16 December 2014

Asian Currencies Against USD YTD Performance - 16 Dec 2014

SINGAPORE, Dec 16 (Reuters) - The following table shows rates for Asian currencies against the dollar at 0153 GMT.


Change on the day at 0153 GMT
Currency Latest bid Previous day Pct Move
Japan yen 117.75 117.81 +0.05
Sing dlr 1.3108 1.3130 +0.17
Taiwan dlr 31.312 31.342 +0.10
Korean won 1095.40 1099.10 +0.34
Baht 32.96 32.97 +0.03
Peso 44.82 44.67 -0.32
Rupiah 12850.00 12695.00 -1.21
Rupee 62.94 62.94 -0.00
Ringgit 3.4950 3.4965 +0.04
Yuan 6.1931 6.1912 -0.03

Change so far in 2014

Currency Latest bid End prev year Pct Move
Japan yen 117.75 105.28 -10.59
Sing dlr 1.3108 1.2632 -3.63
Taiwan dlr 31.312 29.950 -4.35
Korean won 1095.40 1055.40 -3.65
Baht 32.96 32.86 -0.30
Peso 44.82 44.40 -0.94
Rupiah 12850.00 12160.00 -5.37
Rupee 62.94 61.80 -1.81
Ringgit 3.4950 3.2755 -6.28
Yuan 6.1931 6.0539 -2.25

From the table above, we know that Japan Yen dropped the most against USD YTD (about 10.59%) due to the famous Abenomic pushed by Japan prime minister, followed by Malaysia Ringgit (-6.28%), Indonesia Rupiah (-5.37%) and Taiwan Dollar (-4.35%). Indonesia Rupiah suffered the most today as hot money is getting out from emerging market, as prospect of emerging market turns negative after the drop in prices across the commodities market, lead by current spot light - Crude Oil. There is rising concern over the possibility of default by certain developing countries such as Venezuela and it has resulted in pulling out of investment in emerging markets.

05 December 2014

Ezion - Latest Bond Issue at 7% - Dec 2014

I understood that Ezion issued its latest perpetual bond at 7%, with condition to increase the interest rate 4 years later if it does not recall the bond back at that time. So far it is over subscribed by investors (purely for high net worth individuals or institutional investors), and I believe it will not have any of issuing more "bond like" securities to get more funding. The issue now is whether it will have to pay more borrowing costs during bear market of crude oil as compared to few years back.

The crude oil has dropped from peak of US$110 plus to current US$60 plus, a near 50% drop just in a few months time. The main reason behind is due to the supply glut where there is US shale boom encouraging producers to kept pumping crude oil from US, and OPEC had no choice but to defend their market shares by keeping current production target of 30 million per barrel a day unchanged until next year meeting. In fact, US shale boom is not new to the people in this industry. US is expected to be the biggest exporter of crude oil by next few years if the trend continues.

Nonetheless, as Ezion mainly focus on shallow water area where break even cost is lesser (about US$40 per barrel), so there is a cushion to it to further grow its business in Asia Pacific region. I believe that the expectation of growth rate is reduced at this moment, hence the equity required rate of return becomes higher. If we look at the PE ratio now, it is now about 7 times compared to double digit a few months back.

Ezion recorded 9M14 revenue of US$282M, 42% growth compared to corresponding period last year, with net profit grew 16% to US$140M. It is expected to have more than US$200M net profit this year after including one off disposal gain of offshore marine asset to Ausgroup which is expected to be around US$30M. Cash flow wise, it recorded net operating cash flow of US$139M, with capex of US$344M. The negative free cash flow is mainly due to current expansion stage where it needs to purchase more service rigs for future revenue generation.

With expected PB ratio of about 1.29X and PE ratio of about 6 - 7X and a very good net profit margin (about 50% npm), I believe that it has little room to drop further if current crude oil market could stabilize at US$60 - US$80 range. It would be even a very good purchase if the PB ratio could be below 1.00X. With positive 2 digit CAGR for next few years, I believe that it is considered a good buy at this price level. Please note that it is not suitable for investors looking for dividend income as it provides only 0.1 cents dividend as the management believe that it is better to keep most of the profit for reinvestment.

28 November 2014

Keong Hong Full Year Report Summary - November 2014

Keong Hong recorded total revenue of S$272M, an increase of 85% yoy compared to previous year, but net profit dropped by 10% to S$20M. Gross profit margin and net profit margin are 11.12% and 7.21% respectively. The decrease in profit margin is mainly due to the product mix and increase in construction costs admist intense competition as well as higher labor costs due to government labor tightening policy. 

The company announced a final 1.25 cents dividend or total 2.25 cents dividend, which translated to 5.7% full year dividend yield based on the market price of 39 cents, and PE ratio and PB ratio are 4.6X and 1.14X. 

27 November 2014

BRC Asia - Full Year Report Summary - November 2014

Singapore, 26 November 2014 – SGX-Mainboard listed BRC Asia Limited (“BRC” or “The Group”), one of the largest prefabricated steel reinforcement providers in Singapore, reported net profit of S$28.4 million on revenue of S$397.4 million for its financial year ended 30 September 2014 (“FY2014”), which were 20% and 7% lower respectively when compared with the preceding financial year ended 30 September 2013 (“FY2013”). This was despite having achieved a record sales volume in FY2014 in a booming local construction market. The key reason was declining selling prices which fell faster than steel costs due to intensifying competition.

Financial Highlights of BRC Asia

26 November 2014

Sim Lian Annual Report 2014 Quick Analysis - November 2014

Sim Lian group is a local construction company that ventures into property development and property investment in Singapore as well as in oversea (Australia). The portfolio of developments at home now include residential, commercial and integrated developments in key locations.

Financial Highlights

Income Statement
The group achieved total revenue of S$715M for FY 2014, a 3.7% drop from a year ago. Net profit however showed 2.3% improvement to S$172M. There are several reasons attributed to this:

  1. Improvement in gross profit margin - 30.19% compared to 27.21% a year ago, which I believe is due mainly to changes in product mix as well as better operating efficiency.  
  2. Increase in other operating income - S$7.7m compared to S$5.8m last year, due mainly to increase in interest income and other rental and sundry income. 
  3. Shares of results of joint ventures, net of tax increased to S$22.5M from S$11.7M previous year.  

08 November 2014

Wee Hur - Another Record Year this Year - November 2014

According to the latest quarterly report release yesterday, Wee Hur showed a great improvement in both revenue and net profit for 9mth period ended September 2014, as one of its Industrial project obtained TOP on August 2014. Wee Hur easily achieved S$102 Million net profit with 3 months to go for current financial year. As this is a record year for Wee Hur, I believe that the dividend payout will not be lesser than 4 cents as per paid during FY2012.

