27 December 2013

Sim Lian 2014Q1 Result Summary - December 2013

Please allow me to post a summary of Sim Liang 2014Q1 Result although it has been released since last month. Below is the screen shot from my worksheet, and I hope that it could give you some highlight on the performance compared to FY2013.

Income Statement Comparison
Balance Sheet Comparison (Part 1)

Balance Sheet Comparison - Part 2
Cash Flow Statement Comparison - Part 1

Cash Flow Statement Comparison - Part 2

Management Comment on Market Outlook FY2014

26 December 2013

Hao Yuan Venture into Iskandar Malaysia - Dec 2013

Although I am not very familiar with Hao Yuan, but I believe that such as move (RM1.6B land acquisition) and RM8.0B gross development value in Iskandar Malaysia will definitely attract many investors to take a look of this project. You may go to the below link for further explanation.

Source: http://www.businesstimes.com.sg/breaking-news/singapore/singapores-hao-yuan-investment-lead-us24b-development-iskandar-waterfront-20

I understood from my friend that there was some bookings to be cancelled for Country Garden project in Danga Bay. Nonetheless, what I could hope for is the business development here such as MNCs to setup their branches here so that they could rely on Singapore, a regional hub to link to other countries in the world.

Due to the strong Singapore dollar currency, I believe it will attract a few investors to park their excess cash here, until the cooling measurement imposed by Singapore government is reversed.

19 December 2013

US QE Tapering Program Started - Dec 2013

Today (18 November 3PM US time), US FED announced its plan to start QE tapering by reducing the monthly bond purchases to US$75B from US$85B earlier. It somehow was digested in the market, while US stock market pushed up to above 16,000 point again.

To me, I am not surprised that the QE tapering has been started, the question now is whether it will affect the market sentiment. FED hint that the future interest rate will remain in near zero range as long as unemployment rate stays above 6.5% and they would manage it so that inflation rate could stay in merely 2% range.

Given the speech by Bernanke, a retiring FED chairman, I believe that all center banks around the world would adjust their monetary policy by preparing to adjust the interest rate upward gradually, in long run. This, to me will definitely cool down the sentiment so that speculators would reduce their long position and we could see the impact of bubble caused by QE would be reduced to the minimum level.

As Singapore is a small open economy, I believe it would definitely re-adjust its monetary policy later. So, the inflated asset value would be reduced gradually, if not significantly. The hot money would definitely be flowing back to more traditional tools such as money market fund / T Bill / etc. Nonetheless, we should always look for good purchase opportunity during high interest rate environment. There might be some bargain buy there.

You may refer to the below link for further explanation.

Source: http://www.bloomberg.com/quicktake/federal-reserve-quantitative-easing-tape/

18 December 2013

Iskandar Malaysia Property Sales Seen Slow Down - Dec 2013

It seems that after so many developers rushing into Iskandar Malaysia after Klang Valley / Penang property boom and Singapore property cooling measurement, Johor government started to implement several action to discourage investors especially foreigners to invest here.

Some of the steps taken were:

  1. Introducing 2% of Buyer Stamp Duty for foreigners, instead of maximum RM10,000 previously
  2. Introducing 30% of Real Property Gain Tax (RPGT) within the first 5 years and a permanent 5% tax after that to foreign buyer 
  3. Minimum foreigner purchase price increased to RM1.0M from RM500K previously
Which such measurement taken in place, I believe that it may rule some speculators without holding power out. So far, some of the launches this year has poorer take-up rate compared to about 1 year ago. For more detailed information, you may refer to the link below:

Another issue that brought to the spot light was that Johore Sultan announced weekend holidays to fall on Friday and Saturday. It may create inconvenience to private businesses that have a business tie with Kuala Lumpur / Singapore offices. Many investors will be worrying what other changes of policy that Johor government would make later. 

In my humble opinion, Iskandar Malaysia should strive to be a so called suburb of Greater Singapore. But it only can be happened if and only if both government could push to make it happen. High Speed Rail project details is set to be confirmed by next year (2014) and let's see if it could be materialized by year 2020. I sincerely hope Iskandar Malaysia could set to be a good example in Modern Islamic Countries. 

17 December 2013

Woodlands Regional Center (Singapore North Corridor) Land Tender - December 2013

URA announced tander of two pieces of land near to Woodlands Causeway Point. You may refer to the link here for the details.

Woodlands Regional Center is envisaged as another growing engine of Singapore, under the plan of government to further reduce the dependency of CCR as main CBD area. I just noticed that Woodlands Center is now planned to be linked with BKE, SLE & NSE (in future).

Below is the screen shot of NSE which I took from LTA website.

What I was thinking was that, it would be more convenient for drivers to travel in between JB and Singapore via the North South Expressway if there is a new route for private transport to come from/to JB. The total length of NSE is about 22KM which I think is at least 30% faster if you come to downtown from JB (if and only if there is a road for private transport to go via new route) via BKE/SLE/CTE.

16 December 2013

Total Debt Servicing Rate (TDSR) - a Total Game Changer

In case you do not know what TDSR means for, it is a framework introduced by Singapore government in late June this year to further curb the property bubble by allowing 60% of total income to be served to pay the loan across all other loans such as car loans / personal loans etc.

This is probably the last and most effective action the government to take to curb the speculation of Singapore real estate market, with the cautious mindset to prevent the increasing interest rate in later year (2015/2015) that may hit Singapore economy.

Let me give you an example of how TDSR works:

Under this framework, all property loans must stay within 60 per cent of all monthly debt obligations to monthly gross income. Financial institutions must consider all outstanding debt obligations - such as property loans, car payments and credit card loans - in computing the TDSR, which also fixes interest rates at the higher of either the prevailing market interest rate or a specified medium term rate.

Imagine a family with a car loan S$2000, personal loan S$1,000 and gross income S$8K. Previously the family could take up to 35% of gross income which is S$2,800 mortgage loan. But with car loan and personal taken into consideration, now the family could take up to S$4,800 total debt or S$1,800 mortgage loan payment scheme. The family may now either to postpone the plan to upgrade the car or to reduce their budget on home purchase.

Hopefully by next year when the property price is stabilized, both my wife and I could consider to settle down here by purchasing a resale HDB with lower COV (but still with additional ABSD) thanks to this framework.

Source: http://www.businesstimes.com.sg/premium/top-stories/tdsr-game-changer-20131216

Debt management

Most of the time, if we focus on business development plan, we may require a significant amount to support the working capital as well as CAPEX plan. To execute it well, we may sometime extend loan to customers by introducing longer receivable time as well as obtaining higher debts from banks. 

In normal circumstance, we may face positive & negative impacts on the debt management planning. We may not need higher equity demands as we can ride on the debts from banks to support our expansion strategy without diluting equity earning per shares. We may also obtain higher revenue by allowing customers to pay us in longer period, and let them to grow their business together with us. 

Of cause there is a risk in it. We may end up increasing bad debt ratio together with the increased interest rate. We may also face higher interest rate during the bad time. To combat with this, a cautious yet detailed execution planning is needed. 

Sometime, I believe that to make suppliers & customers success together is part of our business / jobs. And we could further increase the profit together in the same ecosystem. Win-win strategy is always a better strategy. 

15 December 2013

Shares Investment - Invest for the Future (Dec 2013)

To be frank, I'm still in the learning stage. This post may be a short note to me to remember why I want to invest in shares, and what is the necessary things to keep myself calm when things are not happening as what I thought.

There are thousands of reasons why you would like to invest in equities than other financial products, such as bonds, real estates, unit trusts, commodities / derivatives etc. Once the tools can fit into your investment philosophy, then you should keep on digging deeper to find out how / what's the best to keep your dream alive.

