Monday, August 31, 2009

Holding Review August 2009

My first review so a little more explanation. I also put the STI ETF as a comparison to the stocks I bought. I chose the ETF since I can easily switch to the ETF if I am sure I cannot do better than the ETF with my own analysis. I will probably continue buying with individual companies for another 5 years, till I am 30 years old, before the decision will occurs.


Note that the STI ETF is exclusive of the dividend payouts so actually the performance of it should be higher. With the huge losses, maybe I should consider getting Protrader for stop orders or track the stock more closely. There are other strategies with warrants which I am not clueless that may helps too. Nevertheless, I prefer to seek prevention, by analyzing and buying the right business, than the cure, of selling when price falls rapidly. Also, when prices fall, I could buy more to reduce the cost of buying too. The concept of dollar cost averaging can reduce the market risk and I wish to employ it on the next company I wish to buy.

Investment SecuritiesPurchase DateAnnualised ReturnSharesBuy PriceValue(+fees)Market Price
STI ETF15-Jan-2008-14.37%1,9833.476910.252.67
STI ETF17-Oct-200828.81%5022.081072.282.67
STI ETF25-Aug-200924.51%3,6042.659583.472.67

Review of China Powerplus: My first buy and it has been terrible. Luckily, I only buy shares with money I can afford to lose. I bought it because I like the business of selling small agricultural tools, unlike China Farm. Also, when I bought it, it had around 25% of its price covered with cash and no debts. Its domestic and exports sales have been erratic and unpredicatable. In addition, the Chairman decision to buy China Steel, another company he is related to, have not reap any benefit as yet. Nevertheless, I will still keep it since I have little time for analyzing the business and its competition.

Review of Cacola: With my failure in China Powerplus, I looked carefully before deciding on Cacola Furnitures. It had even more cash compared to its price than Powerplus. Also, the margins give me some confidence to buying it. Nevetheless, I was careful and bought only $1000 since I am not sure of its competition and business environment. I did the review on another blog post in more details.

Review of Sihuan Pharma: Bought it recently but yet to hit its offer price. Did a more detailed blog post with also other previous similar companies with cash offer for comparisons.

Others: Interestingly, KXD Digital, a troubled company I mentioned before, raised capital through diluting its shares and the price had doubled.

Overall: My plan ahead will just be selling Sihuan Pharma when it hit its offer price, and focus on analyzing Cacola and the furntiure sector more. With the 2 furniture IPOs, Latitude Tree and Passion Holdings, it will be easier to find more information about the furniture sector. I rather focus on understanding a sector than think I analyzing many different companies. My purpose for spending time with analyzing is
a) to beat the returns of STI ETF which I will probably buy when I cannot beat it or find better returns elsewhere with as little time in analyzing as possible (time is money since it takes minimal time to buy STI ETF),
b) pickup business skill and knowledge


  1. SGX - KXD Digital Placement Share
  2. Tableizer - tool to convert excel to html table (used to create the table easily)

Review on Cacola Holdings August 2009

I been waiting for the 21st August court result but it seems like it will not be released yet. However, it have since acquire some subsidiaries and disposed Cacola Home Decor. Also, the stock have suddenly became more liquid, maybe because of the 2 furniture IPOs that attracted attention to similar companies or people who divested away Man Wah delisting. No idea though, but

I bought only $1,000 worth of Cacola Holdings during 17th October 2008. It shows how little confident and that I rather be charged a higher commission because of the minimum $25 dollar per transaction. Currently, the company has drastically poorer revenue for FY2009 as seen in the quarterly reports and the profit guidance with every quarter.

Why I bought it:

I was tracking the company for a couple of months and liked the ROE of 40% in FY2007 and was okay with the slower growth of around 10% from the quarterly updates for FY2008. It was also cash-rich and little debt. Based on just cash asset and subtracting the debt, it had almost 50% of its price in net cash. I also anticipate that Chinese yuan will appreciates to slow down the huge growth in FY2007. It also has greater margin than the other furniture companies in Singapore, therefore it should have a safe moat. In addition, the company have clear expansion plans for both its manufacturing and sales. It was also small cap, and I like it because I hope to find companies before it get into the radar of bigger institutional investors.

The business was also easily understandable, create and sell furnitures. In furniture sector, I believe lowest cost company is important since furniture typically have no brands. You will buy a table for its design, quality and more importantly price. There are no logos/brands printed in furnitures you buy. Design can be 'copied', quality is dependent and not easy to compare. Most people do not really know the different kind of wood and quality at all. For price, while shopping in Singapore for furniture for my home, it is easy to know that the lowest priced furnitures are mostly manufactured in China or Malaysia (although now I know Vietnam too is low-cost from the IPO of Latitude Tree). Furthermore, with the huge number of properties in China, regardless of old or new, people should tend to buy new furnitures and have budgeted for it before buying a house.

Since then: It did not give dividend in FY2008, which seems to have a huge impact for most investors. It did not affect me since I still preferred business growth than dividend, especially for a small cap company. The financial controller also quited for personal reasons.

Then, the consecutive profit guidance came with the reasons of global financial crisis which has resulted in a decrease in sales orders from the PRC distributors and overseas customers.

Even worse, Cacola Holdings has failed to make payment of HK$21,379,644.75 and was served with a Writ of Summon by IW Asset Management Limited. Up till today, it is still ongoing and I have no clue how IW Asset Management Limited is related to Cacola except it was a loan owning to IW Assets in 5th March 2009.

The company then appoints Mr. Wong Chi Man, ex Financial Controller for Pan Hong Property, as its Financial Controller. A quick check of his reason for leaving was "To pursue new career opportunity." in February 2008. Not sure what happened but his next work was at Henry Wong & Company, Certified Public Accountants for June 2008 to June 2009.

The first 2 quarters results were 70% less revenues than the previous year. Also, it establish the fully-owned subsidiary Grateful Victory that is an investment holding for USD$50,000. Not sure what is the point of it too. It already had another subsidiary, Sincere Treasure with paid-up capital of US$60,000, at British Virgin Island. There also have only 79 Cacola Specialty Store compared to 129 at December 2008. The company has yet to finish using the IPO proceed though, since it delay the mega store and have RMB$42.8m in balance.

Meanwhile, Man Wah has also delisted since and probably will look for an IPO in Hong Kong where valuations are better than Singapore. Lorenzo and HTL has bought back some shares recently too. The furniture sector is currently valued very lowly. Just found out another related listed company, Pertama Holdings(P22) do wholesales under the name, Harvey Norman.

Also, note for FY2012, the company tax incentive will be gone and need to pay the full 25% tax for PRC. Sadly too, neither Chairman nor CEO of the company attended the AGM for FY2008.

Actions: I decide the outlook is tougherI realised after buying just how competitive the furniture sector is. Looking at the exhibitor list of some furniture trade shows many companies. I did not look at the IPO or search for its competitors in China or Hong Kong. Perhaps I should, but there are lots of unlisted companies too. Also, the way the company is handling the Writ of Summon is worrying since the company does have enough cash and there must be reasons for not paying immediately.

Also, it is harder to find data on China with few websites in English. For example, I still cannot find trade data of Dongguan, where Cacola is based, or China easily. There is a China Statistical Yearbook that is hard to use. Perhaps it is easier to find statistics in Chinese. By the way, Dongguan is near Guangdong.


  1. Cacola 2009 Q2 Unaudited results
  2. ExtraordinaryProfits blog that I learned about Cacola
  3. Euromonitor report in China (Just summary, need payment for statistics)
  4. Euromonitor report in Singapore
  5. Panjiva - website that tracks shipments and have info

Review on Sihuan Pharma and previous other cash offer companies August 2009

My first experience with cash offer was average. I never like active trading but had to, just in case something wrong happen. This is the time where I wish I had stop order so that I can spend less time monitoring. I believe POEMS Protrader allow that but it isn't free.

The price of Sihuan is still pretty stagnant, I could have probably try buy much later than I thought. I am still clueless if there are alternatives to just selling the stock on the market. I am not sure if I can accept the cash offer if I buy the stock after the announcement since I do not think I will have the letter to fill up to accept the offer. Furthermore, I am not sure of the charges to accepting the cash offer and how long it will take? I checked POEMS website and it wrote $10.70 for transaction with cash offer. However, I am not certain if that is the correct cost.

