Sunday, June 17, 2018

How Do We Measure A "Moat"?

I believe many of you, similar to me, have your minds on World Cup and your portfolio have taken a back seat.

After all, with the trade tariffs news (US and Europe, US and China, US and Canada), Fed rate hikes, and ECB to phase out QE at the end of the year, I have major doubts the share prices will rise back next week.

STI have also fallen from 3,385.71, as of 26 Dec 2017, to 3,356.73 as of 15 Jun 2018. This is the first time in 6 months that STI have fallen below the 26 Dec 2017 level.

In addition, we are also having the "sell in May and go away till November" effect and most probably the World Cup effect.

So in order to sleep well, how should we invest?

I always felt investing in fundamentally strong companies that is constantly able to generate good earnings will generally help retail investors to sleep well. In order to do that, Simple Investor and I created Fundamental Scorecard website.

As of this month, Simple Investor has continued to improve his Full Analysis Scorecard with a "Moat Scoring".


I believe this is the first time someone has tried to measure a "Moat" of a company and I have to say it is quite accurate. I am really amazed!

Anyway here is what Simple Investor wrote on his Facebook:

"Let's talk about moat.

The term economic moat, popularized by Warren Buffett, refers to a business' ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms.

Basically, it's a defensive structure. Some company has it, others, not so much.

With the recent update of full analysis, I want to showcase some examples of moat. Let's take a look at 3 companies.

The first example of a strong moat company is M1. From its past performance, we can deduce that M1 does indeed have a moat. After all, the telco industry was a oligopoly until the recent days. Remember the days where our mobile plans, internet and cable TV only got more expensive? As detected by the moat scorecard, M1 has a long term strong moat - but that is decreasing.

When looking at moat, one should also consider its durability and trend, in addition to strength. As we can see for M1, although things are not looking good, they still have enough power to put up a fight - but we would prefer to invest in a situation where the moat is stable or increasing, since results are unpredictable with moat destruction.


The next example is one with a weak moat. I'm sure Old Chang Kee is a familiar name to most of us, but when is the last time you bought something from them? And did you know a stick of fish ball is now $1.60? As we can see, Old Chang Kee faces some pressure when increasing prices, thus it only has a weak moat. Further inspection tells us this moat is decreasing, and history shows an even worse sign - company has dipped below moat criteria, breaking its historical trend. All these points us towards caution when dealing with the company.


The last example would be one without moat. SIA is a typical company with no pricing power, leading to a no moat scoring in our scorecard. These are the companies we try to avoid, especially in long term holdings.


What about Kimly, Sheng Siong, Ho Bee Land, Thai Beverages and over 700 other stocks? Check out full analysis scorecard at https://www.fundamentalscorecard.com/

Full analysis - understand a company in 5 minutes. By the way, what is shown is only the first page of full analysis scorecard. Other pages includes ratio and warning signs, shareholders concern, Net worth analysis, recent insider transactions, insider shareholdings, growth, value and income analysis.

*P.S can you spot our next upgrade? Hint: It's in the valuation column.

*Information in this post are not buy/sell recommendation. Always consult a professional should you need to before making investment decisions."

With that, I hope you will take a short break from World Cup and look at our Fundamental Scorecard website.

We do not expect you to be convinced to sign up immediately, but do ask us questions if you have, we are more than happy to answer your queries!

Please do your own due diligence before you invest in any of the companies discussed above.

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

Sunday, June 10, 2018

A Short Short Post

This week, I just have some thoughts.

It wasn't a good feeling when I stared at my portfolio that has been in red since many months ago.

I am still fine with the red portfolio - down about 4.3%.

However after Trump's recent G7 summit's chaos, I really start to believe we are in a bit of a s*** for at least till end of the year. 

In addition, now that we have a world cup coming and more interest rate hike. I believe the volatility will be significant. Or probably a redder portfolio in the next few months.

Now that I have said it, I hope everyone will be prepared for what is coming.

Nevertheless, I doubt we will see a major bear but a continuous playful bear for the rest of the year.


That's all for this short post.

Maybe its time to ignore everything and just focus on what's important - The World Cup!

World Cup 2018
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Sunday, June 3, 2018

Big Idea 4

I bought a new company and announced it on my Facebook Page recently. The overwhelming likes made me revealed the company at that time. Thus, there was a dilemma in me whether I should announced why I bought that company or talked about the other company which I had re-invested in Jan 2018?

I decided that the latter - The company that I had re-invested in Jan-2018 - will be Big Idea 4.

I have written quite a lot about this company and invested in it slightly before April 2016. I sold the last of their shares in Dec 2017 at its peak and almost a 2-times bagger, after the company divested its main business and announced a mega-dividend. After the price came down, I re-invest in the company.

Reasons Why This Counter Qualifies as a "Big Idea"

1. Most "Liquid" Balance Sheet


Based on the above information:

Net Current Asset Value - $0.522

If we take Financial Assets and Other Receivables into account, the Net Asset Value will rise to over $0.648.

This value is 16% above the current share price.

Do note that the Financial Assets is related to their shares in another listed firm, and Other Receivables are related to the remaining amount from the divestment of its main business.