To me, Equities means being a partner (be it active/passive) of the the company's management that maybe the major shareholders too. In this case, if you are using passive approach, what your mind maybe is just to enjoy the dividend received / capital gain along the investment journey. It is easier for you than the management to liquidate all your holdings just to jump into another boat to continue your long term journey. In this case, I would imagine most of us (retail investors) are having lesser control of the company, and therefore demand lesser return from the management. However, if you have the long term investor mindset, the first few things you may need to find out from the management is:

  • What else have you done which any other competitor not yet?
  • What is your succession planing?
In fact, we should focus on what the group intend to do in next 5 years before we can decide to stay a longer term with him. I have seen some good companies can grow to great companies within next few years. The desire of success was in the DNA of the top management. They could make a bold decision with cautious execution plan on the long term strategy they made earlier. The most important part is the corporate finance, where the company could plan ahead of their investment plan, so that they will not facing any kind of cash flow problems, which would happen after the economy peak is over.

11 December 2013

Buy Or Sell in Current Singapore Stock Market? Dec 2013

It's now getting end of the year of Year 2013. I noticed that some investors would agree that they may earn a lot from market volatility, but most of the investors especially passive investors may not enjoy it, especially STI index Year-To-Date performance is now in the negative territory, with the fear that QE tapering is soon to be announced by FED by middle of the month. 

Frankly speaking, I am not afraid of the volatility, but am just afraid of whether my counters are doing business well given the current market condition. The good company can grow to a better company by applying cautious expansion strategy. By next year 2014, I am still looking good in several sectors (it maybe translated to a lesser return possibility if everyone is looking good in those sectors), such as Oil & Gas, Consumer, Construction (especially for those related to BTO / MRT projects) etc. For those sectors that greatly impacted by the interest rate sensitivity would be REITs (yield spread would be widened), Property Developers (property cooling measurement is taking a hit now), 

If you are a long term investor, you should not be afraid of the market sell off for a time being. In fact, Singapore is now one of the cheapest stock markets in Asia in term of PE (about 13X or 7.7% earning yield). So long as the FD rate remains below 3.0% by year 2015 / 2016, I believe that there are more people willing to take out their money from banks & CPF OA to invest in various investment tools.

Having say that, I do not think it's wise to bet for a trend in short term as volatility still there. Ya, I'm still a strong believer in betting big in a good company is far better than putting money in bank in long run. 

09 December 2013

Riot In Little India, Singapore - December 2013

There was a riot happened in Little India, after a guy was killed in an accident that took place in Little India. Hundreds of angry foreign workers anticipated in a riot that destroyed a few police cars. Nonetheless it is now under control and the police is investigating the case.

This is another serious case after Chinese bus drivers stopped working for a few days in an attempt to show their unhappiness after being noticed of a lower salary compared to their Malaysian & Singaporean colleagues. This resulted a 4 Chinese put into jail and 27 was terminated contract and sent back to China. 

I believe the Singapore government is now in the midst of dealing with foreign labor policy to ensure that all these things that will not be happened again. According to the government, all foreigners are not allowed to raise their voice in public area. Even for Singaporean, they can only do it in Hong Lim Park. 

To me, I am quite worried if things go wrong, and may resulted in more foreign MNCs to reconsider their long term strategy to treat Singapore as their regional hub. However, I think this is a non-event and we will see how Singapore government handle this issue with everyone in mind. Hopefully it can be resolved soon and we will see a peaceful Singapore again.

02 December 2013

E&O Recent Launch - Andaman Edition 18 East, Penang (Dec 2013)

E&O recently announced latest launch - Andaman Edition 18 East, Penang. You may watch the following video for more detailed information. The project is located at Seri Tanjung Pinang, a strategic location for people to seek a decent living in Penang Island which is famous of its varieties of good food and heritage scene.

Source: http://www.propertyguru.com.my/property-news/2013/11/11336/e-o-brings-to-life-living-by-the-sea-concept

You may find my previous post to find out more on E&O, which is listed in Bursa Malaysia and being one of the well known developers in Malaysia.

Thai Beverages - Political Risk (Dec 2013)

Thailand recent unrest have triggered a tough question to Thai Prime Minister Yingluck Shinawatra to solve her internal issues. I hope that the issues can be resolved asap as it will give negative impact to investment and business in Thailand. 

As a company base in Thailand, Thai Beverages is having large Thai exposure even though after the acquisition of F&N recently. I sincerely hope that Thailand can return to a functional government soon. While I am not very sure of the actual impact to Thai Beverages, but we can see a weakening price chart and hopefully the price can come back to above 50c if the protests can be resolved soon. 

With recent weakened Thai Baht, it only could help exporters but not importers to gain more profits. So far, many countries has issued warnings to its residents to be very careful while traveling in Thailand. I hope that every travelers in Thailand can come back safely. 

27 November 2013

My View on Shares Market - November 2013

We had seen a record year for US Market and Malaysia Market this year but not Singapore. Part of the reasons why were due to the changes of Singapore government policy on tightening up labor inflow as well as cooling measurement in property market. The changes has resulted in higher inflation environment and the government decided to allow slightly stronger S$ in attempt to battle with the increasing environment. 

As a result of increased rental & labor cost recently, I did realize that most of the companies in service industry were not doing really well, as we still see those in the retail industry suffered from a lower profit margin and higher overhead expenses. 

For property development wise, we saw a softer market condition with lesser new launches in private property market in-spite the fact that the government is pushing hard for more HDB BTO units for the first timers to subscribe. Nonetheless, I believe it is a good sign for long run as the developers may not suffer from "Sudden Jump" in property sales if anything goes wrong. I will treat is as a soft landing for the market to digest the oversupplied items in the market. I also have seen more developers switched their focus on oversea markets. 

For plantation sector, I believe there is a slow recovery in ASP as economy moves on. Nonetheless, I believe the increase in price is not as significant as previous. First Resources remains my top pick, but it is now at a higher price range. I still look good on Wilmar longer term as the crushing & palm oil business may recover from losses in long run. 

25 November 2013

Thai Beverages 9M2013 Result - Net Profit Dropped 50% Amid Revenue Slide 7%

Follow up from previous quarter result update, let me summarize the 9M2013 Result of Thai Beverages here (extracted from Thai Beverages 9M2013 Quarterly Report)

Income Statement
Balance Sheet - Part 1 (Assets)

Balance Sheet - Liabilities

Breakdown of 2013Q3 Report

The overall economy in the third quarter of 2013 indicated the sign of slowdown from the previous
quarter with respect to both private sector consumption and investment which made the manufacturing
recovery in the industrial sector still precarious. Nevertheless, exports of some products showed signs
of recovery in line with the foreign demand, such as agricultural, electronics, and automotive products.
The tourism sector has expanded robustly as a result of the high growth of tourists. Fiscal spending
accelerated for economic boost but remained below target.

ThaiBev business has been impacted by the new excise tax that was effective since 4 September 2013. 
The excise tax calculation methodology for alcohol beverage was previously imposed by either value 
of ex-factory price or volume of pure alcohol, whichever was higher. Now it is based on both value 
and alcohol content. Therefore, price of all alcohol products will be adjusted differently in accordance 
with the product types.

Overall Business 
In September 2013, the Company completed the fair value assessment of the identifiable net assets of F&N from the acquisition to comply with the accounting standards. The Company’s financial statements have been revised to present gain from purchase of investment, amounting to Baht 12,688 million, in the third quarter of 2012 when the acquisition was made. However, for the full year 2012 financial statements, there would be no impacts from this fair value assessment. 

For the third quarter of 2013, ThaiBev’s total sales revenue decreased 6.8% from previous year to Baht 35,041 million. Net profit for the period was Baht 4,030 million or 74.5% decrease due to a drop of net profit from F&N results caused by the revision of gain from purchase of investment as well as, a decrease in spirits, non-alcoholic beverage, and the food business. However, the beer business saw an improvement with a decrease in net loss.

Spirits Business 
For the third quarter of 2013, spirits sales volume increased by 4%, which mainly came from an increase in sales volume of white spirits. The sales of spirits business increased 7.4% when compared to the same period of last year. However, the net profit of Baht 4,322 million decreased by 13.2%YoY 28/32 due to the high margin base effect from an increase in selling price, while the cost of production was still based on the previous tax rate before the excise tax was increased last year.

