Tuesday, May 30, 2017

A Review Of The Recent Results Of A Comeback Kid, A Landbank Monster and A Samurai Chef

With another wave of results being released, I will be doing my 2nd review of some of the counters in my portfolio.

Read the 1st review here.

The Comeback Kid - Singhaiyi Group Ltd - Full Year 2017 Results
[No Review via Super Scorecard]

Read here for the past write up of this counter.

The reason this counter was name as  'Comeback Kid" because I bought, sold and bought this counter again over the space of 5 months.

In January, I purchase this counter in at 97 and sold some of it at 113 within 2 days due to the sudden rise. By mid-Feb, I sold all of the remaining shares of this counter at 135.

In April, I decided to repurchase this counter over 3 tranches at 120, 116 and 117. This was because based on my previous write up, I believe there are still many catalysts yet to be realised Thus, I was hoping that during the release of results, the company will be providing some catalyst to push the share price up.

However, this did not materialize and the share price went to to a maximum of only 125.

For now, my decision is to hold and average down, if necessary, as one of the main catalyst has not yet been realized in any of their past financial reports - that is the revenue and profits in "The Vales" and "City Suites" has yet to be included in any of the past reports.

The Landbank Monster - Bukit Sembawang Estates Limited Full Year 2017 Results
[Super Scorecard Result - 7 points/Just Pass]

Read here for the past write up of this counter.

This is one of my favourite counter because:
- Unlike its competitors, it has a huge landbank that are freehold and these land are stated at cost.
- Cash pile can continued to pay numerous years of dividend of 33 cents.
- Super strong balance sheet with very low liabilities.
- High free cash flow.

With the above positive pointers, despite revenue falling almost 50% and net profit falls 21%, I will continue to hold this counter.

Nevertheless, we still need to be cautious about this counters' developments. As stated in their full year financials, it is stated that "Other operating expenses increased by 81.4% as compared to FY2016 mainly due to additional allowance for foreseeable losses on development properties of $5.8million for Paterson Collection".

The Samurai Chef - Japan Food Holdings LtdFull Year 2017 Results
[Super Scorecard Result - 6 points/Fail]

Read here for the past write up of this counter.

For those that followed my blog will know that I bought this counter only on Early-April.

At that time, I was predicting better results and hopefully higher dividends. However, the company did produced better results but the dividend remains, Therefore, the share price did not really rise.

Nevertheless, it is important to note the main positive point - "...the board (“Board”) of directors of the Company (“Directors”) intends to recommend dividends of at least 50% of the Group’s audited consolidated net profits attributable to shareholders per financial year, an increase of 10% from the current target dividend payout ratio of 40%.." - of this full year results.

Therefore, I will continue to hold this counter despite the Super Scorecard Results change from pass (previously was 7 points) to fail.

In Short

As stated above, I will most probably continue to hold these 3 counters for a longer period of time or at least till 2018.

But as per stated previously in the last review, I am currently re-balancing my portfolio. Thus, I may still change my decision on a later date as I am already sitting on paper gains for the counters above.

For those who is interested in Super Scorecard, do read up on the Launch of T.U.B Circle. If you are interested to sign up, feel free to contact me.

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

Pssst... I will be coming up with "The Ultimate Workshop" most probably in the last week of june. Stay tuned.

Monday, May 22, 2017

An Interview With Faye Wang

For this month's interviewee, you may not really know her (yup, at last, an interviewee that is a female!), but she is actually a stock market analyst on InvestingNote.

I first noticed her was when she posted her analysis of Sheng Shiong on InvestingNote. It was quite detailed and seems to have addressed some of the changes in Sheng Shiong over the last few years.

She has also continued to contribute to several articles on The Signal Blog, which I felt were interesting and provide a good overview of the counters as well as its respective industry.

Therefore, with this interview, I felt it will be good for us to know her better and understand her thought process when she invest or analysis. 