There are dangers with these offers,
* The offer do not go through and prices may plunge,
* stock usually illiquid so making assumption you can buy/sell (okay for small amount but not big lots),

I review the previous cash offers I can find and calculate the possible profit and look at their situations. For the buying price, I take the closing price on the next day after the announcement. For the number of lots, I choose the lot that will minimize the brokerage charges. I use online non-advisory which the charge is 0.28% of the contract or minimum $25. For those too lazy, your contract should be > $8929 or else you will pay > 0.28% brokerage charges since you are paying the minimum of $25. Although, you can save even more by trading in higher amount since the charges are tiered, 0.22% > 50k, 0.18% > 100k. Also, clearing charges are capped at $600 or 0.04% but it takes a huge amount of $1.5m to take advantage.

Reviews of other previous cash offers

* Possible mandatory announcement of offer @ $3.9459, above the previous $3.02, made at 19th February 2008 end of day.
* Never reached the offer price
* Condition 1: Convertible Bonds @ $4.455 are converted. Sounds like a crazy condition since who will convert/buy at $4.455 and can only sell at loss at $3.9459?
* Condition 2: valid exercise of consolidated 2003 warrants. Not sure about this, but it expires at October 2008 and entitle warrantholder to subscribe share at $0.05 each, with around 582,678 shares exercisable.
* Ongoing because of delay with the PRC Anti-trust approval.

Not a straightforward offer with some call/put options. Also, it mention of requirement of PRC Anti-trust approval. Condition 1 sounds illogical but at 10 December 2008, there are news of some convertible bonds are converted. The price was $0.755 at 19th November when the bond was converted, and the amount per share it converted sounds wrong. Perhaps I calculated wrongly so I attached the documents, if anyone wish to check.

"S$175,000,000 zero coupon secured exchangeable bonds due 2012 (the "Bonds") issued by Best Decade had exercised its right to exchange S$300,000.00 in principal amount of Bonds ("Relevant Bonds") for 75,000 ordinary share"

If held till maturity, the final amount should be $300,000. So the amount converted currently is $300,000/75,000 = $4 per share. Unless they
a) thinks Delong will be > $4 per share when the bond due at 2012,
b) feels they cannot get their amount back if company will bust before 2012,
I cannot think of much other reasons why they converted at 530% of the price on the market.

SP Chemicals:
* Announcement of offer @ $0.73, above the previous $0.615, made at 15th September 2008 end of day.
* $0.73 reached at 13st January 2009, around 4 months after offer
* Never went above offer price
* Delisted
* 13 lots @ $0.705 and selling @ $0.73 = 2.82%, annualized = 8.65%

It took the longest period to reach the offer price, around 4 months. Interestingly, the stock drops to as low as $0.67(5% less from 0.705) during this period. I cannot find any reasons or explanation to it. Perhaps, a trader sold due to fear of the offer not materializing or lost his patience. Honestly, I wonder if I sell my shares too on fear since there are no explanation at all, or will I buy more shares hoping it was a dumb decisions by someone else.

* Announcement of offer @ $0.21, above the previous $0.165, made at 4th May 2009 end of day.
* Alternate to cash offer, 0.374 shares of HK$0.10 each in capital of Kingboard Laminates, parent company listed in Hong Kong. It is only valid provided it got clearance of Stock Exchange of Hong Kong(SEHK).
* $0.21 reached at 6th May 2009, 2 days later!
* Went as high as $2.65, 21st August 2009, because some shareholders not happy with offer
* Still ongoing
* 44 lots @ $0.205 and selling @ $0.21= 3.82%, annualized = 313.90%

The shareholders don't seem to like the offer and also how the scheme meeting was held. I believe it was held in Hong Kong and shareholders will not go there just for the meeting.

Chunghong Holding:
* Announcement of offer @ $0.115, above the previous $0.095 made at 5th May 2009 end of day. No Closing Date.
* $0.115 reached at 12th May 2009, around 1 week after offer
* Went as high as $0.130, 28th August 2009, not sure of reasons
* Still ongoing
* 82 lots @ $0.110 and selling @ $0.115 = 3.82%, annualized = 71.96%
It is still ongoing although there are chances to cash out as early as 1 week after offer. However, the price was already very close to exit offer on the next day of offer. Without calculation, I will thought the margin will be smaller than C K Tangs, but due to the cheaper price, the margin are higher.

C K Tang:
* Announcement of exit offer @ $0.83, above the previous $0.70, made at 8th May 2009 end of day.
* 0.83 reached at 10th June, around 1 month later.
* 15th July, price starts to increase to the high 0.885, probably due to some shareholder unhappy with the exit offer or thinking there will be a higher cash offer. The effort was useless in the end too, wonder who bought them so high.
* 6th August, suspension of trading after approval.
* 11 lots @ 0.815 and selling @ 0.83 = 1.13%, annualized = 12.5%

It took around 1 month to reach the cash offer, I do not have the trade information so no clue of number of shares traded >= cash offer. I calculated profit margin based on the last price after the announcement, buying minimum lots that will reduce the brokerage charge(online non-advisory, 0.28% or min $25) and the cash offer price.

Singapore Petroleum Co.:
* Pre-conditional offer @ $6.25, above the previous $5.04, made at 24th May 2009 end of day.
* 13th July, unconditional offer made, closing date 21st August 2009
* Considering only from 13th July, $6.25 reached on 27th July, 2 weeks later
* Went as high as $6.42, 11st August 2009, not sure of reasons
* Still ongoing
* 2 lots @ $6.12 and selling @ $6.25 = 1.41%, annualized = 36.76%

A few difference from other offer,
1) plans to stay listed even after offer,
2) a pre-condition cash offer first.

Man Wah:
* Annoucement of offer @ $0.23, above the previous day $0.21, made at 5th June 2009 end of day.
* $0.23 reached at 2nd July, around 1 month later
* Reached high of $0.245
* Suspended on 19th August
* 40 lots @ $0.225 and selling @ $0.230 = 1.41%, annualized = 20.41%

Almost forgot about this stock, till I saw it on the newspaper about S-chip delisting.

Tsit Wing:
* Annoucement of offer @ $0.27, above the previous day $0.20, made at 15th June 2009 end of day.
* $0.27 reached at 17th June, 2 days later
* Reached high of $0.275
* Ongoing
* 34 lots @ $0.265 and selling @ $0.270 = 1.51%, annualized = 215.35%

Did not know about this but just happened to see it while searching for some other terms. This stock is very illiquid with days without any volume at all. If you miss selling on 17th June, the next time it reached $0.27 was 9th July.

Sihuan Pharma:
* Conditonal announcement of offer @ $0.975, above the previous day $0.765, made at 24th August 2009 end of day.
* Condition 1: No change in business that will result in reduction of > 3% in net income
* Condition 2: No restatement since incorporation that will result in reduction of > 3% in (i) the consolidated profit attributable to equity holders of the Company or (ii) the consolidated net assets
* Never reached the offer price
* Ongoing
* 10 lots @ $0.955 and selling $@ 0.975 = 1.38%

I bought the share without looking into too much details. I didn't realize I have more time since it usually don't goes to the offer price immediately. Also, I am not sure if they are opportunity to buy at even cheaper if I see it earlier or will it be at $0.955 almost immediately at market open. Based on the condition, it will probably waits till the 3Q results are announced before there will be huge open market purchase. The previous 3Q results are announced around November, so there are still a couple of months.

I still have some additional questions to understanding these offers, who bought the stocks the next day after the offer. Is it the banks that make announcement on behalf of companies? Or is it the company or investors instead? Also, who buys the share at the offer price on the market? Is it the company or investors that thinks the price will go higher? Also, there are various terms like conditional, unconditional, voluntary, etc. Is voluntary delisting the same as privatization?


Friday, August 28, 2009

IPO: Passion Holdings

Company Info:

We are principally engaged in the design, production and sale of a wide range of handicrafts and furnishings. Currently, our products are sold either under our brand name “Passion” or as ODM products through our distributors both in the PRC and overseas.

Our products can be broadly divided into five series, namely the rattan-wood series, the bamboo-wood series, the MDF series, the wood series and the iron series. Our products, such as wooden photo and picture frames, small rattan-wood furniture, and other decorative objects, can be widely used as decorations, interior designs or home furnishings. Our manufacturing facilities are located in Longyan City, Fujian Province, the PRC. Most of our products are exported to countries outside the PRC which include the UK, France, Spain, Italy, Turkey, Greece, Canada and the USA. As at the Latest Practicable Date, our Group has a diversified base of more than 200 distributors located overseas. Our export sales accounted for approximately 84.1% of our total revenue in FY2009. Our Group also has a local distribution network of more than 200 points of sale in the PRC through our 10 local distributors.

