Wednesday, September 20, 2017

Why I Choose ComfortDelGro Over M1

This will be a follow up of my previous post as I talk about the sick Blue Chips in my portfolio.

After my last review of my portfolio, I kept thinking of what to do with my sick Blue Chips. I believe that I should reduce the number sick Blue Chips in my portfolio. Eventually, it was a decision to keep either ComfortDelGro or M1.

By the time you read this, and as the title suggest, I will have already sold off all my M1 shares.

So why did I choose ComfortDelGro over M1?

1. I have Singtel and M1. 

Since I already have 2 telecommunication companies in my portfolio, and this industry will be impacted in the future, I decided to just keep 1 of them in my portfolio.

2. ComfortDelGro is a much bigger company!

Other than market cap, ComfortDelGro is a much bigger firm than M1. ComfortDelGro owns part of VICOM and SBS Transit. But M1 is just M1.

3. ComfortDelGro has been increasing their dividend, while M1 has been reducing their dividend.

4. The Ultimate Scorecard and Full Analysis Scorecard indicate that ComfortDelGro is a better company than M1.

I will only be showing you part of the scorecard (If you are interested, do sign up here!).

ComfortDelGro Full Analysis Scorecard

M1 Full Analysis Scorecard

ComfortDelGro The Ultimate Scorecard

M1 The Ultimate Scorecard


5. M1 future is much more questionable than ComfortDelGro.

M1 is moving into the IoT industry with Nokia. This is a new industry for M1 and I am unsure of how this will impact the company's financials. 

As for ComfortDelGro, although its financials are impacted by Uber and Grab, but their business direction will still be revolving around the transport industry.

In Short

Firstly I must say I was a staunch investor of M1. Even at this point, I am still wondering if I did the right thing. However, based on my argument above, I believe I have to follow my head rather than my heart. Only time will tell if I made the right decision.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of all the SGX counters now!

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Sunday, September 17, 2017

My 10% Portfolio - Changes After 3 Quarters

Time flies and it is time to review my portfolio again.

Once again, let me emphasize on the following:

1. This portfolio review is calculated from the start of the year and the aim is to review the total portfolio gain after 1 year.

2. Some of the counter's initial share prices are their respective share prices at the start of this year (Especially those counters in this post).

3. The gain and loss stated is just a simple calculation of the difference in share prices, ignoring the transaction fees.

4. At times, if stated, the gain could be including dividends.

5. This review will include my overseas counters in USA and Hong Kong.

These are the updates to my 10% Portfolio:

As per Previous Post
Current
Oversea-Chinese Banking Corporation
Sold at 15% Profit!
Singapore Telecommunications Limited
Singapore Telecommunications Limited
ComfortDelGro Corporation Limited
ComfortDelGro Corporation Limited
Bukit Sembawang Estates Ltd
Bukit Sembawang Estates Ltd
M1 Limited
M1 Limited
Chuan Hup Holding Limited
Chuan Hup Holding Limited
Hock Lian Seng Holding Ltd
Hock Lian Seng Holding Ltd
ST Engineering Ltd
ST Engineering Ltd
Ellipsiz Ltd
Ellipsiz Ltd
PNE Industries Limited
PNE Industries Limited
Frasers Centrepoint Limited
Frasers Centrepoint Limited
Captii Limited
Captii Limited
Singapore Post Limited
Sold at 5% Loss!
Maxi-Cash Financial Services Corp Ltd
Sold at 20% Profit!
Ocean Sky International Ltd
Ocean Sky International Ltd
Tiong Seng Holding Ltd
Tiong Seng Holding Ltd
Samudera Shipping Line Ltd
Sold at 5% Loss!
AGV Group Ltd
AGV Group Ltd
NikkoAM-StraitsTrading Asia ex Japan REIT ETF
NikkoAM-StraitsTrading Asia ex Japan REIT ETF
TTJ Holdings Limited
Sold at 10% Profit!
Japan Food Holding Ltd
Japan Food Holding Ltd
Singhaiyi Group Ltd
Singhaiyi Group Ltd
The Walt Disney Company (USA Counter)
The Walt Disney Company (USA Counter)
VASCO Data Security International, Inc. (USA Counter)
VASCO Data Security International, Inc. (USA Counter)
Textron (USA Counter)
Textron (USA Counter)
Sitoy Group Holdings Ltd (HK Counter)
Sitoy Group Holdings Ltd (HK Counter)
Alco Holdings Ltd (HK Counter)
Alco Holdings Ltd (HK Counter)

Additional: Yongnam Holdings Limited (3rd time I bought this counter in a year!)

