Thursday, December 31, 2009

Holding Review on December 2009

Just the addition 50 lots of Iconic Holding at the start of the month. Been a nice year for me in investing. This blog forces me to think when I buy/sell, although rationalization does not equates profit. I learned about how bad I am in investment so I have shun lots of investment. Surprisingly, I have gone into delisting companies and will definitely research more into them.

Review





StockPurchase DateAnnualized ReturnBuying PriceCurrent Price
Powerplus15-Jan-2008-37.99%0.2150.055
STI ETF*15-Jan-2008-7.83%3.472.95
Cacola17-Oct-2008-31.90%0.0950.06
STI ETF*17-Oct-200831.70%2.082.95
ASA Group28-Sep-200928.94%0.0550.06
STI ETF*28-Sep-200934.28%2.672.95
Iconic Holding27-Oct-2009-2.03%0.1650.165
STI ETF*27-Oct-200938.66%2.752.95
Iconic Holding3-Dec-2009-4.87%0.1650.165
STI ETF*3-Dec-200931.33%2.872.95


I still haven't sold Powerplus or Cacola, a sign that I am probably too emotional. Regardless, keeping them till I figure they are really in trouble. I will also keep ASA while keeping in touch of its update. Iconic Holding meeting will be in January and I should probably prepare to send my envelope accepting the cash offer.

Going forward, I am considering to create another blog and programmatically post SGX news into it. I really hate that how hard SGX website is for searching news. I will recommending http://stiboard.com/livequote/announcement/ too if you have the same problems too.

Wednesday, December 30, 2009

Fung Choi Media Group Limited (F11)


Looking into Fung Choi, because a friend asked for thoughts on it. Honestly, I had stop looking into financial because
1) the huge variation in numbers and expected growth, I find that I am very bad at estimating with historical data.
2) the huge time and effort needed, M&A seems more easy but of course have limited growth
3) Most importantly, I don't know how to set a target price range


Company Info:

Fung Choi Media Group Limited is an investment holding company. Through its subsidiaries, the Company is engaged in printing of advertising materials, magazines, books and light packaging boxes, manufacturing and printing of corrugated carton boxes, provision of advertising agency services and design, manufacture and sale of commercial point-of-sale display units. It operates in four segments: Printing division, which is engaged in printing of advertising materials, magazines, books and light packaging boxes; Packaging division, which is engaged in manufacturing and printing of corrugated carton boxes; Advertising division, which is engaged in provision of advertising agency services, and Commercial displays division, which is engaged in design, manufacture and sale of commercial point-of-sale display units. During the fiscal year ended June 30, 2009, the Company disposed of its entire interest in Guangzhou Fung Choi Printing Co., Ltd.

IPO Detail: (2004)


S$34.7m : Net proceed of which,
$ 6.2m : Invest in joint venture between with FCPL and GPPG,
$ 6.3m : Repay borrowings
$ 5.8m : Fund development, automation and improvement of production managment system
$ 2.1m : Further investment in new joint venture or working capital
$14.3m : Working capital

No formal dividend policy

Competitive Strength:

Strong business partners, National Statistics Bureau in Beijing, Haier Group Corrporation in Qingdao, F&N Investment.

Competition:

Mostly, China based companies. Fragmented market.

Future Plans:

  • Seek alliance with strategic partners
  • Increase market penetration and promotion activities
  • Increase application of production managment system

Why not?

It is easier to find a reason to buy a stock. So I rather ask myself, why I should not buy a stock.
  • Based on IPO, they invest in new and advanced printing machinery with 5 years left. It is almost time to upgrade and increased capex?
  • Slowing revenue growth since IPO at 9%
  • Receivable growth much higher than revenue growth? 48% vs 9% in FY2009. Possible difficulties in recovering the receivables?
  • Dropping profit margin, ROE
  • FY2009 states increased operating cost from transportation, labor and material
  • FY2009 states huge decline in outdoor advertising
  • Increasing current liabilities
  • Q1 FY2010 Profit drops 6% compared to Q1 FY2009
  • Q1 FY2010 Selling expenses rises 40.3% compared to Q1 FY2009, various expenses also increases in double digits.
  • Q1 FY2010 receivable growth of 12% outgrowth Q1 FY2010 Revenue growth of 9.4%
  • Increasing number of issued shares
  • Convertible Bonds representing 12% of issued capital @ S$0.75 for each Share that might dilute values?


Not going to comment about buy or sell since I really don't know how to estimate. However, I am going to track the news of this company.

References:

  1. NextInsight 2007 - FUNG CHOI issues RMB380 m bonds ahead of subsidiary's IPO
  2. SGX - Fung Choi 2004 IPO Details
  3. SGX - Fung Choi Q1 Update
  4. SGX - Fung Choi Respond to SGX Query
  5. SGX - Fung Choi FY2009 Annual Report
  6. SGX - Fung Choi Disposal of Guangzhou Fung Choi Printing
  7. Fung Choi Website

Monday, December 28, 2009

Singapore's biggest air-con interchange opens


Finally, the $24-million air-con Boon Lay Interchange opens today. Newspaper reports that most commuters give the thumb ups. However, my first thought on reading it was actually disgust. The thought of how much energy are we going to spend just to cool the biggest air-con interchange at one of the hottest cities, just makes me feel it was extravagant. Hopefully, there are energy-saving measures and the air-con temperatures are appropriate. Searching on the internet, there are comments at Straits Time on the air-con, the interchange built for foreign, needing more buses and not aircon. SGForum had a more detailed discussion.

Regardless, the reports end with the unsurprisingly trend of more air-con hub. Transport Minister Raymond Lim had said in August that the LTA will build more "integrated public-transport hubs" that give commuters easy access to adjoining shopping areas and other transport modes.

The next air-conditioned integrated interchanges, being built at Serangoon and Clementi, are slated to open in 2011. In the next 10 years, commuters can also expect such interchanges in Jurong East, Bedok, Joo Koon and Marina South.

Thursday, December 24, 2009

MoneySense Links


MoneySENSE is a national financial education programme launched by Mr. Lee Hsien Loong, then Deputy Prime Minister and Chairman of the MAS on 16 October 2003. MoneySENSE brings together industry and public sector initiatives to enhance the basic financial literacy of consumers.

The MoneySENSE programme covers 3 tiers of financial literacy:


Tier I - Basic Money Management - which covers skills in budgeting and saving, and provides tips on the responsible use of credit;
Tier II - Financial Planning - to equip Singaporeans with the skills and knowledge to plan for their long-term financial needs; and
Tier III - Investment Know-How - which imparts knowledge about the different investment products and skills for investing.

Webcasts/Videos
Main Page to 4 Videos
1) Sharing - The Secrets To Better Family Financial Management, Presenters: Edmund Chen and Xiang Yun
2) Where do I park my money? Presenter: Prof Jeremy Goh
3) Making SENSE of Home Loan, Presenter: Dennis Ng (Watch this if you are considering taking loan)
4) Highlighting the Risks and Pitfalls of Investments, Presenter: Mr David Gerald (Must watch and do the calculation)



References:

  1. Buying a Home and taking a Home Loan PDF
  2. Key Questions to Ask the Bank Before Taking a Home Loan
  3. 10 Questions All Investors Should Ask

Saturday, December 19, 2009

Cash Offer for Jurong Cement (J04)


Another company being taken over, Jurong Cement. A quick check at the news find 5 directors resigned recently, reported from the Business Times. Since it was announced over the weekend, there is an opportunity to look into more details.


Company Info:

Jurong Cement Limited (JCL) is an investment holding company. The operations of the Company and its subsidiaries are grouped mainly under property investment and investment holding, and manufacturing and dealing in cement. Jurong Readymix Concrete Pte Ltd is a core business of the Company, and delivers a range of concrete. JCL Drymix is a dry-mix mortar that includes render and skimcoat plasters, construction grouts and mortar, flooring compounds and screeds, waterproofing tile adhesives and protective coatings under the JURCEM brand. The Company's cementitious division receives imported ordinary portland cement and ground granulated blast furnace slag using bucket elevators and fluidslide distribution system that boost a capacity of 900 tons per hour (tph). Jurong Cement Bulk Terminal Pte Ltd is also designed with blending facilities of up to 120 tph to cater to blended cement, offering a range of cementitious materials for special concrete and dry mortar applications.