Yet another furniture IPO after Latitude Tree, so I checked up the issue manager if there were from the same company. Nothing useful but just for interest, the issue manager/sponsor of the last few IPOs, (Latitude Tree, Mary Chia, Singapore Medical Group, JLJ Holding and Heatec Jietong) was PrimePartners. For Passion Art, the company is Genesis Capital. The website of Genesis Capital shows their previous deals with Gallant Venture, Hengxin Technology, Sino Environment, etc.

Interestingly, I compared the expansion plan of Latitude Tree and Passion Holdings although Passion Art isn't completely into wood (iron also) and not furniture(ornaments and handicrafts).

Passion Holdings: S$6m => increase 60% to 70% capacity.
Latitude Tree: S$2m => increase 10% capacity.

It is not fair since % increase in capacity does not imply equal increase in revenue %.

No image since I cannot find the website, or easily find furnitures with "Passion" brand since passion is a very common word.

IPO Detail:

Net proceed: S$18.6m
$6.0m for expanding production capacity (increasing by around 60% to 70%)
$8.0m for expanding sales and distribution network within PRC
$4.0m for promoting and strengthening "Passion" brand name in PRC
$0.6m balance for working capital

No fixed dividend policy


  • Expanding production capacity,
    We intend to expand our production capacity by investing in additional production lines and machinery such as wood processing lines, spray-painting machines, assembling machines, packing machines and frame production lines at our existing plants. We also intend to invest in technological enhancements to our production process to increase the quality of our products as well as enhance our manufacturing efficiency to reduce manufacturing costs. Further, we intend to purchase land use rights for the purpose of building a new plant to set up additional facilities in line with our efforts to broaden our sales and distribution network. Our Directors have identified possible locations for the new plant but have not committed to or entered into any agreements for the
    acquisition of the land use rights or such assets.
  • Expand our sales and distribution network within the PRC and strengthen our “Passion” brand name,
    We intend to expand our sales and distribution network by appointing additional distributors in the big cities of the PRC, such as Shanghai, Beijing, Guangzhou, Dalian, Qingdao and Xiamen, which are the more economically significant areas. These new distributors will also set up Passion Art specialty stores so as to expand our network and build our brand name within the PRC. In order to incentivize our local distributors to set up more Passion Art specialty stores in the PRC, we intend to subsidize 50% of the renovation costs to be incurred by our local distributors in setting up new Passion Art specialty stores. At the opportune time, we intend to establish Passion Art specialty stores which are wholly managed by us.As a result of our brand development and marketing efforts in the recent years, our products under our “Passion” brand name have begun to gain recognition amongst consumers in the PRC. We intend to
    further strengthen and promote our “Passion” brand name as we believe it to be important to the success of our business strategy and our future growth, particularly in the PRC.
  • Enhance our design and development capabilities,
    We intend to employ more skilled and experienced design and development personnel and strengthen our core team of designers to oversee the design and development work of our Group. We intend to increase the range of products that we manufacture. In addition, our design and development team will continue to develop or institute substitute processes that focus on improving production efficiency and consequently cost reduction.
  • Expand our business through acquisitions, joint ventures and strategic alliances,
    We may expand our business through acquisitions, joint ventures and strategic alliances that we believe will complement our current and future businesses. We believe that suitable acquisitions, joint ventures and strategic alliances will give us access to new markets and prospective clients as well as new businesses. They may also bring about greater economies of scale and provide an impetus for our future
  • Acquire forest base for supply of raw materials,
    One of our medium-term plans is to acquire forest bases comprising high-yield and fast-growing trees to provide us with more wood, which is one of our main raw materials. This will provide us with a constant supply of wood, and reduce the costs of our key raw materials. We will make such an acquisition if a suitable opportunity presents itself and only at an attractive price.


* Guangdong Yihua Timber Industry Co., Ltd.

* Markor International Furniture Co., Ltd

* Shengshi Bainian Home Decoration Products Co.,Ltd.

* Dongguan City Yiteng Furniture Production Co., Ltd.

* LADD Furniture, Inc.
(美国莱德家具公司) USA

* Straten Co., Ltd.
(德国诗德蓝家居饰品公司) Germany


* Chen Huiling, Executive Chairman and Founder of Group, since 2001
Previous Directorship in Yiwei, sold company to someone else

* Zhao Long, Chief Executive Officer, since 2006

* Hong Wei, Independent Director, appointed 2009

* Lim Jun Xiong, Independent Director, appointed 2009
Current Directorship with:
Gentrade Pte Ltd
Mirach Energy Limited
Previous Directorship:
CPA Australia Ltd
HSBC Trustee (Singapore) Limited
HSBC International Trustee (Singapore) Limited
Global Asset Protection Private Limited

* Tan Thiam Hee, Independent Director, appointed 2008
Current Directorship with:
Koon Holdings Limited
Koon Construction & Transport Co.
Pte. Ltd.
Gems Marine Pte Ltd
Entire Engineering Pte Ltd
Entire Construction Pte Ltd

Previous Directorship:
Bodysential Pte Ltd
Haw Par Capital Pte Ltd
M & G Maritime Services Pte Ltd
Pickwick Securities Private Limited
Sovereign Marketing Pte Ltd
Sports Services Ltd
Straits Maritime Leasing Private Limited
Underwater World Attractions Pte Ltd
Underwater World International Pte Ltd
Underwater World Singapore Pte Ltd
USE Enterprise Pte Ltd

No board interlock

Expected renumeration for FY2010: Band A for all (< S$250,000)

Investment tips:

Why not?
* The major customers contribution % of revenue is decreased in FY2009, although it can be due to increased overall revenue.
* Most of net proceed used in PRC sales, when only < 20% of revenue in PRC. Why not focus overseas but rather at PRC when it already mentioned competitve? (although revenue clearly growing very rapidly in PRC)
* 100% Reliant on distributors
* Intends to subsidize/pay 50% of renovation costs of PRC distributors, mentioned of 1 distributor alone and it took RMB$25.8m already
* Trade recv to assets ratio is increasing, risks of defaulters
* Company observes general increase of labor cost
* Subsidiary, Yirong Arts & Crafts will be taxed at 25% starting from Jan 2010 instead of the current 12.5%
* Pre-IPO investors paid < half of what new investors are paying
* Does not expect seasonality, weird because Latitude Tree mentions it does in Jan to Mar due to Christmas, New Year
* COGS breakdown, Material 90%, Direct labor 6%, manufacturing overhead 3%, design 1% (compare with Latitude Tree, Materials 42%, industrial material and production overhead 33%, direct labor 9%). No wonder it wants to possible get a forest since materials takes such a huge %.
* Lots of advances and borrowing by Chairman, Ms Chen Huiling. A RMB130m dividend at FY2009 for Ms Chen Huiling only was used to offset the amount she owned.
* 10x of advertisement used in 2009(RMB 9m compared to 0.9m in 2008) but grown does not show similar increases in revenue yet.
* Interest on bank loans increasing from 7.71% to 8.57%
* PRC law requirement for 10% of profit after tax to be kept at reserve till > 50% of registered capital
* Sundry payables rises from RMB1,663 to RMB4,590,122, not sure about the detail.

The comparison/concerns of labor costs for both Passion Holdings and Latitude Tree seems invalid since it took < 10%. I wonder why they mention so much on it when material costs and production overheads are taking the bulk of COGS.


  1. Genesis Capital
  2. Passion Holdings - Prospectus

Tuesday, August 25, 2009

Sihuan Pharma (BL5) Cash Offer @ 27.5% premium

Normally, I only post on Monday and Thursday, but I had to post as I saw the "Cash Offer" on Sihuan at a premium of 27.5%(0.975) over its last price at 0.765. I bought 10 lots @ 0.955 since that is last price I checked. I am not sure if I can profit and the profit seems to be only around 1%. However, 1% in a few weeks/months seems good, provided the cash offer do goes through.

Investment tips:

The announcement was made last night, so there might be a slight chance of getting it even cheaper this morning. However, I was alerted only at noon where the price was already at 0.955. I probably need my alert to be setup more frequently since time is the key in the short window of opportunity. Furthermore, I cannot be sure if the price immediately goes to 0.955 when the stock market open, or there is really a window of opportunity to earn a quick profit.