I would like to say thank you to my friend who introduced this counter to me, as I would not know if it could achieve this good result this year as most of the revenue can be recognized after the TOP (e.g. HDB, EC, Commercial, Industrial, foreign properties etc). This makes us more difficult in predicting / forecasting the revenue as well as the profit for a property development company, and it will show a very volatility of the revenue and profitability trend since 2011 (the implementation of FRS115).

Nonetheless, I believe that it is now bear market for real estate market, as there is lesser transaction done on market. But it may also a good time to buy the land piece at cheap price as what Wee Hur did for an acquisition of industrial land in Woodlands which it targeted to launch it by next year (FY2015). I believe that with prudent care and good execution, it will achieve a good take up rate for the projects on hand. It maybe a good time for long term investors who try to accumulate those cheap property stocks before the market rebound later (perhaps 2 years time after Singapore GE??).

As for its venture in China, it is still in Due Diligence stage so that I believe that the profit may not be kicked in soon. As for dormitory business, it will be in full operation only by December 2014 and let us see if it could provide a good recurring income to the group or not from next year onward.

06 November 2014

Most of the Time, It Does Not Really the Hot Stocks that Make Money For You - November 2014

I understand how brokers make money. Most of the time, they will recommend you to buy stocks based on the current "popular" topics. And those counters on the top volume board will get many traders to target on. Why would so many buyers chasing after the "hot" stocks?

Reason #1:

It is easier to buy and sell (in other word, it is easier for buyers to buy and then sell it off within a few seconds). Based on some conventional theory, you could reduce a risk level for a counter if you could buy and sell easily. This is what we call - Liquidity Risk. There are too many investors targeting on those counters with high trading volume / so called liquidity so that they could easily trade it and run away if needed.

Reason #2:

Normally for hot counters, they will have some reasons for public to chase after. Some may try to long for good reasons or some may go and short for bad reasons. If investors solely trade based on the only reason that it is a hot stock, then it may just force the investors to sell it off later when the trading volume is low (by that time, the share price maybe lower due to the fact that the liquidity risk is higher - go back to my reason #1).

Reason #3: 

Some investors / traders just don't have any idea on what they want to invest / trade. So they may just follow the market trend (buy or sell what most people will trade). This is only good for those investors who have strong belief after they have done their own homework. If you simply just follow the market, you may later find yourself lost in the middle.

So Why Do You Need to Change the Mindset? 

I also understood that some of the investors make money by NOT trading the hot stocks. They would rather go and wait for the quiet period to come, so that they could buy the counters at cheaper price. For some counters, they have been neglected by the public due to the liquidity issue (daily trading volume is very low, that you gotta wait for a few more days to complete a whole big chunk of purchase). Instituitional investors may also not favor in those small-medium cap counters or under traded counters as they have to give reasons to the stakeholders why they buy them. It is better for them to just follow what other fund house will buy in order to not to differentiate too much from the peers. (After all, the performance bonus of the fund manager is just to beat the market, not 100% different from the market).

Many hidden gems were previously under-covered by most analysts / fund managers. It may be good if we could find it before most of the people started investing in it.

The other reasons is that, there is low trading volume during the bear market. Most people especially traders would go and have a rest during bear market as they could not find a good opportunity to trade short term. It maybe an opportunity for certain investors to slowly pick up their own choices of investment during the bear market.

Your Comments?

Leave us your comments below.

04 November 2014

Thai Beverages Unveils 2020 Strategic Roadmap - November 2014

ThaiBev Unveils “Vision 2020” Strategic Roadmap for its Group

  • Increase revenue contribution from non-alcoholic beverages to over 50%
  • Increase revenue contribution from outside of Thailand to over 50%
  • Streamline businesses into three product groups supported by common infrastructure
  • Push core brands and key markets for each product group

Thai Beverage Public Company Limited (“ThaiBev” or the “Group”) unveiled “Vision 2020”, the Group’s roadmap for the next six years. Driven by “Five Strategic Imperatives” – Growth, Diversity, Brands, Reach, and Professionalism, ThaiBev is setting out to further the success it has progressively achieved since its establishment in 2003.

“Vision 2020 is all about sustainable leadership. It underlines our resolve to consolidate and build on our leading position in Southeast Asia. To this end, we endeavor to align our various businesses along a common path and harness our combined strengths. Through Vision 2020, we seek to provide customers with even better products; create greater value and deliver more sustainable returns to shareholders; and enlarge opportunities for our employees,” commented Mr Thapana Sirivadhanabhakdi, President and CEO of ThaiBev.

For more details, please refer to here.

My Notes

It seems that Thai Beverages is making a good / brave move to further diversify its core business into non-core sector such as soft drinks / non-alcoholic drinks. It is expected that F&N + Sermsuk will be playing a key role in making it success in long run to venture to global market. 

I would see the way that F&N to dispose off Myanmar brewery business a step further to its vision 2020. From now on, I believe Thai Beverages will be treated as MNC instead of labelled as Thai based company after the F&N acquisition. Hopefully it could also dispose off Chang beer division in future (which I doubt so) as it is still not making good money even compared to non-alcohol division . 

03 November 2014

Frasers Centrepoint Limited begins integration of Australia business - November 2014

Singapore, 3 November 2014 – Frasers Centrepoint Limited (“FCL” or the “Company”, and together with its subsidiaries, the “Group”), which recently acquired Australand for A$2.6 billion, today announced that Bob Johnston will lead the combined Frasers Property Australia and Australand businesses; as a consequence, Guy Pahor will be stepping down as Chief Executive Officer of Frasers Property Australia. FCL had announced on 31 October 2014 the completion of the compulsory acquisition of Australand. Australand became a wholly-owned subsidiary of the Group following the compulsory acquisition.

Australand has three operating divisions, namely Residential, Commercial & Industrial and Investment Properties and has over 500 employees across Sydney, Melbourne, Perth, Adelaide and South East Queensland.

02 November 2014

Jams, higher tolls and animosity choking Singapore-Johor lifeline - November 2014

Based on the story from the link here, it seems that it is not getting better for Iskandar Malaysia to grow further without the co-operation between two governments across the borders. The recent increase of toll fees in Causeway does not help in easing the congestion, but in fact, it has actually dampened the demand of investment from Singapore, especially for those SMEs that thinking of moving to Iskandar Malaysia from Singapore. 

As a local living in Johor Bahru for more than 20 years, worked in KL for about 2 years and now working in  Singapore, I believe that it's quite hard for Malaysia government to solely focus on Iskandar Malaysia, as they would prefer to focus on Klang Valley (or Greater Kuala Lumpur) which is targeted an increased population of more than 10 million in near future. Penang as tourism hub and electrical hub would get investment from MNCs as well. So how do Iskandar Malaysia would like to position itself? 

28 October 2014

Wing Tai 1Q15 Report Summary - October 2014

Wing Tai reported revenue of S$160M with net profit attributable to shareholders of S$24M (about 15% net profit margin) for its 1st quarter ended 30 September 2014. The net profit is on par compared to corresponding quarter last year although total revenue dropped 28% against last year, thanks to the increase of shares of associated and joint venture companies.