2. Still "Profitable" Business


Despite a drop in Gross Profit Margin, the Q3 2018 losses was due to an exchange loss not due to the current business operations. If this exchange loss was added back, the net profit will be $26k.

However, many people could potentially missed this and sold off this company too early.

Nevertheless, it is important to note that the Gross Profit Margin has dropped and I will continue to monitor the results in Q4.

3. Management 

This is something I am not sure if anyone has picked it up before. The company's current management are the sons of the biggest shareholder.

Rather than "giving a company" to the children to play along, this should be a way the biggest shareholder want a firm control of the company.

Do note that the children had experience in managing other listed firms before.

In Short

Currently the company's share price has dipped significantly. I had continuously added it at various level. This company now contributes to over 8.6% of my portfolio (Remember that these big ideas are supposed to contribute up to 50% of my portfolio?), with a loss of 11.4%.

Recently the company have also made an acquisition and many people, including me, do not reall have positive vibe about this acquisition.

Nevertheless, this is a company I purchase mainly due to the margin of safety above its net asset value.

In 2 months time, it will announce its full year results and more answers on the use of its cash pile could be reveal in its financial report. Therefore, I will decide then on what to do with this company. In the meantime, if the share price continues to fall much more, I may continue to invest more into this big idea!

Please do your own due diligence before you invest this counter (if you knew what it is).

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! Only about $10 a month!

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

Thursday, May 31, 2018

Thank You SGX For Inviting Me!

Firstly, I like to say my thanks again to SGX for inviting me to be one of the panel speakers along with so many other gurus!




It was a great talk and I learnt a lot from the other speakers as well! I hope my answers for the many questions have been satisfactory to the participants as well!

As I look at the pigeonhole website (participants were able to post questions on this website), I realised there is 1 particular question relating to my scorecard method. Therefore, I think I should provide an answer to the question. Hopefully the people that posted this question and voted for this question is able to read this answer!


How can the tub scorecard capture and account for market sentiments and industry outlook. Also, even if it’s an undervalued stock, how can then the value be realized if it’s out of favour?

Ans: Firstly my scorecard capture and account for market sentiments and industry outlook via the changes in share price. This is because the scorecard report contain ratios such as Price-to-Book, Price to Earnings, Price-to-Free-Cash-Flow and Dividend Yield. Thus, any change in share price will cause the scoring to change.

As for the second portion of the question, I can only say value will take time to realise. But for the scorecard method, there are 2 factors that could give the value counter a higher chance of realising the value -

(1) my scorecard focus on company with lots of cash. A company with cash is able to use them to make investment, buy new businesses and give dividend. This will potentially increase the share price to a higher level.

(2) To pass my scorecard, the company has to do well in not 1 area (balance sheet, earnings, cashflow statement, etc), but at least 2 or even 3 areas to get a pass. Thus, this allows more opportunity for the company's value to get recognised.

However, I must also comment that not all counters that pass my scorecard is a definite hit. Similar to all other methods, this is just a level 1 check. We must have a deeper understanding of the business and financials in order to ensure we are purchasing a company that we are comfortable holding while we sleep at night.

That's all!

If you have more questions, do feel free to post them on my Facebook Page, on InvestingNote, commenting below or even email me. I will try my best to answer each and everyone of them!

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! Only about $10 a month!

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

Sunday, May 27, 2018

SGX Event and The Role Of Dividend Yield

Before we go into the actual discussion, I like to inform my readers that I am very privileged to be invited to be one of the speakers for the panel for "My First Stock Carnival Week - Different Investing Styles and Finding Your Ways" organised by SGX.

I will like to thank Shanison of IN and SG Thumbtack Investor for the recommendation.

Here is the link to register for the event and its FREE!

I hope to see you there and do "direct" all the question you have for me, I will try my best to answer!


So back to main topic of today - Dividend Yield.

Recently while I was engage in some analysis, I realised dividend yield played a lesser role in my analysis currently as compared to my previous analysis. 

Thus, it makes me wonder if dividend yield should be an important factor in our analysis?

For example, if a company makes increasing revenue and net profit, but did not increase the dividend, should retail investors be angry with the firm?

As much as many of us are obsessed with dividend, I believe we should not be upset if a company did not increase its dividend. After all, it is still increasing its revenue and net profit for you as a shareholder - the directors could have other things in mind. 

We should be patient and see what they use for the money instead. It could be for research and development work that could push the company towards another level!

Thus, unless you are an income investor (whom I suppose should be focus on REITs or Blue Chips), then I believe dividend yield could be a factor in an investor's analysis, but should not play a big factor in whether you intend to continue to invest in the company. 

What do you think?

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! Only about $10 a month!

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

Thursday, May 24, 2018

My Ex Just Announced Her Results!

If you have read about the previous post about my Ex, I am updating here that she just announced her full year results!

And I was right! The dividend has decrease from 33 cents to 18 cents!

If the retailer investor is looking for 5% dividend yield, then he will be expecting the share price to fall to $3.60!

But I have my doubt that the share price will drop till so much!

If you read about the news article, there are a lot of hidden messages. Are you able to catch them?

For existing retailer investor, I advise you to ignore the news report and spent some time to look at their latest financials results. Hopefully you will be able to pick out their "important" numbers.