The current price now $1.28 and the offer price is $2.10. However, it is very very illiquid, with the last trade at 18th Nov(1 month ago) and only 5k. I guess the offer price is attractive to current shareholder and will probably see more volume. Will definitely take a look on the order queued up and prices.

References:

  1. Google Cache of Business Time - Conflict in Jurong Cement board
  2. Google Cache of Business Time - $2.10 a share offer for Jurong Cement
  3. SGX - Offer Docuemnt

Thursday, December 17, 2009

Naked short selling on Chemoil?

I was thinking, after I saw that the offer price of Chemoil was lower than it's last close price, perhaps I should have tried to naked sell it. However, I have no confidence it will drops or rises(if someone tries to counter bid the offer). Furthermore, I have no knowledge how to do naked selling. I only know if you don't settled it by the end of the day, you have to pay a fine of $1,000+. I should probably ask my remisier/broker about it.

A little update on Iconic Holding, the Meeting will be at 11 Jan 2010. I haven't seen any update on the percentage of shareholding. Will probably need to hold it for quite a while.

Wednesday, December 16, 2009

Cash Offer for Chemoil (AV5)


A pre-conditional takeover offer by Glencore International

Chemoil Energy Limited and its subsidiaries are mainly global traders in marine fuel products. The Company operates in ports, such as Long Beach, Houston, New Orleans, New York, Panama, Rotterdam, Fujairah and Singapore. As of December 31, 2008, it was organized into three segments: retail, which is engaged in the sales of physical supplies of marine fuel and related products; cargo, which is engaged in the sales of marine fuel and related products, such as the components of marine fuel used to blend into marine fuel, to customers such as traders, physical suppliers and resellers, and ex-wharf, which is engaged in sales of marine fuel to customers, such as resellers or distributors that accept delivery at its service centers and resell and deliver the product.


The transaction for the Chandran’s portion of the stock must be completed within two business days of Feb. 28, according to the purchase document. What confused me is that the offer price is much lower than the latest stock price.

References:

  1. Chemoil Holding Announcement
  2. Bloomberg - Glencore Buys 50.8% Stake in Chemoil for $233 Million

Delisting Company: Furama (A09)



Yet another company delisting with similar reasons, no reason for listing and poor liquidity.

Company Info:

Furama Ltd. is a Singapore-based company. The Company owns, operates and invests in hotels. The Company operates in two segments: hotel operations and property investment activities. Its hotel operations segment is engaged in operating hotels owned by the Company. Property investment activities include property development and investment holdings.

Profit Margin:

Selling @ Offer Price of $2.00
Buying 5 lots @ 1.97 = 0.81%
Buying 5 lots @ 1.98 = 0.30%

Not attractive at all but still an option.

References:

  1. SGX Offer Document
  2. Edge Singapore - Samta Hotels makes cash offer for all remaining Furama shares for delisting

Tuesday, December 15, 2009

Delisting Company: Sunway International Holding (S34)


Didn't see any delisting offer in the document. It is a dually-listed in HK too.


Company Info:

Sunway International Holdings Limited was found by the Wong's Family in the early 80's. It is one of the leading manufacturer and supplier of consumer electronics with six well equipped production facilities located in Fujian Province of The People's Republic of China. The company has grown from a modest, family business to a vertically integrated, multi-national corporation with a skilled workforce of some 15,000. Over the years, Sunway has established extensive distribution channels covering major Provinces in the PRC and an active, international customer base of over 1,500. The company is listed in the Hong Kong Stock Exchange and the main board of The Singapore Exchange Securities Trading since 1999.

References:

  1. SGX - Delisting Document
  2. Sunway International Holding Website
  3. Business Times

Thursday, December 10, 2009

Delisting Company: China Lifestyle Food And Beverages Group (E69)

China Lifestyle Food and Beverages Group Limited is a lifestyle food and beverages company in the People's Republic of China. The Company manufactures and distributes a variety of jelly desserts and beverages, as well as a range of candies and potato chips.
Rationale for delisting:

Greater management flexibility. Allow offeror to rationalize the resources and cost structure for greater efficiency and competitiveness
Restructuring. Conduct review to decide whether a) change existing business b) redeploy fixed assets c) discontinue employment of employees

Profit Margin: Selling @ Offer Price $0.178 on the market
3.97%, Buy 51 lots @ 0.17
1.00%, Buy 50 lots @ 0.175

My money is locked in Iconic Holding, so will probably only look at it when I got the money back.

References:

  1. SGX - Delisting Offer
  2. ChannelNewsAsia - China Lifestyle Food & Beverages plans to go private

Buy an iPhone in Singapore?


I recommend reading the comparison table @ iMerlion. It shows the costs for the different plans by each telco.

The blog also focus on Singapore iPhone applications so it is worth subscribing to get updated too.

Saturday, December 5, 2009

Retirement and CPF Life


For Singaporean, the CPF Website have improved but still hard. It can be better to have personalized information based on the date of birth instead of looking at generalized tables for different age groups, or flash that requires input of date of birth or OA/SA/RA amount every time.

I decided to find retirement information for my parent since we have no idea about their CPF monies.



CPF Life vs Minimum Sum payout. (Only those born before 1959)Only a choice for older generation since it is compulsory for younger generation to be in the CPF Life. Firstly, you need to know roughly your
1. Annual Value(AV) of your property,
2. Assessable Income.

I know the above are for deciding your CPF Life Bonus. Typically, a male get more payout than a female, probably due to the higher life expectancy of a female. According to IRAS, there should be a portfolio showing the property AV but I cannot find it. However, based on the calculation of the property tax paid (4% of AV if you own and occupy), I can gauge that the AV is in the < $6,000 range.

I added the CPF Life Bonus and calculated a simple compound interest on the RA+CPF Life Bonus and then assuming 5% interest(4% for retirement account and 1% for first $60,000) till the DDA(Drawdown age) and got the estimated amount in RA at retirement. Then, I used an online annuity calculator to determine roughly how many years the amount can last to get the same monthly payout as the CPF Life Income Plan(highest payout w/o any bequest).

I found the breakeven to be
Probable Amount in RA @ DDAAnnuity Interest RateYears it can last to match CPF Life Income Amount
$8,7525%22
$8,7524%(Most likely the estimator used this)19
$8,7523%17


Perhaps I should not used 5% as the interest till the DDA, but regardless if I have just used the way of dividing the RA by the given monthly payout, it will only be 10 years ignoring all interests gained. Seems like joining the CPF Life might not worthwhile unless my parent outlived the years calculated. Regardless, we need to visit CPF to get more details about the estimated minimum sum payout and the CPF Life payout to make a decision. I do believe I overestimated the calculation but I also believe the CPF Life makes profits for the government/insurance companies it buy the annunities from.

Another way of comparison is to compare with other annuities companies like the 3 big banks or NTUC. I think CPF is probably offering a better rate . There is a better blog post with more technical calculation. Someone also post a question to Mr Tan Kin Lian and got a couple of responses from him and the readers.


Life expectancy. Knowing the rough breakeven, the question is the life expectancy of my parent. CPF Life is a gamble that you can outlive the average person they predict. Honestly, when I think about it, I have no clue how long someone can live. I know my parent say the obituary still have people in their 50s or 60s despite media mentioned of increasing life expectancy. It is probably due to the increasing life expectancy is for those who are born later. Singapore Statistics does provide a yearly lifetable showing your life expectancy. Looking at the statistics, I was surprised the life expectancy of everyone seem to keep growing, compared to the lifetable of 2003, and the life expectancy is about the same regardless of your current age. Based on the latest statistics, it is roughly 84 years old. If it is true, it might be worthwhile to get my parent on the CPF Life scheme.

Dependants' Protection Scheme (DPS) as additional term insurance cover. While looking through the CPF, I realized there is a DPS scheme that provides affordable term insurance. It covers $46,000 up to age 60 and costs onl y at most $260 a year for those very close to 60. It does seems very cheap and should be taken into consideration. Not too sure about the restriction yet but it does feel very worthwhile. A blog post with the premium amount, I could not link the website from the CPF help page.

Voluntary Deferment Bonus (V-Bonus). Further reading up, I found about the deferment bonus as incentive for older generation to defer their DDA(Drawdown age) to 65. The CPF Calculator. It is roughly 2% of $30,000 if you have at least that amount in your RA.

