that this guy is trustworthy and have certain level of integrity on its suppliers, customers as well as employees.

14 November 2011

China Minzhong Quarterly Report Update

Below are the extraction from SGX website:

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_C1E56E69D2B6B00F482579470025F803/$file/1QFY2012ResultsPresentation.pdf?openelement

  • 1Q2012 to 1Q2011 Revenue increased 36.8% to RMB361.4M from RMB264.1M
  • 1Q2012 to 1Q2011 Gross Profit increased 68.5% to RMB147.0M from RMB87.2M
  • 1Q2012 to 1Q2011 Net Profit increased 77.9% to RMB93.1M from RMB52.4M
  • 1Q2012 to 1Q2011 Net Profit Margin increased 6.0% to 25.8% from 19.8% due to better product mix - Champignon mushrooms (14.0%), Black Fungus (14.7%), German Chives (8.4%), Capsicums (7.6%), King Oyster Mushrooms (9.2%)
  • Net Profit / Current Equity Holdings for 1Q2012 = 93.1/3,000.8 = 3.1%
  • Outlook - 
    • Despite the global economic uncertainty, the demand for vegetables products remains robust, underpinned by population growth, rising urbanization and the increased preferences for healthy dietary eating habits. Globally, food manufacturers’ needs for cost-competitive and reliable supply of raw material food ingredients are increasing on the back of increased weather adversities and supply shortages across the agricultural landscape. The Group remains well-positioned to capitalize on these opportunities with its established track record, ongoing expansion plans and highly specialized product knowledge and emphasis on product quality assurance.  
    • The Group continues to reap rewards from the expansion of its cultivation and processing capacity over the past financial year. Harvests from newly-added vegetable farmland and the additional processing capacity at the Group’s New  Industrial Park are expected to contribute positively to the Group’s business performance in the new financial year. The Group’s continued shift towards a higher value product mix will also help to drive the increase in average selling prices and margins in the long term. 

09 November 2011

Things to Take Note when Investing in REITs

Something that I learnt from investing in REITs:
  • Check the Debt Ratio. If the Debt Ratio is too high, it means a higher posiblity for company to raise fresh money from shareholders through Right Issues or Private Placement and it would dilute the EPS for short term. However, we should access the impact in long run before making final decision. 
  • Check the Management Plan of Acquisition. If the management is very aggresive to expand its portfolio size within a few more years, it is also very high chances that management will issue the placement or right issues to the sharesholders. Again, we should also access the impact of the acquisition and see if the acquisition can bring more profits / cash flow to the portfolio.
  • Check the components inside the Portfolio. Make sure you understand the country risk / sector risk as the Income of the Trust are normally formed by two:
    • Business Risk -The better occupancy rate and the bargaining power of raising rental income, the better the business is.
    • Financial Risk - Fix Rate / Variable Rate of the Borrowings. 
  •  Check the background of the Management and its relationship with the government as well as other related parties.
  • Understand your Investment Horizon and Risk Appetite. REITs always experience an economy circle as the occopuancy rate is always higher when the ecomy is good and lower when the economy is in down turn. In my opinion, we can apply dollar cost averaging to reduce the impact of the timing problem
 Feel free to give me your comments. Please let me know if you are interested in investing in Singapore REITs.

02 November 2011

Mah Sing - Silver Award (Developer of the Year Worldwide Category)


OPP Industry Awards 2011 - Winners
Raheja on top of the world at OPP Awards for Excellence 2011

Raheja Developers Ltd of India won the title of Developer of the Year Worldwide at The OPP Awards for Excellence 2011 this week, alongside 40 other OPP gold and silver medal winners. The awards were presented at a special ceremony at The Property Investor Show & OPPLive.

Raheja took gold in the worldwide developer category because, the judges said, “it is clear to see that Raheja is a construction and development company with a difference. It offers luxury living for smaller costs, excellent customer care levels, and the highest imaginable standards for the welfare of its staff, as well as for the environment. India is a country that is expanding fast and developing new homes at a breakneck speed. It needs firms like Raheja to make sure that it moves forward with a world-class vision of delivering the best possible products at the best possible prices. Planning, people, marketing, sales, administration and delivery - they do it all so well. An excellent entry.”

