30 March 2013

What are we looking for in Shares Investment?

To me, investment is a combination of art and science. With limited fund, we could only invest in certain counters. Some would say shares investment is just like gambling. You can earn a lot but you can also lose a lot. As it is so liquid, that you can just simply buy and sell and try to earn the shares price difference to make the profit. But to me it is not a workable methods, especially it could affect my emotion when making trading decisions. 

I prefer a long term investment, but it does not mean that I should hold for a very long term. But it only tells me that, before invest in a company, I should do a due diligence, to make sure this company is worth to invest in long term, before putting my hard earned money into it. To me, I prefer to have "certainty" when picking up the counters. 

Example, if I know that this company still survive in long run, I could treat it better than Bond / Commodities / Real Estate asset classes. Due to Inflation factor, if the company has the bargaining power to pass most of the cost rising to its clients or suppliers, then I would consider it as a very good counter. For example, you can see the fast food restaurant like KFC or MacDonald can increase the selling price in 2-3 years, it means that the clients are still willing to buy it when the selling price is rising. 

I am looking for some stocks that in growth period. But this brings another question, will I have to pay more to get a growth stock? I could use discounted rate model to justify the intrinsic value. Anyway, as this is only a guess for me, I still prefer not to purchase a stock that has PE of more than 20, unless I am very sure that the future PE (e.g. few years time) could be reduced to below 10. 

I also know that to get a good result, we should buy low and sell high. Buy Low is the first action that can prevent us to Sell Low. But before Buy Low we should also select the correct stock. So it really brings back to the question - What do you looking for in Shares Investment. To Sell High, we can use two methods:

1. Switch to Other Undervalued Stocks
2. Switch to Cash

I prefer to switch to other undervalued stocks, as I believe in long run, equity is a better investment tools compared to Cash. But frankly speaking, I still like to hold in Stocks, unless I am pretty sure that the global market outlook is going to turn worse. Nonetheless, given my passed year experience, the only way we could make a decent return is when we can get a cheaper price during bear market. And normally Bull Market is longer than Bear Market. This is due to certain reasons: 1. Bull Market takes a longer time to build as the confidence level is not easily be built up. 2. People Tend to Avoid Risk of Losing Money. So you can see a faster pace of cutting lose compared to buying up. 

Eventually, I still believe in picking a good counter in good timing is one of the ways we could earn more in stock market. 

26 March 2013

Iskandar Malaysia - Getting More High Rise Luxurious Development Projects Here

Not too long ago, my Singaporean friend asked me on the projects in Johor Bahru due to two reasons:

1. Cooling Measures by Singapore Government on Singapore Properties by introducing ABSD.
2. Promotion by Malaysia Government on Iskandar Malaysia.

She is interested on High Rise project in Johor Bahru (Zone A in Iskandar Malaysia). She asked me on Astaka project so I helped her to find out some information on this project. According to the Sales Agent, the project is welcomed by the investor and 50% booked in early stage. To my understanding, the project psf is around RM900, and they come out with large condo (e.g. 2200sf ++). To me, this project attracts those who prefers tighter security and convenience to go to JB CBD / Causeways as it is around 1.5KM away from JB CIQ.

Actually there are already quite a number of developers try to build high rise residential to cater for new demand for those who expect to live across the border once the project of MRT to be linked to JB is completed by year 2018.

As I am not too sure how the things are going on, I do expect more luxurious high rise project to come. I still remembered that many friends / investors not looking good on high rise project developed by KSL, called KSL Resort. The psf could be easily more than RM1,000 which it started to sell about 5 or 6 years ago.

Now, I am not sure whether there is a bubble in JB property market, like what I also doubt in Singapore property market. However, as long as the interest rate is in the lower rate environment, more higher value jobs created in Singapore / Iskandar Malaysia region, and better co-operation in between these two countries, I believe that the price now is justifiable. But I doubt the property price in Iskandar Malaysia could be as high as in Singapore. At least in next 10 years.