Anyway, I calulated the amount I bought(I used POEMS profit/loss to calculate):

10,000 @ 0.955 = S$9550.00
Total costs (include sgx charges) = S$9583.47.

If it does sell @ 0.975,
10,000 @ 0.975 = S$9750.00
Total amount (include sgx charges) = S$9715.83.

Overall Profit = S$132.36,
Total investment = S$9583.47(buying),
Profit Margin = 1.38%.

I could have bought more but was worried my calculation was wrong. I am thinking why will people sell the stock if it can be worth more? Perhaps, those without the information update or too lazy to care the few %? Only time will tell if I profit from this deal.


  1. Cash Offer of Sihuan Pharma
  2. SGX Profit/Loss Calculator

Monday, August 24, 2009

Troubled Company: TRI-M Technologies (T13)

Continuing my contrarian approach and reluctant to invest, I filter troubled companies with decreasing revenues and got TRI-M as one of the many companies.

Company Info: We are a diversified Electronics Manufacturing Services ("EMS") provider of manufacturing and testing of high quality electronics products to the global market. Our core business competencies are Printed Circuit Board Assembly ("PCBA") Manufacturing and Box-Build (final assembly). Our services include prototyping, full turnkey and consignment manufacturing, and total supply chain management.

In 2008, the Group announced our plans to diversify into the oil and gas industry to enhance shareholder value. We believe our proposed oil and gas venture will create a new revenue stream for us and improve the Group’s financial condition.

No IPO Details and not meaningful since IPO was in 1993, 16 years ago.

I look through the chart using ChartNexus and news announcement from SGX starting from 14th August 2007 for significant events.

Aug to Oct 2007. The company was not profitable (since 2004, not sure how far back since it shows only data till 5 years ago based on Reuters data), and trading around 0.11 cents. It was very illiquid with no trading for month. The company announces it HY2007 and as usual SGX queries troubled companies with questions. The major shareholder Surreyville Pte Ltd show committement and the company mention early success getting new customers despite losing a key customer to another contract manufacturer and another key customer suffering business downturn.

Nov to Dec 2007. There was a period of wild swing seeing the stock double in 3 days to 0.21 and bouncing back to 0.11 cents. It was probably due to the CEO and CFO, Mr. Chia Wei Ho leaving to pursue his own interests. The company also consolidated the Shenzhen plants costing 1.49 cents per share of earning and reducing its NTA.

Jan to Feb 2008. The company, still without a CEO, announce its FY2008 results. It was also placed on the SGX watch list at 28 February due to SGX ruling for companies with market cap. < S$40m and 3 consecutive years of pre-tax losses.

Mar 2008. The company issue 40m shares at 9% discount to raise fund and convert its business focus to producing crude oil. Somehow, the share doubled to 0.33 cents during this period without any known reasons to management after query from SGX.

Apr 2008. The company doubled its price again to 0.72 cents. As usual, no known reasons by the Board after the SGX query. The company clarifies the report by Business Times about the company eyeing earnings turnaround in the next 2 years. It mentions the company oil and gas investment will require another round of funding and also it is still keeping the electronic business, mainly for European automotive gadget market as a new market.

May to Dec 2008. Little announcement except for a not surprising profit guidance. The company reach its high of 1.00 cents at 12th Aug 2008. The acqusition of the oil & gas company, Kingworld Resources Limited was confirmed and completed by using further issuing of shares. Norton Appraisals Limited appraises the company at S$1.37b and the purchase was completed with only S$203m. There are quite a few technical jargon I cannot comprehend regarding the business outlook of Kingworld Resources Limited.

Investment Tips: A quick search of Mr. Tiong Hiew King, owner of Kingworld Resources, shows him as in Forbes #1014 richest in 2008. If you have invested the company at 0.11 cents 2 years ago, you will have profited around 800%. To be even more drastic, you could have made 700% in the March and April 2008 period. Based on financial statement alone, I will have ignored this company immediately. Without the support of the Mr. Tiong Hiew King, the company will probably be delisted and shareholders holding to worthless stock. But, I will still be eager to see how long company electronic sector survive and the impact of the acquisition in the future.


  1. TRI-M Technologies homepage
  2. ChartNexus - Free Software for technical analysis
  3. Reuters - Financial Statement for TRI-M
  4. Acquistion of Kingworld Resources Limited
  5. Acquisition Press Release Presentation
  6. Wikipedia - Tiong Hiew King

Reader Digest Scam?

My family recently receive a couple of mail from Reader Digest about the chance to win cash. The problem is, we do not even subscribe to them at all. They mention about winners getting a free limousine ride to the prize award ceremony in Reader Digest Singapore building too. Too good to be true.

Danger if you did not read in detailed:

It might not be a scam but it is definitely a marketing ploy. They have a Yes/No envelope for you to reply back your details to them. Typically, you will think "Yes" imply you are interested in joining the lucky draw. However, "Yes" imply that you will subscribe to their paid services. Regardless that the contest is real or not, Reader Digest having the right to deduct money from you feels sneaky. Even if you reply with the "No" envelope, what if they still charge you? The thought of the envelopes reminds me of those complex investment structure, with clauses hidden inside their thick prospectus.


  1. Unsolicited copies of Reader's Digest, an invoice and then a letter threatening legal action
  2. Readers Digest competition anyone won anything??
  3. Reader's Digest Sweepstakes: Are They For Real?
  4. Reader's Digest scam - On the internet

Thursday, August 20, 2009

Delisting Companies: ChungHong Holdings (D7H) and Delong Holdings (B1N)

Company Info: ChungHong Holdings Limited (ChungHong) is an investment holding company engaged in the manufacture, assembly and sales of electronic products. The Company is a service provider of one-stop printed circuit board assembly (PCBA) and original equipment manufacturer (OEM) solutions for the electronics industry.

There was a premium of 21.05% for the cash offer, however the announcement was made while the stock was in trading halt. Therefore, there was almost no window of opportunity.

Company Info: Delong Holdings Limited is principally engaged in the manufacture and sale of hot-rolled steel coils with the People’s Republic of China as its principal market.

There was a premium of 30.7%, however there was several conditions regarding the options and bonds. It seems that the offer will fail and the stock has since dwindle to a quarter of its price since the offer document on Feb 2008. Interestingly, the buyer was Roman Abramovich, and for those who don't know soccer, he is the man who bought Chelsea, a famous football club in England.

Investment tips:

Nothing special about the ChungHong offer except the need to buy as soon as possible since there was not much window of opportunity. However, Delong Holding is a example that offers can fail and fall quite badly. I will need to maybe look in details to be careful about future similar offer.


  1. ChungHong Holding Delisting Offer
  2. Delong Holding Delisting Offer

Monday, August 17, 2009

IPO: Latitude Tree

Since I am invested in Cacola, a furniture company, I look into the IPO of Latitude Tree, a Vietnam manufacturer of wooden furniture.

We are principally engaged in the manufacture and sale of indoor wooden furniture using a variety of composite wood as well as solid wood materials including hardwood such as poplar, pine, oak and rubberwood. Our product range is mainly focused on Collection Sets. Our main product categories are bedroom Collection Sets, dining room Collection Sets, living room Collection Sets and others.