Balance sheet wise, the group recorded total assets of S$4.9 Billion with total equity of S$3.0 Billion. This translates to a healthy total debts to total asset ratio of below 40%. The development properties stood at S$1.5 Billion, with investment properties S$0.6 Billion and Investment in associated companies & JV at S$1.3 Billion. I believe that the group still largely allocate its business in investment (whether in associated / JV or in properties) to help cushion during the slowdown of property market in Hong Kong and Singapore.

Raffles Medical 3Q14 Quarterly Report Summary - October 2014

Singapore, 27 October 2014 – RafflesMedicalGroup, (“Group”) a leading integrated private healthcare provider in Singapore and the region recorded a 11.1% growth in revenue from S$85.1 million in Q3 2013 to S$94.5 million in Q3 2014. 

23 October 2014

KL-SG High Speed Rail Project - 7 Stops to be Confirmed - October 2014

SINGAPORE - The high-speed rail (HSR) project connecting Singapore and Kuala Lumpur will have seven stops in Malaysia, namely Kuala Lumpur, Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat, and Nusajaya.
While several of the proposed stations had been announced earlier, the location of the stations were confirmed on Wednesday by Malaysia's Land Public Transport Commission chairman, Syed Hamid Albar.
- See more at: http://www.straitstimes.com/news/singapore/transport/story/singapore-kuala-lumpur-high-speed-rail-have-seven-stops-malaysia-2014#xtor=CS1-10

My Notes

Previously Malaysia Transport Minister announced that there were 5 stops in between KL and SG, namely Putrajaya, Seremban, Kuala Lumpur, Batu Pahat and Nusajaya apart from another terminal located at Singapore (most probably at Jurong lake district as announced by Singapore prime minister LHL). Some of us quite surprised that Muar and Malacca (Ayer Keroh) were not in the list. 

21 October 2014

Keppel Land 3Q2014 Report Summary - October 2014

Recycling of Assets Lifts Profits
  • Net profit dropped marginally by 3.3% y-o-y at $308 million on lower contribution from property trading
  • Contributions from property investment and fund management rose, accounting for a higher share of 34.4% and 15.8% of net profit respectively
  • Net tangible asset per share rose to $4.59, 10.6% higher compared with $4.15 as at end-September last year
  • Net debt/equity ratio improved to 0.37x
The Group recorded net profit of $308 million for the first nine months of 2014, down marginally by 3.3% year-on-year (y-o-y). As part of its continuing efforts to recycle capital, Keppel Land divested Equity Plaza and received a net gain of $59.5 million. The gain from the sale of Equity Plaza and a share of Keppel REIT’s gain from the divestment of its 92.8% stake in Prudential Tower was partly offset by a loss of $20.3 million arising from the dilution of interest in Keppel REIT and higher tax expense. Net profit would have been higher by 7% if not for a tax write-back of $30.7 million in the same period in 2013.

Triyards Financial Year ended 31 August 2014 Report Summary - October 2014


The company recorded US$27m net profit attributable to shareholders (drop 15% y/y) on the back of total revenue of US$269m (drop 2% y/y). This translated to net profit margin of about 9.9% (drop 1.5%).

FY2014 EPS was 9.04 US cents compared to 11.71 US cents for FY2013. NTA was 57.37 US cents for FY2014 compared to 49.90 US cents. ROE was around 17% which to me still not too bad, although the ROE was lesser when comparing to previous year.

Trailing PE of Triyard is now around S$0.675 / 9.04 US cents or about 6.0x. Trailing PB ratio is 0.94. The company proposed 1.0 SG cents final dividend, which translated to be around 1.5% final dividend yield.


19 October 2014

Crude Oil rebound from Two Year Low - Oct 2014

This is just to record that crude oil rebounded from its two year low of USD80 to current USD82++. Frankly speaking, I do not really know the real reasons behind but the main idea was that the supply is more than demand currently. Few points here:
  • Shale oil from US hit record production thanks to the latest technology that can extract the oil out from rocks which could not be done previously.
  • Increase in USD helped lower down the crude oil price as it is normally negative correlated with USD movement.
  • Rumor saying that US was trying to revenge Russia

18 October 2014

Iskandar Malaysia Update - October 2014

My Notes

Iskandar Malaysia experienced a change of taste by investors as more investors targeting landed residential or industrial projects instead of those luxury high rise project near to Johor Bahru custom such as Danga Bay. I believe that some investors may worry about the rental market once all the projects completed by 2015 - 2017. 

The recent news on toll charge rise in between two countries may deter some residents who already bought the houses in Iskandar Malaysia to move back and stay here. The only catalyst that I could think of is that the RTS (Rapid Transit System) location at Bukit Chagar was confirmed by Malaysia government recently. It may still take some time for both governments to confirm the detailed plan such as whether it's built under the undersea tunnel or over a bridge and to start the bidding of the project soon. 

13 October 2014

Free Fall of Singapore Stock Market - October 2014

Starting from this month (October 2014), the investors have experienced the volatility in equity market. Some decided to leave the market as they do not dare to see the volatility, some prefer to short against the market as they followed the trend, some may just did nothing as long as the businesses were still running good in long run.

To me, I prefer a volatile market although it seems that there are more risks involved. The opportunities lies on the risks. For some investors, they may find more counters in their watchlist hit the targeted buy range. There are still some concerns to the investors, as they could not handle the paper losses or they just not too sure of handling it.

28 September 2014

A Short Discussion with Brother on Bloomberg Summary for the Counter - September 2014

I had a short discussion with brother on Bloomberg mobile app today morning, as he was quite interested to learn about the shares investment. If you are not aware of, Bloomberg came out mobile app that you can download it from Play Store / App Store for free. So we went to Watch list >> Counters >> Financial Summary section. I explained to him about the 3 items there:

  1. Income Statement
  2. Balance Sheet
  3. Cash Flow Statement

22 September 2014

RTS Station to be Located at Bukit Chagar - September 2014

Malaysia Government had recently confirmed that RTS (Rapid Transit System) will be ended at Bukit Chagar, Johor Bahru which you could find from the map that  I abstracted from Google Map below. 

A: Bukit Chagar Location
This is the latest news on the RTS / BRT / MRT that connect Johor Bahru to Woodlands North Station (Thompson Line) targeted to be completed on year 2019 / 2020. With the time left less than 5 years, I believe that the projected completion date of 2018 maybe a bit rush to both governments.

15 September 2014

Vibrant 2015Q1 Result Summary - September 2014

Company Background

Vibrant is a holding company that mainly focus on logistic business with 3 other interrelated division - Finance Service, Property Development and Property Management. It is also the main sponsor of Sabana REIT, the first Shariah Compliance REIT listed in Singapore. 

Since listed in SGX, the dividend payment increased every year. The latest full year dividend was 0.55 cents or about 5% dividend yield based on current dividend yield. 