Beer Business 
For the third quarter of 2013, sales of the beer business was Baht 6,624 million or decreased by 7.4% 
when compared to the same period of last year mainly due to a decrease in sales volume. Nevertheless, an increase in selling price, a decrease in material costs and depreciation resulted to the decrease in net loss in this quarter when compared to the same period of last year. The net loss of beer segment was Baht 246 million, or a decrease of Baht 78 million. 

Non-alcohol Business 
For the third quarter of 2013, the non-alcohol beverage business reported sales of Baht 3,542 million or decreased by 51.6%YoY mainly due to a decrease in sales of Sermsuk. At the end of 2012, the bottling agreement between Sermsuk and an international enterprise was terminated, and Sermsuk subsequently launched “est” cola and flavored carbonated soft drinks to the market nationwide. The sales volume of Sermsuk dropped by 39.8% when compared YoY.
The sales volume of Oishi saw a decrease by 11.2%. Regarding other non-alcohol beverage, the sales volume of soda water increased by 4.0%, while the sales volume of drinking water decreased by 5.1% when compared to the same period of last year.
For the third quarter of 2013, the advertisement and promotional expenses of non-alcohol business decreased. However, a decrease in sales still incurred the net loss of Baht 419 million for the non-alcohol beverage business. 

International Business 
For the third quarter of 2013, the international business had a negative growth rate of 19% when compared YoY mainly due to the lower sales of bulk Scotch whisky, Chinese Yu Lin Quan spirits, and Chang beer. 

My View (November 2013)

Thai Beverages recent result showed that it was currently in the midst of transforming its domestic market oriented strategy (Thailand) to Asean market oriented strategy (by acquiring F&N). However, we still did not see synergy here as the non-alcohol & beer division were still suffering from losses. 

It may take longer time than expected for the management to fully make use of F&N brand to penetrate more markets for its own branded items such as Chang beers & Oishi. While I believe that it may not seem possible to beat Pepsi in Thailand market (as Pepsi is an international market), I hope that the overall non-alcohol business could be strengthened again. 

Nonetheless, ThaiBev still enjoy a rather healthy cash flow due to its dominance in Spirit business. I hope that the management can improve other division so that it can regain confidence from investors. 

Below is the current market trend of Thai Beverages:

Source: Maybank KE Chart

24 November 2013

Johor - Changes of Working Days to Sunday to Thursday (From Jan 2014 Onwards)

Johor Sultan announced that the working days will change to Sunday to Thursday with effect from January 1 2014.

I just checked with few friends and relatives. Some gave positive and some negative comments on this. The positive comments are:

  • Sunday Banking is possible now. It provides alternatives for Malaysia working in Singapore to come to Johor and do their personal banking services in Johor on Sunday. 
  • Sunday Government - More and more people from private sectors can now go and do their NRIC / Passports without taking leaves on Sunday. 
  • Possible Lesser jam on Friday, especially for those who come back to Johor from Singapore to enjoy weekend home here. 
The negative comments:
  • Schooling changes from Sunday to Friday. It means that for those parents whose working days remain Monday to Friday, they cannot enjoy two days weekend with their kids now. Instead, it may become a headache for them if they are the one who fetch the kids to and from school, especially on Sunday & Friday. 
  • Inefficient in Banking Services / Logistic Services. It may not be as effective as current, as some may work from Sunday to Thursday and some Monday to Friday. It may seems like the actual fully working days are from Monday to Thursday (reduced to 4 days) as compared to now. 
So far, I treat it as slightly negative impact, as foreigners may fear that the policy keeps changing and may affect their foreign direct investment here. A consistent and pro-investment government policy is a need for the state to grow further. However, I fully understand that the government officers (mostly Muslims) would welcome this changes as they can just focus on their own family days on Friday. Just FYI if you are not aware of, Johor holidays actually were Friday and Saturday prior to 1994.  

23 November 2013

Iskandar Malaysia Update - November 2013

IRDA plans to develop Iskandar Malaysia as an Aviation Hub. As CEO Datuk Ismail Ibrahim said Iskandar Malaysia was now ready with the infrastructure required to meet the demand of the regional aviation growth. He said aviation industry had always been a sub-sector promoted by IRDA and falls under Flagship E (Senai/Skudai), where Senai International Airport serves as the gateways and catalyst for the sector's development.

Senai Airport can now accommodate the biggest passenger aircraft, the Airbus A380, and the biggest cargo aircraft, the Antonov 225. The airport has the capacity to handle 3.5 million passengers and 80,000 tonnes of cargo annually as well as 20,000 sq m of apron space for aircraft parking.

“We are also looking forward to the implementation of the Asean Open Skies policy which will take effect in 2015. It is envisioned that the Asean region will see faster traffic growth and connectivity when the Asean sky is liberated in 2015,’’ said Ismail.


My View: As Singapore also is working hard to defend its leadership in Asean regional aviation hubs, I believe the only way for Senai airport to compete is to stand as a complement of Singapore airport, as most of the flights would be focusing on Singapore instead of Senai, and Malaysia will also focus on KLIA / KLIA2. Nonetheless, it can be a good gateways for foreigners to fly here from KL and enjoy a 2 days trip in Legoland / other recreation activities before heading back home via Singapore airports.

Johor state is in the plan of changing weekends holidays to Friday & Saturday from current Saturday & Sunday. 

Source: http://www.thestar.com.my/News/Nation/2013/11/18/Weekend-change-worries-traders-Its-not-timely-say-Johor-groups.aspx

Bus Rapid Transit System will be the main public transport system across the ten corridors of Iskandar Malaysia.

My View: This is at least the first step for Malaysian to enjoy a better public transport system before they develop a MRT system in Iskandar Malaysia here. What I was hoping was that the period of taking bus to town can be shortened by at least 50% so that more people are willing to ride on the public transport instead of driving cars. 

Source: http://www.trl.co.uk/trl-news-hub/transport-news/latest-transport-news/malaysian-government-outlines-long-term-transport-plan_801660286.htm


21 November 2013

Introduction to New Shares Investors - Trade Key In (November 2013)

Since I have became remisier two years ago, I have met quite a few new clients who do not have any ideas on investing. In this post, I would like to share with you on how to key in trade through Smart Phone / Desktop Application instead of calling remisier to put in trade.

Some benefits of putting trade yourself instead of calling remisiers are:

  • Save Execution Costs - You can save a big chunk if you are a heavy trader. Even if you are not, you can still achieve better result by saving the execution costs in long run. You may find a number of broking firm providing you a simple yet easy to use application to put in trade and monitor your stock portfolio. 
  • Save hassle of not being able to reach remisier, especially during peak hours. You can simply putting the trade in queue even before the market is opened. 
Of course, you may also loose a chance to get remisier's advance as it would become DIY service. Nonetheless, if you think you can get a better result without remisier's assistance, you may just focus on DIY service. Let me explain the field that you need to fill in in order to get the trade done.

Counter Name: The shares that you want to Buy or Sell. You may get it from the Searching Field.
Action: Buy or Sell. Please be extra cautious when selecting Buy or Sell.
Payment Mode: Cash, SRS, CPF. You have to get your SRS/CPF Investment Account linked first before putting any SRS/CPF trade. You may contact your dealer/broker on this. 
Settlement Currency: The Settlement Currency by default would be SGD or the Counter's Denominated Currency. 
Force Key: By default is Empty, unless you want to subscribe this service. My advice is not to use this as chances of getting the trade done outside the 20 bid range is rather very low. 

Please check again the information you have put in before click on "Submit" button as the action cannot be reversed after the trade is submitted and filled up. You may contact your broker/dealer in case you accidentally selected wrong payment mode (i.e. this is a CPF trade instead of Cash trade etc) on the same trading day before market closed, so that he/she may have a chance to amend the payment mode for you. 

So please treat it as part of your online banking transaction that requires additional care. 

Feel free to check with me so that I can improve my post here. Thank You. 