Tax relief for parents. You can also get $7,000 tax relief for topping up your parent CPF with cash if it is less than the Minimum Sum. They can be additional savings too and might be worthwhile. For cash top-ups for siblings/spouse, the sibling/spouse must not have earned more than $2,000 in the preceding year.

Medisave Minimum Sum. With effect from 1 July, the Medisave Minimum Sum (MMS) will be raised to $32,000 from $29,500. Members will be able to withdraw their Medisave savings in excess of the MMS at or after 55 years old. I always thought money in the Medisave will be gone but just found out it can be partially withdraw if it above the minimum sum.


Probable tasks. To find out more from CPF,
- CPF Life will get exactly how much? (or is it only known when the annuity is bought at DDA?)
- Minimum Sum payout (how much monthly and how long it can last, interest is CPF RA rate or based on the bank?)
- Life Plus/Income plan, entire RA for annuity premium. (What if still got CPF? the amount in OA/RA?)
- V-Bonus, how will it affect the amount?
- Sign up before 31st Dec 2010 for $4,000 bonus (or pro-rated bonus)

I wonder if CPF will provide a financially skilled assistance that provide on-the-spot calculation/estimate or just a rough assistance that tell you about the various scheme only.

Friday, December 4, 2009

Added 50 lots of Iconic Holding

Staying fully invested again with 50 additional lots of Iconic Holding @ 0.165. Might have better deals elsewhere with the market sudden uptrend. Regardless, I will stick to the lazy and more guaranteed way of earning money from the stock market by getting these delisting companies. I have not been researching much, just skimming through news. Iconic did have a recent update of your balance sheet.

References:

SGX - Iconic Holding Update

Thursday, December 3, 2009

Full Apex, NextInsight, Gambling

I read other financial blogs too, and interesting discover there is one on Full Apex. I had already profited from it and was surprised at how soon I managed to sell it. Perhaps it got to do with someone wanting to oppose it and feel the offer is undervalued.

Sometimes I read the NextInsight and how profitable the stock challengers mostly are and wonder if it is really so easy. You could then just mimic then and profit too then. Perhaps the stock rises because everyone follows the challengers and buy. It results in a self-fulfilling prophecy since everyone thinks they will profit.

I also read up some gambling theories, not from the bettor point of view but rather the organizer point of view. I am interested to know why do people are buy something that they know the odds are against them. I feel that equity investment is a form of gambling but the odds are much better than those offered by Singapore Pools. Of course, there are ways to win for sure with arbitrage but in Singapore there is only 1 legal gambling outlets so no chances to apply that. Basically, people continue to gamble, even when they lose,
a) underestimate the chance of losing, (most people are very bad with mental calculation)
b) near miss (where you miss by a number or different arrangement)
c) sense of ownership for the numbers (you buy your date of birth or car license plate)
d) huge prizes
e) revenge (emotionally want to win back your losses)
f) sense of winning (having lucky friends that win)

References:

  1. Blog on opposing Full Apex delisting @ I’ll do it myself
  2. Next Insight - Stock Challenge

Monday, November 30, 2009

Holding Review on November 2009

Just the addition of Iconic Holding, another delisting company that I wait to sell @ 0.17. Also had profited $437.39 from Full Apex during the month and $152 from the NETS Flashpay.

Review





Investment SecuritiesPurchase DateAnnualised ReturnSharesBuy Price
Powerplus15-Jan-2008-39.77%32,0000.215
STI ETF*15-Jan-2008-10.17%1,9833.47
Cacola17-Oct-2008-38.99%11,0000.095
STI ETF*17-Oct-200828.67%5022.08
ASA Group28-Sep-200943.88%33,0000.055
STI ETF*28-Sep-200923.36%6802.67
Iconic Holding27-Oct-2009-37.39%520000.165
STI ETF*27-Oct-200923.35%3,1202.75


Dividend stocks have been in my mind for a long time. I don't want to buy them, because I feel they are probably well researched by many making it less rewarding. Also, dividend might not be that good to a company compared to the company reinvesting the money since it is taxed. But it assume the company makes good reinvestment too.

Thursday, November 26, 2009

Returns from Full Apex


Earn $437.39 in the couple of weeks of holding Full Apex. Going to try investing the money in Iconic Holdings. Chartered Semiconductor is still available but its not profitable at its current $2.67.

Review




StockPurchase DateAnnualized ReturnBuying PriceSelling Price
Full Apex12-Nov-2009133.67%0.170.18
STI ETF*12-Nov-200965.72%2.772.86


Given the experience of Sihuan and Iconic Holding, I am surprised it reach its offer price so soon. I did beat my benchmark the STI ETF too.

Efficiency may not be good?

Just a thought, sometime we think that the more efficiency we are the better it is. However, in some cases, I don't think it is true.

For example, in the hawker center, if you don't know what food is good, how do u normally judge and choose in the various choices?

Some people may
* choose food they like to eat,
* choose food that have the most people eating now,
* choose stall with the longest queue

Based on the 3rd reasons, sometime it can be a good idea to slow down the cooking process to let the queue grow. Of course that only work to attract people to buy your food for the 1st time, the price, suitability of the food is still the biggest factor to getting constant customers.

Monday, November 23, 2009

China hints at resumption of yuan appreciation

Quite a while ago, but news of China hinting resumption of yuan appreciation. It was one of the reason why I like to invest in China companies but didn't seem to occur. I was searching for the article and instead found a contrasting view a couple of week before the article saying China yuan will be maintained till export recovered.

Not sure what to follow, but I believe in the long term, other countries will keep pressuring China to appreciate their yuan so Chinese will import their goods.

Reuters - China hints resumption of yuan
STI - China maintain weak yuan

Thursday, November 19, 2009

Profited from Full Apex (F18)

I had sold my Full Apex today on the open market, will probably take a couple days to get the money back. Profited about $500 excluding brokerage. Will do the details calculation when I get the amount back.

NETS Flashpay Limited Offer no more

The $7 offer above is no more based on the website and what a friend said.

Review:

For me, I made around $152 dollar for the 76 cards I bought and refunded through UOB ATM. I took me around a few hours for 3-4 time to get the amount and probably could have done all that in 1 day. So, the NETS Flashpay and earning $152 a day experience was a good one. Thank you, NETS for the early hongbao :)

However, I wish to correct my previous calculation using profit margin, 2/15 = 13%. Instead, it should be a matter of $/hr rather than profit margin since time is the bigger constraint. Since the offer is no more, I can show some calculation that I made that make it feel like a good offer.

Time needed to buy and refunded a card
1 min to buy(tested) + 1 min to refunded at UOB ATM
# of possible cards refunded in 1 hour
30 cards
Amount made per hour
$60/hr

The reason why I got less is
a) the queuing time in Boon Lay (only for my first 10+ cards, but my friend and I found Bukit Gombak kiosk had no users. And since we took turns, we got less cards each then if we do it individually at our own time.)
b) I didn't have a UOB account, so I needed some time to setup the account, I also setup the UOB trading account since I wish to try the platform.


Monday, November 16, 2009

Podcast: Mad Money Machine


Introducing another podcast I listen to. A index fund investor but what interests me is the news and tools introduced on the show.

For example, Icarra which is a free portfolio tracker. It also allows comparison with other portfolio or stocks.

The recent episode also track Jim Cramer, a former hedge fund maanger, 12 stocks to buy on the recovery on Icarra here

References:

  1. Mad Money Machine Website

Some updates to Furniture Sector

Some updates to furniture sectors, probably missed out HTL International news since it was quite a while ago. I am pretty much full invested and no looking into any stock till I get the cash back from the delisting Iconic and Full Apex.

Lee Wen Ching(DBS) Downgrade Koda from Buy to Hold @ $0.29

Cacola 3Q Result

Thursday, November 12, 2009

Opening UOB KayHian and U-plus


I opened a saving/statement account with UOB to allow the refund of the NETS Flashpay cards on hands. This will means another $500 average balance needed besides the $500 also for the POSB account. I will just treat then as emergency funds although there is a early account closure fee of $30 for closing within 6 months.

I didn't know there is a difference between saving and statement account.

  • Saving account with bank book,
  • Statement account, UOB send monthly statement to you


I also tried to open a trading account with UOB KayHian although I didn't note my CDP account number so I need to go back another day.