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

1. Tell us more about yourself and why did you join investingnote?

Faye: My name is Faye Wang. I read economies in my undergraduate years, and found myself extremely interested in corporate finance and different investment instruments. Thus, I embarked on a Master’s degree in financial analysis and fund management at the University of Exeter, United Kingdom. Personally, I believe securities investment do not concern just stock prices, but also involves gauging a firm’s whole business, as well as the industry it is in. Based on that, I adhere to the principles of fundamental analysis and consider myself a value investor.

I joined InvestingNote because I feel that IN is a very unique social network platform that allows me to synergize my passion for investing and what I learned in my post-graduate course.

I was always interested in the Singapore stock market, which is quite mature and efficient, albeit with a relatively low trading volume. Searching online for resources to educate myself about the Singaporean market, I found IN, and felt that it is an efficient platform, not only for existing investors and traders to share ideas, but also to help prospective investors learn more about the market.

I was also attracted by the very idea of a social network for stock trading and financial literacy that IN represented. By joining IN, I hope users can benefit from my analyses, for which I aim to maximize the utilization of my knowledge, toward their investment decisions.

At the same time, I also hope to gain valuable insights and experiences from the wisdom of the users at IN.

2. How did you get into investing?

Faye: When I was at University, I always heard sayings such as, ‘smart people do not put their money in the stock market’, or ‘retail investors are the one who bear the losses in exchange markets, while profit is being taken by the big institutional players’. As a student with an economics background, my interest in investing was driven by pure curiosity. However, I did not think my knowledge was enough for me to enter the market, and thus I acquired further education and sought work experience in the financial industry. During my postgraduate program, I started dabbling in the Chinese exchange market. My investment activities came to a halt, however, when I commenced my internship at the securities department of ICBC bank, to avoid potential conflicts of interest. It was not all sad news as, while there, I gained valuable insights regarding the Chinese stock market. At the same time, I found that those popular sayings above seemed to be false. Securities are one of the most popular investing instruments as they are well-regulated and liquid. For sure they carry some risk, but wise investors know how to diversify risk by using appropriate portfolios, when to take profit and exit, or when to cut their losses timely.

3. What is your investing style? Any idols?

Faye: I am inclined towards value investing. The basic strategy is buy a stock when it is underpriced (compared to its fair value), and sell when it is overpriced. You may ask me how one decides the fair value of a stock; there are several options:

1) Use the discounted cash flow or other models to calculate the ‘intrinsic value’ of a firm. However, there may be some problems in applying the models. One of them is to choose a growth rate since you it to discount the cash flow or dividend (when using a dividend growth model). Different people hold different views, and one can use revenue growth, historical EPS growth or ROE. Thus, results may be subjective and can really depend on the model or growth rate you apply.

2) Use comparable indicators like the P/E or PEG ratio to help you judge whether the stock is undervalued or overvalued.

In lieu of ‘idol’, I would prefer to use the term ‘teachers’ to refer to the people who influence me in the realm of investing. No one is perfect, people make mistakes sometimes, and thus it is important to learn both from other people's successes, and their failures. There are two people who have deeply influenced me, namely Benjamin Graham and Korekawa Ginzo. Margin of Safety and Risk Control are two important things I have learned from the two masters.

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

Faye: I have put some of my thoughts on the stock-picking process in one article at IN, available from this link.

Inspiration for investment can be very random, like a piece of news about some company saying that it has increased revenue. A screen with preset criteria can also used for stock-picking, and scouring through the annual reports is necessary to get certain selected ratios and numbers. However, all of them just give me a inkling of how the company will perform, and an incentive to investigate further.

My stock-picking process follows the top-down method, where I will choose an industry that I am familiar with or have interest in, such as the healthcare industry. Then, I will set a few key criteria in my mind before starting to screen, such as revenue growth >5%, return on equity (ROE) >15%, P/E ratio <20. I will also generally avoid stocks with excessive leverage (all the numbers mentioned are just examples, and you should have your own criteria). A stock does not have to exactly meet all the criteria, but a rough standard should be satisfied. After deriving the screened results, I will take a look at the company’s financial results and current stock price. Normally I will not buy immediately but will first observe for a period of time.