17 November 2013

Sino Grandness, Almost There - November 2013 (Latest Update 24 Dec 2013)

Sino Grandness just released its latest quarterly report this month. Summary of the 9M13 report shown as below:

Revenue RMB 1,718.1 M, Up 39.2%
Gross Profit RMB 657.9 M, Up 40.5%
Gross Profit Margin 38.3%, Up 0.4%
Net Profit RMB 341.7 M, Up 52.4%
Net Profit Margin  19.9%

Beverage % Of Total Revenue = 59.5%
Oversea Canned Products % Of Total Revenue = 32.2%
Domestic Canned Products% Of Total Revenue  = 8.3%

From here, we can conclude that about 60% of the revenue is from Beverage division, which I think is quite in line with group's strategy to focus in domestic beverage market and get it listed in Hong Kong Exchange. If the group can manage to have at least RMB 300 M more revenue from beverage division for 4Q2013, I believe it can hit RMB 250M Net Profit target and has higher chance to get Garden Fresh listed in Hong Kong Exchange by October next year.

Beverage Revenue Trend From 1Q11 to 3Q13

EPS 9M13 stood at 12.2 Sing cents, which translated to annualized EPS 16.3 Sing cents, or 4.69 PE.

With Sino Grandness latest plan to increase CAPEX to double up current capacity (about RMB 600 M), I believe the future revenue growing speed should be at least in tandem of the speed of CAPEX plan. What worried me was the Free Cash Flow. Now with company to aggressively promoting its beverages to distributors, a big chunk of operating cash flows is used to support the credit sales.

Nonetheless, I am still quite impressed with the result Sino Grandness achieved so far, and with the hope the beverages division can be listed successfully next year. So let's see what market can re-value the market value next year if Garden Fresh can be listed successfully, and how management can push the non-beverage division for domestic market next year. I hope that the Cash Conversion Cycle can be reduced with diversified distributor network and strengthened relationship.

Last Updated: 18 November 2013

I got the reply from Sino Grandness IR department, that Sino Grandness intended to use the spin off proceed of Garden Fresh to partly support its huge CAPEX plan next year. It seems that Sino Grandness is quite confident in getting Garden Fresh listed IPO by next year. With Big 4 to audit the report before listed next year, I believe the IPO can attract many investors (provided it is granted permission to be listed by Oct 2014). 

With no any customers contributed to more than 5% of total revenue, the company is confident that they are well control in bad debt. 

So now I have little more confidence in this company. Although I will not be putting any fresh money in this counter at current price, but will just wait for any sudden drop again (like China Minzhong short selling issue earlier this year) to take up the opportunity again.

Again, I prefer ambitious company with careful corporate finance planning. I hope Mr. Goh can further assist 黄总 in achieving their goals in building a successful story. 

Last Updated: December 2013

Below is the screen shot which I compiled from company's annual report (audited) and quarterly report (un-audited). Please note that quarterly report figure may differ from audited annual report later. However, I hope that the changes are not major. 

Below is a link I found from internet (written in English). In summary, it mentioned that Garden Fresh had grown up to "luxury" fruit drinks brand in China Mainland, with so many efforts made in sales exhibition, advertising & promotion campaigns. It is now the number 1 loquat juice brand in China. You may come to the link here to take a look. 

07 November 2013

US Market Record High - November 2013

US Market advanced, sending the Dow Jones Industrial Average to a record close, as Federal Reserve officials said economic weakness warrants continued stimulus and investors await data this week on jobs and growth.

My thought is that, with stimulus to continue (we may see a reducing amount of QE next year), the investors still prefer to stay investing in equity market. I am still not sure when the interest rate will go up, but I believe that it will eventually, to curb the inflation. 

While Singapore use Currency as its main tool to fight against inflation (imported goods), it may also follow US step to increase the interest rate to stop hot monies from flowing into the country. Now, with so many cooling measurement applied to property market, we do see a continued interested among Chinese investors to purchase private properties here. 

Singapore market still does not recover from its peak in May 2013, which I think is a bit weird. Maybe the hot money continue to flow back to US market, once signal of recovery there is strengthen. Nonetheless, I still look good on Singapore stock market as the overall market PE remains at reasonable level.

Mr. Cheng from Wing Tai was appointed as Deputy Chairman of Temasek. I believe it is due to his vast experience in oversea business. I hope that he can bring in more ideas for Temasek to continue to grow the fund in prudent way. 

Source: http://www.bloomberg.com/news/2013-11-06/u-s-stock-index-futures-rise-amid-stimulus-speculation.html


31 October 2013

Wing Tai - Could it be undervalued? - Last Update Dec 2013

Wing Tai is a property and retail player in Singapore, Hong Kong, Malaysia and China.

For latest quarterly report released on 25 October 2013, it reported a decrease of 66% net profit to S$24.5M from S$72M same period last year. Total Net Equity Value stood at S$2.8 Billion. So the ROE is rather very low (below 4%).

However, if we look at long term say 10 years time, the Net Equity Value rose to S$ 2.8 B FY2013 from S$ 946 M FY2004, or CAGR of 13%. Imagine, if you put in a $1.00, your invested capital there would be increased to $3.39.

As now the share price is trading at about 0.6X of Net Equity Value, it could mean that if we put $0.60 today, we may be able to able retrieve $3.39 10 years later. Sounds cool right?

However, it is not just as simple as that. We got to analyze what made the share price trading below Book value, and would it continue the trend forever? And what is our target selling price?

The business model of Wing Tai is to have a combination of property investment & development projects apart from retail business which brings in less significant income stream to the group (although we also saw a rise of Retail contribution of revenue to S$210M from S$36M).

So they can create accounting income by few ways: earn from property development projects, increased value of investment properties, or share of profits from associate & JV projects.

If you look at Shares of Result of Associated Companies & JV Companies before Tax, you will see that it has ballooned to S$294M  from S$15M in FY2004, or CAGR of 39%. The contribution from Associated Companies & JV Companies even contributed more than its core operating business in FY2012 (restated). So, it means that actually Wing Tai group actually depends quite largely on its associated & JV companies.

If you look at Hong Kong associate company (Wing Tai Properties), the net profit derived from disposal gain from non core assets & gain from investment properties revaluation. So it means for a double effect. During Property Boom, the profit would be more and during Economy Recession, the income would be affected by revenue as well as devaluation of investment properties.

So far, the group can generate operating cash flow constantly, with 2 exceptional years (2004 - SARS in Hong Kong and Singapore & 2009 - Global Recession), while the Cash Flow from Investing were always in positive mode except for year 2013 (due to borrowing to  JV companies of S$120M).

So let's look at how its listed associated & JV companies performed over five years. I copied and pasted from annual reports:

Wing Tai Malaysia (60.1% Holdings, Listed in MY)

Wing Tai Properties (33.5% Holdings, Listed in HK)

So, if you ask me when is the best to invest in property counters, I would say to wait for a recession time to come. Now the U.S. economy is recovering while Europe economy still stagnant for a long time, maybe we can diversify to Europe property / finance sectors when the time is right.



Last Updated (December 2013)

Award of Tender

The Directors of Wing Tai Holdings Limited wish to announce that Winmine Investment Pte. Ltd. (a subsidiary of the Company) has been awarded the tender for a leasehold land parcel Plot 17/2, Huai Hai Middle Road Precinct No. 45 in Shanghai Huangpu District having an approximate site area of 8,593.9 square metres at the price of RMB1,104,000,000. Following the award of the tender, Winmine will incorporate a new company in Huangpu District to develop the Land as an office cum retail development. 

I treat it as a positive move for the Co. to further diversify its property development projects from Singapore alone. Currently for property development project, Singapore contributed about >60%. So with this project, I believe the company can better weather the weakening property demand in Singapore market. As this is a retail cum commercial development, the profit margin could be higher compared to residential project. I have to do more research on Shang Hai property market before giving any comment on the impact of the project to Wing Tai.