Silver medals in the Developer of the Year Worldwide category went to Mah Sing Group Berhad and Absolute World Group.

MahSing won, said the judges, because the “group is one of those developers that has got everything covered – from individual villas up to major pieces of commercial property. The company’s products are perfectly tailored to the local market and their relevance will definitely make them sell well. We particularly liked the fact that they are so carefully focused on quality, and that they work hard to adopt international best practice at all times. Developers around the world could learn from Mah Sing’s ability to maintain high quality standards alongside quick turnaround times.”

And Absolute World Group won through, according to the judges, because “the focus that the company is bringing to its new condo-hotel is excellent. The project is definitely going to be a winner. The 60% growth that Absolute has created over the past two years is evidence of its strong internal systems and its excellent management structure. Absolute is going to keep on growing and they deserve every success.”

The full list of all category winners is:

Category 1 – Best developer:


GOLD WORLDWIDE: Raheja Developers Ltd
 SILVER WORLDWIDE: Mah Sing Group berhad
SILVER WORLDWIDE: Absolute World Group

01 November 2011

Mah Sing Ends LOI with China Partner

Mah Sing announced on 28 Of October 2011 that it had ended the Letter Of Intent to jointly develop a property in China with its business partner there after near to 2 years of waiting. To the best of my knowledge, this is the 2nd time Mah Sing has stop such project before it kicks off due to the long time waiting.

What I am more curious is how company is going to due with its near to 30M USD deposit in China Bank? The 2nd question is, how is the company is going to expand its business to at least regional level?

However, I am still think that Mah Sing Top Management is very good in managing their cash flow, and I hope that they can keep on acquiring new piece of land when the market is in the downturn and sell more whent the market is going up. This is what I call - 'Buy Low' and 'Sell High'. In another word, we can call it 'Buy when marke price is undervalued' and 'Sell when the market price is overvalued'.

Source: http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/all/964F1D73966D04B84825793700366A26/$File/Mah%20Sing%20Changzhou.pdf

28 October 2011

Buy Low and Sell High - Short Term Trading Method

Normally I encourage my clients to have At Least two strategies, one is the short term trading strategy, another one is long term investment. Most of the time, Long Term Investment is meant for "BUY ONLY WHEN MARKET CRASHED A LOT", and Short Term Trading is meant for "PORTFOLIO REBALANCING - BUY STOCK A AT LOWER PRICE AND SELL STOCK B AT HIGHER PRICE". Hope this can help you too.

Try to find out undervalued stock and buy it. Sell it when it near to the intrinsic value or when you find out another undervalued stock. But how to find out undervalued stock? And how to know whether it is near to the intrinsic value? Frankly speaking, I am still learning on finding a more accurate way to do so. So far, I only know that:

- If the company keeps on 'Shares-Buy-Back', means that it is giving confidence to the investors that the stock is considered as 'Undervalued'
- If there are a lot of privatization activities in the market, means that there are more companies are currently undervalued
- If there is no company willing to IPO or extand the date to IPO, means that the market is actually 'Undervalued'

How to find out whether the market/company is Overvalued? So far I only know that:

- If the company keeps on issuing right issues to get money from the investors
- If the company management starts selling their shares to the market
- If the company management over confident on their business and Trade Receivables and Inventory Levels keeps on moving up very fast

20 October 2011

You are The One who Decide the Return Performance Ultimately

I have spoken to a lot of my friends who are also very enthutiastic in their investment in equity as well as property. All of us share the common identity, which is believe in our decision to make the investment as well as the self-discipline that we uphold ourselves from preventing ourselves to be hit from the recent market downturn.

I always asked them a question, "Why do some people earn money but some people lose money from the same investment project?' Different people gave me different answer. Some answers are "Because these fellows are lucky", "Because these people did a lot of good things so they were able to earn money from the market", "Because they are skillful" & "Because they entered in the right timing" etc.

To me, I just realized that actually "YOU" are the CORE reason to decide the return performance of the invested project that you invested into. Your mind already controls how much you could earn without you notice. Let me give you example, if your mind telling you that must cut loss before the price dropped too much lower and buy it back when the price goes up, then your whole body and brain will function as a trading machine, telling you to keep on monitoring the whole market to wait for a very good opportunities to do so. If your mind telling you that Investing is Gambling, then your brain and body will function as a gambling machine, keep on searching the good bet to put.