There are 2 "firsts" over the last 3 years in the most ignored portion of the financial results! If you picked them out, that will be great!

Next, for existing retailer investor, it is also important to remember "why did you invest in Bukit Sembawang Estates Ltd"?

Once you remembered the reason, go back to the facts and see if the company still have "it".

As for me, let's just see how much the share price will drop!

Please do your own due diligence before you invest this counter.

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! Only about $10 a month!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

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

Sunday, May 20, 2018

What Is A Moat?

Recently for my Big Idea 1 and Big Idea 3, I have been talking about discovering "Moats" of the companies.

But I am wonder if those information that I provided are really "moats"of a company? Or am I using this term too loosely?

As per Investopedia (do read this page for a much deeper understanding), an economic moat is a competitive advantage that one company has over other companies in the same industry; this term was coined by Warren Buffett, a renowned investor and executive at Berkshire Hathaway. The wider the moat, the larger and more sustainable the competitive advantage of a firm. By having a well-known brand name, pricing power and a large portion of market demand, a company with a wide moat possesses characteristics that act as barriers against other companies.

The website further explains that economic moat describes a company's competitive advantage derived as a result of various business tactics that allow it to earn above-average profits for a sustainable period of time. Companies that obtain defensible competitive advantage from patents, cutting-edge technologies and other cost advantages can have a wide economic moat that curbs competition within their industry. Also, firms that enjoy strong economic moat tend to demonstrate solid financial performance and rising returns on capital over time. The most common sources of economic moat are cost advantages, switching costs, efficient scale, intangible assets and network effects.

In laymen terms, my understanding of the explanation is that A MOAT is a COMPETITIVE ADVANTAGE over its competitors, that could potentially allow it to earn a HIGHER OR AN INCREASING REVENUE AND NET PROFIT, showing GREAT RETURN OF CAPITAL OVER TIME.

Some examples of a moat can be patents, franchised rights, know-how, and being a market leader. On the other hand, many moats can also be caused by government intervention - such as Singapore require a Telco provider to be licensed.

In addition, I underline "OVER TIME" is that certain comparative advantage, while allowing a company to earn a high revenue, net profit with great returns, is not sustainable. Thus, I believe it is important to understand this concept and analyse a business correctly by placing an emphasis that the comparative advantage is sustainable.

It is also important to note "moats" does not make a company invincible. Just take a look at the traditional businesses getting disrupted over the last few years. An example is Comfort Delgro's drop in taxi revenue with the introduction of Grab and previously Uber. Another example is SPH reducing advertising revenue when internet becomes widespread.

Therefore, even if a company has a moat, there could be a possibility that it could eventually be destroyed. With that in mind, it is important that a company continue to innovate and improve, in order to continue to maintain or improve the company's financial standing.

1 question I have in mind is if a company having cyclical earnings can be considered having a moat? In my opinion, if the revenue and net profit is not consistent, I do not think the company should be considered having a moat.

However, if you disagree, do comment below!

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! Only about $10 a month!

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

Sunday, May 13, 2018

Big Idea 3

After writing about Big Idea 1 and Big Idea 2, I will talking about the next Big Idea.

Big Idea 3 is actually quite a new company in my portfolio. I have only held it for about 1 month.

It was also never mention in any of my portfolio listing. Upon checking, I realize that I have only written about this counter in a 2015 post.

Reasons Why This Counter Qualifies as a "Big Idea"

1. Discovering Its Moat

I must confess that this company do not really have a significant moat. In fact, its industry have a low barrier of entry.

However, as this company sells a "luxury niche product", it creates an invisible barrier of entry.  This is because consumers will not just go to any shop to buy this "product". They tend to choose renowned shops that they TRUST to buy this "product".

Since it is also a "luxury niche product", not anyone can just straight away open a new shop to sell this "product".

In my opinion, this company is also a market leader within this "luxury niche product" space.

Thus, with a company's name that is easily recognised by consumers intending to purchase this product and also being the market leader within its space, I believe these are possibly the company's moat!

2. Improving Margins + Better Than Its Direct Competitor

Counter's Financial

Direct Competitor's Financial

Firstly, you will notice that the company's Gross Margin and Net Profit are improving over the last 3 quarters. If you compare it to 2017 4th quarter, there is a high possibility that the next quarter's Gross Margin and Net Profit could improve further.

Next, if you compare the company's margin against its direct competitor's margin, you will realise the company is performing much better even though their Gross Margin is almost the same.

Finally, even if the company's "other income" is removed, which in this case is rental income, the Net Profit is still much better than its direct competitor.

3. Management's Words

If you knew which company I am talking about and you read the 2017 annual report's Chairman letter, it have stated that the goal is to reduce the inventory turnover days.

Thus, from the above analysis, the inventory turnover days have reduced significantly every quarter and it is also been faster than its competitor.

With the above improvement in inventory turnover days, I will gladly ASSUME that if the company continue to perform "similarly", the 4th quarter financials will be satisfactory for the investors.

In Short

The above stated reasons are explanations of why I decided to list this counter as one of my Big Idea. Do note that there are still many potential reasons to why I invested in this counter.