Tuesday, November 10, 2009

Delisting Company: Full Apex (F18)

Another company delisting, this time it is a packaging company, Full Apex. I wonder if it is the season of delisting or just because that I started to track them for delist in SGX news.

Regardless, the cash offer is at $0.18 per share. Last trade price currently is $0.17.

Because I will probably need the cash later on, I decide against buying it at $0.175 and queue at $0.17 that I probably won't get. There is a higher margin with the NETS Flashpay card.

The margins are:


Buy 51 lot @ $0.17, Sell @ $0.18 = 5.13%
Buy 51 lot @ $0.175, Sell @ $0.18 = 2.14%

Monday, November 9, 2009

NETS Flashpay

I just bought "several" more NETS FlashPay after finding out from a friend that UOB allow refunding of the card. This implied that technically, u can immediately get the extra $2 by just buying and refunding the card. I shall not show the calculation of the amount you can expect to earn if u just keep doing it for the whole day since it can be pretty impressive. If anyone is interested, just calculate it yourself instead. It takes around 1 min to buy a NETs Flashpay card.

Thursday, November 5, 2009

Bought eleven $10 Nets Flashpay card

I decided to get lots of Net Flashpay card after hearing a friend tell me about the offer they are giving. Basically, you get $17 card value for paying $15 in a Net Flashpay card at the kiosk.

Profit Margin = 2/15 = 13.3%

However, the slow processing of the kiosk made it too time consuming and I just get eleven instead. There are 2 extreme views of my actions that I know people will have. Most probably, people will feel that it is crazy that I buy so many.

Drawback of buying multiple cards:


Unable to use each card to zero. Especially for buses rides, prices are in the cents and it is unlikely to use each card to zero cent. Therefore, there will be values wasted in each card if not used completely. Probably got to hope there is a refund options in the future like cashcard to get back the amount inside.

Desire to spend unnecessary. Similar to credit card, it can induce more spending since it is so easy to spend money.

Nets goes bankrupt. Doubt this will happen or without any refund.

Troublesome when taking bus. Since I use another SMRT card, I need to take one of them out instead else both cards can clash or be deducted together.

Topup cost of $0.50. Luckily I overheard someone talking about the extra charges to topup. There are currently only 3 types of topup where the cost is free
a) iNETS Kiosks
b) TransitLink Ticket Offices
c) NETS Sales and Customer Service Centre
d) Sheng Siong (unconfirmed, since free if u are spending there)

References:

  1. Nets Flashpay website
  2. Linkpoints - online registation $30 spent earn 1 Linkpoint

Tuesday, November 3, 2009

Memstar Awarded RMB$60m Contract

I should probably read more about Memstar, a water treatment company since it got some deals with government. However, time do not permit me to spend time with studying so I just get updated with its news.

Memstar is awarded RMB$60m contract to supply membrane products to Guangzhou Municipal Government for its water treatment plant. Upon completion in June 2010, it will be the largest MBR(Membrane Bioreactor) plant in China.

References:

  1. SGX - Reference

Monday, November 2, 2009

Suze Orman Show


I love to listen to podcasts to get information while doing other stuffs. One financial podcast I listen is "The Suze Orman Show". It is also showing in CNBC, but is available for download too as a podcast. The show is mostly focus on personal finance with her answering questions of a variety of people.

It is amazing to see people with insufficient retirement fund wanting to buy things they cannot afford too. It is also fun to see Suze Orman agitated over the decisions the people made. Nevertheless, still do your own research on what you listen.

Some concept I learned recently


Bond Ladder. Suze mentioned about her dislike of Bond Fund. Currently, I own one, Philips Money Market Fund, which parked my money while I looked for finanical opportunity. Doubt I look at bonds since with my goal and risk tolerance, I will look probably at equities.

References:

  1. Suze Orman Show

Friday, October 30, 2009

Cacola Update

Cacola has brought forward the hearing of the winding up against subsidiary to 19th December 2009.
SGX Reference

Thursday, October 29, 2009

Comparing STI ETF

Benchmarking with STI ETF is good because
a) it is diversified
b) if you do worse than the index, you can switch to it easily since it is traded like stock

There are currently 2 listed STI ETF available, so you still need to choose. They are:


DBS Singapore STI ETF,

Advantage
* Smaller lot of 100
* Lower expense ratio, based on the values on the website.

Disadvantage
* Less liquidity

streetTRACKS® Straits Times Index Fund
Advantages and disadvantages are the opposite of DBS's ETF.

SGX also provides a link to track only the STI ETF. Open the link.

I feel the lot number isn't that important, since the biggest cost is the minimum brokerage cost of $25. The less liquidity might be overcome if DBS managed to get enough of its funds to buy into its own ETF. Regardless, at this stage, I will prefer to look at streetTRACKS ETF rather than DBS if I am ever going to buy the STI ETF.

Tuesday, October 27, 2009

Bought Iconic (537)

Bought some Iconic with separate orders of @ $0.165
30 lots, 3 lots and 19 lots = 52 lots

Expected Profit Margin if selling from open market : 2.3%

If not, it will be higher but will take longer. Should probably had put in an order of 10 lots @ $0.16 instead of just 56 lots of $0.16 at the start of the days. Regardless, if the combining works, I should only be charged for the brokerage once.

Monday, October 26, 2009

Delisting Company: Iconic Holding (537)

Another company, Iconic Holding delisting soon. I did not look into its business or logo because it does not have any core business anymore. It is delisting since it has no core business.

Profit Margin


Buy 56 lots @ $0.16 and Sell @ $0.17 = 5.51%

I am going to queue up my order. Also, might try buying less lots that might incur more charges. Wish to try if POEMS will only combine all the buy orders in a day and charge only 1 time based on overall trade for that day rather than each trade. My friend OCBC account allows that option, therefore people get queue multiple 1 lots rather than buying in bulk. If the minimum $25 charges is levied on each trade, then it will not be worthwhile.

Again, just to warn, the offer may fail, or the exact date to get the amount is not known. Therefore, trade at your own risks.

(edit: POEMS have the ability to combine too, and it is automatic based on the POEMS FAQ. It is called "Amalgamate", combining trade of similar action, same day and same stock.

References:

  1. SGX - Iconic Holding Delisting

Holding Review on October 2009

Except for the selling of Sihuan through accepting the cash offer, there are no changes. Earn $160+ using $9,600 for Sihuan in a couple of months. However, did not beat the STI ETF during the period of holding.




Investment SecuritiesPurchase DateAnnualised ReturnSharesBuy Price
Powerplus15-Jan-2008-40.55%32,0000.215
STI ETF*15-Jan-2008-11.85%1,9833.47
Cacola17-Oct-2008-27.51%11,0000.095
STI ETF*17-Oct-200828.15%5022.08
ASA Group28-Sep-200997.15%33,0000.055
STI ETF*28-Sep-200918.90%6802.67


No plan to invest in risky asset since I might need cash soon. Keeping them in Philips Money Market Fund till I got better plans.

Thursday, October 22, 2009

Investing from Data Mining


Business intelligence, data mining, etc are techniques that make use of the computation power of computers, and algorithm from human research to find meaning out of data. From a statistician point of view, the goal of investing is easy. The goal is to find the stock that will give you the capital return since the best dividend return cannot achieve more than the best capital return.

Approach:

Given the goal, with Reuters data, you can just zoom into 1 label/data which is price per share. Ignoring all data set, I did a quick run through finding which data correlates closely to price per share without even cleaning the data. The best was Gross Dividend, Total Revenue and Cash from Operating Activities each with correlation ratio of around 0.5 to 0.6. A positive 0.6 ratio means that given Gross Dividend rises by 1, price should rises by 0.6. From a statistician point of view and without any knowledge of the data, it means if a companies has more dividend, total revenue and cash from operating activities, the prices is very likely to rises too.

Since dividend seems to have a huge impact to price, I did an additional step to find which companies had no given any dividend and is the most probably to give one based on the financial statements. Again using data mining, I found that Swiber is the most likely to give dividend. However, the company seems to be leveraging more currently than paying to its shareholder.

Limitations of Approach:
Past Performance Is Not An Indicator Of Future Results. Like how many unit trusts advertised in small print, "Past Performance Is Not An Indicator Of Future Results", this approach assumed that you can use past data to predict the future.