Popular 2015Q1 Result Summary - September 2014

Popular holdings reported a decent quarterly report this month. The revenue increase 6% to S$141 Million compared to corresponding period last year, with Profit attributable to owners of the company increased to 77% to S$9.4 Million from S$5.3 Million last year. The improvement is mainly due to the higher turnover achieved by the Retail and Distribution and Publishing and e-Learning Divisions offset by no revenue from property division. 

The net profit margin was improved to 7% from 4% previous corresponding quarter, with annualized PE 5.19X and annualized PB 0.86X, I think it will gain more public awareness from investors once the net profit margin can be improved again. 

10 September 2014

Neo Group 1H15 Result Summary - September 2014

Neo Group reported an increase of 21% in first half year 2015 revenue compared to corresponding period last year, despite the drop of net profit of 9.1% compared to the same period last year (Net profit margin dropped to 9% from 12%). The main reasons due mainly to increase in depreciation expenses, advertising expenses for restaurant related businesses as well as operating lease expenses due to the expansion of the business operation.

According to the group, they are in transition to double up their capacity in operation. The new centralized kitchen is targeted to be completed by October 2014 which I believe it will improve the gross profit margin as well as net profit margin in second half year 2015 result. I am quite surprised that the group also engage in online florist business although it is somewhat indirectly linked to existing catering business.

01 September 2014

Dukang FY14 Result Summary - September 2014

Dukang released its unaudited fully year 2014 report. The sales dropped by 40% to RMB 1,451 Million from RMB 2,406 Million a year ago. Net Profit dropped by 89% to RMB 44 Million from RMB 390 Million a year ago. It is mainly due to the decrease in gross profit margin to 36% from 41% previous year as well as the decrease in revenue. The company highlighted that decrease in revenue from both Luoyang Dukang and Siwu operations, as a result of China’s current austerity measures on luxury gifts and spending

Balance Sheet wise, Dukang registered an increase of almost 100% in inventory level to RMB 689 Million from RMB 343 Million, mainly due to the bulk purchase of good quality grain alcohol at a competitive price. The Cash level dropped to RMB 392 Million from RMB 758 Million a year ago. Nonetheless, the group maintain a healthy debt level by having total liabilities to total asset ratio of around 21%. The total equity to shareholders increased by about 2% RMB 1,999 Million. 

29 August 2014

Straco - My View of Its Acquisition / Lease of Singapore Flyer - August 2014

I had been to Singapore flyer once, and it was during 1-for-1 promotion which I bought it from Groupon website if I still remember correctly. It has one of the most beautiful scene in Singapore, and if possible you can try to ride on it during sunset (so you could enjoy both day and night scene for just 1 ride).The nearest MRT station is Promenade station (Circle Line). You may still need to walk down for 5 - 10 minutes to reach there.

Some of the information of Singapore Flyer:

The Singapore Flyer, which cost $240 million to build and has 28 air-conditioned capsules each able to accommodate 28 passengers, was opened in March 2008. It was the world's tallest Ferris wheel at 165m until Las Vegas' High Roller (167.6m) opened in March this year.

Fundamental Analysis - PB Ratio, PE Ratio and Dividend Yield

Yesterday there was a property information / education show in TV 8 (in Singapore) to introduce the commercial property investment. In the show, the guests gave some examples of how to define good investment, such as the rental yield was 4-5% for commercial buildings as compared to 2-3% for private residential buildings, and potential capital gain is higher for commercial buildings as compared to residential buildings. At the same time, the guests suggested to use "leveraging" method for property investment. For example, if you have S$1,000,000 in bank account, you could borrow up to 80% of the total property value. You could take up to 80% loan or S$1.2 million for S$1.5 million investment and S$300K cash deposit plus S$100K all relevant charges. If you are financially sound, you can take up to 2 commercial buildings with S$1.5 million each. Of course, you have to take into consideration of the underlying risk involved, and that is why even though the rental yield is higher for commercial buildings, it also requires you to have stronger holding power so that you could afford to pay for the bank loan while waiting for new tenants to rent it from you.

In shares investment, the so called fundamentalists will refer to "Relative" comparison methods to determine whether this counter is trading cheaper or more attractive to other counters / companies in same industries. However, do note that this is not the only way for picking the right counter. You still need to do more homework in order you can be more confident in your company selection.

26 August 2014

SGX - Board Lot Size Reduced to 100 Units Starting 19 January 2015

Starting from 19th Jan ’15, SGX will reduce the standard board lot size of securities listed on SGX from 1,000 to 100 units, making it more affordable for retail investors to invest in a wider range of equities, including blue chips, and enable them to build more balanced and diversified portfolios. The reduction will apply to ordinary shares, including shares traded on GlobalQuote, REITS and business trusts, company warrants, structured warrants and extended settlement contracts. Existing counters with board lot sizes of 100 or less units will remain unchanged.

The reduced board lot size will benefit all investors and make it easier to invest in blue chips and index component stocks which tend to be higher-priced. It will also allow institutional investors to better manage their risk exposures through finer asset allocation of funds.

Board lot sizes for exchange traded funds, American Depositary Receipts and fixed income instruments, including retail bonds, Singapore Government Securities and preference shares will remain unchanged.

In light of the changes, SGX aims to implement a minimum subscription and allocation of $500 for mainboard counters and $200 for Catalist counters, on investors applying for shares during the a company’s IPO period.

SGX currently trades at 22.5x forward P/E.

My Notes

If you look at Bursa volume vs SGX volume, you may notice that SGX volume is not high compared to its neighbor. There are a lot of reasons here, such as Singapore is now experiencing transition period to reduce its reliance on labor intensified industries and the government aim for sustainable yet lower GDP growth compared to Malaysia. Another reason could be the introduction of smaller unit of board loat size of securities listed on Bursa. 

If you are young investors age range 20 years old to 30 years old, the chances of you to own DBS/OCBC/UOB is lower as it requires you to have at least S$10K to own just one piece of a bank counter, and you will loss opportunity cost to diversify your stock portfolio. Some good companies such as Jardine related companies require even near to S$50K to own just 1 lot of the counter. 

With introduction of smaller board lot size, I believe that it provides opportunity to the young and enthusiastic investor to create their own stock portfolio, besides parking their excess money on unit trust. This may increase overall portfolio performance if you are able to perform right choices on both diversification and stock picking at the right time.

For those who have odd lots of more than 100 shares may also be easier to liquidate or top up their shares starting next year, as the board lot size is reduced to 100 shares. It will also reduce the transaction cost for those who have little invested capital. 

Hopefully with this implementation, SGX trading volume would slowly pick up next year. 

22 August 2014

My Notes on Oil & Gas Sector - August 2014

O&G sector is still growing rapidly as long as there is a need for the Exploration & Production (E&P) companies to continue their R&D as well as production activities when crude oil is higher than US$90.00. It becomes a norm that the crude oil is at higher range as compared to few years back where crude oil suddenly surged from US$40 to US$140 and above and then dropped significantly to US$40 before arrived at US$90 - US$100 level.