Major Customers:

* Ashley Furniture
* RiversEdge Furniture
* Broyhill Furniture (Decreasing)
* Casana Furniture
* Embassy International (Change from PRC to Vietnam)
* Winners Only
* Magnussen Home

Major Suppliers:
* Akzo Nobel Coating
* Shinex Coatings Joint Stock
* B.T. Hunter Enterprise Co., Ltd (for MDF & particle board)
* Sen Hong Enterprise Co., Ltd (for plywood, one of few suppliers that obtain cert that pass the California Code of Regulations governing formaldehyde emissions from composite wood products)
* Dragon World Industrial Co., (for MDF, poplar & particle board)

Major Sub-contractor:
* Lim Yee Fancy Plywood (for layering of veneer board, around 5%)

Trade Fairs attended
* High Point Furniture Market,
* Las Vegas Furniture Market,
* Malaysia International Furniture Fair,
* Shenzhen International Furniture Exhibition,
* Index Dubai 2007

* Receivable 14 to 21 days
* Payable 30 to 60 days
* Inventory turnover around 60 days

IPO Detail:

Net Proceed: S$6.14m
$2.00m for upgrading and expansion of production facilities
$2.00m for expansion of warehouse facilities
$2.14m balance for working capital
Dividend policy >= 30% net profit for FY2009, FY2010, FY2011

Future Plans

  • 10% increase in annual production capacity with upgrade,
  • Expansion of warehouse facilities for value-added service,
  • Explore opportunity as ODM instead of just OEM by purchasing interior design software,
  • Explore expansion to India, PRC, South Africa and Eastern Europe,
  • Expand product range for SOHO, occasional furniture, baby’s bedroom furniture and entertainment furniture

Competitive Strength:

  • Largest exporter of wooden furniture in Vietnam between 2006 and 2008
  • High rate of repeat customer, around 97%
  • High automation with machinery from Taiwan (claimed to be lower maintenance cost than European)
  • Long term rental tenure
  • Minimum salary of US$62/month in Vietnam vs US$162/month in PRC


  • Poh Huat Furniture Industries Vietnam Joint Stock Company
  • Kaiser Furniture Vietnam Joint Stock Company
  • Shing Mark Enterprises Co., Ltd
  • Sanlim Furniture Co., Ltd
  • Fortune Furniture Co., Ltd


  • Lin Tzu-Keng, CEO at 2009 joined 1988
    Directorship in 9 companies

  • Yek Siew Liong, Non-executive Chairman at 2009 since 2007
    Directorship in 10 companies
    Previous Directorship in 6 other companies

  • Yeoh Joe Son, Finance Director at 2009 joined 1995

  • Toh Seng Thong, Non-Executive Director at 2009 joined 2003
    Directorship in 1 company, Adventa Berhad
    Previous Directorship in Golden Pharos Berhad, resigned in Sep 2008 reasons unknown

  • Ng Wei Hua, Independent Director at 2009
    Directorship in 2 companies
    * Metro Paragon Sdn Bhd
    * Platinum Support Sdn Bhd

  • Leow Siew Beng, Independent Director at 2007
    Directorship in 1 company, China Club Investment Pte Ltd
    Previous Directorship in 10 companies
    * Including Eastgate that was subject to CID investigation in 2005 for infringing IP rights occuring before Mr Leow joined.

  • Lin Chin-Hung, Alternate Director at 2009 joined 2001

    No board interlock

    Expected renumeration for FY2009, Band A for all

Investment tips:

Why not?
  • Net Profit drops in FY2008
  • Dropping profit margin
  • Negative net working capital
  • COGS of around 85% of total revenue compared to around 68% for other similar furniture companies in SGX, except Sitra 85%
  • Revenue to Canada and Malaysia dipped, heavily relying only USA market
  • Cost of raw materials take 42%, industrial material and production overhead 33%, direct labor 9%
  • Labor law requiring minimum salary and insurance coverage
  • Tax incentive of 50% for the 25% corporate income tax will reduce to 15% and no incentive completely in 2011
  • Subsidiary RK Resources tax exemption may expires
  • Adoption of new accounting standard undergoing, so reclassification possible
  • Moved from Malaysia to Vietnam in 2000 due to lower labor and production cost, however with laws like minimum salary and insurance coverage, is it still valid?
  • Major customers, Ashley Furniture and Broyhill Furniture also manufacture their own furnitures. Therefore, possibility of not buying from Latitude Tree.
  • Increasing competition with growing furniture companies in Vietnam (Source: General Statistics Office in Vietnam)
  • Competition in Vietnam includes Scancom, IKEA, Scanasia
  • No long-term committment with customers
  • Reliance of US economy that has seen declining sales of furniture
  • Unionized labor at subsidiary RK Resources, with next meeting at 2012

A quick search of Ashley Furniture shows that it is the largest furniture retailer in USA. However, without any long term commitment, can Latitude Tree continue to get revenue from them. Also, does have a negative working capital too. Searching further for export potential of wooden products led to some bad expectation of not hitting the target exports this year. Furthermore, with the expansion increasing production by only 10% and the 2-shift production line already using 90%, there seems to be limited growth in revenue unless more acquisition or higher profit margin products are introduced. In additional, there are competition with companies like IKEA, Scancom, and also stated-owned companies.


  1. Latitude Tree Prospectus
  2. General Statistics Office of Vietnam
  3. Wooden exports show signs of recovery
  4. Wooden products sector may miss export target

Laws: Anti-dumping

Change in law policy can impact companies outlook severely. For example, there can be environmental standards requiring companies to buy better wastewater treatment or other equipments. This benefit companies that had already invested in them or have the cash flow for them. Also, the manufacturer of those equipments will win too. However, companies without enough cashflow to invest will have to cease operations or borrow heavily too.

One law policy I seen mostly is the anti-dumping law against certain China exports.

Countries who cannot compete with the cheaper China alternatives will try to use the law to protect their own exports. For example, while examining the Prospectus of Latitude Tree, I realize that Vietnam is benefiting from the anti-dumping law against China furniture exports. Steel, chemical and textile are also the more common sectors that China have been hit by anti-dumping law.

Investment tips:

Government policy can be underlooked when analyzing a company. When economic are bad, the biggest spenders are always the government. It is good to know more law policies that have impact on companies. Government policy can be a dual-edged sword, some will help a company, while others will hurt a company.


  1. National Bureau of Economic Research - Anti-dumping statistics
  2. Wikipedia - Porter five forces analysis

Thursday, August 13, 2009

Delisted Company: Man Wah

Man Wah, the biggest market cap furniture company in Singapore was delisted as 11 Aug 09. The reasons for its delisting were:

* Low trading liquidity of 514,505
* Upfront premium of 9.52% based on price at the previous day of announcement, 4 Jun 09
* Lack of understanding from local investors

Company Info:

Man Wah Holdings Limited is a home furnishing company primarily engaged in the design, manufacture and sale of a range of mid to high-end motion sofas (specialty sofas with features, such as recline and footrests), which are sold in the People’s Republic of China and Hong Kong, and direct export to the international market under its brand Cheers.

Investment tips:

I should have track this stock earlier and try to profit the almost guaranteed 9% premium in 2 months. The chance of the delisting was high because the company owns a majority of share.

Other companies delisted during this period was CK Tangs and Singapore Petroleum Co(SPC). SPC was delisted after being takeover by PetroChina. Its premium was even higher at 20+ %.

I will setup alerts for SGX announcements regarding "cash offer". There seems to be a very short window of opportunity to profit. However, there is an risk that the "cash offer" get rejected. Nevertheless, even if the stock didn't delist successfully, it means there is a positive sentiments it is worth higher.


  1. Channel News Asia Forum - Discussion about opposing Man Wah delisting

Qian Feng Fabric Tech 30 minute analysis

Anxious to get invested since my analysis paralysis, I lookup the top ROA and EPS ranking stock in my filter and decides to list all the negative signs why I should not buy it.

Qian Feng Fabric Tech Limited is engaged in the production, dyeing and post-processing treatment of synthetic knitted fabrics. The Company produce fabrics with functionalities, such as water-resistance, fire-resistance, chlorine resistance, Ultra-violet (UV) protection, moisture wicking, anti-static, anti-mildew and anti-bacterial properties. Fabrics that it produces are used in a variety of products, such as casual wear, sportswear, shoes and bags.

Why not?

  1. Mention of possible dividend policy in Prospectus, 20% of profit for FY2008 and FY2009 but not given in FY2008 due to unstable economy
  2. 1Q2009 shows tiny increase in revenue compared to 4Q2008
  3. Mention of expecting negative growth in sports and leisure apparels, shoes
  4. Previous years success largely attributed to the Olympics that is over
  5. Expects ASP to come down due to declining material price and fierce competition
  6. Uncertain consumer demand
  7. Focus on R&D to raise ASP
  8. Small market cap
  9. Downward trend for ROE and ROA
  10. Increasing capex
  11. Tax benefit expiring
  12. Appointment and resignation of assistant company secretaries

Investment tips:

The fabrics sector does seems promising with 6 companies making up the top 10 in ROA and EPS. However, it can possibly be attributed to the Olympics. The trend seems to be focused on R&D to differentiate and improve margins. However, it is a sign of a indefensible moat.

Also, I notice Fibrechem while filtering stocks with increasing dividend payout. Then, I remembered it was involved in a fraud. Another sign why increasing dividend might not be a good way to judge a company although you do get back part of the investment though. However, NextInsight last visit shows that business is as usual.