Only you understand who 'YOU' are, then only 'YOU' can achieve a better result. That is why I keep on telling my friends that, 'Investing' is not finding the best counter/project/real estate to invest in, but to find out the real 'YOU'.

Happy Trading/Investing/Gambling. And wish me happy birthday. :)

19 October 2011

Some Personal Suggestions to SGX

Singapore Stock Exchange is aggressively promoting itself to be a regional financial hub, in the bid of competing with Hong Kong to lure more companies to listed in it. As an Independent Dealer in Singapore, there is some suggestions that I think I can contribute to it:

  • Continue to lure more Europe companies to get listed in Singapore Stock Exchange. Given the weaken market of Europe and US, there is no point for them to get listed there. Maybe we are able to get other companies to get dual-listings here, as it will benefit the companies to see their intrinsic value to match with market value. 
  • With more wealth management activities going on in Singapore, we should also encourage wealth management firms to get listed in SGX. This would generate more profits in the whole market.
  • Be more stringent in rules & regulations. It will give more confidence to the public investors that the companies that listed in SGX are compliance with the listing rules and also up to the financial reporting standard. 
  • Create more innovative products and services but also providing education services to the public, for instance, not many retail investors understand how CFD and ADR work. With better understanding as well a skill needed to master a product, then only investors will participate in the market.
Disclaimer: I do not hold SGX in my portfolio. I am Independent Dealer working in Singapore.

18 October 2011

Sino Grandness - A China Company that Grows in Its Fruit Juice Business

Just a couple of days ago, Sino Grandness hold a briefing with us ( a group of remisier in Kim Eng). There were two main officers came to our office. One was the IR Head and another was CFO. From the name card, I roughly knew that CFO background was Financial Controller and IR Head were Malaysian and head hunted by the China man.

One thing that made me curious was that, what was the purpose that they came to our office for the briefing and what can we learn from there? As a remisier, my duty is not to fully understand the underlying business model as well as its intrinsic value so that everyone can buy or sell based on my research report. However, I can judge a company based on what he told us.

First of all, the IR head told us that CEO 黄总 was formally ex-AGM from China Government Department that related to Exporting. So when he first stated his own private business after the China Government opened up the opportunities to its people, he was able to get the connection to export to the famous Supermarket / Hypermarket in U.S.A and Europe. As what he assured us, the quality of the canned food are qualified under Europe and U.S.A standard. Their canned food business is now expanding to Australia.

As you would be able to see from research report from various research houses, that this company is still expanding very aggressively for its fruit juice 鲜绿园 brand in China. They worked very hard for the past 1 year to get the fruit juices sold in 1st tier city in a few province. So their plan is to get more invested capital through convertible bond for their fruit juice subsidiary shares to grow their fruit juice business and get its division listed one day.

As what I can see is that, if you are a big investor, then your choice of investment is widen, as you would be able to get private placement or convertible bonds from the investment bank, that retail investor normally hard to get through.

Now come to the questions, why are they coming to our company for the briefing? I believe that it is due to the liquidity issues. If a company that is illiquid and hard to fulfill the minimum spread of number of the investors, then they have to have more activities to lure more new investors. Ok, then another question is, why there are not many investors in this company?  As you are aware of, a lot of S-Chip shares are now dropping a lot from its previous high, as there are a lot of bad news coming out from the market, such as Chaoda.

So I asked the IR head, how would he re-assure the investors that it is safe to invest in his company. He replied me that, "to know whether a company has problem in its financial statement, you should look at his Cash Flow as well as the reason behind on why the company still issue a lot of right issues and other corporate action while it showed a lot of cash in the balance sheet statement."

He also said that the CEO was well trained to manage a group of people, and he was able to hire a Taiwanese to be the Research & Development Head in his Co, which is not easily be done by other China businessmen. CEO was also willing to pay higher to lure other senior managers from competitors to join him. And this is why they are able to grow the new division so fast.

So, above are the reasons why I hold a little shares of Sino Grandness. If you look at the balance sheet, it is quite normal. Now it is time for me to focus more on its management especially the CEO (He is still around 50, so there is still a long way for him to fight). The CEO promised not to sell his shares within 2 years of listed in Singapore Shares Market. So let us see whether he will sell his shares next year. :) It will prompt alert to us.