From what I read from many research reports written by analysts from various research houses, it shows that the uptrend is still going but maybe a bit loss in momentum. Some analysts prefer the supporting activities such as OSV builders (Nam Cheong etc), liftboat / service rigs providers (Ezion etc) but maintain neutral / negative in rig builders such as Keppel Corp / Sembawang Marine. I do believe that the overall sector would remain strong as long as the needs for crude oil remain solid, as alternatives such as renewable energy still in early stage in R&D.

18 August 2014

Thai Beverages Half Yearly Report Summary - August 2014

Summary of Income Statement

CPF to Allow Partial Withdrawal after Age of 65 - August 2014

Singapore will broaden the options for its citizens to monetize state-subsidized homes and may offer greater flexibility for retirees to draw funds from the mandatory savings program, Prime Minister Lee Hsien Loong said.

A plan that lets elderly citizens sell part of their leases on smaller Housing & Development Board apartments back to the government will be extended to so-called four-room flats, or those that are about 968 square feet in size, Lee said. The homes developed by the government are usually sold with 99-year leases, and buyers typically fund them with the state-run pension plan called Central Provident Fund or CPF.

17 August 2014

Number and Price of Private Homes Sold Trend - Aug 2014

Source: http://www.straitstimes.com/news/business/more-business-stories/story/interactive-charts-impact-singapores-property-cooling-meas

Time Value of Money - Key Thing You Need to Know

We have wasted a lot of time doing a lot of things that do not bring any benefits to us. Sometimes, we focus on making money than making use of time wisely. In investment, the first element of the success formula is "Time".

Everyone has equal time, although they may not have same earning profile. Whether you are a business owner, a worker, a retiree, or even a young kid, we all have same amount of time. With "time", we can create something out from nothing. In investment, we can create money from the money. The money we have is just like a seed of plant, where you need some patience and time and the technique to grow the plant so that it can bear nice fruits and the seeds again.

14 August 2014

Sino Grandness Quarterly Report Summary - August 2014

Performance Review

The company reported a stellar quarterly report. 1H14 Revenue improved 34% to RMB1,294 million from a year ago, with net profit increased 32% to RMB230 million, mainly due to the increase of beverages and domestic can food division as well as the higher average selling price, with exported can food remains on par with last year performance. Current product mix is now 67% beverage, 24% oversea canned, and 9% domestic canned.

Gross Margin Analysis across Divisions (2011 - 1H2014)

13 August 2014

It's Never Too Late to Plan For Your Retirement

Welcome to my blog here, the objective of this blog is to educate investors in managing their hard earned money, that is why you hardly see that I post out technical chart for short term trading purpose, as I believe that there is a time lag effect. What I encourage most of the investors is that to separate themselves from speculating and focus on the real value of the investment.

One of the reasons why we wish to have investment with our excess cash is to better utilize that amount of money other than just save it into the bank account and earn for the tiny interest. Maybe you think that the government should do something in order to protect our retirement life, such as giving subsidies in healthcare sectors, but it is time for us to play our part here to continue with our retirement lifestyle by making smarter choice.

Bumitama Agri Quarterly Report Summary - August 2014

Performance Review

First Half Year 2014 Revenue up 52%  to S$303 million, with net profit increased 96% to S$64 million.

1H14 EPS: 3.68 SG cents, up 97% (compared to 1H13), mainly due to both increase in sales volume and average selling price.

NAV: 40.6 SG cents, up 8% (compared to Dec 2013)

FCF: Positive

Expected ROE ~ 20%

Estimated Annualized PE ~ 15 - 17 X

Company Comment on Outlook

During the last two months, prices of palm oil have adjusted lower in view of the reduced threat of El Nino, anticipated increase in output from Malaysia and Indonesia as well as the softer soybean prices. However these are just seasonal volatilities as the long term prospect of palm oil remains positive.

Singapore Population - August 2014

From the statistic data extracted from Department of Statistics Singapore, it showed that the percentage of citizens over total population in Singapore was dropping since the data was collected from 1960 onward. As of June 2013, the percentage of citizen is around 61.4% from above 90% as of 1960s, making Singapore a truly global city with more than a third are foreigners or Singapore PRs. Even if we take into account Singapaore PR as Singapore residents, the percentage of total citizens and SPR is about 71%. There are two main points here:

  • The rate of job creation of Singapore government is faster than population growth of Singapore citizens.
  • It is getting lesser or harder for foreign workers to convert to Singapore PRs and citizens.

12 August 2014

Food Empire - Recovering from Russia-Ukraine Crisis - August 2014

Income Statement

Straco Quarterly Report Summary - August 2014 (Revenue Up 24%, Net Profit Up 4.8%)

Performance Review

1H14 revenue up 24% to S$34 million, with 2Q14 visitors increased 22.4% to 840,000 persons for combined visitation to Shanghai Ocean Aquarium "SOA" and Underwater World Xiamen "UMX".

Administrative expenses for 2Q2014 increased $1.89 million, or 142.4% from 2Q2013, mainly due to the foreign exchange loss of $396,000 recorded in the current period as the Chinese Yuan (RMB) weakened against the Singapore dollar (SGD) during the period; as opposed to an exchange gain of $1.15 million recorded in 2Q2013 when the RMB strengthened against SGD at that time. Taking away the foreign exchange differences in both periods, profit before tax for the current quarter would have been $13.15 million, an increase of 29.8% compared to 2Q2013.

The Group generated net cash from operating activities amounting to $10.14 million in 2Q2014. During the quarter, the Company paid out special and final dividend amounting to $16.95 million for the financial year ended 31 December 2013, and received $0.43 million from the exercises of share options. As at 30 June 2014, the Group’s cash and cash equivalent balance amounted to $99.97 million.

Valuetronics Quarterly Report Summary - August 2014 (Revenue Up 2.5%, Net Profit Up 1.8%)

Valuetronics is an Electronic Manufacturing Service (“EMS”) provider, which focuses on the design and development of products that meet the ever-changing customers’ needs. We are the preferred choice of some successful global companies involved in consumer electronics as well as industrial and commercial electronics products, with core competencies ranging from tool fabrication, injection moulding, metal stamping, machining, surface mount technology (“SMT”) and finished product assembly on full turnkey basis.

The Group classified its EMS business into 2 reportable segments, namely consumer electronics products (“Consumer Electronics”) and industrial and commercial electronics products (“Industrial and Commercial Electronics”).

CSE Global Quarterly Report - August 2014 (Net Profit dropped 9.1%, Revenue increased 6.2%)

Review of Performance

Breadtalk Quarterly Report Summary - August 2014

Breadtalks 1H14 revenue recorded a 13.6% increase to S$280M compared to S$246M corresponding period last year, but net profit registered a 4.9% drop to S$4.4M, mainly due to S$2.2M asset write off for the closure of non-performing outlets. The food atrium is the best performer as revenue increased by 20.9%. The other income increased by 113% mainly due to the monies received for Singapore's Wage Credit Scheme and management fees from its food court operations.