Data cleaning. Typically, in data mining, we need to clean the data to remove outliers, which are supposed to be data that is extraordinary and skew the accuracy. However, I didn't do that since I don't have much prior knowledge and statistics can be easily manipulated to improve accuracy of result. Also, the result can probably be improved by normalized some data like converting revenue, operating cashflow, etc to the per share unit. Nevertheless, I am assuming that I have no knowledge of data and is only interested to get the stock that will maximize capital gain. Besides, I only did a simple analysis just for interests.

I also been looking at stock prices only Monday weekly. Mostly for making more efficient use of time and also not being myopic. Sometimes, when you look too closely, you are ignorant of the big changes. I will slowly try to switch to looking only monthly, and hopefully only yearly. Warren Buffett once mentions about having one good idea each year. With less choice, you will filter out the weaker choices hopefully and only buy the best one. I still keep updated on certain keywords in SGX and also news of holding I am buying. But there are mostly "push" based, so I only act if there are news rather than watching news for something interesting.

Tuesday, October 20, 2009

Memstar RMB500m Investment for 55.8% stake in SWG (5MS)


Company Info:

Memstar Technology Ltd. specializes in the research and development, manufacture and application of polyvinylidene fluoride (PVDF) hollow fiber membrane and membrane products. Its membrane products are used in both industrial and domestic/commercial applications. The industrial applications are the pressurized membrane modules and submerged membrane modules that are used in water/wastewater treatment, water reclamation, seawater desalination, food, pharmaceutical, chemical, power generation, petroleum, bio-separation and other separation processes. The domestic/commercial applications include membrane water purifiers or integrated water purifying systems for households, commercial buildings, small businesses, hotels, schools and hospitals. Its subsidiaries include Memstar Pte. Ltd., Memstar (Guangzhou) Co., Ltd and Memstar (Mianyang) Co., Ltd.

The deal is with the Shenyang Municipal Government with the following details
• To set up an entity, targeted to be a major membrane technology based water player in North China.
• Water and wastewater treatment assets of combined capacity of more than 730,000 m3/day will be injected into the entity by SWG in the initial phase (which is equivalent to approximately 50% of Singapore’s entire daily water or
wastewater treatment capacity).
• Potential to upgrade existing facilities using Memstar’s PVDF membrane products and technology.

What interested me to research future was the phrase "SWG will guarantee a return on investment 12% per annum, which is approximately RMB55.8m for the Company's effective interest" and a government involvement.



I tried to find the IPO details for competitors since I don't know much about the competitive water membrane industry except for Hyflux and United Envirotech. However, I realised it had changed names several times. From the homepage of Memstar
The Company was incorporated on 12 June 1979 as Form Pte Ltd. On 14 August 1997, it was converted to a public limited company, at which time the name of the Company was changed to Form Holdings Ltd. It then changed to MediaStream Limited in May 2000. The Company changed its name from MediaStream Limited to Memstar Technology Ltd (“Memstar”) on 12 September 2007 upon the successful completion of the acquisition of Memstar Group.


Form Holdings was a producer of music album for various industry. Totally unrelated to the current business, so I decided not to not look further.

Investment tips:

Why not?
  • The document states it is only a head of agreement (not binding I think)
  • No dates of when the plan will start
  • Harder to find/get information since the place is in China. I like China outlook but hate to search in Chinese...
  • No knowledge of competitive edge of Memstar. I know nothing of water membrane technology and how much better is Memstar vs. competitor in Singapore, or even other countries. I do know Memstar is pretty cash rich currently.
  • 39.3% of the market capitalization will be in this deal. So any failure/natural disasters, etc will impact the company severely.


I considered for quite a while and decided to just watch and wait for more further development about it. I might regret if the stock price rises and lose the opportunity but nevertheless, I cannot think of a exit strategy so I decided not to take any action.

References:

  1. SGX - Memstar announcement of deal
  2. Wikipedia - Shenyang
  3. Memstar Technology

Monday, October 19, 2009

Returns from Sihuan

I got my $9750 from Sihuan on the 14th Oct when I checked my POSB account. I was hoping they could send a letter telling me they sent the money over instead of me being surprised. Nevertheless, I transfered the amount to POEM for the Philips MMF. (edit: I received the mail from SGX about the transfer on 19th October, 5 days after the actual transfer)


StockPurchase DateAnnualized ReturnBuying PriceSelling Price
Sihuan25-Aug-200912.65%0.9550.975
STI ETF*25-Aug-200927.74%2.652.77


Sadly, I did only half as good as the STI ETF benchmark even though I got around 12% annualized returns. I did include the charge for stamp for Sihuan and the usual brokerage charges for the STI ETF, but still the market breakout made STI ETF returns increase greatly.

However, Sihuan was a good experience. I learn that there are no charges for accepting cash offer except for and stamp. But, it still puzzles me is when does the payment after accepting the cash offer occur. I will be happy to hear someone to enlighten me about it since there is still a China Precision and Chartered Semiconductor cash offer. I am not sure if the payment is after the offer become unconditional, or even earlier.

Thursday, October 15, 2009

Cacola, Lorenzo and ASA Group Updates

General news update on some of my holding and related companies.

Cacola
SGX Reference
At last, some news about the winding up petition and not surprisingly, it has been adjourned to 13 January 2010.

Lorenzo
SGX Reference
Lorenzo boosts production capacity and enhances PRC presence with new S$14 million production capacity. A look at their latest balance sheet show that they have around S$10 million in cash and deposits and S$7 million in receivable. Most probably, they will take a long term loan to finance the acquisition.


ASA Group
SGX Reference
More details information about how Shanghai Jinming will manage ASA Group is released. Shanghai Chaoyue Trading (SCT), an associate of Shanghai Jinming Investment Group entered an agency and distributorship agreement (A&D). SCT will act as an exclusive agent to sell polished, cermaic and rustic tiles under ASA brand to the retail public and also special construction projects. ASA can leverage on the sales network that Shanghai Jinming Real Estate have. However, ASA is going to sell the tiles at a discounted price, and not sure how much is the discount.

iPhone and Starhub


Recently, Starhub had lost the rights to the English Premier League to Singtel. Then, M1 inked a deal with iPhone to begin selling it at the end of the year.

When talking with a friend, there was a way Starhub could anti-competitively deal with the iPhone. Typically in Singapore, handphone are subsidized and telecom companies earn the money mostly through the subscription contract. Therefore, Starhub could snap up the iPhones available with the cheapest plan and don't use any data. However, this is assuming iPhone users typically exceed data usage and contribute a lot of revenue to Singtel or M1.

Monday, October 12, 2009

Companies and Brands

Buying companies you know can reduce some risks since you are updated with their news. For people who don't know much companies, you can try by looking through the items you use and buy. Who are their competitor/alternatives and what competitive edge do they have that made you bought them? There are big companies like SPH, SMRT, etc but also other consumer goods that you might have bought but not realized. Therefore, I tried to list some brands that you might had bought but not realized they are related to a listed company. You may want to guess the company by not scrolling too fast beyond the image. The listed company name is below the image.


Brands (Chicken Essence, etc)

Cerebos Pacific

Harvey Norman

Pertama Holdings

G2000

Wing Tai

Dian Xiao Er

Soup Restaurant

Cold Storage, Giant, Shop n Save, 7 Eleven, etc

Dairy Farm International Holdings

Tiger Balm

Haw Par


Of course, there are more companies like the sushi companies like Apex-Pal and Japan Food. Nevertheless, it can be a good start to find something you know about.

Thursday, October 8, 2009

Delisted Companies: Evergo, Asia Dekor and Konami

More delisted companies in the SGX, Asia Dekor and Konami, although there isn't any opportunties with these already. However, I do not want to have survivorship bias, meaning analyzing only companies that 'survive' and remain on SGX, which typically are the good one left.



KONAMI CORPORATION (Konami) develops, publishes, markets and distributes video game software products globally for stationary consoles, such as Sony PlayStation, PlayStation 2, PLAYSTATION 3, Nintendo Wii, and Microsoft Xbox 360, and for portable consoles, such as Sony PlayStation Portable and Nintendo DS, as well as for use on personal computers. The Company operates in three segments: Digital Entertainment, Health & Fitness and Gaming & System. The Company plans, produces, operates and distributes entertainment content for mobile phone online games. Konami produces gaming machines for casinos in the United States, Australia and other overseas jurisdictions, in addition to video games and token-operated games installed in amusement arcades and other entertainment venues in Japan. The Company produces card games, character goods, toys and hobbies, publications, compact discs (CDs) and digital versatile discs (DVDs) and other merchandize products.
They are quite big in games, however I didn't know they was even listed in the first place. They just delisted without any offer. Not sure why, perhaps they own all the shareholding.