Regardless, it is good to note that I do not think the above reasons indicates that the company does have a great moat. But I believe, even without a significant moat, it qualifies as a Big Idea due to its improving margins and financials.

Do note that its full year results will be coming out this month.

Please do your own due diligence before you invest this counter (if you knew what it is).

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! Only about $10 a month!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

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

Friday, May 11, 2018

Trip From Beijing

Sorry for the delay in writing, but I just came back from a trip in Beijing. I was expecting a culture shock but it turn out better than expected.

Throughout the trip, I had learnt many interesting aspect of the city, such as the following:

1. Spitting on the ground is common.

2. Seem hard to get any taxi and train stations are quite a long walk away (Or maybe Singaporeans are just too pampered?). End up becoming the "cabbage head" for other transport services.

3. You need to walk a lot, especially in the landmarks. Do need to look out for any trams.

4. Taobao has killed cheap clothing in the city. Shopping became quite boring. Only international/big brands that are not located within Taobao seem to have shops around.

5. High living standards. The food seem to cost as much as those in Singapore.

6. But it is still the ancient city with many landmarks not to be missed.

7. Security is a top priority in the city. Even train stations have checks. There are also a lot of police around. I felt very safe.

8. The pollution is very bad. The sky is clear but the dust in the air look like "snow". I am serious!

9. The power of Wechat and Alipay. If you happen to use cash there, you are not a local. Cash is a thing of the past.

But this trip made me realised why some interesting business can only work in Beijing and not in Singapore?

1. Last Mile Courier.

There is a reason why courier services are "great businesses" in China. You will see a lot of such vehicles in China. This is because Beijing is an ancient city and there are a lot of old houses ("Hutongs") without clear address. Thus, last mile courier services are required to locate each and every customer within the city.



2. Bike Services

Due to the traveling distance between destinations and the location of some of the residential area, these services are definitely required by the public.

Unlike Singapore, everywhere is very convenient and within walking distance from bus stops or train station. But this is different in Beijing.

However, due to the number of operators, this industry seems to be very competitive right now (Yes, both Singapore and Beijing currently have a lot of operators!). Bike services operators have to differentiate themselves to be relevant in future and not to continue "burn cash".

3. Small Transport Taxi


This is really something interesting I found in Beijing. There are quite a lot of these small taxi around in Beijing. However, it seem to be cater to pick up a single passenger only. Thus, I did not take this transport when I was there.

In Short

This trip made me realised 2 important factors - (1) As investors in overseas markets, I felt we should actually go to these countries to take a look and understand how businesses operate there. With extra knowledge, then you will be able to select better businesses that could possibly survive the competitive aspect in each industry. (2) Localisation is required for businesses that are expanding into China or overseas. Without understanding the country and just expand directly into the country will just be a waste of time.

Oh... I also took a picture that is linked to one of my Big Ideas.


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! Only about $10 a month!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

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

Words of Wisdom and Big Idea 2

Update on 11 May 2018: Sorry for publishing the draft copy. Amended the draft via the Blogger app and I went overseas to publish them, but end up the draft copy got published instead. 

Before I start talking about my Big Idea 2, here are some words of wisdom I had with A after he read about my previous post.

The conversation are broken down into sessions which I deem are words of wisdom and even if you knew them, it can act as a reminder.

Section 1: Diversification

"The question is about diversification. I have a dual answer to that. If you are not a professional investor, if your goal is not to manage money to earn a significantly better return than the world, then I believe in extreme diversification. I believe 98% - 99% who invest should extensively diversify and not trade, so that leads them to an index fund type of decision with very low costs. All they are going to do is own part of America and they have made a decision that owning a part of America is worthwhile. I don’t quarrel with that at all. That is the way they should approach it, unless they want to bring an intensity to the game to make a decision and start evaluating businesses.

Once you are in the businesses of evaluating businesses, and you decide that you are going to bring the effort and intensity and time involved to get that job done, then I think diversification is a terrible mistake to any degree."

Section 2: 6 Wonderful Business

"If you can identify six wonderful businesses, that is all the diversification you need and you will make a lot of money. I can guarantee that going into a seventh one instead of putting more money into your first one is gotta be a terrible mistake.

Very few people have gotten rich on their seventh best idea. But a lot of people have gotten rich with their best idea. So I would say for anyone, working with normal capital, who really knows the businesses they have gone into, six is plenty and I probably have half of what I like best. I don’t diversify personally.

All the people I’ve known that have done well with the exception of Walter Schloss, Walter diversifies a lot. I call him Noah, he has two of everything."

Section 3: Becoming The Expert

"Diversification is the way to go for many of them. But we are definitely those moving deeper into investment, learning more and doing it. For those with experience and competency, we will find things that look so much better and safer than to public. So you find a gem, you put in 20% of your portfolio.

I guess it might be a natural thing to concentrate, or at least only accumulate your best positions as we move towards being an expert. Of course, the important thing is not to over estimate our abilities and kill ourselves."

Section 4: Conversation Between WB and CM

"WB: If we were running only our own money, putting 75% of our net worth in a single position is not a problem if it is something we really have high confidence in. Putting 500% or more of your net worth in a position is a problem. Several times, I have had 75% of my non-Berkshire net worth in a situation. You will see things where it would be a mistake not to act. You won’t see them often, and the press and your friends won’t be talking about them. Wouldn’t you say, Charlie? 75% is not a real significant amount?