Additional: Netlink Trust (Got it at IPO placement)

Additional: Secura Group Ltd

Additional: Miyoshi Limited

Additional: The Trendlines Group Ltd

Since the last quarter, I have stated that I wanted to reduce the number of SG counters in my portfolio. But after selling till about 19 counters, I end up buying other SG counters. Thus, there are still 22 SG counters. In total, there are still 27 counters (22 SG and 5 Overseas counters) in my portfolio. 

On an overall basis, I am currently achieving a total gain of about 13.6% since the start of the year! This is a slight drop from my last update. But it is still above my target of 10% gain. 

Nevertheless I will like to talk about 2 categories of my portfolio.

Sick Blue Chips:
This is not the year for Traditional Blue Chip companies. One of the reasons my portfolio have not been able to gain much more, despite numerous of my penny counters booming, was due to some of the blue chips in my portfolio. 

In my portfolio shown above, I have 3 sick Blue Chips. Singtel, to a certain extent, was expected to boom after Netlink Trust was listed. But that didn't happen.

The other 2 sick Blue Chips are Comfort DelGro and M1. These 2 Blue Chips are in a bad shape. Their share price has been dropping and it is important for me to know when to let go or stop averaging down. I am still thinking about it...

My portfolio gain will continue to be impacted by these sick Blue Chips. Hopefully there will be a near term catalyst to boost their share prices soon!

Counters I bought due to Scorecard:
After my launch of the Fundamental Scorecard website, I went on to purchase and also add on a few counters due to The Ultimate Scorecard recommendation. So far I am already into my 2nd month of holding these counters. For those that do not know, the recommendation from The Ultimate Scorecard should be held for at least 4 months.

These counters are:
- Ellipsiz Ltd - Bought at $0.635 vs Current share price of $0.790

- Miyoshi Limited - Bought at $0.066 vs Current share price of $0.065

- Chuan Hup Holding Limited - Bought at $0.275 vs Current share price of $0.320

- Hock Lian Seng Holding Ltd - Bought at $0.450 vs Current share price of $0.440

- Captii Limited - Bought at $0.600 vs Current share price of $0.515

So far, 2 of the counters have fall slightly (less than 3%). 1 of them have fallen much more (about 15%).

BUT 2 OF THEM HAVE RISEN SIGNIFICANTLY (estimated about 15% and 25%).

If you have deem the above conclusion as the failure of The Ultimate Scorecard, then my defense is that if you have bought the above counters, you will definitely gain more than loss.

This is because lets not forget that Captii has already given a dividend of 2.5 cents, Chuan Hup had already announced a 3 cents dividend and Ellipsiz will be paying a dividend of 6.5 cents soon. 

Furthermore, I am only into my 2nd month. The conclusion can only be provided after I held them for 4 months. 

With that, by the next update, I hope that I can achieve an overall gain of 15% for this year.

Please do your own due diligence before you invest in any of the stocks in my portfolio.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of all the SGX counters now!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Thursday, September 14, 2017

The Share Buyback Counter

In my own opinion, having written a 3-part series on the construction industry (Part 1, 2 and 3) and invested in many construction and property counters, I believe my understanding of the construction and property industry is at least above average.

Thus, this time round I will be writing about Tiong Seng Holding Limited (Tiong Seng), which I had been vested since the start of the year at a very low price of only $0.230. It has since risen till the current price of $0.320. A whopping 36% paper gain!


Profile In Short (Taken from 2016 Annual Report)

Riding on over 58 years of strong track record, Tiong Seng is a homegrown leading construction and civil engineering company in Singapore and a niche real estate developer in China.

Accorded the highest A1 grading from the Building Construction Authority (“BCA”) for both general building and civil engineering projects, the company is qualified to undertake public sector construction projects with unlimited contract value. It is also the first construction builder in Singapore to receive the prestigious Singapore Quality Award (SQA) in 2013.

Tiong Seng believe in addressing clients’ needs by combining the discipline of meticulous project planning and management through the systemisation of innovative building solutions. Over the years, the company have constantly invested (and re-invested) in its suite of construction technologies in order to stay ahead of the curve.

As a result, the company becomes the pioneering experts in state-of-the-art capabilities such as pre-cast, prefabrication, Building Information Modeling (BIM), advanced formwork systems, and Cobiax. With the growing emphasis on construction site productivity, Tiong Seng believe that sharpening its competitive edge will enable them, to not only transcend above their peers, but also combat the market headwinds.