Disclaimer: I hold Sino Grandness. Please consult your remisier or dealer before making any investment decision.

17 October 2011

Human Factor in Running a Business

I am a self-employed person under Kim Eng Securities Pte. Ltd. Previously I was with Bursa Malaysia and Phillip Securities Pte. Ltd and I was learning how to run a trading business especially in Equities and Unit Trusts as a programmer, business analyst as well as business development executive.

The ways of doing business, are not more than communicating with other people in your daily life. When you wake up from the morning, you will watch the TV program and the news reporter will tell you the market movement in the market. After that you might want to read the research articles written by various research team from different broking firm. You may also wish to make the investment decision when the market is open.

When you read from the news or research articles, you may also wish to do some homework yourself, by reading through the charts (Technical Analysis) as well as its fundamentals (Fundamental Analysis). You may use about 1-2 hours to make a decision on buying a financial products such as CFD, Equities, Unit Trusts as well as others.

Of course, when you are not in a very sure position to make a decision, you may consult your remisier as well as your wealth manager. For those trained in financial products, they may give you financial advices based on your risk & return appetite. You have to understand the underlying risk and potential return before you start a brand new investment. The more sophisticated investor you are, the more risk that you can undertake, as you would be able to go through the downturn as well as upturn in the market.

Let me give you an example on how to evaluate a company:

DBS is a Singapore Local bank that similar to Maybank in Malaysia. Besides that Asset and Liabilities in the Balance Sheet, you may also wonder why the Price / Book Ratio is higher than its peers. What makes it superior than its peers when they are running the same business?

Intangible Asset that makes a different. From here, we may not know how to evaluate the intangible asset in a company. We have to understand how the company runs its business before we can determine how much the intangible asset is. I would take 'Management' as one of the intangible asset - an asset that makes a company different from its peers. You would be able to notice that a company stock price is dropping (for example Steve Jobs from Apple) when he stepped down as a CEO of a company. Besides that "Management", "Company Culture" & "Business Model" are those intangible assets that make a company different from another. Some company that good in 'R&D' may enhance its leadership in creating a better products or some company that good in 'managing cost effeciently' may also enlarge its business scale so that it can achieve economy of scale.

If you read the book titled 'Good to Great' or 'Built to Last', you may understand why some industry leaders are able to extain its leadership for a certain period of time (e.g. means that they are able to enjoy higher and consistent ROE for a period of long time). For the industry followers, they would find their niche to achieve better  than average result in the industry. If you are able to find it from the market, then it is good that you can hold it for a longer period until you find another undervalued company that worth to switch to.

Trust me, that investing is an art. You would never able to judge a company stock price just based on graph or fundamental figures. The more you understand the business model the company has, the better potential result you may get.

Good luck in your investing. :)


13 October 2011

Singapore Commercial Property Market View

According to Kim Eng Research Team, we as a Singaporean/Singapore PR are not able to buy the new commercial shop lot as the price is too expensive, unless you are targeting for those old building, such as Adelphi etc. So what I can predict is that, with the next few more years, there will be more REITs coming out in the Singapore Market. Try to target those REITs that are being well managed by a group of people as they may acquire more commercial buildings under their management and thus increase your future dividend income. You may also leverage on the number of REITs that you are holding, but please be reminded that there will be a margin call when the REITs price drops a lot. However, I believe that bank will also call you to ask you to pay for more loan payment when there is any incident coming out such as SARS.

There is one website which is quite consistently update on REITs - www.reitdata.com. Please do your homework or call your remisier before you make any investment decision.

Good luck in your investing! :)

06 October 2011

Path to Financial Freedom

A Simple Way Towards Financial Freedom is to Get Your Mind Free first. Try not to frame you in traditional way of thinking. Always think out of box, and you will get another way to reach it.

My Formula of Path to Financial Freedom:

Total Asset * Annual Return Rate > Annual Expenses.

Total Asset - The more asset you have, the more income you will receive. Sometime, Intangible Asset is more valuable than Tangible Asset, such as "Professional Knowledge" and "Capability to handle Incident" or "Capability to grow up a business" etc. Those intangible assets will increase the annual return rate in future. 


