Monday, September 28, 2015

TTJ Holding Ltd - Fairly Valued?

Now I shall write about another of my stock holding in the portfolio - another value gem found - TTJ Holding Ltd.

Profile in Short

TTJ Holdings Ltd is a company that deals with steel structure works and works on various government projects. It also operates one dormitory under the name of Terusan Lodge 1 in Singapore (but it will end in 2017 ~ A Cash Cow Gone!).

However I am not worried after looking at the presentation slides below:

Order Book For 2016 and 2017

Industry Outlook

Potential Projects
In addition, anyone who is interested in this stock should take a look at this forum thread (more good stuff)!

The Value Stock Scorecard

Price: $0.385 (as at 28 Sep 2015)

Net Current Asset Per Share: $0.299 (-28.55%)

% Cash of Price: 62.51%

% Cash of Current Asset: 65.91%

Cash/Debt: 506.687 times

Discounted Net Asset Value: $0.316 (-21.69%)

Price to Sales: 1.429

Earning Yield: 11.59%

Dividend Yield: 20.78% (FY2015 Dividend has increased till 8 cents but not deem as special).

Debt to Equity: 0.13%

Profit Margin over 10 years: Able to improve/maintain profit margin at more than 15% despite lower Revenue.

10 year average PE: 9.12.

10 years Average ROE: 20.63%

10 years Average ROA: 11.54%

Value Stock: Yes – 9/14

Why So Good?

Great Profit Margin, ROA, ROE - The ability to generate great returns despite having lower revenue and within a difficult environment.

Order Book for 2016/2017 fulfilled - With the order book has been fulfilled for 2016 & 2017, revenue should be "saved". The question is if the management is able to maintain the Profit Margin. However, over the last few years, the company has managed to improved the profit margin since it was listed. Thus, without any change in the management team, I deem the ability to continue to maintain the profit margin to be unchange as well.

Further Potential Projects - As the Singapore Government will continue to improve the country's infrastructure and also to "save" the GDP, the company's track record will put them in the lead to get these projects as well.

Why So Bad?

Dormitory Business will end in 2017 - A big chuck of the revenue will be gone in 2017 as the lease expires. This has been a Cash Cow for the company since it was leased. Other than its main business, the company will need to find other avenues to earn more passive income.

In Short

Current net asset value is already more than 20% below the current share price. After 2017, profit margin may also fall and the quarterly result in 2016 will be a major indication of how the company will move in. With the above factors taken into account, TTJ Holdings Ltd seem to be near to the fair value now (I believe the price should be slightly more than 40cents in view that it is still deem as a value stock), unless the bumper dividend of 8 cents in 2015 will continue till 2016 or the management managed to secured another passive income avenue.

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

Sunday, September 27, 2015

The Value Scorecard - Amendments

Hi Guys,

I have been reading more and more lately and felt value investing should be about Balance Sheet than Income Statement, or Book Value rather than Earnings or PB ratio (Price to Book) rather than PE ratio (Price to Earnings).

As the previous Value Scorecard has given more weightage towards PE, I have adjusted the scoring for PE factor.

I have also adjusted the factor for:

1. Cash Per Share as a % of Price from 70% to 68%.

2. NAV and Share Price difference from 50% to 30%.

Do note that depsite the amendments, there is no change that Chuan Hup Holding Ltd is a Value Stock.

I also intend to share this Value Scorecard. If you are interested in trying out this Value Scorecard, please like my Facebook Page and comment that you are interested on the Facebook post or on this post. Thank you.

The Value Scorecard

Thursday, September 24, 2015

Eastern Holding Ltd: A miss opportunity

Eastern Holding Ltd is an investing holding firm that engages in publishing and property development activities.

It caught my eye over the last few months because of a huge stock price decrease due to a huge one time dividend that was given. Do note that the company did not give out any dividend other than this 1 time dividend.

If I remember correctly - the stock has low debt and the net current asset value was close to the stock price.

Nevertheless, even after the numerous analysis on the stock, I decided against buying the stock – Mainly due to the fact that I am unable to predict if the company will continue to give out dividend.

Anyway Christmas came early for shareholders of Eastern Holding Ltd as its majority shareholders have decide to delist the company at 42.5 cents (18% above the current price).

Sadly this is definitely a missed opportunity for me.

But as an investor all these years, I have encountered too many missed opportunities in the market (like selling SATS earlier than I should).

I have learnt to reflect and try to understand my rational at that point of time. If I am wrong, learn from it. If I continue to believe in that action, move on and not dwell on it any longer. There will always be opportunities in the market.