Before we look at the pro and cons of Tiong Seng, let’s look at how this counter fare against the scorecards (These scorecards are taken from the Fundamental Scorecard website that was launched recently) at a previous share price of $0.295:


Despite the Ultimate Scorecard saying Tiong Seng is not a value counter, it still gave the counter a “Buy” rating at the previous share price of $0.295 via the alternative valuation method. This is most probably due to Tiong Seng amazing ability to generate cash! This is further emphasized via the low P/FCF.

Another margin of safety is that the discount it has against its NAV.

Based on Full Analysis:




However, if you follow the Full Analysis report above, Tiong Seng is not a good counter to invest in.

Nevertheless, it is good to point out that the price analysis does explain that its intrinsic value is still far away from the share price of $0.295 at that point in time.

Any other positive factors on the company?

1. State of the Art Technology

As explain in its profile and if you read about Tiong Seng, you will notice people will talk about its technology abilities. I remembered, when it IPOed, one of the main attraction was Tiong Seng ability to innovate and develop its technology.

However, it is also important to note that Tiong Seng MUST continue to innovate its' technology. If not, it will eventually fall behind.

2. Amazing Share Buyback

Despite the company giving out low dividend (a dividend yield of less than 3%), it returns its' shareholders via share buyback. As stated on one of the InvestingNote thread, the company had made more than 94 times of Share Buy Back since Sep 2015.

3. High Order Book

As per the latest quarterly financial report, the company still have an amazing $700 million worth of order book.

4. Tiong Seng 30% stake in Goodwood Grand

Tiong Seng has a 30% stake in the property development, Goodwood Grand. This development will be completed in Dec 2017. It was purchased for $141 million by the consortium. Up till now, according to URA cavaet, 37 units (out of 73 units) amounting to $89 million has been sold and registered. 

Total Area of all 73 units based on the development fact sheet = 114,620 sf

Current Area of all 37 units sold as per URA cavaet = 39,199 sf

Average price per square feet for the 37 units (with a 40% discounted price) = $2,407 x 60% = estimated $1,444 psf

Total possible gain of the whole development = $89 mil + (114,620 - 39,199) x 1,444 = $197 mil.

With Tiong Seng's 30% stake, its possible revenue gain next year once the project is completed and fully sold = $59 million!

5. Future Properties Development

This year, one of Tiong Seng’s subsidiary has established a 60/40 joint venture with one of Ocean Sky International Limited subsidiary. The joint venture had purchased 2 land banks:

- 2 sites at Jervois Road with a combined site area of approximately 1,246.3 square metres and zoned “Residential” with a gross plot ratio of 1.4.

- Sloane Court Hotel at 17 Balmoral Road which is located in prime district 10, with a combined site area of approximately 3,617.9 square metres and zoned “Residential” with a gross plot ratio of 1.6.

This will definitely boost its balance sheet in the near future, while investors wait for a more few years before the recognition of the revenue and net profit take place.

But what are the risk involved?

1. High Liabilities

One of the most significant risk is Tiong Seng’s high liabilities figure. Despite the company paying down its interest-bearing loan since 2016, it is important to note that the total liabilities figure is still huge.

If we compared its total liabilities to equity ratio with other established construction counters in SGX (chosen due to its similarities in business model and based on its latest quarterly financial report):

BBR Holdings (S) Ltd - 135,102 / 135,102 = 1.00x

Koh Brothers Group Limited - 366,618 / 279,183 = 1.31x

Lian Beng Group Ltd – (540,656 + 428,898) / 667,650 = 1.45x

Chip Eng Seng Corporation Ltd – (334,215 + 1,182,983) / 765,959 = 1.98x

Tiong Seng Holdings Limited - 636,187 / 319,360 = 1.99x

Tiong Seng has the highest total liabilities to equity ratio. Hopefully it will start to reduce its liabilities soon rather than later.

2. Developments in China

Another risk that may have went unnoticed is its business dealing and properties development in China. I have already seen too many China scandals floating within the SGX. Thus, I always have a negative outlook on companies with major developments in China. At the back of my mind, I will always ask myself if these deals are legitimate and if the cash can be “found”.

In Short

Tiong Seng seems to be a growth counter rather than a value counter. Although the company is growing, but it is also managing its balance sheet with a significant pay-down of the interest bearing loan since last year. The company's future also seem to be bright with its' JV recent purchase of  2 other land banks. The only question is will its share price drop if its share buy back stops? 