Sometime, we can treat annual expenses as total asset (capitalize it) so that we can always reach the destination of become financial freedom.

04 October 2011

Contrarian Thinking

Today is 4 October 2011, which is near to my birthday. I still remembered that many people were saying that October traditionally is not a good month, as there are several issues happened on October. By the way, I treat it as my lucky month because of my birthday falls into this month.

So what do I think about the Contrarian?

A contrarian must accept that he/she is different from other people, at least as compared to the majority. It means that you should do opposed to your fear and greed. If you are not greedy people, then only you can earn money from your investment. Similar to the fear, if you are a fearful person, then you can also earn money from your investment.

There are too many short term traders in the market, hope to earn a big bulk of money from the market. So to be a contrarian, you should be a long term investor, with the hope that to earn money when the market is the bear market instead of bull market.

How to do that?

Keep on doing the things that against your mind. Sometime, we will feel fearful when the stock price keeps on dropping, as we would have a lot of unrealized losses. If we cut loss at 50%, I do not think that it is a good idea, as I would think that it is a silly thing of just selling off your investment base on the sole reason that the stock price is dropping.

Always stay away from the market. The more rational you are, the higher chance you will get the profit from your investment. I still believe that, as long as you can purchase 1 dollar worth of asset by paying 50cents or less than that, you will sure earn the money in near future.

Above article is my own humble opinion to encourage myself to stay investing in this uncertainty.

29 September 2011

Singapore Stock Watch List - Update 2 - 29 September 2011

I finally completed the 1st round of stock screening of SGX market. Below is the stock list after I have done a first level stock screening:
  • QINGMEI GROUP HOLDINGS LIMITED
  • YAMADA GREEN RESOURCES LIMITED
  • Anchun International Holdings Ltd
  • Hersing Corporation Ltd.
  • Mun Siong Engineering Ltd
  • Chip Eng Seng Corporation Ltd
  • Sino Grandness Food Industry Group Ltd
  • Hafary Holdings Ltd
  • Ziwo Holdings Ltd
  • Smartflex Holdings Ltd
  • Boardroom Limited
  • Elite KSB Holdings Limited
  • Armstrong Industrial Corporation Limited
  • Boustead Singapore Limited
  • Golden Agri-Resources Ltd
  • Pan Hong Property Group Limited
  • Thakral Corporation Ltd
  • PCA Technology Ltd
  • First Resources Ltd
  • China Fishery Group Limited
  • UMS Holdings Limited
  • UOL Group Limited
  • Q & M Dental Group (Singapore) Limited
  • GRP Limited
  • YHI International Ltd
  • CASA Holdings Limited
  • Datacraft Asia Ltd
  • Transit-Mixed Concrete Ltd
  • Fujian Zhenyun Plastics Industry Co. Ltd

28 September 2011

Takeover Bids from PNB on SP Setia

It is a shock to me, as I didn't suspect that SP Setia would be taken over by PNB or Malaysia GLC, as I thought it should be able to defend its public listed status in Bursa Malaysia, as its market value as at recent stands at RM 6B-7B. I suspect there would be a lot of M&A going on on property sector in Malaysia. Recent E&O shares purchase by Sime Darby as well as Sunrise acquisition by UEM Land also another indicator that GLC actively acquire property development company which is managed by good management. I believe this is one of the reasons why Sunway boss wish to consolidate his company into one, so that it is harder to be taken over by another company.

I am not sure whether Mah Sing would be acquired by those big boys in the market. However, if we look at bright side, those company that acquired by the big boys would be easier to get a bigger project from government. Let us wait and see for another actions by GLC in near future.

Time to start accumulating stocks slowly

Based on my experience, some of the stocks in the stock market has reached its lowest point this year. While we cannot deny the stock price is moving south, I believe that it is time to start accumulating good company with more reasonable price. There are three strategies now:

  1. Buy into High Dividend Yield Stock. The cheaper the price is, the higher the dividend yield is. Please make sure the company can distribute dividend in consistent manner. 
  2. Buy into Undervalued Stock. To determine whether the company is undervalue, you could judge it current PE with historical PE or other market variable indicator such as P/NTA, P/CF, P/S and P/B etc.
  3. Buy into Growth Stock. To determine whether the company is a growth stock, you can check whether the PEG ratio is low, CAGR is high, industry is a growing industry, having a good management etc.

