Thursday, April 8, 2021

Orbcomm Got Acquired. 3x My Position.

Short Post.


Basically, Orbcomm got acquired at US$11.50 per share. I have written in this post before that I had purchase Orbcomm at US$3.820 in Oct 2020. 

Thus, the acquired share price is 301% above my initial purchase price!

One of the methods I did was compared all the telematics companies in the industry (as per the excel pic below), and see where each company is located.


Other than the number of geographical countries/regions that it is located, Orbcomm also stands out as one of the main companies/or the only company that has a dual service system where it has satellite and cellular system. 

This allowed them to be a leader in tracking vessels in the marine sector as cellular does not work well in sea water.

In short, my opinion is that analysing the Qualitative information is as important as analysing the Quantitative information.

Now that Orbcomm is acquired, it is time to find the next company to re-deploy the cash!

If you are interested, please do bookmark this Blog or follow me on TUBInvesting FB, or Fundamental Scorecard Telegram Group (please google for the links!).

Stay tune for my next post!

Monday, March 29, 2021

2021 Strategy Series: Nutryfarm – AZT

Not Vested at Point of Writing and may/may not invest in it over the next 72 hrs.

If you remember my strategy of my portfolio, I do STILL invest in SG companies. It is my form of recovery stocks or it acts as a hedge towards my heavily invested US growth stocks. In other words, rather than going to the US and find recovery stocks, I tend to prefer to find them in SG market here.

So here I am going to talk about another company that I am still considering whether to buy in view of its recent run up.

I got to know this company when a friend asked me about it.

Part 1 – What the Company Does?

Ignore what the company does in the past.

Basically, to know this company. we should know what it could possibility become.

This company will eventually become a trading firm to assist Thailand Durian farms to shipped their Durians to China.

Yes and to repeat, the business will eventually become a trading durian business between Thailand and China.

The reason for this is the change in CEO as of Jan 21. 

As per Next Insight Article stated, “an industry veteran of the durian business in Thailand, Mr. Cheng was the founder and director of One Family (Thai) Company Limited incorporated in Thailand in 2016.
It is principally in the business of plantation, and value-added processing of durians and exporting durians from Thailand to China mainly.

After a series of corporate moves, including a placement of 13,300,000 shares to him (at 4 cents apiece), Mr Cheng was appointed its CEO on 6 January 2021. 

His stake in NutryFarm stands at 11.52%. 

Why did Mr Cheng switch from his family business to join NutryFarm? It is likely that he saw the listed company as a vehicle that can significantly scale up the durian/fruit business and manage large working capital and receivables.”

Upon coming on board as the CEO, rapid changes have follows:

Based on Press Release on 17 Mar 21 - “Reference the announcements on 28 December 2020 and 8, 18 and 29 January 2021, the Group has entered into various agreements to sell over 1,480 containers of fresh durians from Thailand to major Chinese fruit importers since December 2020. The total contract value of these agreements is estimated at approximately RMB 962.0 million as announced on 13 February 2021. At the same time, together with RFG and TTT, the Group has todate entered into purchase agreements to purchase 870 containers of fresh durians from the plantations to fulfill the orders. Shipments have already started since 20 February 2021 and will continue through the course of the year.”

Note that this press release is in RMB. Their Annual Report and Q1 are in HK. After converting RMB$962m, the estimated revenue is about S$197m or HK$1.14bn.

Part 2: The Segment of Fundamental Scorecard That Caught My Eyes

Fundamental Scorecard is a visualization tool that simplify all quantitative information into graphs while calculating the intrinsic value using timeless theories, and providing conclusions about the company for the reader to have an easier time to make decision. (If you are interested, do click on this link).


Just to be clear, everything looks quite bad. The main positive is that the cashflow is looking good and on a improving trend. 

Nevertheless, as I stated, these are PAST financials. We have to LOOK FORWARD when reviewing this company.

Part 3: My Qualitative Research with USCCR

Similar to Fundamental Scorecard, USCCR is my own simple way of doing Qualitative Research. Qualitative research is important because it Builds Conviction of a company you are intending to buy or is holding, even if the whole world is against you. It will Reduces the chances for you to make Rash Decisions that you may regret later.


Understand the Business – To be honest, I am not interested in its health food products. But based on its latest Q1 report, the income statement has shown some improvement. Nevertheless, what I am interested in the company is in near term (by 2021), most of its revenue will be from this Durian trading business.