Asia Dekor's principal activities are manufacturing and selling laminated flooring and related products, particleboards, high density fireboards and medium density fireboards, providing administrative services to Group companies, and investment holding. Its main products include strengthened wooden flooring, melamine laminated flooring, painted paper and other building decoration materials. The Group's operations are carried out in Singapore, PRC (excluding Hong Kong) and exported to North America, Asia, Europe, Oceania.
Asia Dekor is being bought over, and offer $0.268, 48.9% premium over last closing price on 14th Novemeber 2007. The stock price never hit the offer price, only as high as $0.24. Buying at 38 lots at $0.24, selling at $0.268 implies 10.89% profit margin. Not sure why there is sure a huge premium, but this is a good example where company did not hit the offer price. I should probably checked how long did it takes for the shareholder to get their price, because 10% is very attractive, compared to the measly 1+ % I am getting from Sihuan. There are some dividend and capital reduction that I did not have time to read about. Not sure of the impact to the final price of the offer.


Evergro Properties Limited is a investment holding company. The Company’s subsidiaries are mainly engaged in investment holding, marketing agency, property development, sale of properties in the People’s Republic of China (PRC), construction and operation of golf courses and sale of golf memberships in PRC. The Company’s businesses are grouped into three divisions: Property trading, golf club operations and others. The major subsidiaries include Dragon Link Investment Pte Ltd, Second Dragon Development Pte Ltd, Third Dragon Holdings Pte Ltd, Sixth Dragon Development Pte Ltd, Dragonland Technology Pte Ltd, Eighth Dragon Development Pte Ltd and Ninth Dragon Development Pte Ltd.
They got bought over by Keppel Land, with the price of $0.29, 16% premium over last closing price. However, there is a Share Offer, exchanging for shares in Keppel Land that is a 21.1% premium. The stock price went as high as $0.405, probably due to a higher stock price in Keppel Land too.

Monday, October 5, 2009

Irony of Buffett

If someone wants to buy $20 of your stuff with only $10, will you sell it? Probably not unless you don't feel it is worth $20, or you need the money urgently.

Yet that is how Warren Buffett, a rich person, earn his money. How?


He does it by buying company that are undervalued or discount. He is well-known for fact so when he wants to buy a stake in your company, he is probably buying it at a cheap rate. He also buy them but does not manage them at all. So why will someone sell something he knows is more valuable to someone at a discount? Furthermore, the buyer don't even 'care' or manage the company then.

So why will a owner of a company offer his company to Buffett then? Probably, they are desperate for huge amount cash or financing that banks are not going to give. Buffett should have a hoard of cash available for opportunity.

Another reason is that the owner wish to sell or spark his stock price. People will be aware when Buffett buys a company and will wish to buy a stake too. This may spark the price and the owner can sell it then.

Just feel that it is an irony that with his huge reputation, he can still pick cheap companies.

Friday, October 2, 2009

Accepting Sihuan Pharma (BL5) Offer

Yesterday on 1st October 2009, the Sihuan Pharma Offer has became unconditional with more than 90% of votes. Since a offer can only be invalid if 10% of people vote against it or the conditions are not met, it meant basically the shareholders have all agreed to it. Therefore, I decide to fill up the form and accept the offer. Not sure when the payment will be received. I shall just wait for it then.

Thursday, October 1, 2009

Lessons from Previous Investment

My initial 2 investment are still in 'buy-and-pray' mode. I did not know about 'buy-and-pray' till I read around recently. Nevertheless, the earlier you learn your mistake, the cheaper the cost of the lessons. It is good to reflect lessons gained to previous making them again.

Lessons learned:



Try not to read analyst reports if you are easily influenced. Analyst reports are not totally bad. I like them because they organize news related to the companies. My biggest problem is most of the time, you will find reports with BUY rather than HOLD or SELL. It is very easy to be induced to buying every stock they mention and set your target price based on their report. I bought China Powerplus when reading a couple of those reports and other research. Nowaday, I only read reports if I am sure I will not buy the company and have no clue about the sector. Also, try to verify the content of the report too or you just live to regret when it is too late.

My stock will not drop anymore if it hits the 52 weeks low. Again, I believe I bought China Powerplus close to its 52 weeks low. I just ignore 52 weeks high, low nowaday.

Company is in Forbes Asia's 200 Best Under A Billion. Cacola was in the Forbes list at 2008 (check reference for link). However, I did buy Cacola for its rich cash position too but the Forbes list made my buying decision easier. There are a couple of companies too this year, like Ezra and others. Do your research and not just because they are in the list.

No Exit Strategy. Still not sure about what metrics should be used, definitely not price but maybe revenue or something else. It will be better than my current 'buy-and-hold'(if prices rises) or 'buy-and-pray'(if prices drops).

Staying invested. During the lows of STI ETF, I have been avoiding the market because I never felt
a) stock market was not low enough,
b) the recovery was not going to be rapid so I should have some time.
c) I don't have time to research and feel comfortable about any company

Therefore, I missed the recovery, although it is not certain if it is sustainable. I should had listened to my friend sensible advice of buying in the STI ETF and using dollar cost averaging to reduce my market risk.

Overall, I still like investing individual company and gaining more knowledge. However, in the next couple articles, I will probably be discussing more on my personal finance and retirement since
a) personal finance and retirement is more predictable than stock market.
b) I haven't beat the STI ETF yet
c) you are never too young to think about retirement/finanical freedom
d) I probably need my money soon to repay my education loan so I cannot commit in long-term investment unless I find a constant cashflow or defer the payment

References:

  1. Asia's 200 Best Under A Billion: Cacola Furniture International - Forbes.com

Tuesday, September 29, 2009

Holding Review on September 2009

Only 1 change, that is my addition of ASA Group recently at $0.055. The reason is mostly speculative as I bought it because of some insider trading and the long-term loan provided by the major shareholder. The company is also in the SGX Watchlist so SGX will probably help me query them more often. Its price is very low so it is very sensitive to any price change. A change of $0.005 will already result in a 9% change in value, so be extra careful and do your own homework.

I had been trying to get China Precision at 0.27 but could not. I tried different lots size, placing order at 5:15pm to hopefully end up at the start of the queue the next day but nothing seems to work.



Investment SecuritiesPurchase DateAnnualised ReturnSharesBuy Price
Powerplus15-Jan-2008-39.60%32,0000.215
STI ETF*15-Jan-2008-13.70%1,9833.47
Cacola17-Oct-2008-24.26%11,0000.095
STI ETF*17-Oct-200826.40%5022.08
Sihuan25-Aug-20097.24%10,0000.955
STI ETF*25-Aug-20094.20%3,6042.65
ASA Group28-Sep-20092720.26%33,0000.055
STI ETF*28-Sep-2009-548.09%6802.67

* indicate benchmark for performance tracking. Note the STI ETF does not include dividends, so performance of the ETF is underrated by around 4 to 5% per year.


Sihuan: Still no open market purchase by China Pharma. China Pharma stock has risen quite a bit, and there don't seem to be any bad news. So continue to try selling at $0.975, the offer price. I am still not sure if it is worthwhile to accept the offer instead of selling on the open market.

Cacola: I decide against studying in detailed about Cacola. I read about Buffett saying, if you need a computer or calculator for analyzing the company, it is too complex for you. Sadly, there has been no news release about the 21st August court result against IW Asset. Probably, it was postponed but no idea. For people interested in searching more, try 东莞家居乐 which is the chinese name of Cacola.

Powerplus: I should probably sell it if I find better opportunity and not get too emotional with it. The buying of China Steel Australia, a company a previous non-executive chairman had directorship in, did not have a positive impact to the company income statement this year. The company also converted the plant from a nickel pig iron to merchant pig iron, resulting in huge capital expenditure. I have no clue about steel industry and I did not buy Powerplus to study about steel sector. However, people interested should look at the China Steel Australia website for more details. The acquisiton of the TOPSO trademark does not seem of value with little mention of it after the acquisition.