CM: Sometimes, I have had more than 100% in an individual investment.

WB: You just had a good banker. Look at LTCM — they put 25x their money in things that had to converge but couldn’t play out the hand. There are people in this room with more than 90% of their worth in Berkshire. I saw things in 2002 in junk bonds that would have been worth going heavily into. You could have bought Cap Cities in 1974 — selling for one-third the property value, with the best manager, and in a good business. You could have put 100% in Coca-Cola when we bought it and that wouldn’t have been a dangerous position.

CM: Students learn corporate finance at business schools. They are taught that the whole secret is diversification. But the exact rule is the opposite. The ‘know-nothing’ investor should practice diversification, but it is crazy if you are an expert. The goal of investment is to find situations where it is safe not to diversify. If you only put 20% into the opportunity of a life-time, you are not being rational. Very seldom do we get to buy as much of any good idea as we would like to."

Section 5: Concentration

"Concentration is a passage of rite once someone reaches a certain level, they will find things that makes sense to them. They may still be wrong, but less likely so. Expensive or not we will only see after a while."

Section 6: Share Price

"All I see is some price floating up and down. The market is there to serve you, not to instruct you. Drop in price doesn't mean the company really worth less. In fact, we probably make more money when the volatility of the market is higher.

When I do invest, I don’t care if the stock price goes from $10 to $2 but I do care about if the value went from $10 to $2. When price drop, all you have is bargain. The company is still worth so much more. Any drop is temporary and an opportunity. But when value drop, all you have left is an empty shell."

So that's all of the words of wisdom.

As for Big Idea 2, I do not think I will be writing more about it anymore. I have after all written a few post totally dedicated to the company. In addition, the last one I even tried to find out the fair value of the business. Nevertheless, do note that I have held this counter for more than 1.5 years.

The important aspect of Big Idea 2 is that it has a subsidiary and an associate listed in SGX. It also have another associate listed in ASX.

Thus, if the market continue to be on a bull run, I believe Big Idea 2 will also continue to do well and achieve remarkable results when it report its full year financials in August.

Please do your own due diligence before you invest this counter (if you knew what it is).

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! Only about $10 a month!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

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

Tuesday, May 1, 2018

Big Idea 1

I have stated numerous times that I wanted to consolidate/reduce my positions in my blog. But it has been in vain.

However, a chat with Simple Investor SG recently made me understand the real power of a concentrated portfolio (Read his last year review here). If you knew about his current returns in 2018, you will get a reality hit like me.

Thus, I decided to focus and cut down from 26 counters at last count to a current 20 counters. I foresee myself reducing further after World Cup and Full Year Results releases in May/June.

Nevertheless, I have also decided that I will focus about up to 50% (could rise to 60% or more) of the portfolio on a group of 6 to 8 counters (not yet decided fully on the exact numbers), which I will rename them as "Big Idea". These counters are meant to be potentially vested till the end of the year (unless it rises too fast).

Image from Freepik.com

Big Idea 1
will be the company that I stated in this previous post.

I released minimum information about the company in that post and many of you may brush off this idea. But I will be revealing more information about this company and why I intend to keep it as a "Big Idea".

Do note that I have written about this counter before and have been vested in this counter for more than 1 year as of today.

Reasons Why This Counter Qualifies as a "Big Idea"

1. Discovering Of Its Moats

Comparsion to Competitors

This will be a much better presentation that the one in my previous post.

Big Idea 1 financials are in the 2nd column as compared to its competitors. It was able to gain a higher Gross Profit Margin (GP Margin) as well as an incredible net profit margin (NPAT Margin) as compared to its competitors.

Do note that I consider Company 1 to be its direct competitor and you do have to look at the differences.

Although not all the competitors are listed here, but I deem the above as some of the better companies in the industry. 

Therefore, I deem this discovery as a Moat. The reasons below are my assumption/considerations of why this company was able to achieve such good results as compared to its peers.

2. Low Cost Of Goods As Compared To Direct Competitors

After reading the full post and if you already knew which counter I am talking about, then you should looked into their "products". 

The company do not sell this particular product as compared to its competitors, and I am not solely referring to the competitors I stated above. 

Although it refers itself to a certain branding/industry and a customer will directly relates the company to that product, but if you look closer, it does not sell that particular product in its shops. 

I believe it is able to keep its cost of goods low because they do not sell this product as compared to its direct competitors (not sole referring to the one listed in reason 1).

3. Multi-brand Strategy

Firstly, investors should acknowledge that Singaporean like new stuff. With a Kiasu attitude, we want to be the first to try out the new stuff in the shopping malls.

This company must have understood this concept since it was established in Singapore in 1997. Therefore, with a multi-brand strategy, the company is able to switch the shops around if a certain brand is not performing well as compared to others in that particular location.

By switching brands, it injects a new atmosphere in the shop and will encourage shoppers to come back to the shop.

4. Location, Locations and Locations

The company has over 45 shops in Singapore. In your mind, you will be wondering that the rental cost will have killed their operating expense. Then why is it able to achieve such high net profit margin?