Scalable / Macro Trend – China demand from Durian. 

Competition – Malaysia Frozen Durian (?).

Catalyst / Future Growth – Possibility of renewing of contracts from the China customers.

Risk – Change in Government Policy, Possibility of higher operating cost, Unforeseen Delays
To explain further:

1. On demand from China. 

As per the Nextinsight Article, it is stated that:
  • Between 2009 and 2019, China’s fresh durian imports grew nine-fold, from US$124 million (S$169 million) to US$1.1 billion, according to a Channelnews Asia report.
  • If that sounds unbelievable, consider that in 2020, the figure doubled to US$2.2 billion, according to the Ministry of Agriculture and Cooperatives of Thailand. 
  • Thailand is the only country allowed to export fresh whole durians directly to China under a 2003 trade agreement.
2. Malaysia Frozen Durian - There are talks that Malaysia Durian are also in demand. But Malaysia Supply will also need to cater to Singaporeans, which has a huge . Thus, if the China prefer Fresh Durian, Thailand will become their sole supplier.

3. On Risks - there are just too much risk involved currently with significant uncertainty and the share price running up in a short time frame. 

On the other hand, as per the NextInsight Article, Raffles Financial Pte Ltd invested $5 million for 10,000,000 shares in Singapore-listed NutryFarm through a married deal with a substantial shareholder, as announced on the SGX website on 12 March 2021. I don’t think any finance house will just any how invest like that.

Conclusion

I did some maths. Solely on a financial point of view and from a PE perspective –



*Do note that most of the existing business figure are extrapolate from Q1 financials. 
*For Durian Business, Gross Margin of Durian Business is taken from a press release. Operating Expenses are deemed as 1 times or 1.5 times of the existing business.

It seems that based on the current share price, the good news is already priced in. But if the company shows signs of expanding the durian business beyond the current volume, then there is a good chance that the current share price maybe deems undervalued. After all, Raffles Financial Pte Ltd purchased at S$0.5 per share.

I may just dip and nibble a bit and then wait for more possible good news.

If you are interested, please do bookmark this Blog or follow me on TUBInvesting FB, or Fundamental Scorecard Telegram Group (please google for the links!).

Stay tune for my next post!

Wednesday, March 24, 2021

EV: The Amazing Race

 This is a short post on my upcoming webinar series on EV.

Why EV?

As stated in the previous post, EV contributes 2.5% of the total passenger vehicle sold in 2019 and 4.2% of the passenger vehicles sold in 2020. 

I believe it has the potential to grow to 6.5% in 2021 and 9% in 2022 – which is almost 10m EVs – similar to the accumulative number of electric vehicles globally!

In addition, there are over 1.4 billion vehicles as of 2018. Imagine if all the vehicles change to an EV, the Total Addressable Market will be huge!

We will also be discussing on Apple whom is rumored to join this race!

The webinar will be conducted with Lyn of Lyn Trading Club (within InvestingNote). We will discuss about the EV sector and its companies within this sector using FA + Story + TA! 

The webinar will be conducted this Saturday, on 27 March 2021 - from 2pm to 4pm!

If you are interested to hear more about the EV sector and the amazing race through the use of FA + Story + TA, CLICK HERE TO SIGN UP!

If you sign up for this webinar, you will be able to attend Lyn Live Trading for FREE for 1 week – worth S$99!

See you soon!

Monday, March 22, 2021

Venture Out And Explore

This actually did not catch my eyes today. After all, the portion of my SG stocks are my hedge against my US growth portfolio. It’s maxed out. However, JR_Chai asked me if I am writing a piece of article on this. This triggers some opinions in my head and I told him I will probably post them out tonight.

Warning: This is an opinionated piece. Please do not proceed if you have a heavy weightage of SG Blue Chips in your portfolio.

Ok I already warned you.

So what is “this” that I mentioned previously?

This is the new proposal that Capitaland has put up today. 

As per CNA article, it states that “CapitaLand, majority-owned by Singapore state investor Temasek, announced on Monday (Mar 22) plans to split itself into two in a strategy aimed at pursuing growth as an asset-light company.

It is proposing to inject its real estate investment trusts and investment management unit into a separate listed Singapore entity and place its real estate development business under a Temasek unit.

The restructuring move by CapitaLand comes after it posted its first annual loss in nearly two decades in 2020, and like rival property developers, faces a tough outlook due to the coronavirus pandemic. It is one of Asia's largest real estate firms by assets with operations in Singapore, China, India and other markets.”