Current Price: $0.315 as of 14 Sep 2017.

Please do your own due diligence before you invest in this stock. 

Do note the author is vested in this counter/company at $0.230. 

If you are interested to subscribe to know more about The Ultimate Scorecard or Full Analysis, do visit Fundamental Scorecard website for more information! Sign up to get the latest scorecard of all the SGX counters now!

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Thursday, September 7, 2017

An Interview With "ozxinvest"

I have never met him. But I have always interact with him on InvestingNote and find him to be a very patient and disciplined investor.

It was what he wrote that make me notice him. Just read the messages he wrote below? Make you really want to invest right?



In addition, if you follow him on InvestingNote, you will realise that he is a very good investor as well. Almost all his counters have made significant gains this year.

In my view, he is more like a fundamental "story" investor. He invest when he believes in a certain "story" of a counter and he will ignore all noises until the "story" plays out. Once the "story" plays out, significant gains will be made.

My perception of him maybe wrong at the end of the day, but that's most probably because I am always so tempted to invest along with him whenever I read his "stories".

Without further ado, let's get straight to the interview questions and his answers!

1. Tell us more about yourself.

ozxinvest: I am into my mid-forties and unemployed, not because I am already retired, but I chose to quit my job years back to become a stay home parent and a homemaker.

I am also a retail investor. I didn't come from a well to do family and stayed in a rented one room flat when I was young, so living below my means isn't a difficult thing to do for me, and this somehow helps in my investing journey.

2. How did you get into investing?

ozxinvest: I started to play stocks during the dotcom bubble period year 1999. That was the time when almost everyone was placing a bet on the market and monitoring the teletext seemed to be a good past time to do. You just choose any stock that weren't moving yet and bet on it, chances of winning are good and of course good only until the bubble burst.

3. What is your investing style? Any idols?

ozxinvest: I don't use TA, because it's too abstract for me. My approach towards investing and trading is simple.

Firstly, I will normally LOOK for neglected stocks that have a sustainable payout and a near term catalyst, and preferably with relatively low/no debts.

Secondly, I try to AVOID speculative stocks and buying based on hope.

Thirdly, I believe that we should have a PLAN on hand for every situations, I have created a A-Z plans for buying and selling stocks.

With all these plans in mind and ready to EXECUTE, buying and selling become smoother and easier to decide.

For example,  if the speculation level of a stock I hold gets too high, I would consider selling it partially with plans B and R (book profits and reduce costs) or even do a plan E (Exit) first even if it seems like the sky is the limit. Or if a catalyst is nearing, I would go into rapid Plan A and O (accumulate and  build up an oversize position).

I believe in long term investing but that does not mean that I will buy and hold a stock forever. It just mean having a long term view on companies you have an eye on and buy it when it's cheap and sell it when it's necessary to bring down your overall costs on your portfolio.

I don't have a particular idol. John Templeton, Ben Graham, Warren Buffett, Charlie Munger, Peter Lynch, Philip Fisher etc, all are great investors to be admired. Locally, we also have a few investment bloggers who are successful and to look up upon. However, I think trying to know and understand myself and able to think independently is more important than trying to emulate the investing style of successful investors or traders, or try to follow or copy their trades or tactics.

4. What is your thought process when it comes to stock-picking?

ozxinvest: Ideas can come from anywhere, better if it is something we can see and touch, the first thing that comes to my mind when picking stock should be, if it's good but cheap: then why is it so?

It helps to look at past corporate actions and announcements, browse through the past ARs, google for past news and monitor the price action for some time.

If it makes sense, after checking my wallet, the next thought would be: should I buy it now or later? Then a few other factors will be taken into account, like liquidity, market sentiment etc. Pretty simple and common sense thought process but necessary steps to do.

5. What is your best investment and worst investment since you started investing/trading?

ozxinvest: My best investment in terms of quantum and % would be DBS ($10) bought in late 2008 together with the issuance of DBS rights and excess rights ($5.42) bought in early 2009. I placed all my bets on it during the GFC. I sold them in late 2009 ($14) for a 40% and 159% gain respectively, exclusive of dividends.

My worst investment in terms of quantum and % would be Ultro Tech (now renamed Ley Choon) using CPF fund bought in 2003 which was bought on tips and hope, sold in 2016 for more than 100% loss due to CPF and bank charges. I have left it in the CPFIS to remind me of my ignorance and stupidity and did not look at it anymore for a long time. In 2016, I decided that I no longer needed that reminder and at the same time I found myself even more stupid all this while to not sell it away as I was paying quarterly bank charges every year for holding a negligible stock value in CPFIS. So when you cannot let go of the past wrong mindset and refuse to see it from another angle, that stupidity will continue to follow you even when it doesn't hurt and seems to matter anymore.