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

Faye: I would not recommend too many stocks in one portfolio because normal investors will not have enough time to monitor so many of them. For me personally, it is less than 10. However, it really depends on one’s capital, risk appetite and the returns expected. I would also recommend investors put indexed ETFs into their portfolio as a form of diversification. Additionally, the portfolio should cover at least 3 industries or sectors, and it is also recommended to cover different types of stocks such as defensive, cyclical, dividend and growth stocks.

6. Any thoughts about the current market situation?

Faye: The Singapore stock market is currently quite bullish; research seems to indicate that this started in the beginning of 2017. However, as many stocks reach their 52-week or all-time high, market corrections can be expected to be forthcoming. All investors and traders should consider their transactions with extra caution.

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

Faye: ThaiBev, Guocoland, Yanlord.

I am interested in the healthcare industry because of the increasing aging population and am optimistic about its future potential, but have not added any stocks in the watchlist as they seem to be relatively overbought lately.

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

Faye: Considering that I myself am also a newbie in investing, I humbly provide the following suggestions:

1) Know as much as possible about the company you are going to invest in. It is good to start from the financial statements, and you can refer to one of my previous articles on how to fundamentally analyse a stock at https://www.investingnote.com/posts/75620. You should also equip yourself with other information such as their business models, nature of the industry the business is in, recent news related to the firm et cetera. Next, you should always have an intuitive forecast or gut feel of future trends.

2) Do not blindly follow others, and always do your own critical thinking. You may always see ‘DYODD’ in other’s post and article, and that is not just for the sake of indemnity. It is true that when many people start to discuss a stock, it is already too late to board the ship. People are emotional, and thus can easily be influenced by others; bear that in mind. There is an entire field of study in behavioural finance called sentiment analysis devoted to studying how emotions can affect stock price movements.

3) Always keep learning about the market. Read financial blogs and understand the different asset classes, old or new. Pay attention to any recent policy changes and consider the consequences they may have on the stock market. Listen to other people’s opinions as another way of learning but remember to have your own judgement.

4) Use InvestingNote! :D

Hope you like this interview series and please do remember to like our Facebook page (T.U.B Investing) and follow me or her on InvestingNote.

Saturday, May 13, 2017

A Review Of The Recent Results Of The Small/Mid Caps In My Portfolio

Updated on 20 May 2017: I should have updated this earlier. I have actually sold off all of BBR Holdings Ltd on 16 May 2017. The main reason is due to my rebalancing of my portfolio. This is one of the counters that I had already made about 20% gain, so it seems to be good to liquidate at that point in time. The selling has nothing to do with the financials or fundamentals of the company. 

Before I start, I like to apologize for the lack of post and updates on my TUB Investing Facebook Page and InvestingNote. This was because of my new role at work (I think I stated this before) and I was overseas recently. In addition, I will be on reservist soon. So the lack of updates will most probably continue.

As per the title of this post, many of my small and mid caps has just released their most recent quarterly results (6 of them were released on 12 May!). However, due to the lack of time, rather than a long lengthy analysis on each counter, I will be reviewing and commenting on them all in this post. 

1. BBR Holdings Ltd - 1st Quarter of FY2017 
[Super Scorecard Result - 3 points/Fail]

- Results were much better, especially when compared with 1st Quarter of FY2016. 
- To understand about this counter better, just read it all from the posts in SG Thumbtack Investor Blog.
- Currently sitting on a comfortable margin of safety and will continue to hold it till end of FY2017.

2. Captii Limited - 1st Quarter of FY2017 
[Super Scorecard Result - 10 points/Pass]

- Result were also better for this quarter in FY2017, as compared to the similar quarter in the last financial year. 
- Although the share price has risen significantly, but this counter still pass the Super Scorecard. 
- This counter should benefit from the additional competition within the Singapore Telecom Industry.