In my opinion, this is what I came to my mind after I reading the article – Capitaland don’t know what to do after making a loss recently. So it decide to follow SG Blue Chip Keppel, to going into fund management and become an asset light company. Asset light seem to be the “in” word now.

Basically, it continues to highlight the lack of innovation within the SG Blue Chip companies and they could have done this so much earlier to unlock value for the long-invested shareholders.

Doing it now only highlights you are at your wits end. 

Same for Keppel and Sembcorp. Oil, gas and marine has already past its prime. It sure took them long enough to realise. 

This brings me to another entity – ComfortDelgro. 

There was a night when another friend asked me about the transport giant in Singapore. I mentioned this – When Uber and Grab came, they probably don’t think too much about it and were caught. Now that everyone is talking about robo-taxi, I still don’t see them do anything. However, I believe they will continue to do well in Singapore but they will suffer intentionally when robo-taxi becomes the norm.

This again highlights the point that SG Blue Chip tends to lack innovation. At times, I wonder why we cannot think forward like some of our non-STI SG firms.

Look at how UMS has grown or how AEM has been able to grow so fast!

I am still waiting for the chance to see a SG pure tech firm to be accepted into STI.

On the other hand, you probably feel that I am being too critical. I do also have to agree if I were in the shoes of the management, I may probably do the same thing at this point in time

That is why when I see the change in management in Singtel – I see it as a positive move. At least it’s a start. But whether Singtel really change, only time will tell.

So for the million dollar question of “Will I ever invest in Capitaland once this restructure is complete?” I will probably say no.

This is because my SG allocation is full and I rather invest into the US market now. 

There are many emerging trends arising in the US market now – such as Igaming, Electric Vehicles (EV), 5G, Energy, Fintech, etc. 

One of the main trend that I am interested in is the EV sector.


As per the FB live I did with JR_Chai and Lyn, I mention that EV contributes 2.5% of the total passenger vehicle sold in 2019 and 4.2% of the passenger vehicles sold in 2020. I believe it has the potential to grow to 6.5% in 2021 and 9% in 2022 – which is almost 10m EVs – similar to the accumulative number of electric vehicles globally!

If you are also interested to hear more about the EV sector and the amazing race through the use of FA + Story + TA, do click here to know more! If you sign up for this webinar, you will be able to attend Lyn Trading Club for 1 week – worth S$83!

Conclusion

If you are still heavily invested in Singapore and you continue to be satisfied with how you are doing, I guess there is nothing wrong with it.

But if you want to improve and do better, I will say – go on and take some RISK (THAT YOU ARE CONFIDENT OF HANDLING) and be a bit more adventurous. 

Venture out and Explore.

Or just sign up.

Wednesday, March 17, 2021

2021 Strategy Series: Nio Inc. - NIO

Vested with an initial price at US$43.85.

Electric Vehicle (EV) is the talk of the town.

I am sure most of us have some form of EV related companies in their portfolio. I do have more than a couple of EV companies in my portfolio – the last discussed CRNC is one. 

*Do note that I am still holding onto CRNC and APPs despite the last market correction.

Today I will be discussing another EV company today – It is a China EV company that promoting a very unique proposition – Battery As A Service. My average share price as of today is $32+.

It is a controversial pick – especially by one who emphasize on Fundamentals. But I believe my explanation below will allow you to understand why I choose this company as an investment.

Part 1 – What the Company Does?

Taken from one of its press release, “NIO Inc. is a pioneer in China’s premium smart electric vehicle market. Founded in November 2014, NIO’s mission is to shape a joyful lifestyle. NIO aims to build a community starting with smart electric vehicles to share joy and grow together with users. NIO designs, jointly manufactures, and sells smart premium electric vehicles, driving innovations in next-generation technologies in connectivity, autonomous driving, and artificial intelligence. Redefining the user experience, NIO provides users with comprehensive and convenient power solutions, the Battery as a Service (BaaS), NIO Pilot and NIO Autonomous Driving (NAD), Autonomous Driving as a Service (ADaaS) and other user-centric services. NIO began deliveries of the ES8, a 7-seater flagship premium electric SUV, in China in June 2018, and its variant, the 6-seater ES8, in March 2019. NIO officially launched the ES6, a 5-seater high-performance premium electric SUV, in December 2018 and began deliveries of the ES6 in June 2019. NIO officially launched the EC6, a 5-seater premium electric coupe SUV, in December 2019 and began deliveries of the EC6 in September 2020. On January 9, 2021, NIO ET7, the smart electric flagship sedan and NIO’s first autonomous driving model, was officially launched.”