25 March 2013

Doing Business Or/And Investment In Iskandar Malaysia

An article from Business Times featured on last week, on what to do before deciding to move to Iskandar Malaysia. There are several things to note: 
1. National Priority There are additional rules of course. The state of Johor does not permit foreigners to buy double-storey shophouses or single-storey houses, whether linked, terraced or detached. Three-storey shophouses, double-storey houses, vacant bungalow land, condominium units and service apartments are permitted so long as they each cost RM500,000 (S$199,384) or more. The state also charges RM10,000 for each successful application for approval. Purchases of industrial properties must be made in the name of a locally incorporated company. This, however, does not apply to residential and commercial properties.
2. Bumiputra PoliciesIf the vendor is a bumiputra or a government agency, purchasing land valued at RM20 million or more is seen as divestment by bumiputra interests and the approval of the Economic Planning Unit (EPU) of the Ministry of Finance is required. It will usually approve the sale on condition of 30 per cent bumiputra equity participation in the project.
3. Economic benefits - Pioneer status which relieves an enterprise from income tax on its profits could see the limit of statutory income which is exempted from tax increased from the usual 60-70 per cent range to 100 per cent. The period of exemption could also be extended from five to 10 years. Likewise, investment tax allowance could be increased from 60 per cent of qualifying capital expenditure to 100 per cent of such expenses. Foreign investors should confer with Irda sooner rather than later on their business plans to have a feel of the level of incentives they can expect to avoid disappointment. Many things in Malaysia are going up the value chain and while land is plenty, labour is not.
4. Across borders - A metropolis without the construct of national boundaries is the idea behind Iskandar. Does the idea of people working, living and playing across two countries seem so hard in this part of the world?

17 March 2013

How to Increase Your Property Numbers Without Further Cash Out Flow?

Copied from my friend:

1. Get a decent Positive Cash Flow Properties. But be aware of change of rule from Government. With current property curb by Singapore government, I believe it is getting harder to play leveraging game in Singapore property market. However, this can prevent more property price collapse once the SIBOR getting back to higher rate in future.

2. Buy property at good location with good management. Buy property with good development in place, especially for those developers that have 15 years planning ahead. This is to ensure a property that can have capital appreciation in long time, not just for speculation only. Some developers just earn money when they develop the project and just run away without further management. This will not increase the property price in long run.

3. Sell when the price is right And Do not Buy Eagerly. Do not get into "Emotion" when an urgent buyer approach you to buy from you at higher price. And do not buy eagerly. Do more research before you buy any property.

07 March 2013

Iskandar Malaysia Getting Popular?

Yesterday I talked with my friend over phone on Iskandar Malaysia. She is a Singaporean but wanted to invest in Malaysia property since Government now pushing very hard to curb the property price rising in Singapore. She is a long term investor, or rather believe in long term investment. She likes to hold a property for around 7 years before dispose of the property. What she told me was that, Property Investment is a Leveraging Investment. It means that you could double up your invested capital just few years time and enjoy a steady rental income if you make a right choice.

Ok, so back to the topic, is Iskandar Malaysia getting popular now? I believe the answer is Yes, after Singapore government push for people to stop purchasing property, or rather speculating property in Singapore. Actually to me, it is a good chance for people to buy property in JB and travel to work in Singapore. If you notice, there are two causeways linked to Singapore from Iskandar Malaysia, one is TUAS and another is Woodlands. With new customs built up since last few years ago, the traffic jam is improving but still heavily jam during the peak hours. So now, with both government push for RTS (Rail Transport System) in both cross ways (e.g. Thomson Line - Tanjung Puteri Linkage project to be revealed detailed plan by this year or next), it is a good time to purchase a JB property.

Now the only worry is that, a lot of property development projects are actually focus more on residential project. Without business / economy activities in place, it is very hard for more talents / middle-high class staying and working in Iskandar Malaysia, needless to say about growing it to be a financial hub. To me, Iskandar Malaysia could be a compliment to Singapore. It could provide land banks and lower cost labors to Singapore, and to grow with Singapore together to be a bigger metropolis. What worry me is that, with more condominiums / service apartments being built recent years, who is going to stay there? It only benefit to those who have their own private transports such as motorcycles and motorcars.

Anyway, we could see a better and clearer pictures when everything planned for Infrastructure is executed well here. I also notice that more expats like to stay in Iskandar Malaysia and send their kids to private schools to enjoy a better life style while maintaining  same or even lower living costs there. They could just buy a much more cheaper Malaysia car and hire a driver to send them off to work in Singapore, and enjoy a happy weekend in Iskandar Malaysia, to avoid crowded shopping area in Singapore such as Orchard Road.

Being a Singapore PR and Malaysian, I truly hope for a closer co-operation in these two area, and more people could benefit from here. Let's Malaysian to stay in Malaysia while allowing them to work in Singapore to contributing their brains and taxes to Singapore government.