1H14 EPS 1.57 cents compared to 1.65 cents last year, NAV stood at 33.6 cents comapared to 30.1 cents a year ago. It implies an expected annualized ROE of around 10% - 12%. Company declared 0.5 cents interim dividend to be paid on 5 September 2014. 

11 August 2014

Super Group Quarterly Report Summary - August 2014

Performance Review

Half year revenue drop marginally 5% to S$256 million, with net profits contributed to owners of the Company dropped 44% to S$34 million from S$60 million a year ago, mainly due to drop in sales and gross profit margin and increase in general and administration expenses.

PPE increased 4% mainly due to construction and equipment costs incurred for the Singapore Tuas factory extension, the new China Changzhou plant, the Botanical Herbal Extraction facility and the new soluble spray-dry coffee powder facility.

Sarine Technology Quarterly Report Summary - August 2014

Half Year 2014 Performance Review

Revenue increased 15.9% to US$49 million, with net earnings increased 8% to US$17.6 million, partly due to 44% increase in R&D expenses, 14.5% increase in sales & marketing expenses and 20.5% increase in general and administration expenses offset by increase of 188% in net financial income. 

The revenue derived from different region: India 81%, Israel 6%, Africa 4%, Europe 2%, North America 1% and the rest from other region. Galaxy family related revenues remain the biggest contributor to the total revenue. 

Q&M Quarterly Report Summary - August 2014

Current Performance Review:

Revenue: S$36.2 million, up 18% mainly due to the expansion in the network of new dental and medical outlets and an increase in revenue from existing dental and medical clinics in Singapore.

EPS: 0.44 cents (diluted basis), up 33%

NAV: 7.4 cents, down from 7.6 cents due to large base of total outstanding shares

Expected ROE: 10% - 15%

10 August 2014

Middle East, Singapore, China. What's Next?

If I still remember correctly, Iskandar Malaysia is one of the corridor projects proposed by former prime minister of Malaysia Tun Abdullah. His original plan was strongly supported by Middle East companies initially. After that Dubai was hit by the global financial crisis and Middle East investors retreated from this region. Singapore developers especially MNC started venture in Iskandar Malaysia seriously only after year 2012, as the property price in Singapore rose significantly due to the US Quantitative Easing. And from this year onward, many Chinese developers rushed into this region and try to replicate their business model in China, in the hope that Johor Bahru - Singapore can be like another Shen Zhen - Hong Kong.

So far, I have not seen significant demographic changes as most of the development actually are cater to those whose who are working in Singapore. Most of the locals here cannot afford the high real estate price here, as their wages are not as high as those in Singapore, mainly due to the currency conversion rate of 2.55. If this continues and Malaysia government cannot create higher salary jobs, it definitely could only be the backyard of Singapore.

Wheelock Properties Quarterly Report Summary - August 2014

Income Statement

09 August 2014

Nam Cheong Posted 76% Increase in Net Profit - August 2014

Net Profit: RM134m + 76%
  Revenue: RM786m + 54%

1H EPS: RM 0.049
    NAV: RM 0.476

Expected Annaulized ROE : 20% - 25% (Good)
Total Debt to Asset Ratio: 56% (A bit high, although it is a norm for shipbuilding company to leverage on borrowings in order to boost up the ROE)

Company Review

Gross profit increased by 57%, from RM97.5 million for 1H 2013 to RM153.2 million recorded for 1H 2014, which is in tandem with higher revenue recorded. The gross profit margins for 1H 2014 and 1H 2013 were consistent at 19%. The shipbuilding segment's gross profit margin were maintained at the range of 17% to 19%. However, the vessel chartering segment's gross profit margin was lower at 33% in 1H 2014, due to chartering-in of a vessel to fulfill a time charter contract as the Group's vessel which was intended to perform this charter was then unavailable.

Other income was higher for 1H 2014 as compared to 1H 2013 due to fair value gain on derivatives of RM7.5 million and net foreign exchange gain of RM4.1 million.

Selling and administrative expenses increased by RM5.0 million in 1H 2014 due to share and cash plan expenses while finance cost was consistent with 1H 2013.

Share of profit in jointly controlled entities recorded a gain of RM3.1 million as more assets have been deployed by the jointly controlled entities.

As a result of the rise in overall revenue, net profit after taxation for 1H 2014 of RM134.4 million, was 75% higher as compared to RM76.8 million in 1H 2013.

Company Outlook Comment

The global and regional outlook of the Exploration and Production (“E&P”) sector remains upbeat, with
global spending expected to reach a new record of US$723 billion in 2014 before hitting US$1 trillion in

The increased activities by oil majors in 2014 have benefited the Group so far, as evident by the order wins of 13 vessels worth approximately US$290 million (year-to-date). Our order book value, as at 1 July 2014,
stood at approximately RM1.7 billion, comprising a mix of OSVs for shallow and deep water operations that
are due for deliveries up to 2015.

Within Asia-Pacific, Malaysia is expected to exhibit a robust performance in the medium term. As a key
driver in Malaysia’s oil and gas industry, Petronas seeks to rejuvenate mature assets and develop marginal
oilfields, having pledged US$14 billion to enhanced oil recovery projects2. This development allows us to
capitalise on our strong links with oilfield service companies in Malaysia which will enable us to secure
vessel orders.

In addition, the global OSV fleet is ageing with over 30% of vessels being of traditional build and in
operation for over 25 years3. In order to cope with the present-day operational demands, operators and
charterers are looking to replace older vessels with modern variants that are better-equipped to do their jobs
more efficiently.

Going forward, we believe that increased investments by these oil majors will benefit us, as we continue to
see demand for AHTS vessels, and other offshore vessels, especially in the shallow water region. The
demand for small size AHTS vessels remains strong as offshore service providers replace older vessels with
new and higher specification vessels. As one of leading players in the construction of mid size PSVs, we are
able to benefit from the growing demands in this sector of the industry as well.

My Notes

Nam Cheong has good working relationship with Petronas as it is one of the biggest OSV builders in Malaysia. With Petronas targeting to have US$14 billion capex budget, I believe Nam Cheong can be benefited from there.

The key risk here is the Build-To-Stock business model that the company is doing now. The management claimed that this business model is workable as it has strong relationship with customers and they can build the vessels faster than other builders when the customers need it urgently. It also brings higher profit margin compared to Build-To-Order business model.

The other risk is whether the fluctuated crude oil price could support current E&P activities.

With expected PE ratio of 11X - 12X this year, I believe it depends on the order winning momentum to keep the company in reasonable price range. My most favorite counter in O&G sector is still Ezion at this moment.