29 October 2013

Impact of Budget 2014 on Malaysia Property Market

Yesterday we saw a significant price volatility on Singapore counters that have significant exposure in Malaysia Property development, such as Albedo & Rowsley. The reason why I think so is that the impact of Budget 2014 on Malaysia Property Market.

If you are not aware of, the property price started to surge since year 2009 after global financial crisis, as there are many countries tried to stimulate economic growth by pumping a lot of money into the market and cause a drop in interest rates. When the money are not used usefully in business development, one of the safest ways is to park under Real Estates instead of earning low interest rates in banks. So we now see Singapore and Malaysia Property market could surge more than 100% in few years time.

There are few reasons why the price surge. Firstly, Inflation causes a weaken money purchasing power, and the real wages increase is not much. Secondly, increasing interest of hot money in Asia countries, partly due to weakening economy of Europe & America, caused the supply could not catch up with sudden demand.

However, the people in both countries can feel the pain now, as majority of the citizen working in the city, especially those who are fresh graduates could not afford to buy a house near to their working places. In KL, it could cost at least RM400K++ to own an apartment near Taman Melati.

So now Malaysia government is trying to push harder to curb speculation by introducing few measurement:

  1. Increase of RPGT from maximum 15% to maximum 30%
  2. To prohibit DIBS Scheme and do not allow Financial Institution to borrow money to developers under this scheme
  3. Increase of floor price for foreigner purchase to RM1.0M from RM500K previously
I believe above measurement can at least stabilize if not to reduce the selling price of developers in prime area, especially some of them claim to use DIBS scheme to attract buyers who just need to pay for the down payment and dispose it off 4 - 5 years later. I believe the proper market will cool down soon as it may raise to the concerns to those buyers who try to speculate in the market. 

Nonetheless, the only way I think to curb the surge of property price is to increase the interest rate. It will definitely reduce the demand of the excess cash to park under real estate.

28 October 2013

Shares Investment Ideas - What Happen if ROE Fluctuate?

Since my first shares investment since Asia Financial Crisis 15 years ago, I always look for reasons how shares price can move up or down. Apart from Macro Economy perspective, the 1st reason why a company can have its share price move up in long run is due to its strong performance in its business development over a long time frame.

My thought is that, to earn money from stock market over a long run, we should first focus on the fundamental of a company, before move on to find out the entry and exit point of each investment. To do so, we can always figure out financial ratio of a company and 1 of the most important ratio is ROE (Return of Equity). It is one of the indicators to access how strong the earning power the company could have and the competitive edge against its peers. 

Most of the time, I would look for consistent and high ROE company before move on to search for volatile ROE companies. So I would like to find out the reasons why ROE fluctuate in this post. 

First of all, it would mean that the company is a cyclical company. The performance can be better during economic boom and worst during recession. So, we have to look at longer term, say 10 years performance of a company to determine what the long term sustainable growth rate the company would have.

Secondly, the company could have a different product mix during different financial years. This is quite common when the company is having wide range of products. The reasons why they try to diversify the product range instead of concentrate on single sectors could be due to the risk management or having better bargaining power against customers. 

Thirdly, the company cannot increase / control the sale price while inventory cost surges up. It may happen to commodities companies where they cannot easily pass the inflation costs to customers when the sales price is fixed.

Fourthly, Huge CAPEX (Fixed Cost) expenses per yaer - Companies must maintain certain amount of CAPEX (be it replacement cost or increase of fixed asset purchase) so that to have the economic of scales in long run. In theory, a company with high Capex is not a good choice during recession. 

Fifthly, The company had exceptional earnings / losses during financial years. It could be fair price gain/loss from investment (be it securities / properties / other investment tools) or disposal gain from PPE (e.g. real estates etc) or even a provision for future losses. We may need to do some adjustments to bring this back to normalized rate (e.g. you may need to focus on core earnings stream before looking at the other operating income / expenses. )

Sixthly, Income & Expenses not arrive at the same time. For example, a company may need to take in huge borrowing and thus incur interest expenses before the project completes and bring in better income stream later. 

25 October 2013

My Thought after Sim Lian AGM - Oct 2013

I just finished attending AGM of Sim Lian at Jurong Country Club. So far, this is my 1st AGM attended in any of Singapore Listed Companies. One of the reasons why I wished to attend the AGM was that I would like to meet those directors whose faces were not printed out in Annual Report (haha, you may treat it as a joke), and I think EDs & Group CEO are all handsome and pretty people there. The group CEO is a soft spoken people and I enjoyed chatting with him for a while after AGM was finished. 

Anyway, below is the summary that I got it from AGM just now:
  1. Sim Lian Equity grew from S$200M++ to S$800M++ in just 4 years time. I believe it is due to its good strategy to tap on uptrend of property market cycle by introducing higher profit margin projects. After UBI One is completed, the profit margin may fall to normalized rate. (FC mentioned that the industrial property project normally enjoys a higher profit margin compared to residential property project)
  2. Investment Properties started to be appeared in Balance Sheet, with the group's intention to generate more recurring income. In fact, the property bought in Sydney also would bring in about 6% rental yield. I believe the group played in a prudent way to ensure that the excess cash is taken good care of, although the ROI is definitely lesser than property development project
  3. Net Debt Ratio dropped to near to 0% level in FY2013. It may indicates that the group would think it is harder to seek a good land bank with reasonable price. In fact, they may focus on their strategy to have more recurring income projects to diversify the concentrated risk on property development project
  4. The reason of Joint Venture given by Top Management was to cater for huge CAPEX projects that may exceed group's capacity to do it alone. Anyway, my personal view is that it may increase ROE by pulling Assets & Liabilities out of the group's BS. Of course, I still think it is a good way to do so as it may capitalize loan to JV in BS, while still enjoying the shared profit of JV and an increased net profit margin. I foresee this may be a trend for group to park some huge projects in this JV categories
  5. Group CEO shared with me that the script dividend reinvestment scheme was implemented as and when the group needs the cash to support ongoing working capital. They do not have intention to privatize the group at this moment although I think they already control at least 70% stake. Personally, I think the Dividend Reinvestment Scheme was good for those who still think the group has bright future and are willing to be the long term investors. 
  6. With 4.6c dividend payout, it implies to about 5.2% dividend yield, which I think is good. Anyway, I think Sim Lian is in the midst of increasing recurring income properties, so the coming net profit may not exceed the record result in FY2012
If you ask me whether this share is cheap, I think it is not. However, I would opt in for the dividend re-investment scheme if there is any. Ya, it is definitely in my watch list and I am still waiting for a chance to increase my exposure in it later.

22 October 2013

A Letter to My Soon-to-be-Born Baby

To My Dearest Baby,

You are coming to this Wonder land soon. I hope that you can be happy and healthy always, and be a kindhearted people with the full mindset of contribution to society when you grow up. Because of you, both your mother and I have to adjust our long term plan to get ready for your arrival. Nonetheless, it was a good experience that cannot be bought by money, and we are ready to be a good parents to you too.

The very first thing I like to share with you is that, "There is No Free Lunch in This World". Do NOT take everything for granted. In fact, you should learn to get the things you want with your own hard work. I hope that you can manage your time well, and concentrate on the things you love and bring benefits to the people around the world.

As you are a Malaysian, we hope that you can get along with your Malay and Indian neighbors well when growing up. And you will be studying in Chinese Primary School, so I think we have to speak both English and Mandarin to you at home, so that you are still be able to master both Chinese and English languages.

Secondly, be always prepared for the worst while hoping for the best to come. This is to let you be more prudent in managing your own pocket money and own stuffs. We will teach you how to save and spend money wisely. It is always good to leave a portion of your money into savings so that you can use it for big purchase or investment that is good for you and everyone.

I will bring you to public library and enjoy the reading environment there. It is getting harder for a kid to spend big time in reading, as most of your friends would be playing the electronic devices such as tablets, net books etc. You will learn a lot of new knowledge from the book & magazine.

I will bring you together as a part time social worker when you grow up. I wish you to learn that there are still unfortunate guys outside, and you will learn to be appreciate of what you have now and do not waste any food or things you have.