23 September 2011

My Stock Portfolio Update

After 1 week of volatility on stock market, I started accumulating Mah Sing share, that I never thought I would be able to accumulate by this year. Number of shares that I own is now about 0.008% of total of Mah Sing's outstanding shares. So for example, if Mah Sing still able to achieve its Market Shares of RM5B within next 5 years of what projected by the management, then I would have about RM400K worth of market value shares within the next 5 years. But can Mah Sing's management realize my dream? Let's give another 5 years to proof it to us.

I also opened CDS account with Kim Eng (my current company) for S$5.00 so that I could trade Malaysia Shares with my central dealing team as I am more familiar with Malaysia market. Due to the needs related to my work, I am now forced to focus on Singapore stock market. I had subscribed Share Investor (web version - Fundamental) for 6 months. So, I am now able to perform the Stock Screening on Singapore stocks. 

The Singapore Stocks that under my watch list:

  • YAMADA GREEN RESOURCES LIMITED (China/Food)
  • Hersing Corporation Ltd. (Property & Construction)
  • Mun Siong Engineering Ltd (Oil & Gas)
  • Chip Eng Seng (Property & Construction)
  • Sino Grandness Food Industry Group Ltd (China/Food)
  • Hafary Holdings Ltd (Retail)
  • Ziwo Holdings Ltd (China/Textile)
  • Smartflex Holdings Ltd. (Manufacturing)
  • Boardroom Limited (Banking & Finance)
  • Elite KSB Holdings Limited (Food)
  • Armstrong Industrial Corporation Limited (Manufacturing)
  • Golden Agri-Resources Ltd (Plantation)
  • Boustead Singapore Limited (Plantation)
and more....

I will go through another screening process - to check on its sector as well as its company management and update you later. 


22 September 2011

Be Aware of a Company which Growth in Earnings is Not In Tandem With Growth in Revenue

As what we know that, the formula of ROE is Return on Equity, however, we should split it into Du Pont Formula which is:

Earnings              Revenue           Asset
---------     x      ---------    x    --------
Revenue                Asset             Equity

If we found that the growth in Earnings different from growth in revenue, there are 2 scenarios:

  • Earnings Growth faster than Revenue Growth
    • There could be some non-recurring earnings there, so we have to deduct the non-recurring profit from there and recalculate the earning
    • Some of the cost savings methods are in place. Operation Efficiency is improved
    • The earning growth comes from a new division / products that are not traditionally traded previously 
  • Revenue Growth faster than Earnings Growth 
    • Operations Efficiency Deteriorated
    • Some of the Revenue increased cannot bring in more profit. The company may be in the transition period as more expenses are incurred in the R&D session or Marketing session. 
    • Profit Recognition differs from the Revenue Recognition method. Example: Property Development sector. 

21 September 2011

How to Find Hidden Gems?

In my humble opinion, we must be very hardworking to find it out ourselves, as there are many low profile stocks or companies that do not appear in the mainstream media or social media. We should look at several criteria that fulfill it:

  • It is a small-mid cap company that has the potential to grow to a big-Cap company
  • It is in a boring industry or mature industry, but it has the ability to grow faster than peers due to its competitive advantage against others
  • It is having a big change in management, that it is going to change its business model to cater to current market trend
  • It has a good financial background, means that it is managing its cash flow very well so that there is no problem on paying debt in normal term
  • It has the ability to stands in difficult period, as it has unique business model or techniques as compared to peers
So, do you have any idea on which co. is belongs to the above category? Feel free to share with me via comments below. :)

19 September 2011

Chip Eng Seng News - INCORPORATION OF SUBSIDIARY AND PURCHASE OF A 13-LEVEL COMMERCIAL CBD BUILDING AT 150 QUEEN STREET, MELBOURNE, VICTORIA

Source from: http://www.chipengseng.com/administration/NewsReports/e1c517bd-a2c6-4d0f-a38b-3f2b70bffd1a_Incorporation_of_subsidiary_and_purchase_of_a_13_level_commerical_cbd_building.pdf

My own opinion is that, CES keeps on expanding its property development division in overseas such as Australia and it also has a land in Senai area (in Iskandar Malaysia zone). I will keep on monitoring its news and update it here.