  1. Qian Feng Fabric - Homepage
  2. Next Insight - FIBRECHEM'S factory humming with business - NextInsight finding

Monday, August 10, 2009

Singaporeans' biggest worries

A REACH commissioned biennial face-to-face poll of 1,558 Singaporeans in June this year has found that whilst issues such as cost of living, retrenchment and employment for older workers continued to top peoples’ concerns, Singaporeans nonetheless remain satisfied with the way Singapore is being governed and have confidence in Singapore’s future and its economy.

The biggest worries are:

* Provide job opportunities for older workers and retrenched
* Keeping cost of living affordable
* Amount of money set aside for retirement
* Extent which I can take care the costs of raising my children
* The amount I can save monthly

Investment Tips:

There are several kinds of work that is suitable for older workers but most probably won't do it unless they have insufficient money. For example, jobs like cleaner, waiter, security guards, driver, etc.

Without any income, it means more retirement savings will be required to last your lifetime. Planning ahead will help clear the worries of insufficient money and the standard of living available based on amount of money. I should be planning for my parent but I am still confused with constantly changing CPF withdrawal rules.

Income - Expense = Saving

Some people view saving as the remaining money after expenses. However, the better way is to firstly know the kind of lifestyle and money you require when you retire. Then, save the amount you require and use the remaining as expenses. Thus, it should be:

Income - Saving for retirement = Expenses


  1. REACH Press Release 2009

Delisted Company: Advance Modules Group Ltd (A62)

If you focus on blue chip stocks, you will probably not realise there are many companies delisted from SGX yearly, besides CK Tangs. Therefore, any analysis that excludes delisted or bankrupt companies risks having the survivorship bias.

Therefore, I decide to take a look at Advance Modules (A62) and a timeline of major happening from its listing in 2005 to delisting in August 1st, 2009.

Company Info:

The core business of Advance Modules is in the manufacturing of memory products which are used by giants in the IT industry like Dell, Hewlett Packard and IBM. The Group designs, develops and manufactures products for OEM customers as well as under its own brand names.

IPO Detail:

Net proceed: S$10.4m, uses
a) $3.5m expanding IC packaging so less reliant on packaging suppliers
b) $2.0m product development
c) $3.0m expand sales teams
d) $1.9m balance for working capitial

- Almost 20% uses for product development aka R&D. I am starting to hate R&D because it is a form of gambling by companies.
- Around 1/3 for packaging to reduce reliant. But can they be more efficient than suppliers?
- I will still prefer if IPOs was for capex with secured contracts.

Dividend policy of 50% of FY2005 profit
- gimmick to get people to buy its share? Not focus on building long-term sharehlder value?

Competitive Strength:

  • Emphasis on Product Development:
    - All companies do product development, so nothing unique
  • Established Brand Name using increasing revenue as proof
    - All IPOs must have increasing revenue so nothing unique
  • Competitive Cost Structure using Malayisa and PRC vs. US or European based competitor. Also centralised purchasing of raw materials to provide cost management:
    - There will be export tax, tariff to its oversea customers so it might not be as competitive
    - centralized might reduce flexibility and response time of different department
  • Good Relationships with Customers and Suppliers with 75.7% of revenue from repeat orders:
    - Important but is it reliant on a few big customers only. Also, does it means it cannot find new customers easily?
    - Relationship can be broken easily if competitor gives better terms unless long term contract
  • Strong Emphasis on Quality Control
    - Almost all companies tout quality but does it really helps? The additional costs and many examples of other companies that fail despite accredition indicate that quality isn't important to investor


  • Anwell Technologies
  • Amplefield
  • AGVA Corporation
  • Ban Leong Technologies


Mr Vincent Tan Hian Chong, Group Managing Director, since 2004 joined 1999.
Mr Hee Woon Loong, Executive Director, since 2005 joined 2000.
Mr Choo Sam Po, Executive Director, since 2005 joined 2000.
Mr Koh Yeow Lay, Executive Director and Group Financial Controller, since 2005, joined 2002.
Mr Low Peng Lum , Non-Executive Director, since 2005 joined 1999.
Mr Chua Beng Huat, Independent Director, since 2005.
Dr Dominic Er Kong Kiong, Independent Director, since 2005.
Mr Michael Tang Vee Mun, Independent Director, since 2005.

- Although I should not judge capability by age, but Mr Vincent Tan is only 33 and further more, handle 8 other companies?
- How can someone juggle time with 8 companies and perform well for each
- For a small cap companies, Mr Vincent Tan is in the Band B going to Band C in renumeration. Most companies starts with all A. (A indicates < $250,000, B < $499,999, C < $749,999). An alternative should be, he getting more shares as payment since the company is still so new.
- Mr Vincent Tan, Mr Hee, Mr Choo holds directorship position in Pen-Interconnect(the ultimate holding company), so they should be closely related.


(Note: SGX only limits to histories of announcement to August 2008)
3rd April 2008 : Joint Development with Advanpack Solution
Collaboration of facilities and exchange of CSP, Copper Pillar Bump, Paper Leadframe technology. No expected major capex, and hope to move up value chain as fully integrated memory product manufacturer.
Expected to contribute positively for FY2008.

- Too many jargons and technologies that I don't understand.
- Does exchange give away any advantage?

8th April 2008 : Answer to SGX queries
Q1) Net loss RM8.8m, and decrease in revenue by 60.2% from RM60.5m to RM24.1m, ability to sustain short-term obligations
A) Mention price erosion & oversupply and other companies in industry too

Q2) Breakdown costs of sales RM28.9m
A) Raw material 67%, Direct Labor 5%, Manufacturing Overhead 21.7%

Q3) Explain impairment loss on equipment increasing from RM2.9m to RM12.4m
A) Older machinery to reflect latest fair value.
Change from 10 years to 5 year depreciation

Q4) Revenue drops 60% to RM24.1m due to "production activity in Company's China subsidiaries"
A) Major client setup own production facility

Q5) Why prepayment for new machine and how machine are utilised for capacity
A) Requirement to deposit
Have 8000 8-inch wafers/mth when full utilisation

Q6) Cashflow remain tight, why still prepay
A) Shift to WLSCP that have patent

14th April 2008: Respond to auditors Horwath First Trust's opinion
Q1) Unable to obtain satisfactory audit evidence of sales amounting USD$14.3m for FY2005
A) Ongoing independent review

Q2) Unable to show appropriateness of net allowance for impariment of trade recv amounting to USD$10.5m for FY2006
A) Ongoing independent review

Q3) Does not seems to have sufficient profit to distribute Proposed Dividend of S$3.8m in FY2005
A) Have sufficient profit at time of decision

Q4) Incur net loss of RM6m and only RM0.5m cash;
A) Looks to raise funds by sale and leaseback of building.
Also looking for financier for funding via leasing of new WLSCP machineries

23rd April 2008: Appointment of CFO

7th May 2008: Redesignation of Director
Reason was in view by the new CFO but remain as non-Executive Director

28th May 2008: Transfer of shareholding

31st July 2008: Cessation of Group Operations Director
Reason was mutual consent

I stopped analyzing... too much details and too late already. The problems of the company seems to occur right away the first year and have decreasing revenue. The conclusion of the company is that the current shareholders will continuing to hold shares of the company. Therefore, they cannot sell it on public anymore.

Investment tips:

Why not?
  • 69.8% of trade recv only 2 major debtors
  • Do not handle forex risk despite customer mostly trade in US$
  • Restated statement for 2005
  • Do not invest in a company you don't understand. I have totally no clue about the technologies and impact that Advance Module Group mentions despite my IT background.


  1. SIAS Research

Thursday, August 6, 2009

IPO: Mary Chia

Company Info:

We are one of the leading lifestyle and wellness service providers in Singapore. Our principal business activity is the provision of lifestyle and wellness services for both women and men at our lifestyle and wellness centres under our “Mary Chia” (for women) and “Urban Homme” (for men) brands. Our services can be broadly categorised into:
(i) beauty and facial services;
(ii) slimming services; and
(iii) spa and massage services.
Our ancillary business is the sale of lifestyle and wellness products under our “MU” brand at our lifestyle and wellness centres.