Thirdly, I wish you be a generous person. Treat your friends & families & others well. You will know that you still require team work to get things done well. Do not be a slave of money. Instead, try to master the money game and let it works harder for you. Share the knowledge you have with other friends, and they will too share with you on how they can master the money game with their own methods. However, it is up to you to decide which method suits you most, and just stick to it after several tries on different methods.

I am looking forward to your birthday, soon.

Yours sincerely,

Jack Phang, CFA

IGB To Create Another Mid Valley in Iskandar Malaysia - Oct 2013

IGB started its journey in Iskandar Malaysia by executing a huge mixed property development project which is a Joint Venture in between IGB and Selia Pantai. It is targeting to complete a mega-mall within 15 years time frame.

The main reason to develop a megamall in Zone A, Iskandar Malaysia is in the hope to attract more Singaporean to stay and shopping here.

With lesser land to be developed in Klang Valley and Penang, there are more developers come and join the property development game in Iskandar Malaysia. Hopefully with improved infrastructure such as MRT/BRT Linked to JB (could be in Tanjung Puteri) and better security features in newly developed properties, it can attract more foreigners or locals who working in Singapore to stay and spend in Iskandar Malaysia.

I am still cautiously optimistic that Iskandar Malaysia can be developed well, provided with the collaboration between Singapore & Malaysia government.

Source: http://english.astroawani.com/news/show/mid-valley-southkey-megamall-in-iskandar-to-be-completed-in-2016-24320

17 October 2013

My Singapore Stocks Watch List Update - October 2013

I will update my watch list on adhoc basis. Please visit my blog regularly to keep yourself updated.

As I am die hard fan of retail & property sectors, so I will mainly focus on both sectors, but will gradually monitoring aviation / oil & gas / telecommunications / mining & etc sectors so that I can increase my circle of competence, and be a more successful business-like investor in future.

I am most welcomed of your feedback.

Singapore Stock Watch List
  • Retail Business
    • Food Empire PE=13.x DY=1.95% ROE=12.69% 
    • ThaiBev (ROE, DY) PE=11.X DY=3.225% ROE=35%
    • Super Group PE=28X DY=1.75% ROE=19%
    • Sino Grandness (ROE, NPM) PE=7.6X ROE=34%
    • Eratat  Director sold off all his stakes, prompting curiosity
    • Old Chang Kee (too small capital, inconsistent earning stream)
    • Osim (ROE, NPM) PE=16X DY=3.0% ROE=44%
    • Japan Food  PE=13.6X DY=2.5% ROE=25%
    • Straco PE=15.3X DY=2% ROE=15%
    • Sarin PE=24X DY=3% ROE=36%
    • Jardin C&C (ROE) PE=10X DY=4% ROE=21%
    • SPH (dropping ROE, DY) 
    • Sarin (ROE, DY, rev) 
    • Sheng SIONG (ROE, DY) 
    • Eratat (Reducing ROE) 
    • DairyFarm (reducing ROE) 
    • Oversea Edu (ROE, NPM, DY) - increasing competition from Iskandar Malaysia campus
  • Property & Construction
    • Hiap Hoe (rising ROE, NPM) 
    • Keong Hong
    • Sim Lian
    • Lian Beng
    • Good Land - Target Buy Price 26.0c, due to dilution effect
    • Capitaland
    • Kepland
    • Yanlord
    • FEOrchard
    • Wee Hur
    • KC Dev
    • Aspial
    • Ara (ROE)
    • Aspial (ROE)
    • ChipEngSeng (Reducing ROE)
    • Wing tai (ROE, NPM)
    • Roxy pacific (ROE)
  • Plantation & Related
    • First Resources (ROE)
    • Wilmar
    • Noble
    • CWT (ROE)
  • Oil & Gas
    • Kruez (ROE, rising profit)
    • Ezion
    • Semb marine (dropping ROE)
    • Yang Zi Jiang (reducing ROE, DY, NPM)
    • First REIT
  • Finance
    • Silverlake - can consider only when price below 50c (PE < 15X)(dropping ROE, NPM)
    • SGX ( ROE, NPM, DY)
    • UOB (NPM)
  • Engineering
    • CSE global (ROE)
    • UE E&C - 
    • SIA Egg (ROE, DY)
  • Telecommunication
    • Starhub (ROE, DY, NPM)
    • M1 (ROE)
  • Mining
    • Ipco (REV)
    • Civmec (ROE)
  • Electronic
    • Casa (DY)
    • UE E&C (reducing ROE, DY)
  • Logistic
    • GLP (REV)
    • Singpost (dropping ROE, DY, NPM)
    • Good pack (ROE, NPM)
  • BioMedical
    • Cord life (ROE)
7/10/2013 - 10/10/2013 to be monitored
  • Tye soon (PE)
  • BrC (rising ROE)
  • Boustead (ROE)
  • KSH (ROE)
  • Neratel (ROE, DY, NPM)
  • XMH (ROE)
  • XYEC (ROE, newly listed)
  • 800 super ( RoE, rubbish processing)
14/10/2013 Small Market Cap Counters that enjoying high ROE

  • Goodland
  • Triyards

14 October 2013

My Personal Thought on US Government Partial Shutdown

I just want to note down what my thought now so that I can check again whether my thought was really accurate after time passed.

  1. There will be a serious consequence if the US debt default eventually if both Democrat & Republican parties cannot come to the conclusion on solving the rising debt level issues FAST enough, say before 17 October 2013. If they try to delay the due date to November 2013, it only gives more time for investors to liquidate their shareholdings due to several reasons: 
    1. Year End Holidays are coming. Some of the investors do not really like to carry the fear and enjoy their long term holidays. 
    2. No more positive catalysts after US Market came to near record high of 15800 points. If the market cannot break the record high, the only trend is to go down. 
    3. Fear of QE tapering to kick off soon. The investors are now fear of the rising interest rate environment to come soon. 
  2. Even so, I am cautiously optimistic of longer term investing environment (say until 2017) as the global economy is picking up in long run, although we still see some uncertainties in Europe market & over leveraging in Emerging market. 
  3. I think the only way to make big money is to wait for a market crash (fear factor). So let's just wait and see if there is more unfavorable news to come before we can really bet big on the equity market. 

13 October 2013

Property Bubble in Iskandar Malaysia?

Year 2013 is the tipping point of Iskandar Malaysia development, as we have seen some of the major projects completed here: Legoland, Educity, Hello Kitty World etc and we also know that more well known developers venture here, such as Country Garden, Walker Corporation, Shangri La etc. 

I heard that the property price here have been surged rocket high, as RM300K property in Horizon Hill now can reach about RM1.0M and above. Of course, there are few reasons why we have seen a surge in property price here: 
  1. Support from Central Government - to create economic corridor along side Klang Valley, and Southern Johor has great advantage by just sitting aside Singapore, a logistic and financial hub. 
  2. Improvement of infrastructure spurred demand for foreign talents working in Singapore to travel in between Iskandar Malaysia and Singapore. They can even send their children to study in International School here with cheaper fees. 
  3. Increase in security level compared to few years ago. More gated & guarded communities are built up for those who demand for security enhancement. We now can see police control stations along major streets. 
  4. Increasing demand for Malaysian workers who cannot afford Singapore private property after Singapore government tightened the rules for foreigners & PRs to own a property here, especially introducing ABSD (additional buyer stamp duty. Some of them buying for future retirement or just simply for relatives or parents to stay while they can come and pay visit to those who are working in Singapore. 
  5. We also saw a great improvement in Bus services in Iskandar Malaysia, especially Causeway Link, a company which provides bus services in between Iskandar Malaysia and Singapore. Some may think that by year 2018 or later, we can see MRT linked to JB from Woodlands. It definitely can shorten the traveling time for a person to reach Singapore downtown from JB to within 1.5 hours, compared to 2.5 - 3.0 hours now. 
Nonetheless, if you look at the reasons above, then you may notice that none of the reasons are actually related to the economy boom in Iskandar Malaysia. In fact, Iskandar Malaysia currently rely heavily on Recreation & Education sectors to push up the property price. We still need a huge middle class to support retail business here. So far, I still cannot see Uniqlo / H&M setup a branch here. My wife complaints that there is nothing excited to shop here compared to Singapore. It is not really a good sign if we just rely on tourists / foreigners to boost up the economy here. In fact, I really hope more MNCs to setup a branch office here and it could be a backyard for Singapore. To me, I would call it The Greater Singapore (the area within 50 KM radar of Singapore downtown). Nonetheless, this is just my fat hope, as I know that the Singapore-Iskandar relationship may not be the same as Shenzhen - Hong Kong relationship as Singapore & Malaysia is just a country-country relationship and it relies more on long term political relationship between these two countries. 