Locations of the Shops
I have 2 reasons for this question. 

Firstly, renting in bulk is always cheaper than renting 1 location. From the pictures above, you will have notice that the company have many shop locations under each mall management. This will potentially reduce their rental expenses for each location. 

Secondly, competition for tenants for shop rentals should be high. You can take your reference to this IN post or just look around the shopping malls and see how many outlets have changed tenants over the years. 

Therefore, if you are a mall management firm, will you give in to a company that has many shops located under your management if it comes to you to negotiate the rent?

5. Overseas Expansion With Local Partners

In my opinion, another good strategy that the company engage in is its overseas expansion. Most of its overseas expansion are franchises or joint venture with local partners. Although this could results in lower returns, but there are also lower risk involved. In fact, this strategy will potentially boosted its net profit without gaining much expenses.

In Short

The above stated reasons are explanations of why I decided to list this counter as one of my Big Idea. Do note that there are still many potential reasons to why I continue to stay vested in this counter. But the above discovery of its Moat and the factors behind it made me more assured that this is a counter to keep for the longer term unless fundamental changes occurs.

Please do your own due diligence before you invest this counter (if you knew what it is).

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! Only about $10 a month!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

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

Tuesday, April 24, 2018

This Blog Is 3 Years and 1 Month Old!

After the last post on My Random Talks, I got a lot of encouragement, compliments as well as positive comments from readers on IN and also the particular comment below from the blog. Really appreciate all the comments!

Comment from My Blog

Nevertheless, this was also a time to reflect on how I have been writing my blog posts. I have decided NOT TO NAME the counters I am writing. Rather than telling readers the company's name directly, I hope readers can focus on the reasons I invested in that counter.

I believe this will be more similar to my objective of starting Fundamental Scorecard - to spread the knowledge of fundamental investing. In addition, since I am also promoting the Fundamental Scorecard website subscription, this could be more appropriate.

Having said all that, there will definitely be hints along the post on which counter I am talking about. Furthermore, I will still continue to reveal my portfolio every quarter. So look out for them!

Moving forward, I intend to selected some major ideas and move into consolidation mode. I will call them Big Ideas! It should be focus around 6 or 7 counters and I should have already vested/talked about them.

That's all!

Once again, thank you for all the support over the last 3 years!

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!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

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

Sunday, April 22, 2018

My Random Talks

Recently, it seems that more people are "unhappy" with the way I blog. Maybe it is because I appear to be saying 1 thing and doing another. And of course, my promotion of the Fundamental Scorecard. 

It is certainly quite hard being a blogger, and trying to satisfy every single reader. Sometimes I wonder if I said too much, and being too honest about everything. 

Anyway, FYI, I don't earn big bucks from blogging. I am just trying to share what I found out and to be responsible to what I said.

Then again, I am quite happy with how these anonymous are commenting. This meant that my reader outreach have been increasing! Next time, it will be good to put your name. So I can address you directly or even meet up with you.

So with the above thoughts, I felt that, might as well, I do not reveal what this next company I intend to talk about. 

I will just show you this research I had done.

Research on The Company
This is solely on 1 quarter of the company's income statement as well as its competitors. I am just amazed how well it had done compared to its competitior.

Do note that its' revenue had been increasing over many years and gross margin had been increasing as well.

In Short

I have actually wrote and is currently vested in this company. I will be looking to adding to my position.

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!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

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

Saturday, April 21, 2018

The Dilemma

Since I have been such a supporter of  M1 Ltd in my previous posts, I suppose I should announce that I have sold all my holdings in the company. Nevertheless, due to this action, I had friends questioning if I had become a trader? So HAVE I?

Today, I managed to converse with a trader and an investor. They gave me 2 different perspectives that is the exact opposite of each other. Do note that both of them are making money currently.

Picture taken from Quora

Trader's comment:

I have a small capital. Thus, trading is the way for me. Contra trade do not need capital. I only trade blue chips or REITs, and I place a stop loss and target price for every trade, so I wouldn't hold any trade.

I do invest, as well, for mid term (2 to 3 months) and long term (6 to 8 months). Usually I try not to hold a share for too long, unless I feel it has the potential to be a multibagger.

The market is very volatile right now, most people will take profits and protect profits. There's a saying, "if you don't take your profits, the market will take it back from you".

I feel that this is the mindset of most people who are in the stock market. Sayings such as 'letting your winners run' doesn't apply anymore.

Investor's comment:

An investment operation is one which, on thorough analysis, promises safety of principal and a satisfactory return. - Benjamin Graham.

I believe "no matter what size your capital is, this is the rule of investing".

Switching to a trading mindset to earn a higher percentage is a flawed thinking. It's because of small capital that preservation and proper investing is critical.

Furthermore, compounded interest need time to work. You have to know that you are buying a company and it need time to work and earn money to become a multibagger.

If market offer you the convenience of being able to get a quote on company you own, don't turn this into a disadvantage being influence by the nonsensical quotes of the market. Use it to your advantage, buy when a good company is cheap.

*Do note these are real quotes I have taken from our conversation and are amended to be more smooth-flowing.