F&N Quarterly Report Summary - August 2014

Performance Review

Company Comment on Outlook

The global economy is expected to grow modestly in 2014 with the Singapore economy expected to grow at
between 2% to 4%. As global commodity prices are forecasted to remain volatile, it is expected to impact the key raw material costs in the Food & Beverage segment. In addition, consumer sentiments in the markets in which we operate will continue to be affected by the economic climate. Nevertheless, the Group will continue to monitor the situation closely to mitigate the effects of rising costs and to respond in a timely manner to sustain the operating performance of the Group.

Operating conditions for Printing and Publishing remain challenging but efforts to control operating costs are progressing well whilst initiatives to discontinue unprofitable businesses in past years have enabled reinvestment into growth areas.

Other Information

9M14 EPS: 15.0 cents, from continuing operation:  7.9 cents
NAV: $1.15

Expected ROE is around 10% - 15%

The main contributor of net profit growth is from breweries sector (Myanmar bear). As company divested its share in FCL to shareholders, its main focus now is in beverages division. As PB ratio is now around 3.0x which I believe it is a norm for beverage company with lesser CAPEX requirement and higher cash flow generation, the expected annualized PE is around 19X. I would not say it is cheap at current price, but definitely it is in one of my watchlists as it has strong branding value in Asean countries with 100plus as its flagship product in this region. It also really depends on demographic change and changes of taste of end users to switch to healthier products than carbonated drinks. Overall, this is a good result for company. Hopefully the ROE can be higher after a few more quarters later. It is good that if the company can dispose off the printing division if possible as it drags down overall ROE performance. 

A presentation slide prepared by the company can be found here.

Lee Metal Quarterly Report Performance Summary - August 2014

Performance Review

My Notes

1H2014 EPS 4.92 cents
NTA 35.88 cents

As 1H2014 included S$11.2M net profit from property development (kind of one off item), I believe that the result for 2H2014 would be weaker than 1H2014. As the expected annualized PE is below 7.0X with good dividend yield, I believe it is still reasonable for investors to hold for dividend yield. The risk now is that the worsening result from fabrication and manufacturing of business due to intense competition among the competitors.

As PB ratio now is more than 1.0X, to me it is not considered as cheap. But it always depends on your required return rate (which inclusive of dividend yield) to make your on decision.

08 August 2014

STI Below 3,300 Point - 8 August 2014

As of afternoon today, the STI index is going back to the level below 3,300. It seems that 3,300 is the strong resistance level for STI index now. With US stock market dropped due to Iraq tension, I believe that it could be a short term impact to the market. The key point is whether the stock market could still perform well after the US interest rate increased later.

If we look at the conventional financial term, the interest rate is regarded as risk free rate, as the investors could put their excess cash in fixed deposits at theoretical zero risk. They would invest their excess cash if and only if the return rate is higher than the fixed deposit rate.

The equity risk premium is regarded as the additional required return rate apart from risk free rate. If risk free rate is increased, the equity risk premium is increased as well. The reason why the stock market perform better during increasing interest rate environment (when equity risk premium is increased) could be:

  1. Overall economy are doing well, there are more investors willing to reduce their own target return rate during the good time, as they do not wish to miss the boat.
  2. Increase in interest rate normally may increase inflation rate, as businessmen may pass down part of the additional borrowing cost to the end users. When inflation rate increases, the investors may think that the return in FD (risk free rate investment tool) may not beat inflation, and they are forced to seek additional income by investing in higher risk investment.
  3. When interest rate is rising, the banks may face issues in lending out the money to the borrowers. They may in turn loosen the lending rule by lending it to less qualified borrowers and cause the bubble in bank lending and some of the money may flow into stock market.
Nonetheless, as long as we have long enough investment time horizon, and we are buying company that is fundamentally sound and with sustainable grow business model, it is still a good choice for putting excess cash there. You must always have at least 3-6 months expenses budget before putting excess cash in the stock market or other asset classes other than fixed deposit. 

Wilmar Quarterly Report Presentation Slide - August 2014

Source: http://infopub.sgx.com/FileOpen/Wilmar_2Q14_Results_Briefing_Presentation_7Aug2014.ashx?App=Announcement&FileID=308831

My Notes

Wilmar still experienced a weakening financial report, mainly due to the drop in palm oil division as well as the losses in sugar division.  Although the sugar division was making losses, but the group still worked hard to acquire more sugar related business, it means that the group was doing a good job by acquiring the loss making sugar business at the lower valuation.

The investors have to be patient to wait for the commodities price to rebound later. As NAV is US$237.1 or around S$2.96, Wilmar is now trading at PB ratio of around 1.1 X which I believe is reasonable as this is a blue chip counter with strong fundamental.

Nonetheless, the company declared 2.0c interim dividend, 0.5 cents lesser compared to corresponding period last year. It is translated to around 0.6% dividend yield. Let's wait for the whole year result before we could have a better idea on Wilmar's operating performance, as the group commented that they expected to have a much better result in 2H14.

07 August 2014

Wee Hur Quarterly Report Media Release - August 2014

My Notes

Wee Hur has started its recurring income business model by engaging in dormitory business. With this business model, it could at least provide cash flow to company and maintain at least 2 cent dividend policy for long run barring any unforeseen circumstances. With industiral project Premier @ Kaki Bukit TOP in this quarter, I believe the group could easily register new a record net profit of more than S$100 Million this year. There is a higher chance that the group may propose special dividend next year, unless the group could acquire additional land banks for the rest of the year.

So far the two main news this year:

1. Acquisition of 30 years leasehold land in Woodlands with 60% stake.
2. First oversea venture in mixed development in Huai'an, Jiangsu, China.

Why Choosing a Dividend Play Stock is Better Than Growth Stock without Dividend?

Most of the traders in the stock market are aiming for short term capital gain. They always look for stocks that have potential growth prospect with high possibility of stock price uptrend movement. It has resulted the traders to focus mainly on capital gain that require them to spend more time on focusing the stock price movement. 

On the other hand, some investors prefer to have a "Safer" investment by focusing on dividend yield with moderate growth prospect. Their argument is that even if the market is hit by the crisis, they would still have certain return in that particular period. It makes them feel comfortable even the market has clashed. 

One of the examples is the REIT investment during financial crisis on year 2008 / 2009. Many investors would even accumulate more as their focus is on the more than 10% dividend yield at that point of time. REIT ends up perform much better than STI if dividend payment is included for comparison. 

During the market downtrend, it is very easy for traders to sell out their shares with the hope that they could buy it back at lower price. Some might later just hold cash until the market recovers for a long time. If you are the investors who focus more on dividend payment, you may not be easily affected by the market sentiment. In fact, you may even accumulate more for dividend yield that is 4 times more than the 2.5% CPF ordinary account return rate. 

It may change your mindset that, if the market share drops further, you could still be willing to buy more as the dividend yield is much higher compared to the normal time. 