As a citizen who grew up in JB and working now in Singapore, I sincerely hope that both area can prosper together. In long run.

08 October 2013

First Six Downtown Line MRT Stations to Open December 2013

When I first read the news on the first six downtown line MRT stations to be opened on 22 December 2013, my first thought was the recent poor performance of SMRT. SMRT to me is a GLC which controlled/supported by the Singapore government to introduce or encourage public ride life in Singapore. According to a research which I could remember where the source is, Singapore government is targeting a 75% population to take a ride on public transport in this small island and may consider to impose more ERPs in major road like Alaxandre Road & Holland Road.

Whether you like it or not, now BMW (Bus, MRT, Walk) is the main vehicle of most Singaporean.  And to battle with the inflation, I do not think that the bus & MRT fares would be increased significantly over the years, so what SMRT management could do is to be very careful in performing maintenance jobs (to avoid any additional penalty costs), and at the same time to promote shopping / advertisement experience in some of the popular MRT stations.

Demographic of Singapore has changed. Most of the young couples could just go dining and shopping near to the MRT stations before heading home. With more MRT stations to open, I believe that certain industries can enjoy the benefit from here. Let's work harder to find out investment opportunities here.

Sim Lian could enjoy the benefit for having a good land bank in Bukit Panjang, where Bukit Panjang is one of the terminals of Downtown line. Anyway with so little volume transacted per day, it is not a favorable counter for institutional investors.

My concerns now is whether the Thompson line could be completed by year 2020, as now I am relying heavily on MRT for my daily transport tool. And it would reduce the traveling time to maybe 30 minutes from Woodlands to downtown, a same traveling hour from Punggol to downtown. Let's keep an eye on the progress of MRT, and enjoy the ride (although the user experience may not be as good as 5 years ago).

Below is the source of the news I read. You may take a look here.

Source: http://sg.news.yahoo.com/first-six-downtown-line-mrt-stations-to-open-22-december-042755520.html

07 October 2013

Hu Li Yang's Talk in Singapore stock Conference 5 October 2013

I am one of the fans of Hu Li Yang, not only he is one of the investment guru in Asia region, but also of his great personality on stock investment.

I would like to share with you some of his opinion in year 2014 trend of investment:

  • QE Tapering is the beginning of the clock to swing the asset price back to reasonable price or undervalued price. If you think the shares price is high now, it's better not to touch it until you think that it is cheap to buy. 
  • He is still looking good on Malaysia and Singapore stock market, mentioning that Asean is one of the fastest growing market in the world. However, he cautious that there will be volatility in the market still, and be careful when buying any counters / assets. 
  • It may take 1 year time for market to back to its reasonable level. There are still many people complaints of the high property price, driven by the hot money that flows to different market to look for investment / speculation opportunities. 
  • Gold is not a good long term investment tool now, at least for next 10-20 years. He mentioned that Gold normally has 10 years bull market and 20 years bear market. 
  • Be patient for the market correction and keep the money under the pillow. He jokes that bankers will call you to invest excess money in bank and you may be in trouble if buy at the higher price. 
  • If a share price breaks below 10 day average price level, the higher chance is that the price would be in the down trend. So be careful when the share price is in the down trend as the trend could last for few months - years. 
  • The best performing months are from November to January, the worst performing months are July, August and October. 
To me, Hu is more like a teacher to those who are still new in investing / trading. He doesn't really care about financial ratio like P/E or P/B ratio, but more interested in catching opportunities by looking at the chart or doing some quantitative methods. After all, it is up to you to decide how to apply your own investing / trading strategy based on your real characteristics, because no one can better understand you than you do. 

04 October 2013

Conscience Food - delisting & my thought

Conscience food recently announced a delisting & exit offer to its minor shareholders and it's currently under SGX review and pending for approval. If this is approved, it means for a loss for those who bought shares above the exit offer of 18.4c. 

The argument given by the major shareholder was that the counter was traded illiquididly and it may not appropriate for the major shareholder to keeping listed status as what I thought was they can hardly raise fund at better price. 

This is not a first case for a small counter being forced by the shareholder to be delisted. So to some investors, this is called "liquidity" risk as it actually meant for getting hard to buy or sell through secondary market. As for me, I think that it's necessary for us to play safe not to invest a lot in small and illiquid counter as the shareholder may initiate exit offer to the minor shareholder. Anyway, in this case, conscience food management offered at much higher price than last closing date befofe announcement, so I think it's good for some investors to take the offer and look for better opportunity elsewhere. 

30 September 2013

Nam Cheong - Malaysia Shipbuilder Listed in SGX - September 2013

I learnt Nam Cheong from research houses, that it is now enjoying a forward PE of less than 10.0 X and EPS CAGR of more than 30% in recent years. 

The business model of Nam Cheong is to have both project based business & recurring income base business. While the recurring income business (Vessel Chartering) stake is still very small ( < 10% of total revenue), we do expect that the company could still grow in its main business (Ship building) by managing the Build-To-Stock business model well. BTS business model requires the company to have an accurate forecast on the needs of vessels ahead of the booking from various clients. This is different from Build-To-Order business model where BTO business model would take longer period to complete the vessels.  

If we look at the latest Cash Flow Statement (2013Q2 FS), CAPEX increased a lot while Operating Cash Flow suffering from Negative amount, implying the company may need to have more Financing Cash Flow to support its operating activities (which the company already did a placement earlier this year by issuing new shares). 

Since its debut in SGX 2 years ago, we have seen a very volatile shares price movement. With current shares price of 28.0C, I believe that it can be considered as 1 of the cheap O&G counters listed in SGX. 

However, please note that as Nam Cheong main competitive adventage is its strong relationship with PETRONAS related companies, it is currently depending on Petronas's CAPEX plan to get more deals on shipbuilding contracts. 

The latest news was that it clinched a US$120M contract to sell 4 PSVs to company in Lartin America. I believe that it can further enhance its position by establishing more relationship from various regions in the world. 

I believe it can break its record of 21 Vessels sold last year by this year. I understand that when the O&G sector is expanding, the company may get more contracts. To take opportunities from there, the company may have to borrow more from banks or issue new shares to facilitate the growth of the working capital requirements. To me, I personally prefer to have a optimal debt structure instead of relying on new shares placement. Nonetheless, I will need to monitor closely how the entire O&G sector progress to decide which counter I like best. Currently Ezion (and its related co. such as YHM / Ocean Sky) are in the spotlight, so I tried to put other counters in my watch list. 

18 September 2013

A Lunch Talk with A-Sonic CEO - September 2013

Not too long ago, our company conducted a lunch talk with A-Sonic CEO, to my surprise the CEO is female (I'm sorry that I didn't read the annual report on this company yet). She and her another colleague shared with us their business model as well as their plan to further grow A-Sonic.

If you are not aware of, A-Sonic is expanding their business in Aviation business, and you notice that the revenue from aviation business @ 1H2013 grew 4 times ++ to S$5.0M from S$1.0M last year. The CEO shared with us that the logistic business was a number game, that they have to keep on increasing the logistic volume in order to have a better economy of scales and hence better gross profit. In comparison, aviation business provides better gross profit margin, which is about 25% as compared to single digit percentage of logistic business.

