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.

05 August 2014

The Hour Glass Quarterly Report Summary - August 2014

EPS: 3.56 cents, NTA: 1.59. Annualized EPS / NTA = around 9%. Based on last two financial year trend, 1st quarter normally is the lowest quarter among the total year. I believe that the company would generate more free cash flow later as the inventory level is up compared to last quarter.

From previous quarterly report, I knew that the company also intend to grow non-watch luxury business by hiring Ms. Lim Jee Yah to spearhead Luxury Enterprises - a business group that to scale the Group's Laduree franchise in Southeast Asia region. We may have a better idea on the result a few quarters later.

6. In an effort to develop a new pillar to complement its specialty luxury watch business, the Group recently appointed industry veteran Ms Lim Jee Yah to spearhead Luxury Enterprises - A business group focusing on non-watch, luxury related businesses. On the cards are plans to scale the Group‟s Laduree franchise. The Group holds the franchise of the renowned Parisian patisserie for Southeast Asia.

The group has a proven profit record even during financial crisis. It means that this is a good company with certain competitive edges against the peers and remain resilient during the economic turmoil. With latest 6 cents dividend declared, the dividend yield is around 3.33% with I believe is sustainable as it is only around 20% - 30% of total earnings last year.

The key risks here are low trading volume, intensified competition that reduce the profit margin, as well as the working capital requirement & capex budget to grow the business.

Company Business Review

Revenue for the quarter ended 30 June 2014 (“1Q FY2015”) was $157.0 million compared to $154.7 million achieved in the same period last year (“1Q FY2014”). Gross margin was lower at 20.7% (1Q FY2014: 21.6%) due to a more competitive retail environment. Operating expenses were higher resulting from rental and depreciation expenses. Profit after tax was comparable at $9.1 million. As at 30 June 2014, group inventory was $293.8 million. Cash and cash equivalents were $84.3 million. Consolidated net assets were $374.2 million or $1.59 per share.

Company Comment on Outlook

The global economic and political uncertainty is expected to continue and affect consumer sentiment and the demand for watches and luxury goods. Barring any unforeseen circumstances, the Group expects to remain profitable for the financial year.

ARA Quarterly Report Snapshot - August 2014







My Notes

ARA is one of the companies having a good ROE, largely due to its business model - manager of managers of REITs, hence unlike other REIT manager, it largely depends on its human resources (not displayed in balance sheet) to manage the properties for the REIT managers. With lesser CAPEX requirement due to this unique business model, it is having a healthy free cash flow that can be used for cash dividend distribution or other purposes.

The key issue is the liquidity issue as the average trading volume is not that high for institutional investors. However, I am looking good on this business model, as the company could earn more by getting the private real estate fund listed for higher net income. If you are a passive investors and would like to have good dividend payout, maybe ARA is one of your choices.

Related Posts Plugin for WordPress, Blogger...

View All My Posts Here