Basically, the company is Nio Inc. In my words, it is an EV manufacturer that (1) really has a focus around the customer and (2) has a unique battery solution (as compared to all its competitors, other than 1 other company) via swapping of batteries through their swap stations.

Part 2: The Segment of Fundamental Scorecard That Caught My Eyes

Fundamental Scorecard is a visualization tool that simplify all quantitative information into graphs while calculating the intrinsic value using timeless theories, and providing conclusions about the company for the reader to have an easier time to make decision. 

What caught my eye is the increasing revenue, the reduction in losses, no issue in its balance sheet and the HUGE Growth. This made me look forward to the understanding about the company's story.

If you are interested to know more about EVs in the investment world, click here.

Part 3: My Qualitative Research with USCCR

Similar to Fundamental Scorecard, USCCR is my own simple way of doing Qualitative Research. Qualitative research is important because it Builds Conviction of a company you are intending to buy or is holding, even if the whole world is against you. It will Reduces the chances for you to make Rash Decisions that you may regret later.

Understand The Business – Solely China Only Revenue. 93%:7% Vehicle Sales:Other Sales

Scalable / Macro Trend – EV Trend + China Wants To Be An EV King + Support from Government

Competition – EV Companies in China – Tesla, Xpeng, Li Auto, Geely, BYD, etc

Catalyst / Future Growth – Overseas Expansion, Working with Sinopec/SAIC (China Government Related Entities)

Risk – Sudden lack of support from Government

To explain further:

1. Nio is solely selling its vehicles in China. But that is possible to change in 2021, as stated in their latest transcript, there are announcement that they are intending to move into Norway. US is also not rule out, but probably in the longer term.

2. China has a change in its EV subsidies policy. It is reducing its subsidies for EV but there is an exception – As per article, “However, China’s subsidies typically apply only to vehicles priced under RMB300,000 with a notable exception granted to vehicles built with battery swapping tech—a process that allows consumers to easily replace the car’s battery once it runs dead or needs an upgrade.” 

Nio has a battery swapping service for its vehicles. 

This policy will force those EV manufacturers in China without a battery swapping service to consider having battery swapping service for its future model.

3. Nio is not the only EV manufacturer having a battery swapping service. But it is one of the Top 2 entities having this service in China.

4. As per article, “SAIC Motor PV and Aulton, a Shanghai-based EV transport solution provider, signed a memorandum of understanding on March 11 to carry out strategic collaboration on operation of battery swapping services.” Aulton is a Nio-backed company.

5. Based on article, there are rumor that there is a potential partnership between Sinopec and Nio on placing their swapping stations on the petrol stations. Nio has an issue with expanding the number of battery swapping stations in China as it is stated that there is a need to purchase the land. With the partnership with Sinopec, they can safely place their battery swapping stations at the petrol stations. In the meanwhile, Sinopec has 30,000 petrol stations in China.

Conclusion

Nio Inc. many positives going for them in 2021 if everything is EXECUTED properly. I have yet to mention that there is a possibility of a new factory to expand production soon, or ET7 to be launched by Q1 2022 and it will come with Autonomous driving, or the possibility of mass market model under another brand.

In my opinion, Nio is currently like Tesla, when it was at the initial stages - a company that seem to have a lack of fundamental with crazy ratios that is solely driven by the story. 

But this story currently is heavily supported by Nio’s Big Brother – the China Government. China is a directive driven economy and companies that move along with the policies will win the day.

The other side of the coin is also true. The main risk is that this support from the Government can be taken away almost immediately with a change in policies.

Nevertheless, China has stated that it intends to sell only 'new-energy' vehicles by 2035. As per Wikipedia, despite being the country with the highest amount of sale of EV, it has the lowest plug-in electric car ownership per capita.

Thus, a rising tide lift all boats – the eventual huge EV demand now and in the future, will cause Nio fundamentals to improve significantly over time and the share price should follows.

I will be having a webinar with Lyn on 27 March 2021 (2 to 4) discussing further on different EV manufacturers through the use of FA + Story + TA – Read about it more NOW!