In Short

A trader focus on price and profit, while an investor focus on company, value and capital. I still stand by, maybe including my bias, more towards an investor mindset.

I believe in finding out the value of the company. I do not draw any lines on the company's share price chart. Rather, I really like to look into a company's financials and understand how a company make its money.

However, on holding period, I also have this view that when an investor buys a company, he has to have a long term view. A long term view will allow you to not make rash decision and hold on to your beliefs and view if the share price falls.

But if the company's share price suddenly rise too much, then I think you can still sell it even if you only held on it for a few months.

Regardless, I sold M1 mainly because I want to focus more cash into companies that pass Fundamental Scorecard. My portfolio has been heavily supported by companies that pass Fundamental Scorecard currently. Thus, I intend to put more capital into this area.

With that, I like to have a final word on today's post - any method that makes money is a good method, including any trading methods. 

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! Only about 3 plates of chicken rice per month (One of my subscriber told me to say this)!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

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

Monday, April 16, 2018

Review Of M1 Limited Q1 Results

Before I go into the main topic, I will like to clarify some queries on Fundamental Scorecard website.

People had asked if Fundamental Scorecard requires users to key in any data? 


I like to use this opportunity to clarify that THE ANSWER IS NO! Fundamental Scorecard website's data is already pre-loaded. Eventually each counter will have its own report with the scoring from the pre-loaded data. You do not need to key in any information!


Ok...back to the main topic.

M1 Limited (aka M1) just released its Q1 report this evening.

Basically, revenue and net profit remains flat.

But I like to bring reader's attention to the following 2 slides:

Revenue

Cost of Goods Sold

If we compare the revenue between Q1FY2017 and Q1FY2018, Mobile Services had increased from $137M to $141M. Fixed Services had also increased from $28M to $32M.

Then if we compare the Cost of Goods Sold (COGS) between Q1FY2017 and Q1FY2018, Fixed Services' COGS remains flat despite a higher revenue. 

This is also in line with the recent Moltey Fool's article on M1.

Therefore, in accordance with my previous article, my belief that Fixed Services will most probably be the determinate for FY2018 revenue is still intact.

Nevertheless, it is important to consider the extract below of a conversation I had with an IN member.

Screenshot from IN
If this is true, how will the revenue turn out in future? That will be an interesting pointer!

In Short

After this short review, I will stay vested FOR NOW in view that the counter is still CD currently and only turn XD on 18 April 2018. I want to receive the dividends first before I decide on further actions.

Please do your own due diligence before you invest this counter.

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! Only about $10 a month!

You can also purchase a copy of our Guide to SG Stock 2018 for only $8 via this link.

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

Friday, April 13, 2018

What's My Current View On The Trendlines Group Ltd?

This article may have came a bit too late.

I felt I have to write another article about The Trendlines Group Ltd (Trendlines) after my last post on them, as well as my very bold estimation of Trendlines on IN.

Screenshot from IN
But since the last post and estimation, Trendlines share price has been on a downtrend on a prolong period.

Screenshot from IN
I am not sure if the post or estimation have influenced anyone to purchase Trendlines. Nevertheless I still felt that I had to be responsible and thus, I will write out my current thoughts on Trendlines.

First of all, I will like you to know that I am still vested in Trendlines (about 2.5% of my portfolio).

Why am I still vested? If you had read my previous post on Trendlines, other than point 1*, all the other positive points are still relevant. Some of these points, as elaborated below, have become even more advantageous!

*CEOs did not continue to purchase Trendlines and the company also did not made any share buybacks.

1. Their dividend policies have become clearer with recent new on Stimatix. Stimatix will provide recurring income for Trendlines and in return dividend for the shareholders. Do note that Trendlines owns 28.2% of Stimatix and a payout ratio of 90% of dividend payments received from royalties.

2. Collaborators! Other than B Braun Melsungen AG, Trendlines also have many other extensive partnership collaborators!

Trendlines Investor's Powerpoint

3. Companies born out of Trendlines lab are not within its balance sheet yet! These companies will eventually bring in profit and will definitely boost its asset within the balance sheet. Thus, the balance sheet is actually still understated!

Trendlines Investor's Powerpoint

4. News, news and news! Recently, an IN friend have actually found some news on the Trendlines' portfolio companies that are not explicitly announced and here they are:

Regardless of the above positives, the RISKS that I stated in the previous post still exists too: (1) Overstating of the value of their portfolio company and (2) having failed portfolio companies being written off in future. This could produce losses that will definitely impact the share price negatively.

So what is the Fair Value?

Recently, many of you will have notice the changes in how I view a company recently. I will always try to look for a REASONABLE fair value. For Trendlines' share price, the management had compared against other industry comparables as per its investor's powerpoint slide.

Trendlines Investor's Powerpoint

But I felt the share price calculation should be based on dividend instead. This is because I felt dividend will eventually become the main catalyst for Trendlines over the next 2 years.

So the amount of dividend I calculated is....0.3 cents! This is only about 2.5% dividend yield based on the current share price.

This is based on the estimation of the following -

1. Dividend Payout of 90% of dividend distribution of about US$800k

2. Dividend Payout of 40% of an Exit Event where the net cash after tax distributable proceeds paid to Trendlines for the financial year is at least US$2 million.