06 August 2014

Chip Eng Seng Quarterly Report Summary - August 2014

Company Business Review

“Despite increased pressure arising from a softer property and construction outlook, worker shortages and higher levies, we have continued to perform well. Meanwhile, our financial position remains in good stead to weather the economic uncertainties ahead, while placing us in at an advantageous position to tap on viable business opportunities that may come our way in both Singapore and overseas.”

Comment on Outlook

Going forward, the Group will continue to exercise prudence in expanding its land bank in view of a softening property market in Singapore as it expects challenging times ahead as the cooling measures continue to weigh on the overall demand for properties.

On a segmental basis, the Property Developments Division expects its wholly-owned projects, Belvia and Alexandra Central, to be completed (with revenue and profits recognised) in 3Q 2014 and 4Q 2014 respectively.

Outside Singapore, the Group will continue to focus on preparing its properties in Melbourne (Doncaster and Victoria Street) for launch. Notably, the Group intends to launch its residential development in Doncaster before the end of 2014. The proposed development will feature approximately 105 townhouses as well as 72 low rise apartments. With regards to Tower Melbourne, there are issues pertaining to demolition works. The Group expects a delay in the completion of Tower Melbourne due to ongoing protracted proceedings with the adjoining owner as to what constitutes adequate protection work over the adjoining property.

At the Property Investments Division, the Group is currently carrying out addition and alteration (“A&A”) works at office building, CES Centre (formerly known as San Centre), located along Chin Swee Road. The A&A works are expected to be completed by the end of this year and is expected to yield a stable rental income to the Group following its completion.

As at 30 June 2014, the Group’s construction order book stood at $548.0 million after factoring in the latest $165 million HDB contract secured in June 2014. In anticipation of a heightened demand for public housing in the times ahead, the Group’s Construction Division plans to continue actively tendering for more projects in this segment going forward, while scaling back on private residential projects.

On the hospitality front, the Group’s first hotel property along Alexandra Road is expected to be completed sometime in 2015.

My Notes

1H14 EPS: 6.26 cents
NAV: 80.44
Annualized EPS / NAV:  16%

With completion of Belvia and Alexandra Central in 2H2014, I expect the company could easily have another record year this year. The PE could be lower than 5 for FY14. The counter is now trading near to current book value (without take into account future earnings), I believe the counter is still trading at slightly undervalued to reasonable price range. The company may announce a good dividend this year or at least maintain its 4 cents dividend policy since year 2012.

REX Quarterly Report Summary - August 2014

EPS: -0.56 US Cents (first half of 2014)
NTA: 15.65 US Cents

Business Review

No revenue was recorded in both 2Q FY2014 and 2Q FY2013 as the Group was primarily involved in exploration and drilling activities. The share of loss in relation to Caribbean Rex, HiRex and Rexonic in 2Q FY2014 were predominantly due to expenses incurred in relation to well stimulation, exploration and
drilling activities.

Non-current assets increased to US$98.54 million as at 30 June 2014, from US$82.50 million as at 31 December 2013. The increase was largely due to 1) capital injections into Lime and Caribbean Rex of US$12.74 million and US$2.57 million respectively over the six-month period, partially offset by share of loss in the jointly controlled entities of US$3.68 million, and 2) purchase of an available-for-sale investment in North Energy ASA of US$3.84 million, which was subsequently marked to market at US$4.41 million as at 30 June 2014.

The Group had working capital of US$72.85 million as at 30 June 2014, as compared to working capital of US$94.33 million as at 31 December 2013, a decrease of US$21.48 million. The decrease in working capital was largely due to capital injections into jointly controlled entities of US$15.31 million, purchase of available-for-sale investment of US$3.84 million and general working capital of US$3.18 million.

Company Outlook Comment

Barclay’s “Global 2014 E&P Spending Update” report said that oil and gas companies will increase exploration and production (E&P) spending by 6 per cent to US$712 billion in 2014, despite a slight pullback in spending by industry majors. Barclays said it expected higher spending in Africa and Asia this year, but lower capital budgets in Europe and Latin America would limit the overall increase. The report is based on a survey of more than 300 oil and gas companies in May 2014.

The Group is continuing its five-well onshore drilling programme in Trinidad into the third and fourth quarters of 2014. It is also on track with its plans to undertake extended well testing and early production in the Block 50 Oman concession in the first half of 2015. Active discussions on other business opportunities continue to be in progress and the Company will make the necessary announcements as and when there are material developments.

My Notes

This is high risk investment as the company is still in the growing stage (drilling stage before production stage). I would need to do more homework to understand the business model of this company.

Yang Zi Jiang Quarterly Result Summary - August 2014

Result Highlights

Revenue Breakdown

Balance Sheet

Order Book on Shipbuilding

Strategy Planning

Company Comment on Outlook

Source:  http://infopub.sgx.com/FileOpen/YZJ_2Q2014_Eng_Final.ashx?App=Announcement&FileID=308530

My Notes
  • YangZiJiang experienced marginal drop in revenue and gross profit, but net profit seen a hike due to one-off disposal gain of RMB130M interest income as well as one off tax refund of RMB349 million for new ship yard that enjoys 15% tax rate for the rest of FY2014 and FY2015. 
  • NAV is now RMB4.93, the ROE remains in healthy range thanks to the one off items. 
  • The group is now number one in China to capture the new shipbuilding orders this year. With the market is recovering slowly, the shipyards under the group are expected to be near fully utilization until year 2016.
  • It is also strengthening its financial position by diversifying into property development and finance sectors, although we do not see any significant impact at this moment. 
  • Just few weeks back, Yang Zi Jiang share price was hit by the speculation that the chairman Mr. Ren was involved in an illegal market manipulation in the shares that he bought through open market transaction. Although the share price rebound, it created public awareness that there might be higher risk in financial / property development sectors in China. 
  • Nonetheless, this is one of the S-Chips that performs well for a long run ( 5 years and more). I hope it can continue to be the leader among S-Chips and regain investor confidence in S-Chip. 

Wee Hur First Venture in China - August 2014

My Notes

There are a lot of developers venturing in oversea after the cooling measurement kicked off since last year. Many developers also invest heavily in investment properties to secure the steady cash flow before property market bottom up which I believe it may take another 1 more year to normalize as the government is still trying to get the private property price to lower down further.

Singapore government is implementing a lot of pro-citizen policy that may harm foreign direct investment, especially manufacturing and service industry that rely on low cost labor to survive. One of my friends has moved to Hong Kong, a more strategic location for his trading business with East Asia and South East Asia countries like Vietnam, Mynamar and Thailand.

China government has loosen their policy on mortgage loan in certain cities. I believe that the property market may recover in long run. With civilization in progress in China, there is a real need for citizens to have a living place near to the place with plenty of job opportunities.

Another issue could be the dividend. The company declared dividend of at least 2 cents since year 2011. It declared 4 cents dividend when one of the industrial projects completed with bulk of net profits. I hope that the company could declare at least 4 cents dividend next year as I believe it is another record year for the company this year.

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