IPO Detail:

Net proceed: S$3.9m
$1.0m expansion
$1.0m acquisition, joint ventures, strategic alliances
$1.9m balance

No fixed dividend policy

Competitive Strength:

  • Extensive Network:

    * 15 lifestyle and wellness centres in Singapore
    * 3 lifestyle and wellness centres in Malaysia

  • Expansion Plan:

    * Expand 2 more lifestyle and wellness centres in Singapore by 2009
    * Expand 1 with safari theme in Safra Jurong Club by 2009
    * Expand the untapped men with "Urban Homme" (no details)
    * Expand oversea in Malaysia, venture PRC and Dubai
    * Expand "Mentsu" brand for young PMEBs


  • Maintain or improve Branding
  • Rely on rental which takes up 17.2% of total revvenue FY2008, (Lease normally <= 3 years)
  • Compete against competition
  • Handle customer complaints, although insured partially. Paid S$1,169 in FY2008, S$17,902 in FY2009
  • No long-term contract with suppliers
  • Rely on prepayment of customer for cash-flow
  • Need to obtain licenses, 11 out of 14 require Massage Establishment (wasn't it 15 centres?)


  • Bella Facial Care Center (S) Pte
  • Bioskin Pte Ltd
  • Jean Yip Saloon Pte Ltd
  • London Weight Management Pte Ltd
  • Marie France Bodyline (S) Pte Ltd
  • New York Skin Solutions Pte Ltd
  • OSIM (substitute DIY healthcare)
  • Unlicensed, illegal centres (using illegal, cheaper labor)

Investment tips:

Why not?
  • Amounts due from directors around $8m in FY2008 although repaid. But why and does directors borrow from company often?
  • Urban Homme was not profitable in FY2008 despite increasing revenue, why?
  • Negative working capital
  • S$1.4m of negative cash flow used in investing compared to just $0.2m of cash flow from operations
  • Decreasing advertisement and marketing expenses, $1m in FY2008 despite the importance of branding?
  • Rental contract are relatively short-terms and can led to higher rental in future. Some lessor takes cut of overall turnover in additional to rental.
  • Increasing inventory turnover days, 138 days in FY2008 although it mention it is due to bulk purchases. Credit turnover is only 69 days, so it got to hold goods for additional 60+ days. If customers prepay, it should not be so high since it knows before hand what to get?
  • Waiving of S$0.5m to MCU?
  • Fine for late filling in FY2008


  1. IPO Prospectus

Wednesday, August 5, 2009

About Me

This blog is meant for me to pour my thoughts in investment and money. I prefers fundamental analysis and won't be talking about technical analysis. Investment is a fun journey so I hope to keep learning.

When I retires, I hope to:
a) open orphanage.
b) grow my own food.
c) sell ice-creams to kids.
d) continue to invest, reading annual reports, attending shareholder meeting.
d) have S$3 million in asset.

I placed Google Adsense not totally for earning money but rather to see related sites or information. Google normally does a good job so I can see what is relevant most of the time.

I try to focus only on the business aspect of stocks and not the dividend since it isn't good for shareholders actually. There are better blogs that focus on dividend anyway. Perhaps when I grow older and my investment horizon become shorter, I will then look into dividend stocks.

Other smaller goals that I thought of
a) Learn cycling and use bicycle as main transportation
b) Hire freelance programmer for some of my ideas
c) Job agency for matching jobs for elderly

If you have specific questions you would like to be answered here, please leave your comments or contact me directly. Your comments and opinions are always appreciated!

Digitial Life: TQGlobal Game

"The most valuable element in a game is its intellectual property (IP)."

Reading Digital Life, I saw about TQGlobal, a game company, choosing Singapore as their base. Singapore is strong in IP rights therefore the reason sounds valid. However, thinking about the famous paid games like Final Fantasy, Devil May Cry, Pro Evolution Soccer, etc, I don't think the companies had sued anyone for copying their games. In addition, nobody created a clone too because people played the games for their brand and storyline.

For free famous games like Zynga's Mafia War, there are many clones around. However, most people stay with the original is that there are constantly new features, their friends are there already and they have worked some time to get their status in the game. IP is important but the survival of a game isn't based on IP but rather the user base, the gameplay and media coverage.

Monday, August 3, 2009

What to do if you thinks stock will be stagnate?

I read the Sunday Times and the usual interview with someone about their financial lifestyle. Interesting, the person mentioned he only buy options and never individual stock. I don't know much about options but I know they are leveraged tools. I think it brings the concept that risks is relative to a person knowledge.

Nevertheless, I had in the past, read somewhere saying you should do covered call when you feel the stock will be stagnate. I read through several times and still cannot fathom on it.

Guess, options are still too risky for me till I can understand it.

More resources

Sinotel Technologies Ltd 30 minute analysis

Instead of spending hours searching for information, I decide to try analyzing companies within 30 minutes each. I will look through the IPO prospectus picking out the use of proceed, competitive strength, competition and the people. Then, I will just only list points I feel uncomfortable about the company.

Sinotel Technologies Ltd. is an investment holding company. Through its subsidiaries, the Company is engaged in the provision of wireless telecommunication network infrastructure solutions, hardware and software supports and distribution of telecommunication devices. The Company operates in two business segments: the distribution solutions and the wireless network solutions.

IPO Details:

Intended IPO price: $0.51
No. of shares available for public offer: 3m
No. of shares available for placement offer: 67m
Total post invitation share capital: Approx. 280m
Dividend policy: No fixed policy.

The net proceeds: S$31.7 million.
(a) S$2.0 million to commercialise our proprietary 3G CDMA EV (DO) Module;
(b) S$6.0 million to expand our presence in the mobile entertainment segment;
(c) S$4.0 million to expand our sales and distribution network and market
presence in the PRC;
(d) S$2.6 million to expand our research and product development activities; and
(e) S$17.1, balance for general corporate and working capital for our Group.

Competitive Strength:

  • Track record of innovation:
    We constantly keep ourselves updated and proficient in the changing technologies and consumer preferences in the PRC telecommunication industry.We are sensitive to the latest market trends and development, and have been researching and developing new wireless telecommunication applications and solutions before such solutions come into mainstream. For example, we believe our Group is one of the industry pioneers that offers Mobile Entertainment Enabling Solutions to the Telcos in the PRC and we were also the first distributor to introduce CDMA phone with video entertainment function in the PRC. We believe that our readiness to introduce new wireless telecommunication applications and solutions to our customers will place us in a good position with them as such innovative solutions help to increase the revenue of our customers. In addition, we have been introducing innovative marketing initiatives to our customers since our inception in 2002. We believe we were the first wireless telecommunication solution provider to introduce tripartite fee-sharing arrangements for the distribution of mobile handsets as well as revenue-sharing arrangements for the use of our Wisestreamer platform with China Unicom. We believe that this experience will give us an advantage as we continue to develop and introduce new initiatives to grow our business further.
  • Strong technical competence:
    We place a strong emphasis on our R&D capabilities.We have a team of dedicated software engineers who are able to conceptualise and develop our proprietary wireless telecommunication applications and solutions to meet the unique demands of our customers. As we retain the ownership of the intellectual property rights in our proprietary software, which we supply together with our wireless telecommunication applications and solutions, it gives us the flexibility of pricing our customised solutions competitively. In addition, our ownership of the intellectual property rights in such software also enables us to exploit and enhance the capabilities of our wireless telecommunication applications and solutions, develop or upgrade new solutions or customise to meet the specific needs or requirements of our customers. We believe our strong technical competence and our ability to conceptualise proprietary solutions set us apart from our competitors.
  • Established track records and business relationship with our business partners:
    We believe we have built up a good reputation and rapport in the PRC telecommunication industry, which is established through our quality solutions and services and the securing of large scale telecommunication projects. As at the Latest Practicable Date, we have implemented our wireless communication solutions on more than 400 buildings in Beijing, including key buildings such as Beijing Railway Station which is one of the biggest train stations in Asia and Beijing Hotel which is the first 5-star hotel in Beijing. We have also maintained good working relationships with our business partners such as Langchao LG, and customers such as China Unicom, China Mobile and China Netcom. As a testimony to our established business relationship with our business partners, we are the exclusive national distributor for certain models of high-end LG brand of mobile phones in the PRC and was invited to conduct trial run of our technology on the trial 3G networks of China Unicom (Tianjin branch). The exclusive distribution contracts do not specify any expiry dates as they are based on the handphone models and therefore the period of the exclusive distributorship depends on the life cycle of the handphone models.
  • Exclusive joint operation agreements with certain branches of China Unicom:
    We have entered into 3 exclusive joint operation agreements, ranging from 3 to 5 years, with China Unicom’s Jiangsu, Guangdong and Shanxi branches, to provide the necessary hardware and software for the implementation of our Wisestreamer platform in relation to our Mobile Entertainment Enabling Solutions. Our Wisestreamer platform enables online distribution of mobile media content and facilitates media content playback which allows Telcos and TSPs to offer mobile multimedia streaming services such as mobile video-on-demand, mobile television, live video and music, traffic and home monitoring.With such services, consumers can view live multimedia content through various mobile devices such as mobile phones and PDAs. Under the joint operation agreements, a portion of revenue derived by China Unicom from the use of our Wisestreamer platform will be shared with our Group. Our exclusive joint operation agreements with China Unicom create a strong barrier to entry for any potential competitors who wish to introduce multimedia streaming related solutions to China Unicom in the PRC. We are currently in discussion with 6 other branches of China Unicom in Sichuan, Hunan, Chongqing, Liaoning, Zhejiang and Shanghai for the implementation of our Wisestreamer platform.
  • Experienced and proven management team:
    Our Executive Directors and Executive Officers have been critical to the success of our operations. They have extensive experience in the PRC telecommunication industry and have good industry knowledge on the latest market trend and technology advancements. With our experienced management team, we are able to respond quickly and effectively to our customers’ demands for wireless telecommunication applications and solutions.