Finally, one must also take note of the following taken from the recent annual report and announcements:

1. In August 2016, Medical received a dividend distribution from the Portfolio Company in the amount of approximately 897, the dividend distribution representing Medical’s share of a portion of the cash consideration received from the Licensee.

2. In addition to a dividend which was received subsequent to the initial closing in November 2014, Trendlines Incubators Israel Ltd., the Group’s wholly-owned subsidiary, has additionally been paid approximately US$1.6 million in dividends, to date, upon Stimatix’s completion of the relevant milestones.

3. On September 29, 2016, the Group sold its holdings in E.T.View (including options). The Group received consideration in the amount of 3,700, of which 2,100 is recorded in gain from disposal of investments accounted for under the equity method and 1,600 in gain from change in fair value of investments in Portfolio Companies.

4. In June 2017, the Group completed the sale of its holdings in Biosight LTD. The Group received consideration in the amount of 1,300 and recorded realized gain from change in fair value of investments in Portfolio Companies in the amount of $1,200.

5. On November 13, 2017, the Group completed the sale of its holding in MitrAssist Ltd (“MitrAssist) for a total consideration of approximately 1,150. The Group recorded realized gain from change in fair value of investments in Portfolio Companies in the amount of $1.1M as well as financial expenses in the amount of $0.5M with respect to repayment of the IIA loan relating to MitrAssist.

In Short

I understand that the current estimated dividend yield is quite low. Not even 3%. It could get even lower since the last few exits Trendlines had made is less than US$2 Million. Thus, these are more of the negatives that I believe investors should take note.

BUT I will still stay vested and may even buy more if the share price drop even MUCH MORE.

This is because I believe in the company's growth and it takes time for the revenue to grow. In the meantime, the dividend can "comfort your continuing patience".

I must also state that Trendlines has "not" yet given any dividend and their dividend policy must have well-thought through prior to announcing. Therefore, their current exits events could possibly be used to support their current operations, rather than for dividends. Nevertheless, Trendlines is not the usual business model and investors should not really used their current understanding to define this firm.

Investors will just have to wait for Trendlines to grow for at least 2 years before it become the multibagger we are waiting for.

Simple Investor SG and I will be having our next Coffee With Us on 17 April 2018. If you are interested in the event, do sign up via this LINKWe look forward to meeting you!

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

Thursday, April 5, 2018

Our 1st Coffee With Us

Dear Readers and Subscribers,


As stated previously, Simple Investor SG (Simple) and I will be continuing our “Ask-Us-Anything” session. But this time round, we will be calling it – Coffee with Us!

Coffee With Us is a meet-up session to promote fundamental investing, especially during these volatile times. By having seasoned investors answer questions you may have, we aim to reduce the initial hurdle of embarking on FA. Everyone interested in investing is welcomed.

Coffee With Us
Other than having a name change, we will be requesting a small fee of $10. This is because if it is a free session, many people will sign up but eventually will not turn up.

In addition, in order to facilitate discussion, we will be limiting to a maximum of 5 person per session only.

Unlike the previous sessions, this event will also be more structured. We will be discussing on the following:
  • Basics of Investing
  • Methods of Investing
  • Q&A or Any questions you have

Just To Recap - Background on Simple and I

Simple and I partnered to create the Fundamental Scorecard website. It is basically a website that portray our investment approach into 2 different scorecard methods (Full Analysis from Simple Investor SG and Ultimate Scorecard from me) and each scorecard method will have an individual database with reports of the scores of counters in SGX.

A scorecard method can be considered as a mechanical/systematic way of investing, where your consideration is based on facts and numbers, while your emotions and bias can be put aside.

Through these methods, Simple and I had more wins than losses and we believe that anyone who follow these methods will be able to attain similar results!

It is our goal to spread the knowledge of fundamental investing to everyday average retail investors.

Here are some feedback from the attendees from previous sessions:

A review from one of the participants in the 1st session:

"Hi Terrence (I hope I spelt your name correctly), I truly enjoyed the sharing session just now. It gave me a lot of insights which I would like to follow up on when I’m free. Sure, I will most certainly love to attend talks/sharing sessions like this next time. And do help me let John know I am very appreciative about the sharing session this evening as well."

A review from one of the participants in the 2nd session:

"Hello Terrance, thank you and John for taking time and effort to organise the meeting up Q&A. You guys have done a wonderful work and being patience to explain your investment approach and picking value stocks using scorecards and points system. There is so much we learnt from one another and I wish we can do this more often.

Perhaps it would be benefit to a larger group if anyone of the members would pick a few stocks from his/her watchlist, and we can discuss these stock as a group, focus on their biz and the set of numbers that we should paying more attention than the rest. That would bring more engaging discussions."

Here are the Event Details:

Date: 17 April 2018, Tuesday
Time: 7.30pm to 9.00pm (Try to just come early. We can always have dinner together.)
Location: Outside seating area of The Kitchen (Food Court at The Star Vista. The seating area outside is very big and open. You will be able to find us there.)
Number of Pax: 5 pax
Price: $10

Look for us here!
If you are interested in the event, do sign up via this LINK.

We look forward to meeting you!

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