In my own opinion, Melbourne is a population growing city and more and more migrants like to move there due to its investor friendly environment as well as worker friendly environment. There are a lot of property investment in that city. I also hope to purchase a property in this city, so that I would be able to travel to relax there for 1 week whenever I have a long vacation. :)

How do you define a good stock a.k.a. company?

Today I just met up with one of my friends who is also working in financial industry. What she shared with me about a good company is: 


1. In a Good Industry 


- You are not able to change the whole ecosystem. For example, in stock brokering industry, more people are educated and more IT savvy, and hence it is no way for you to try on traditional way to do the same business. 
- In another word, situated in a good industry in the country that having competitive advantage always give you a better to have a better return in long run. For example in Malaysia, its having competitive advantage in Islamic Finance Sector, Palm Oil Sector, Glove Making Sector and so on while for Singapore, the industry that it has the competitive advantage is in Finance, Offshore Trading, Oil Refining and Real Estate given the stable political system here. 
- In Taiwan, Technology / Hardware Outsourcing is strong here. 
- In Australia, Mining industry is growing there. 
- In U.S.A, Technology (Software) is very strong here. You are able to find thousands of talents working here.


2. With a Good Management - Able to Innovate & Integrity


- In specific, you are also able to perform the bottom-up approach to find a company that managed by a group of good people. We define good management as able to innovate given the changing environment as well as has the integrity to deliver what it promised to its stakeholders on time. 


3. Have Plan to Grow Bigger with Steadiness 


- Again, the company must have the culture with both Aggressive + Conservative characteristic, that it must conservative enough to survive during the hard time and be aggressive enough to grow the business faster when market turns good again. 


Conclusion:


- It is always not easy to determine how a good company is. If you are able to find a good company, please do not try to sell it during the volatility, as you will lose the opportunity cost. For example, Digi recommended Er Ge 5 years ago was just about RM6 and it stands at RM30 now (which is about 5 times). A good company that worth to hold is that, it can grow the profit in consistent way. I will find more companies with above characters and share it with you. 

Things related to Invest in Singapore Stocks with Singapore Broking Firm

1. If you do not have the Singapore Local Bank account, you can park the money in Margin Account.

2. Alternatively, you can open Standard Chartered Bank for free of charges and without any minimum deposit amount in that bank. The only thing you need to do is to go down to Singapore to open the online internet banking account.


3. It is cheaper to trade Singapore shares online by opening Stock Broking Account here, as minimum charges is 25SGD or 0.275%. As SGD appreciates against RM in long run, you as a Malaysian is advised to diversify your portfolio by putting the money in Singapore. As OSK charged 20RM + 20SGD for online trade for Singapore stocks.


4. Always try to keep your cost down by focusing on certain stocks and not always look at diversify your stock, especially when your portfolio is only 100K and above. It is advised to just invest in 3-5 stocks when your portfolio is less than 100k and not more than 10 if your portfolio is less than 1M.

17 September 2011

Nirvana - Funeral Business

Today I went to Nirvana Memorial Center located near to Salak Selatan. For the first time I realize that this is a profit generating business. Reasons:

1. It can be near to Monopoly business for the luxury funeral business, as so far it is the number 1 in this line. You would have little choices if you would like to have a grant funeral for your passed away relatives in Klang Valley area.
2. There are several business model, one of the business model is similar to investment plan, that you could buy for your needs in future with lesser capital now.

Please let us know your thought on that. Thanks.

16 September 2011

Small Personal Sharing Session

Small Personal Sharing Session: 

Date: 15 October 2011
Time: 2PM - 3PM
Venue: B-13, Jalan Jambu Air, Kangkar Pulai (My Parent's House)
Speaker: Jack Phang
Target Audience: 5 people - 10 people
Topic: Property Market & Stock Investment

Please leave us your name, contact number to our email bd@jackphanginvestment.com.

P/S: For those that could not join the seminar, we will send you a soft copy of the notes. You could leave us your email address here to bd@jackphanginvestment.com.