6. How many stocks do you think one should hold for diversification?

ozxinvest: I think one should not be too fixated on how many stocks to hold for diversification.

Diversification itself is not just a number. It should be a long term process of accumulating different stocks cheaply and constantly reducing your holding costs through profit taking and dividends to protect your capital as well as growing it. The more stocks you can handle, the better.

7. Any thoughts about the current market situation?

ozxinvest: I liked how Charlie Munger described the stock market as the Pari-Mutuel System, "Everybody goes there and bets, and the odds change based on what's bet. That's what happens in the stock market."

I see lesser skepticism and more optimism in the current market, people are bidding up prices unreasonably even for loss making stock. Speculative activities abound. But no matter in what situation, we need to be realistic and prudent and ignore the missed boats because our means are always limited, and we should limit our bets according to our means.

8. Able to reveal which stocks are currently on your watchlist?

ozxinvest: The stocks I hold will always be in my watchlist, and I will also maintain a watchlist to avoid, and place some stocks that I am interested in another watchlist.

I don't think I want to reveal them as I am not sure if they will remain in the watchlist. I keep a record of my trades. I would also journalese the stock purchases and sales on a monthly basis in a particular post in InvestingNote, I would also make target estimates of the stocks I hold for fun. It sorts of becoming a habit for now.

9. Finally, any advice for newbie interested to get into investing/trading?

ozxinvest: I don't give advice but I could share some of my thoughts on investing and trading.

Have the correct mindset in investing, it's about money management, not a way to earn quick money or get your adrenaline rush.

Try to focus on things that you should not do, that will keep you away from unnecessary troubles.

Say no to margin or borrowed money.

Stay away from fishy companies and high yield investment programs (HYIP).

If you are keen on day trading using TA, think of how easy data can be obtained nowadays compared to last time when traders have to pay for trading data like metastock.

Ask yourself questions like these?

1. Do you think you can really beat the market consistently when there are so many traders using the same trading signals?

2. Do you think that you are smarter, faster, has an advantage over and got more means than the other fellow trading against you?

3. Do you trade for thrill or trade for a living?

4. Whenever there are massive losses and gains on a speculative stock, who do you think pay for all these?

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Sunday, September 3, 2017

All Roads Lead to Rome

This post is for many of you who went for the recent Value/Growth Investing Workshop, for the readers who have read the post on the Ultimate Scorecard, and for the subscribers to the Ultimate Scorecard database via Fundamental Scorecard website.

Because once again I had made some changes to the Ultimate Scorecard.

Few days ago, I was prompted by a subscriber who went for the workshop that "PB to ROE" equals to "PE" ratio!

Seriously I was dumbfounded. Thus, this weekend I decided to double check on the database and I found that this is absolutely true.

Hence, if I continue to use "PB to ROE", I will end up putting more emphasis on "PE" ratio. Even if I amend some of the figures, I realized the impact will not be great.

Therefore, I decide to change the criteria from "PB to ROE" to just "ROE" ratio. This is because I still want a criteria to calculate management capability.

In addition, the subscriber also shared an article to me indicating the relationship between PB, PE and ROE and how it benefits an undervalue counter.

On the other hand, on the day of the workshop, Christopher of Growing your tree of prosperity has also reminded me that "ROE" encompass the usage of debt. This will actually benefit counters with high debts - something which I am not particularly keen.

Thus, I decided to only award a counter with points for this criteria only if its "Total Liabilities to 50% of its Equity" is below 1. Therefore, this will result in the criteria only awarding points to counters with low liabilities and  high ROE.

Do note that with this adjustment, there are some changes to the back-test result.

Firstly, out of 40 counters, 17 actually provided a "Value or Buy" result. Previously only 12 provided a "Value or Buy" result.

Secondly, despite the increased number of counters with a "Value or Buy" result, the accuracy still remains the same. Out of the 17 counters that provided a "Value or Buy" result, 15 recorded a gain.

Thirdly, despite the changes in the Ultimate Scorecard, the overall accuracy remains the same.

In short, I may have complicated matters when I started using "PB to ROE" as a criteria. I could simply just use ROE as a criteria for management capability. After all, what we want is to find a undervalued counter and that is the objective of using the Ultimate Scorecard.


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