3. Chuan Hup Holdings Limited - 3rd Quarter of FY2017 
[Super Scorecard Result - 8 points/Pass]

- The counter had a poor results in FY2016 and the last 2 quarter of FY2017 were not exceptional as well. However, due to the bullish stock market, the counter seem to have performed much better this quarter. 
- It will report its full year results in August and I am looking forward. Hopefully the view of a special dividend will come true for this year!
- Do note that the Chairman has recently resigned as he went to work for SGX. The new Chairman is also a lawyer and his practice focuses on corporate finance and mergers and acquisitions (as per bloomberg).

4. Ellipsiz Limited - 3rd Quarter of FY2017 
[Super Scorecard Result - 8 points/Pass]

- For this counter, the results were generally "within expectation" and the counter has been JUST passing the Super Scorecard for the last few quarters. 
- The reason I kept this counter in my portfolio was that I have a large margin of safety and I do not really have any semi-conductor companies in my portfolio. 
- Anyway the company seem to be producing some new products and hopefully this will push its revenue and net profit to the next level.

5. Hock Lian Seng Holdings Limited - 1st Quarter of FY2017 
[Super Scorecard Result - 5 points/Fail]

- Rather than selling this counter since it failed the Super Scorecard, I bought more after it become XD. 
- Biased towards civil construction companies as I believe there will be more infrastructure projects moving forward. 
- In addition, the counter currently has an order book of $915 Million. 
- I will continue to hold on to this counter.

6. PNE Industries Limited - 2nd Quarter of FY2017 
[Super Scorecard Result - 9 points/Pass]

- The recent results released on 12 May (after trading hours) announced a dividend of 9 cents. 
- This counter should fly towards $1 this coming monday.

7. Samudera Shipping Line Limited - 1st Quarter of FY2017 
[Super Scorecard Result - 6 points/Fail]

- This counter continue to perform badly, but this is within expectation as the economy and marine industry has yet to fully recover. 
- Will hold the counter for a much longer term if necessary. 
- It is also important to note that this purchase of this counter is based on its hidden asset value and ability to generate free cash flow. This kind of fundamental view will require more time for the management to unlock the counter's value.

8. Tiong Seng Holdings Limited - 1st Quarter of FY2017 
[Super Scorecard Result - 3 points/Fail]

- Despite failing the Super Scorecard, I will continue to hold this counter. 
- Purchase this counter due to its technological advancement in PPVC.
- An order book of $924 Million in construction projects.
- Nevertheless, will need to keep a close watch on this counter.

I will also like to explain that there has been a profit guidance issued for Ocean Sky International Limited. But I will not be in a hurry to sell this counter, because I am interested in this counter's development projects within Cambodia. Nevertheless, I will also keep a close watch on this counter.

In Short

In this review, it seems that my fundamental views for the counters above have yet to change and I still believe in each of their catalysts. This could also be due to my bias as I am already vested in them. Regardless, I purchased these counters with a long term view. So if necessary, I will just continue to hold them.

For those who is interested in Super Scorecard, do read up on the Launch of T.U.B Circle. If you are interested to sign up, feel free to contact me.

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

Pssst... I will be doing a preview talk of The Super Scorecard Workshop and then The Super Scorecard Workshop. Take Note. 

Sunday, May 7, 2017

Review of Singapore's Construction Sector - Part 3

Dear Readers,

This is Part 3 of the Review of the Singapore Construction Sector - the final review of the trilogy.

Part 1 was meant as a more qualitative approach, while Part 2 reviewed the counters via a quantitative approach instead. 

For Part 3, it will be rather short. I will basically be testing each selected counter against, what I am known for, the Super Scorecard.

Do read up on Part 1 and Part 2 here.

So these are the scores for the selected counters - Are you surprised?