Overall: Time has become very tight for me so I cannot really spend much time on studying fundamental of companies, including those I hold. I am seriously considering buying the STI ETF and forget about the stock market for a while till I am more free. I need more capital to make any attempt beating the benchmark more worthwhile.

Monday, September 28, 2009

Buying on sentiment

Sometimes, I feel I should speculate on sentiments. The market seems so predicable when good news occurs.

For example, some good news that had occured in the last month
a) Midas possible double listing in Hong Kong
b) DMX Tech invested by KDDI Corporation, 2nd largest telecom in Japan
c) Ntegrator wins contracts the Next Generation Nationwide Broadband Network in Singapore
d) Sinotel invested by HC International, an hedge fund
e) Noble invested by China Investment Corporation, a China sovereign wealth fund

There are probably more good news too but just listing some examples. As long as you are not too greedy and don't misunderstand the news, typically you can make some quick cash. However, there are some issues with this.

Issues

However, I don't wish to do that because
a) Require lots of time and quick thinking, practically day-trading. I don't like that concept of day-trading although I could probably write some programs to save some time. But still, I am still very anti day-trading currently.
b) I just hate heavily researched and actively traded stock. I just feel those stocks will be already well-researched with lots of others smarter people with commercial tools that can do better than me. Perhaps, I just like to support underdogs.
c) a misinterpretation of the news might lead to quick losses too.

I know both a) and b) are very personal and not really valid. However, people should invest what they feel comfortable about and for me, I still like fundamental, undervalued business.

Wednesday, September 23, 2009

Almost wrongly bought China Animal Healthcare (EP4)

Company Info:

China Animal Healthcare Ltd. is an investment holding company. The Company is principally engaged in the manufacture, sale and distribution of animal drugs for poultry and livestock and its business activities are conducted in People’s Republic of China. In addition, the Company is engaged in the manufacture and sale of animal drugs in injection form for livestock. As of December 31, 2008, the Company manufactures approximately 400 types of treatment and non-treatment drugs for poultry and livestock. It has three business segments: Powdered form drugs, Injection form drugs and Biological drugs.

I was interested in pharma sector since typically people don't care about money when it comes to health, or they are insured by the insurance or government. I also saw China Animal Healthcare with its expansion plan and thought of buying it although it treat livestock, not human.


Not saying it is a bad company, but I almost mistaken it as very cheap when I looked at Reuters. If you want, try looking at the Reuters financial statement on China Animal Healthcare and spot the error.

Its growth was slowing but it does have lots of cash for acquisition. The website was also hacked, but still okay when I checked Google Cache of 21st September 2009.

And the answer to the mistake...
Reuters show the statement as Ringgit but it is supposed to be Renminbi. The difference is 1 Malaysian ringgit = 1.97083257 Chinese yuan. It implies I overestimated the numbers by 97%.

References:

  1. NextInsight - CHINA ANIMAL HEALTHCARE: Vaccine sales to jump next year
  2. China Animal Healthcare Website



Monday, September 21, 2009

Buffett Quote: Never Lose Money


If you google "Never Lose Money", you will probably find it as one of Buffett law. If asked you can choose between
a) investment that lose 20% for first year and gain 20% the next year,
b) investment that gain 20% for first year and lose 20% the next year.
Which one will you choose?


Without any calculation, I thought b) will result in better result but actually both are equally bad.

a) 0.8 * 1.2 = 0.96 => 96% of original investment
b) 1.2 * 0.8 = 0.96 => 96% of original investment

You will lose 4% regardless of the choice. Therefore for every loss you make, you need a much better returns just to get back your investment.

Thursday, September 17, 2009

Troubled Companies: ASA Group Holdings (A25)


Continuing with analyzing troubled companies, I found ASA Group based on its declining revenues since 2004.

Company Info:

ASA Group Holdings Limited is a Singapore-based investment holding company. The Company operates in manufacturing and selling ceramic tile.

IPO Detail:

The IPO was around 10 years ago, so I shall not state much details. A quick check at the list of Executive Directors at the IPO and the current list show that not surprisingly, none of those in the IPO are still around.

Competitive Strength in IPO:

The directors of the Group believe that it produces one of the leading brands of high-end ceramic tiles in China. The Group considers the following to be among its competitive strengths:-

* Established brand name of ‘‘ASA’’ supported by heavy marketing and promotional efforts through television and bus advertisement and participation in trade shows.
* A wide distribution and service network via its 37 branch offices and more than 1,500 distributors and dealers located mainly in eastern, south-western and northern China.
* Strong design capabilities via its in-house Design Department.
* Wide range of products in over 200 designs to meet the tastes and demands of different consumers.
* Fully automated production lines which help to maintain the quality of ASA ceramic tiles.
* Strategic location of its factory with easy access to canals for raw material supply and the railway stations.

Competition:


* Xiandai
* Pan Asia
* Prince
* Importers of foreign ceramic tiles

What happen?


Using the annual reports of FY2008 and FY2007 to find the reasons and challenges.

FY2008
* Natural disasters in China
* Stringent environmental controls since ceramic contribute to air pollution
* Bank of China tighter credit control

FY2007
* Chinese government curbing price of real estate
* Credit tightening policies imposed on banks
* Fierce competition in both domestic and international ceramic tile markets
* Increasing demand for raw materials
* Higher labor costs
* Higher requirements for environmental protection

Interesting development:


Shanghai Jinming Investment has bought the share at $0.09, a premium over its existing price. Not sure how big the company is since it is private. Technically, the company must have seen some value in the company or perhaps its asset. Also, Mr Poh Choo Bin has also slowly accumulate shares of ASA. A quick check shows he was a Substantial Shareholder of Viz Branz. I am going to buy a small amount of the share and hope that the buying of Shanghai Jinming indicates their positive sentiment to ASA.

Investment tips:


Technically speaking on the balance sheet, the future is still bleak for ASA Group. Their recent half-year statement shows revenue still falling about 41%.


References:

  1. ASA Investor Relation Website
  2. SGX - ASA Group IPO in 1998
  3. SGX - ASA Group Annual Report FY2008
  4. SGX - ASA Group Annual Report FY2007
  5. SGX - Shanghai Jinming taking 24.37% shareholding



Monday, September 14, 2009

Reading Warren Buffett Shareholder Letters

Warren Buffett is one of the richest person and successful investor on the world. He mentions what business impresses him in 2007, so I summarize it. It is better to read the whole letter though, but nevertheless the summary:



* a business we understand;
* favorable long-term economics;
* able and trustworthy management;
* a sensible price tag.

We like to buy the whole business or, if management is our partner, at least 80%. A truly great business must have an enduring “moat” that protects excellent returns on invested capital. Therefore a formidable barrier such as a company’s being the low-cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Our criterion of “enduring” causes us to rule out companies in industries prone to rapid and continuous change. Additionally, this criterion eliminates the business whose success depends on having a great manager. There’s no rule that you have to invest money where you’ve earned it. Indeed, it’s often a mistake to do so: Truly great businesses, earning huge returns on tangible assets, can’t for any extended period reinvest a large portion of their earnings internally at high rates of return.

Interesting, the manager is not the key but rather the business outlook together with the manager. Also, mention about companies which cannot reinvest a large portion of earnings internally at high rates of return. That is where he comes in as a capital allocator and 'pool' the money generated and reinvest them accordingly.


Let’s look at the prototype of a dream business, our own See’s Candy. See’s sold 31 million pounds, a growth rate of only 2% annually compared to last year when it was bought. We bought See’s for $25 million when its sales were $30 million and pre-tax earnings were less than $5 million. The capital then required to conduct the business was $8 million. (Modest seasonal debt was also needed for a few months each year.) Consequently, the company was earning 60% pre-tax on invested capital. Two factors helped to minimize the funds required for operations. First, the product was sold for cash, and that eliminated accounts receivable. Second, the production and distribution cycle was short, which minimized inventories. Last year(2006), See’s sales were $383 million, and pre-tax profits were $82 million. The capital now required to run the business is $40 million. This means we have had to reinvest only $32 million since 1972 to handle the modest physical growth – and somewhat immodest financial growth – of the business. In the meantime pre-tax earnings have totaled $1.35 billion. All of that, except for the $32 million, has been sent to Berkshire (or, in the early years, to Blue Chip). After paying corporate taxes on the profits, we have used the rest to buy other attractive businesses. There aren’t many See’s in Corporate America. Typically, companies that increase their earnings from $5 million to $82 million require, say, $400 million or so of capital investment to finance their growth. That’s because growing businesses have both working capital needs that increase in proportion to sales growth and significant requirements for fixed asset investments. A company that needs large increases in capital to engender its growth may well prove to be a satisfactory investment. There is, to follow through on our example, nothing shabby about earning $82 million pre-tax on $400 million of net tangible assets. But that equation for the owner is vastly different from the See’s situation. It’s far better to have an ever-increasing stream of earnings with virtually no major capital requirements. Ask Microsoft or Google.