P/S: How to come to here:

1. Bus - Take 616 or 96 from Larkin Bus Terminal. It will take about 30 minutes to Taman Pulai Jaya/Taman Sri Pulai Perdana 2. You could call this number - +6018 713 8882 to fetch you to Kangkar Pulai after you reach Taman Pulai Jaya / Taman Sri Pulai Perdana 2.
           - Take 51B from JB Citi Square. It will take about 1 hour ++ to reach Kangkar Pulai. Details are here
2. Car - From JB / SG / Skudai - When you reach Skudai/Taman Sri Skudai, follow the sign board to go to Pontian. After that, you can follow the highway to reach Taman Sri Pulai Perdana 2. Kangkar Pulai is just less than 1 minute drive from there. It will take about 26 minutes from JB downtown to here.

15 September 2011

ARA Asset Management CEO Talk

I just attended CEO talk with ARA Asset Management - John Lim and his team during lunch hour. Some of the points that I would like to share with you are:


  • Its target is to be "Premier Integrated Real Estate Fund Manager in Asia"
    • 6 REITs under management
    • No redemption risk (fees are locked in for the life of the Private fund)
    • Underlying Income is packed to real estate and no redemption risk
    • Sources are from: Recurring Income & Acquisition 


  • Just launched Hui Xian REIT (RMB denominated equity offering in the world) 29 Apr 2011. 
  • CAGR of AUM = S$18.8Billion (61% CAGR)
  • focus more on China 
  • Partnership with Cheung Kong group, CaLPERS, TRS, CWT, AmInvestment Group Bhd, Citic Bank
  • Performance (IRR => Cacheo Logistics Trust 15.6%)
  • Shareholdings
    • - John Lim 37%
    • - Cheung Kong Group - 16%
    • - Institutional Investor - 37%
    • - Retail Investor - 10%

  • - 1H2011Result -> net profit > 18% to 29.86m


  • - 4.8 dps / 134c => about 3.5% dividend yield 


  • Strategy
    • - REITs
    • - Private funds
    • - RE Mgmt Services
    • - M&A
  • Fees is not affected by REITs valuation
  • Valuation model => Market Price / AUM
  • Growth as long as we are good fund manager
  • Not following real estate cycle 
  • If china bubble burst, can buy more properties in China 
  • Growth Engine -> China
  • Geography - Core -  China / HK / SG / Msia / Asean (with good connection) 
  • Geography - Others - Japan, India (get the right partner), Middle East - Doha(GCC countries), Australia (APN - A$2B ) 

  • Reasons why get public listed 
    • We need seeds capital to grow fast enough via more cash
    • talent management (needs experts to manage), become rich eventually 
    • Make the shares liquid 

13 September 2011

Singapore Stock Market Movement

It is always advised to stay calm during the up and down of the stock market movement. The market sentiment is considered as weak, or the investors do not willing to hold for long term investment during this period. Instead, they are hoping people to sell the price at cheaper price. However, I believe that with all the short term traders are moving out from the market, we will see a change of market direction in near future (3-6 months time).

For long term investment, my opinion is, try to buy the good company at cheaper price and enjoy the long term growth in earnings / dividend. Enjoy your investment there. :)

12 September 2011

CFA is Just one of the ways to know more about investment.

CFA is just one of the ways to know more about the investment, if you are the newbie investor, it is always advised to take the level 1 exam. Most of the basic knowledge regarding investment is there. But if you think that you could get a better investment result after completing the entire course, then your mindset could be wrong.

One major part of the CFA is "Integrity" or "Ethic and Code of Conduct" for those financial professional in the investment line. If you only know the theory (means that you pass all 3 levels,), you are still not considered as an expert if you do not have relevant hands-on experience), and hence cannot put "CFA" after your name.

For those young investors, try to pass level 1 and see if you are still interested in this line, as this sector is really narrow down to the investment. You can't get other job not related to investment after studying or completing this course. I have a lot of friends who failed level two and gave up there. But some of my friends who do not graduate in Economy/Finance/Accounting field will study hard to complete it because to them, it is the key to enter the investment line. They will need to start all over again by starting from Junior level, regardless of how many working year experience they have in financial non-related sector.

So, always try to keep your mind crystal clear that, CFA will not give you a better result in investing. It is just one of the ways for you to know more about investment.


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