The CEO shared with us the difficulty they faced when they started off the aircraft leasing business few years ago. Firstly, they tried to source the raw material at cheaper price. Secondly, they met the financial crisis few years back and the global economy took a hit from there and they hardly find a potential client to lease from them. Thirdly, it took some time for them to better configure the air craft and send it over to the clients.

In the meeting room, several questions were raised:

1. How do you ensure that you have sufficient cash / fund to support the aviation expansion?

    The business model is that the client must deposit first once the LOI is signed. So the company does not need to worry over the initial cash flow (I think the same goes to Yang Zi Jiang who also require deposit before the shipping project is started). They also have several banking facilities. With 25% gross profit margin, the single digit bank loan interest actually does not mean too much to them as long as they can complete the project in time.

    Nonetheless, the CEO also mentioned that they are in the midst of restructuring the logistic division and logistic business is actually still in growing stage, although it may not as fast as aviation division.

2. How long does it take to complete a project (air craft leasing)? 

    After sourcing the raw material, it takes about 3-4 months for the engineers team to configure and of course it would take about few weeks for authority to approve it.

3. Is there any conflict of interest because CEO actually own substantial percentage in one of the client's co stake? 

    The CEO mentioned that her motive in becoming a substantial stakeholder is to strengthen client relationship and in the hope to become one of the exclusive partners with the client. In fact, the client actually does not require additional fundraising, but they would like to have technology & skills by A-Sonic.

13 September 2013

Iskandar Malaysia Update - September 2013

There were 2 main news in September 2013 for Iskandar Malaysia, firstly Educity attracted RM700M in investments for its purpose of becoming educational hub of international colleges in Southern Johor, secondly some foreign companies expected to invest RM1.0B in halal industrial hubs in Tanjung Langsat & Sedenak, sub-urb of Iskandar Malaysia. 
NUSAJAYA: The EduCity project in Iskandar Malaysia has attracted some RM700mil in investments with the setting up of several international universities, says Deputy Prime Minister Tan Sri Muhyiddin Yassin.Muhyiddin who is also Education Minister, said that 70% of Educity has been developed with three university campuses and two shared facilities.“Besides EduCity, the Government is also developing Pagoh into a multi-varsity education hub and Bandar Sri Alam in Pasir Gudang as a ‘City of Knowledge’,” he said at the ground-breaking ceremony of Management Development Institute of Singapore (MDIS) here yesterday.
JOHOR BAHARU, Sept 3 — Several foreign companies producing halal products are close to investing over RM1 billion in the two international halal industrial hubs in Iskandar Malaysia here.Halal Industry Development Corp Sdn Bhd’s Vice President of Special Projects, Prof Malik Musharaf, said the companies will invest in the hubs in Tanjung Langsat and Sedenak, which were owned and managed by IRDA and the Johor state government."The companies, from Japan, Indonesia, Turkey and Singapore, are in the final stage of discussions with the local authorities on the investments involving over RM1 billion," he told Bernama here today.

10 September 2013

Buy When Volume is Low; Sell When Volume is High

Most of the time, I always think that low volume indicates there are not many serious sellers in the market, and most of the investors apply "wait and see" attitude. With low volume, normally it will not attract institutional investors who require huge liquidity for them to enter and exit quick enough. But as a small investor, I do believe that we could be able to find out hidden gems that suffered from low transaction volume for, maybe 6 months time.

Normally low volume indicates low price movement, and it is actually a good time for us to accumulate good counters, and wait for it to return to the normal value. We can then sell it when the transaction volume is higher or the share price exceeds the intrinsic value.

Nonetheless, we must ensure that the counters that we buy are in good quality and only suffered from temporary bad news.

09 September 2013

Sim Lian - Hidden Gem?

I read through Sim Lian Annual Reports and realized that it has a few property development projects in Malaysia and Singapore and it just ventured in to Commercial property market in Sydney, Australia. 

Unfortunately, I cannot find any faces of BOD in annual reports, which let me remain curious of the Kuik families. There are some of the sources of news I could search from any websites:  

Despite revenue decreased slightly, the group's net profit in FY2013 experienced a significant 27% drop, with COGS increased higher due to raw material & wages. 

Lists of the projects:

Singapore: Clover By The Park, UB.One, Lincoln Residences, Rochelle At Newton, Waterview, Centrale 8 At Tampines, A Treasure Trove, Parc Vera, Tampines Trilliant, Bukit Panjang

Malaysia: Desa Baiduri, KL Trillion 

Source: http://www.theedgemalaysia.com/property/244549-sim-lian-group-eyes-more-land-in-malaysia.html

Ramba Pre-Conditional Offer @ 65C

Ramba announced pre-conditional offer at 65 cents last week, added that the offer would bring synergies among offeror (Sugih) and Ramba on its mining business. The record date would be announced in due course. Let's see how it's the progress later.

03 September 2013

China Minzhong Case Study - Short Selling & Defense Mechanism

China Minzhong gave me an opportunity to study the short selling & defense mechanism on this counter. Firstly, the short seller announced its report on possible faked report. There are few things to note:

1. Concentrated clientele - with concentrated client base, it means that the company has limited source of clients and it may give negative impact to the credit rating given by the financial institutions. The short sellers suspects that the company ballooned the sales by increasing receivables (aggressive sales).  

2. Huge CAPEX along the years - with huge CAPEX, I noticed that this is not a good sign, as the company may capitalize the expenses into Non-Current Assets and amortize / depreciate in later years. Personally speaking, I prefer a company with stable or little CAPEX compared to its revenue growth. That's why I did not invest in Air Asia IPO. The moment I noticed that a company decided to build a wonderful head quarter for itself, I quickly liquidate the shares as I do not think that it is a good decision to create long term shareholder value to the investors. 

The major shareholder (Indofood) announced offer to purchase from other shareholders at $1.12. As this is mandatory but not compulsory offer, it gives room for minority shareholders to think whether to sell it to the major shareholder or do nothing but to hope this case to be closed soon.

If you look at Olam case, Olam net profit dropped after announced that it would cut down the CAPEX budget for next few years. Some investors lost confidence in it and the price is now at around $1.4X. 

30 August 2013

My Shares Investment Philosophy - Aug 2013

If you are following my blog, you can tell that I am more towards fundamentalist. However, it does not mean that fundamentalist can always win in the market. But from my experience, the few ways to earn big money is through:
  1. Long term investment in niche companies with some sort of better profit margins and good growth prospect. You have to be very patient and keep updated the business development progress of the company you are invested in, so that you do not be so eagerly to cut profit whenever the stock price drops further, instead you should stick to the principle that to buy at the lower price and not sell at the lower price. Always do a lot of homework by attending the AGM / financial report briefing / follow up with IR / market analysis by trying out the products & services. For some reasons, you may adjust your portfolio by reducing the position when the price moves up a lot and increasing the position when the price moves down further, provided the factors that affecting the stock price is NOT due to deteriorating prospect, rather it is just due to the macro environment. Some of the examples could be like Ezion Holdings, Sarin Technology, Silverlake etc. We could do some conclusion later after few years time. 
  2. Fully focused on winning bets with higher possibility. One of the examples is Margin of Safety. If the price you purchased is 70% of the intrinsic value, then the chances you are losing money is lesser compared to when the price you purchased is 130% of the intrinsic value. Note: Intrinsic value may volatile along the timeline but it is not as volatile as the stock price movement. So always deal with Mr. Market carefully.
  3. Look beyond the current investment hot topics. Normally when you realized that this is the hot topic of the investment, it means that you have lost a good chance to earn big. So it's either you move on or look beyond the current hot topics. Instead, find out the neglected counters and invest in it and sell it off when more investors are coming back. 
  4. Building up confidence level when you have more experience in winning the game. Sometimes, we cut loss or cut profit due to the inexperience in realizing the intrinsic value of the counter. When the market goes up, we feel that the stock price can be higher and forget that the price may go above intrinsic value and vice versa. 
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