Sounds easy but the hard part is to find and 'sense' a business with that "moat". But interestingly, the 2% sales growth did not affect valuation. It is hard to believe a company can sustain it position with a historical 2% growth. Also, ironically he mentions tech companies like Google where moat are really typically harder to maintain.


One example of good, but far from sensational, business economics is our own FlightSafety. This company delivers benefits to its customers that are the equal of those delivered by any business that I know of. It also possesses a durable competitive advantage: Going to any other flight-training provider than the best is like taking the low bid on a surgical procedure. Nevertheless, this business requires a significant reinvestment of earnings if it is to grow. When we purchased FlightSafety in 1996, its pre-tax operating earnings were $111 million, and its net investment in fixed assets was $570 million. Since our purchase, depreciation charges have totaled $923 million. But capital expenditures have totaled $1.635 billion, most of that for simulators to match the new airplane models that are constantly being introduced. (A simulator can cost us more than $12 million, and we have 273 of them.) Our fixed assets, after depreciation, now amount to $1.079 billion. Pre-tax operating earnings in 2007 were $270 million, a gain of $159 million since 1996. That gain gave us a good, but far from See’s-like, return on our incremental investment of $509 million. Consequently, if measured only by economic returns, FlightSafety is an excellent but not extraordinary business. Its put-up-more-to-earn-more experience is that faced by most corporations. For example, our large investment in regulated utilities falls squarely in this category. We will earn considerably more money in this business ten years from now, but we will invest many billions to make it.

As usual, how do they know FlightSafety is the best? Most companies will always claim they are the better companies.

Now let’s move to the gruesome. The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.

Singapore Airlines was a good company but recently facing too much competition from the smaller airlines. But hard to imagine Singapore Airlines in financial troubles since it is part of Singapore pride.

To sum up, think of three types of “savings accounts.” The great one pays an extraordinarily high interest rate that will rise as the years pass. The good one pays an attractive rate of interest that will be earned also on deposits that are added. Finally, the gruesome account both pays an inadequate interest rate and requires you to keep adding money at those disappointing returns.


Finding a business that is understandable is not easy. For me, those easy to understand business are mostly those without a moat, since bigger companies typically have many subsidiaries and mixed of business. One of the important criteria should be favorable long-term economics, because even Warren Buffett could not rescue the textile business he had at the start of his journey.

References:

  1. List of Shareholder Letters

Thursday, September 10, 2009

Delisting Company: China Precision Technology (I78)


Company Info:

China Precision Technology Limited is an integrated manufacturing services provider for the consumer electronics, automotive and telecommunication industries. The Company provides precision engineering services, such as metal stamping, plastic injection moulding, die-casting, mould design and fabrication, as well as assembly and electroplating for metal and plastic parts. The Company operates in three segments: Electronic Tuner Component (ETC), Automotive and Others. ETC segment manufactures the mechanical parts of the electronic tuner, such as connectors, pins, frame and covers. Automotive segment provides plastic injection moulding and electroplating services for automobile parts. These parts include grills, logo and other accessory parts.

Offer details:
I missed this delisting offer on my alert but I fixed my alert so it will not happen again. I prefer this offer than Chartered because:

* No condition other than the usual regulatory.. Chartered offer will probably only materialize in end of November, December due to the condition stated in the document. I probably have a chance to buy it after I manage to cash out of Sihuan, provided the Sihuan deal complete.

* Uncertain of Chartered business if the offer lapse. Chartered loses money in the last few quarters and is a highly capital intensive company. If the offer is not completed, I feel very uncomfortable having Chartered in my portfolio. Furthermore, I am uncertain of Chartered fulfilling the conditions because I have no knowledge of the semiconductor industry.

Profit Margin:

33 lots @ $0.27 and selling $@ 0.28 = 2.39%

However because of my late entry, I am probably unable to get the stock at $0.27. I had been trying 40 lots @ $0.27 from Tuesday onward but yet to get it.

References:

  1. SGX - China Precision Proposed Delisting

Monday, September 7, 2009

Chartered Semiconductor Offer Details


Following the fall of prices of Chartered Semiconductor after the lifting of the trading halt, there is a wider profit margin that makes it more attractive to look at. The story of ATIC, the Abu Dhabi Acquiror, and Chartered started since May 2009.

Chartered Timeline:

During the 28th May 2009, Business Times reported a rumor that ATIC is looking to buy Temasek stake in Chartered Semiconductor for around $2.4 to $2.6 per share. The stock went up 10%, to as high as $2.22 during that day. Chartered immediately deny any bids the next day and the price falls and rise gradually till another announcement in 12th June. Chartered revises the guidance upward for 2nd quarter and the prices rises to the high of $2.43 before falling gradually again.

The price hits the low of $1.8 during 17th July. Irony, since there was only 2 announcements before 17th July and both were not bad news. Perhaps, the interest of people anticipating the takeover of $2.4 to $2.6 wanes as no bids are made. The prices then slowly bounces back to $2.3 as the results of 2nd quarter are announcement at 24th July.

During August, some Directors acquire of small amount stock through the Restricted Share Unit(RSU). Not very sure what is it, but it should be related and similar to stock option. Finally, an official announcement of the bid is made today, 7th September.

Unlike Sihuan, I did not buy immediately because the profit margin was only 0.05% when I looked at it in the morning. The price now is around $2.60 instead of $2.66 at start. Luckily because of the unattractive margin, I did not get it at the $2.66 price range. If not, I will be sitting on top of a 3% loss immediately. Not sure of the reasons, perhaps some shareholders are cashing out after seeing the bid.

Nevertheless, it seems to be worth looking the offer in detail to determine if the deal will go through regardless of market movement. Besides the usual regulation and also some anti-trust laws requiring approval, there are quite a few financial requirements for Chartered.

* Diminution(Decline) in Company's consolidated Total Equity to an amount < US$1,400m.
Unaudited @ June 2009 was $1,593m.

* Net revenue, excluding net revenue of SMP(Silicon Manufacturing Partners), from 1st July to 30th November > US$550m.
Unaudited @ June 2009, half year net revenue was $593m, unsure of revenue from SMP.

* Cash and equivalents > US$585m.
Unaudited @ June 2009 was US$774m.

* Reduction of order not less than 15%

Note that I simplified most of the details, and the document mentioned more clearly with the various test dates, and the different conditions for various dates. Despite the higher profit margin of around 2.38%, I prefer to wait for the end of tomorrow to decide whether to buy it or not. Because today US market is closed for holiday, Chartered might experienced more changes when the US market open since it is also traded on that exchange.

References:

  1. The Wall Street Journal - Temasek Considers Offer for Chartered Stake (The Business Time article is archived and not free, so I referenced this instead)
  2. SGX - Chartered Rejects any bid from ATIC during 29th May amid rumors
  3. SGX - Chartered revise guidance upward for 2nd Quarter
  4. Reuters - Moody's says may cut Chartered Semi's rating



Abu Dhabi acquiring Chartered Semiconductor (H1Y)


Advanced Technology Investment Company LLC (ATIC), a technology investment company wholly-owned by the Government of Abu Dhabi, has proposed to acquire Chartered Semiconductor. Temasek Holdings, the largest shareholder of Chartered at around 63%, has agreed to the acquisition. After the acquisition, ATIC propose to delist Chartered Semiconductor.

Profit Margin:

The company offered $2.68, over the last done price of $2.66. Calculating the profit margin, it is only at 0.05%. Unless the current shareholder other than Temasek has strong opinion of the offer, it is not going to be worth buying now. There are also several conditions in the offer document for the acquisition to materialize. Currently, the stock is at a trading halt.

References:

  1. SGX - Proposed Acquisition of Chartered Semiconductor
  2. Press Release