05 March 2013

Ben Graham 'Value' Model Criteria

Ben Graham 'Value' Model: 

  1. Is the PER less than one-half the reciprocal of the government-10 year bond yield?
  2. Is the PER less than 40% of the 5-yr average?
  3. Is the dividend yield at least 2/3 of the of the 10 year government bond yield
  4. Is the share price below 2/3 of the Book Value Per Share?
  5. Is the share price less than 2/3 of net current assets per share?
  6. Is the d/e ratio less than 100%?
  7. Is the current ratio>2?
  8. Is the total debt less than 2x net current assets?
  9. Has EPS growth of last 5-yrs averaged >7%
  10. Has the EPS growth been negative no more than 1 year out of the past 5 years?

UOB Malaysia to Setup FDI Advisory Unit - March 2013

More and more Singapore companies looking for expansion in Malaysia after their first choice - Indonesia. UOB Malaysia setup FDI (Foreign Direct Investment) Advisory department to help Singapore companies to invest in Malaysia, especially in Iskandar Malaysia, due to its low labor cost, skilled working forces and geographical advantages compared to the rest countries. You may refer to the articles below to find out more. 

KUALA LUMPUR: United Overseas Bank (Malaysia) Bhd (UOB Malaysia)targets to double its corporate loans to foreign companies investing in the country and it has set up a foreign direct investment (FDI) advisory unit.
UOB Malaysia said on Monday as its plans were to double these corporate loans in the next three years, such a FDI advisory unit would help foreign companies expand their business into Malaysia.
The bank based its projections on the fast-growing volume of FDIs and increased intra-regional trade flows coming into Malaysia.
Currently, Malaysia attracts 10% of the total FDI inflows from intra-regional trade in the Southeast Asian region.
UOB Malaysia said the FDI advisory unit would provide assistance ranging from company incorporation or further expansion into Malaysia, access to UOB's full suite of corporate and personal banking products to borderless financial services through the Bank's long established regional network.
Its unit's first priority will be to focus on Singapore mid-sized SMEs expanding their businesses across the causeway into Iskandar Malaysia.
"Iskandar Malaysia's lower cost of land, skilled labour resources and special tax incentives are attracting Singapore companies," said UOB Malaysia chief executive officer Wong Kim Choong.
"As there is growing interest from Singapore companies requiring financing needs overseas, the launch of this FDI Advisory Unit is timely as it allows customers to tap into the Bank's ecosystem of financing, legal advice and contacts with trade bodies," he added.
Malaysia's competitive cost of doing business and open policies such as the allowance of 100% foreign equity holdings and funds repatriation to the base country made it an attractive business expansion destination, according to UOB Malaysia.
According to the UOB SME Survey 2013, Malaysia is the second most-preferred country by Singapore businesses, after Indonesia, for expansion purposes.
Singapore companies find Iskandar Malaysia attractive for business expansion plans.
Last week, nearly 200 mid-sized SMEs from Singapore took part in UOB Group's first customer seminar to explore the growth potential and business opportunities available in Iskandar Malaysia.
Wong said Singapore companies were keen to have a presence or expand their business into Iskandar Malaysia, Johor.
"The close proximity to Singapore, as well as familiarity with the language and culture, are major considerations as they allow Singapore companies to comfortably manage their businesses closer to home from across the causeway," he said.
Link: KUALA LUMPUR: United Overseas Bank (Malaysia) Bhd (UOB Malaysia)targets to double its corporate loans to foreign companies investing in the country and it has set up a foreign direct investment (FDI) advisory unit.

04 March 2013

Singapore Stock Market Daily Update - 1 Mar 2013

Stocks in Focus: Noble, Golden Agri, UOL, Ho Bee, Wee Hur, Jardine C&C, SembMarine, Nam Cheong, Ezion, Venture, UMS, CAO, Sound Global, Nippecraft, Luzhou, Courage Marine, XinRen

Sound Global: Cessation of Chief Financial Officer, Yu Man to pursue his other career opportunities. His main role basically is  to oversee and coordinates the operation of the finance department as well as manages the financial, accounting and taxation functions and financing activities of the Group.

Nippecraft: Net Loss recorded S2.25M at the back of Revenue at S82.9M. The group mentioned that current market condition remains challenging, remains cautious on Europe and US Market but optimistic on Asia region growth. 

Luzhou Bio-Chem Technology: Net Profits RMB14.6M and Revenue RMB3399.8M. 