Note: I have added a few more blogs/website to read - Do take a look! I will also be amending my labels to make it more reader-friendly. Hope it helps.

Monday, September 21, 2015

Views on Invest Idol Winner - Nicholas Lim

As some of you had known (stated in my previous post), I had participated in the invest idol, went on to the preliminary round and then lost.

Strait Times has announced the winner for Invest Idol this morning. For those who had missed it, here is the report.

It has revealed that the winner only had 2 stocks in his portfolio - Lum Chang and Falcon Energy Group.

One of my friend, who practiced value-investing, was quite frustrated with the result - especially when one of the judge is Lynn Gasper, who sits on SGX as head of retail. It seems to be reflecting wrongly on the views that investors/trades should take more risks.

Then in my view, I explained my pointers rationally:

1. I felt that Nicholas's portfolio in the invest idol competition should not be reflective of his personal portfolio. This portfolio is made for the competition. He played the game differently and impressed the judges. Thus, he stood out and won. Imagine you as the judge and had to hear countless contestants talk about similar companies, how boring is it?

2. His reason for Falcon Energy Group is something I missed out. Its an interesting perspective. However, I still dislike that they are holding on so much debt, especially in this environment. Thus, I am staying focus (Haha...kenichi as you always tell me to stay focus).

3. Nicholas is a full time trader. We are all part time investor, full time worker. He definitely has to take more risk to earn back "what he missed out as fixed income". For him, trading is his fixed income. Investment is our passive income.

4. Anyone who copied Nicholas' portfolio will only received short term benefits if they do not have the holding power/analytic skills like Nicholas. Worst off, they may end up losing a lot more.

5. There must be a balance in the Singapore Market to keep it going. For every trader, there is an investor. For every high risk taker, there is one like me who prefer capital preservation.

Anyway, I am looking forward to invest idol 2 and will still participate again. I find it a good learning experience.

Sunday, September 20, 2015

The Value Portfolio - Recent Actions and Views - Post 2

Just a Short Update on My Portfolio:

1) ISDN Holding Limited
2) Sin Ghee Huat Corporation Limited
3) PNE Industries Limited
4) Chuan Hup Holding Limited
5) LHT Holdings Limited
6) TTJ Holdings Limited
7) Accordia Golf Trust
8) Singapore Telecommunications Limited
9) Sapphire Corporation Limited
10) SEMBCorp Industries Ltd
11) Macquarie International Infrastructure Fund
12) Suntec Real Estate Inv Trust
13) Oversea-Chinese Banking Corporation
14) CH Offshore Ltd
15) Maxi-Cash Financial Services Corp Ltd
16) ST Engineering Ltd

Sold M1 and SATS - As per previous post, I stated I will sell my "In-the-money" stocks at that time. What a WRONG Call - Market didn't tanked further and SATS woke up to be a bigger giant and it got into the STI index. M1 has continued to hold the ground (although more justified in my view). Nevertheless, Cash is king at this time and I will continue to look for more value investment.

Bought ST Engineering Ltd - Became an ST Engineering Ltd's shareholder recently. Got it at near the 52 week low price. In my view, engineering seems like a high margin business (But competitive) and this company has many connections with Singapore government agencies and state-own businesses. May do a write up on them soon. Stay tuned.

Previous Post: The Value Portfolio - Recent Actions and Views

Saturday, September 19, 2015

Recent Views on Investment Environment (As of 19 Sep 2015)

I will be categorizing my blog post more systematically, so it will be easier for readers and even myself to trace back to my previous writing.

By now, all of you will know that Fed decided not to increase the interest rate. Personally I am a bit sad as I was hoping for an interest rate increment so that price of the stocks in my watchlist to go lower (This is based on the assumption that an increase in interest rate will cause market downturn).

However this inaction of not increasing interest rate has caused people to wonder - when will Fed start increasing? Oct? Dec? We will have to wait till the next meeting.

Nevertheless, with everyone expecting an increase of interest rate and Fed not doing so, has caused the market into turmoil. Many markets went down significantly the next day but China went up. STI only react minimally. 

This will definitely caused the market volatility to continue with everyone guessing what will come next. As I have told some of my friends, this volatility may last till year end. Liquidity is still very important.

China and Malaysia 

Other than Fed keeping investors on our toes, China and Malaysia are also keeping us on our toes. You can never know what will happen next.