  • Hengxin
  • Longcheer
  • Ace Achieve
  • Comba Telecom System Holdings Ltd
  • Centron Telecom International Holding
  • Telestone Technologies Corp
  • China GrenTech Co. Ltd
  • Fiberhome Networks Co., Ltd
  • Wuhan Hongxin Telecommunication Technologies Co., Ltd
  • INTECH Cybernetics Group Co., Ltd
  • Shenzhen Tianyin Communication Development Co., Ltd


Jia Yue Ting, Executive Chairman since 2007 joined 2002.
Directorship in 12 other companies
Previous Directorship:
- Shanxi Zhuoyue Industrial. Reasons for leaving unknown.

Gu Hao, Executive Director since 2007 joined 2004

Li Zhen Yu, Executive Director since 2007 joined 2003
Directorship in 1 other company

Pan Liang, Executive Director since 2007 joined 2004

Cao Gui Xing, Independent Director since 2007
Directorship in 4 other companies
Previous Directorship:
- Daxian Holdings Ltd. Reasons for leaving unknown.

Alfred Cheong, Independent Director since 2007
Directorship in 6 other companies
- Cosmic Petroleum Limited. Reasons for leaving unknown.
- First Trust Corporate Services. Reasons for leaving unknown.
- Protiviti Pte. Ltd. Reasons for leaving unknown.

Goh Chee Wee, Independent Director since 2007
Directorship in 21 other companies
Previous Directorship in 37 companies. Reasons for leaving each unknown

Board interlock
Jia Yue Ting and Li Zhen Yu hold directorship in Hongkong Joyful

Investment tips:

Why Not?
  • Exceutive Chairman, Jia Yue Ting holds many directorships in other companies. Will it affects his effort for Sinotel?
  • Competitive market requiring constant R&D that may be wasted
  • Small market cap
  • Testing unknown market, mobile entertainment segment
  • Able to continue to get exclusive agreements?
  • Pay little tax. Why and when will it stops?
  • Reclassified statement for 2007?
  • Negative net cash for 2008
  • Sudden huge capex during 2008
  • 79% of trade recv in 2008 held by just 2 major debtor
  • Around 46% of trade recv in 2008 past due and not impaired


  1. IPO Prospectus
  2. Sinotel Technologies Ltd. (SITT.SI) Financial Statements | Stocks |
    4th August Analyst Report by Mark Chow

Saturday, August 1, 2009


As mentioned previously, avoiding bad investment is a important skill to have. I picked a troubled company that still survive and gather the information from its IPO. I had purposely ignored their past results since all IPOs have to show impressive growth to get listed. I shall focused on

  1. Capital allocation - will it fuel more growth, or just for current owners to cash out?
  2. People - trustworthiness, past records of directorship, board strength
  3. Competitive Strength - Sustainable or just a market lagger.

If you have invested the company, I will appreciate if you can share your experience and information too. I shall be looking into more details in future postings. However, as SGX limits reports and information to only 2 years, I can probably only analyze based on what is available.

Company Info:

KXD Digital Entertainment Limited is an investment holding. The Company is engaged in manufacture and sale of audiovisual entertainment devices, including liquid crystal display (LCD) televisions, portable digital versatile disc (DVD) players and DVD recorders. The Company’s operation is located in People’s Republic of China. Its wholly owned subsidiary, Shenzhen KXD Multi-Media Company Limited, is engaged in manufacturing and sales of audio-visual entertainment appliances and devices.

IPO Details:

Shares Offered: 160 million
By Placement: 152.5 million
By Public Offer: 7.5 million
Offer Price per share: S$0.23
Lead Manager: SBI E2-Capital
Commence Trading: 27 October 2003

Net IPO Proceeds: S$33.5 million, to be used as follows:
$8m to support new LCD and plasma screen business.
$4.5m to establish overseas distribution center for DVD products
$2.5m for R&D facilities
$18.5m balance for working capital

Competitive Strength:

  1. We have a competitive cost structure as compared to manufacturers in developed or developing countriessuch as Europe and Taiwan. By designing and utilising our own subsystems in the production of our end products, we achieve greater cost efficiency as compared to other PRC manufacturers.
  2. Our original design manufacturing capabilities enable us to customise, design and manufacture products that specifically meet our customers’ requirements. We are also able to provide a wide range of integrated services and shorten the purchase orderto delivery lead time for our customers as a result of good material procurement logistics.
  3. Since our first export in 1997, we have established a diversified customer base which spreads over more than 20 countries, thus reducing our reliance on any single economy.
  4. Our emphasis on R&D allows us to anticipate and meet our customers’ requirements in a timely manner. Our R&D department is capable of designing approximately 70 new model designs each year.
  5. We have an experienced and motivated management team who is familiar with the international and domestic PRC market, and are incentivised through share ownership arrangements.


  1. Shinco Electronics
  2. BBK Electronics
  3. Jiangsu Hongtu High Technology
  4. Changzhou Xinqiu Electronics
  5. SVA (group)
  6. Sichuan Changhong Electronics
  7. Amoisonic Electronics

Future Plan

  1. Strengthen our R&D capabilities
  2. Develop new products
  3. Set up service or distribution centers in various countries, such as North America, Western Europe and Taiwan,to enable us to respond to our customers’ queries in a timely manner and keep us abreast of the industry advancement.
  4. Expand the PRC market With the rising consumer spending in the PRC, we intend to expand the PRC market by actively promoting our products through:
    i) participation in relevant industry events and trade shows;
    ii) provision of better service support and engage in relationship marketing; and
    iii) establishment of branches and sales offices in the PRC to provide more efficient pre-sales and after sales services


  • Liu Fusheng, CEO and Managing Director since 1999
    Holding Directorships in 6 other companies
    Previous Directorship
    - Shenzhen City Panda Acoustics. Reasons for leaving not known because cannot find information.

  • Gu Wei, COO and Executive Director since 1997
    Holding Directorship in 1 other company

  • Hu Xiaoming, Executive Director since 2003

  • Lai Guanglin, non-Executive Director since 2003
    Holding Directorships in 2 other companies

  • Lee Joo Hai, Independent Director since 2003
    Holding Directorships in 10 other companies
    Previous Directorship
    - Solid Resources Investment. Reasons for leaving unknown.
    - Kingboard Copper Foil Holdings. Reasons for leaving unknown.
    - Lung Kee Metal Holdings. Reasons for leaving not unknown.
    - Teamsphere. Reasons for leaving not unknown.

  • Zhu Kaiying, Independent Director since 2003
    Holding Directorship in 2 other companies

  • No board interlock found

Investment tips:

Further analysis will be made in future posting. However, there seems to be a few issues already based on the IPO. If you have information of this company, please leave a comment of the links so that I can give a more complete analysis. Investment is a learning journey and sharing of information will help everyone. I doubt I can find annuals before 2 years ago as SGX only allow for 2 years.


  1. IPO Prospectus
  2. IPO: KXD DIGITAL ENTERTAINMENT LIMITED:: SBI E2-Capital brings a new Chinese listing to Singapore that appears to be riding the popularity of DVD systems to explosive growth...