Courage Marine: The Group's turnover decreased by 14% from approximately US$21.7 million in Y2011 to approximately US$18.8 million in FY2012. The dry bulk market is still poor. The demand for commodities, especially in the Greater China region, slowed down in 2012. These factors led to the low demand for trading and adversely affected the freight rates. Despite the decrease in turnover by 14%, the Group's cost of sales decreased by 43% from approximately US$32.6 million in FY2011 to approximately US$18.5 million in FY2012. It was mainly due to lower fixed costs, including insurance, crew fees and depreciation arising from the disposal of aged vessels during the past eighteen months. The Group recorded a gross profit of approximately US$0.3 million in FY2012 compared to a gross loss of US$11 million in FY2011. The Group expects the financial performance for 2013 to be adversely affected by the current challenging economic conditions and uncertain outlook. However, the Group will maintain its cost-effective  structure and focus on keeping its fleet well-deployed and running efficiently.

XinRen: FY2012 Revenue RMB6.4B and on the back of low aluminum prices, which fell  to RMB14,500 per metric tonne. Escalating electricity tariffs in the PRC eroded profitability severely, causing the Group to end FY12 with a net attributable loss of RMB65.8M.  

Frencken: FY2012 Revenue $361.0M, Net Profit -$11.8M. 

Noble Group: FY12 net profits recorded US$91.1M. Group proposed dividend of US1.81¢

Golden Agri: FY12 net profit recorded US$409.6M, due to weaker CPO prices offsetting bumper production, higher soybean raw material prices and price caps imposed on edible oils in China. Group declared final DPS to 0.59¢, taking full year total to 1.19¢ lower than the 1.84¢ paid in FY11.

UOL: Reported net earnings of $807.7m for FY12, boosted by fair value gains of $550M from investment properties and those of its associates. Excluding these, net earnings of $361.2m would have been in-line with forecasts with decline in sales of development properties buffered by recurring rental income from offices, shopping malls and hotels. Gearing dropped to 0.28x from 0.35x, while book NAV rose to $7.98 from $6.88 previously. Proposed a DPS of 15¢.

Ho Bee: FY12 revenues increased to $461.6M, while earnings declined to $187.1M, mainly due to a 57% drop in fair value gains from investment properties and lower associates’ contributions. This jump in revenue was largely driven by higher sales booking from its One Pemimpin and Trilight projects. NAV last stood at $2.58; Proposed DPS of 5¢.

Wee Hur: FY12 results beat estimates as net profit rose to $92.9M as revenue soared to $465.7m due to the lumpy sale and profit recognition of an industrial property development, Harvest@Woodlands. The group is also developing another bigger industrial project (Premier@Kaki Bukit and 2 residential projects (Urban Residences, Parc Centros), which will be booked upon completion in 2014 and 2016. As at end 2012, it boasts a construction orderbook of $528m and cash position of $201m. Final DPS of 3¢ proposed, taking total DPS for FY12 to 4¢.

Jardine C&C: FY12 revenue rose to US$21.5B, while net profit dipped to US$987M. Non-trading items comprised deferred tax of US$31M from dividends receivable from Astra, impairment loss of US$45M on its Vietnam investments and fair value loss of US$16M on Astra’s palm oil plantations. Book Value up 5% to US$13.04. DPS maintained at US$1.23.

Sembcorp Marine: Secured a second US$208m jack-up rig from repeat customer Perisai with delivery scheduled in 2Q15.

Nam Cheong: Awarded US$130M contract to build 4 multi-purpose platform support vessels (including options for 4 additional units) for Bumi Armada. This represents one of its largest order win in its corporate history and brings the group’s confirmed orderbook to RM1.3B. 

Ezion: Proposed private placement of 50m new shares at $1.895 apiece, raising $93.5m to fund the acquisition of a liftboat.

Venture: FY12 revenue -2% to $2,387.7m, net profit -11% to $139.7m; 4Q revenue -6% to $592.8m, net profit flat at $38.2m. NAV stood at $6.55. Final DPS cut to 50¢ from 55¢ was disappointing.

UMS: Results below expectations. FY12 revenue -1% to $113.2m, net profit -39% to $17m; 4Q revenue -14% to $21.6m, net profit -79% to $1.2m. Final DPS of 2¢ takes FY12 DPS to 5¢.

CAO: Results topped estimates. FY12 revenue +64% to US$14.8b, net profit +4% to US$66.2m; 4Q revenue +106%% to US$4.4b, net profit +219% to US$18.2m. DPS cut to 10¢ from 15¢ in previous year.
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