China has changed its policy to counter the significant drop in its share prices and invest millions/billions of its country's pension fund in the China Stock Market. But how long can it hold? 

Due to the 1MDB scandal, the country's stock market did dropped significantly. However, their PM has recently announced that the state equity investment firm will invest $6.6billion into the stock market and it has caused the bull to come back to its market. On the other hand, Malaysia Currency is also being beaten down and even more badly. Recovery does not seem to be around the corner. 

I just feel everyone should just NOT invest in any China/Malaysia Companies. However, if the company manufactures in China/Malaysia or sell its products in China/Malaysia, I guess this is unavoidable. Investor will have to manage their own risk.

PAP won by a major landslide

Yes. PAP won by a major landslide. I was just hoping for a more diverse parliament/government (Not that I am a supporter of any party).

Anyway for many of the investors, this should be a happy event. This meant that there will not be any major changes in our country policies and our government will continue to be stable and improve the business environment.

Especially for the Blue Chips investor, I guess Temasek Holding/GIC will not have major changes and any VERY significant drop in shares prices will be supported eventually.

Note: I have started a facebook page for my blog. Do support me and like the page if you like my writing.

My Previous Post on my views on the market:

Post 1: Lets Talk about Telcos, AIIB, Japan Investment...
Post 2: Lets Talk about Telcos, AIIB & ICT Tenders, Investment Thoughts...

Sunday, September 13, 2015

Chuan Hup Holding Ltd

I am back again - Went on an overseas trip lately.

When I am back, the market became red. And then green. And then red. You can never catch the bottom in this volatility. Thus, as usual, my advice is to invest in good quality company with a long term view.

Therefore, I shall talk about one of the quality company in my portfolio (which I am deeply vested in) - Chuan Hup Holding Ltd.

Profile In Short

Chuan Hup Holding Ltd (CHH) is an investment company which has a major stake in PCI Ltd (Listed in SGX). It also has some shareholding in Finbar Group Ltd - an Australia property development company listed in ASX. CHH collaborated with Finbar Group Ltd and is deeply involved in various Australia Property Developments.

Previously, CHH also had some shareholding in CH Offshore Ltd but it has since been sold off to Falcon Energy in early 2015.

The Value Stock Scorecard

Price: $0.320 (as at 13 Sep 2015)

Net Current Asset Per Share: $0.313 (-5%)

% Cash of Price: 69.72%

% Cash of Current Asset: 55.89%

Cash/Debt: 13.623 times

Discounted Net Asset Value: $0.387 (+14%)

Price to Sales: 0.979

Earning Yield: 21.77%

Dividend Yield: 3.03%.

Debt to Equity: 3.82%

Profit Margin over 10 years: Significantly High (In view of profile of investment company).

10 year average PE: 5.35

10 years Average ROE: 13.96%

10 years Average ROA: 11.85%

Value Stock: Yes – 9/14

Why So Good:

Huge Cash Pile – US$158mil. Being an investment firm, Cash is King. Cash will give the firm the ability to invest in any opportunity that arise, especially during the current market situation. Cash will also give the firm the ability to endure through any difficult times, if necessary. Cash will also allow the firm to give dividends/more dividends to the shareholders, like the current year’s special dividend.

Stake in Finbar and PCI – Rival companies may try to acquire these stakes from CHH. This will give CHH the ability to increase its cash pile and the margin of safety for the shareholders.

Very Strong Balance Sheet – As per the figures of the value stock scorecard above, you can deduce that CHH has a very strong balance sheet. This is due to the ability to rank in profit every now and then due to its investments. In addition, it also has a very low PE, very low debt, high ROE and high ROA.

Why Not Good:

Investment Firm’s Business Activities – CHH has been buying and selling its stake in various companies over the years. Thus, the high income is mainly due to its ability to sell these stakes at a higher price. However, this is also due to its management ability to find good quality companies. In future, this may change if management changes, and there may come a time when there is no stake in subsidiaries to sell, then the high income may end. If only, it can suddenly become Berkshire Hathaway, and not sell stakes, but only the ability to buy new companies.

Australia Property Going Downhill – Australia property prices are going downhill as its property’s bubble has burst. Thus, the investment in Australia may not be as profitable as it was stated to be. Future income will goes down till the prices in Australia property started to rise again.

In Short:

Despite the negativity stated above, I am confident that CHH is a good quality value company in view of its huge cash pile and its historical record over the last 10 years. Its ability to find good quality investment and to sell them at a much higher price over the last few years, without the need to request for any rights issue, speaks volumes about its current management team.