Selected Counters
Score via Super Scorecard
DCF and Graham Method Valuation via Cash Profit
T T J Holdings Limited
13 – PASS
Nam Lee Pressed Metal Industries Limited
10 – PASS
Keong Hong Holdings Limited
9 – PASS
Buy – 0.958 and 0.479
Kori Holdings Limited
7 – PASS
Buy – 0.481 and 0.654
Lum Chang Holdings Limited
Buy – 0.483 and 1.217
Tai Sin Electric Limited
Buy – 0.455 and 0.802
OKP Holdings Limited
KSH Holdings Limited
Tiong Seng Holdings Limited
Buy – 0.703 and 0.716
Transit-Mixed Concrete Ltd
BBR Holdings (S) Ltd
Figtree Holdings Limited
Buy – 0.256 and 0.602
King Wan Corporation Limited
Huationg Global Limited
Buy – 0.939 and 1.478
Swee Hong Limited
Ignore due to restructured and new shareholder

Basically 4 counters passed the Super Scorecard, while many more pass via the alternative valuation method - DCF and Graham Method.

However, although I am the creator of the super scorecard, but I am more confident of a counter passing the Super Scorecard via the scoring system rather than the Alternative Valuation Method.

Therefore, I will ignore the "Buy" calls via the alternative valuation method and focus on those that pass the scorecard.

The Counters That Passed The Super Scorecard

Out of the 4 counters, I am most surprised by Kori Holdings Limited passing the scorecard. 

One of the reason Kori Holding Limited passed is due to its high current asset figure, which is filled with trade receivables. Furthermore, its free cash flow over the last 5 years has been negative. Therefore I will be ignoring this counter.

For Keong Hong Holding Limited, it passed the counters due to its great free cash flow generation and high dividend amount. However, its balance sheet is weak due to slightly high liabilities. Anyway, I have always been rather biased against Keong Hong Holdings Limited and I will continue to stay that way unless its share price fall below 40 cents.

Although Nam Lee Pressed Metal Industries Limited and TTJ Holdings Limited passed the scorecard, but I preferred the latter than the former. 

This is due to 3 reasons:

- TTJ bid for projects and have more say in their expenses. Nam Lee's expenses' mainly due to raw material prices and do not have much influence in them.

- Nam Lee's revenue also has a huge chunk from this US or Europe company (Heard it is Carrier right?). There is a huge concentration risk and any changes of this customer's industry may cause Nam Lee's revenue to be negatively impacted. 

- TTJ has been actively moving into PPVC. PPVC is something I stated in Part 1 that I believe it will be the next innovation. 

In Short

Even with the above analysis, do note that I already have quite a few counters in the construction industry. Nevertheless, by the time you read this post, I will have already added TTJ Holdings Limited as another construction counter in my portfolio.

For those who is interested in Super Scorecard, do read up on the Launch of T.U.B Circle. If you are interested to sign up, feel free to contact me.

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

Pssst... I will be doing a preview talk of The Super Scorecard Workshop and then The Super Scorecard Workshop. Take Note.

Thursday, May 4, 2017

I want to help.

This is supposed to be a post on the part 3 of the review of Singapore Construction Industry. But I came across this 2 articles and felt I had to write about it.

Why did people still fall for these scams?

A conclusion I came across is that because these scheme was proposed to the potential investors as a "guaranteed return" proposal and people are seduced by the high returns.

Another reason I came up with is these people do not have experience with other investment and are seduced by these "professionals". 

My view is that if you have experience with investment such as shares investment, you will not be interested in these schemes. Thus, I decide I should try to do something about it.
  1. I was thinking of re-starting a Super Scorecard workshop. But other than just teaching people to fish, I will also want to place the fish on the participant's plate. Basically during the workshop, I want to try to work with participants to decide on what to invest using the Super Scorecards and fundamental analysis.
  2. Another thought I have is to have an ETF fund that allows people to participate in or start my own fund. But I believe I will need to be registered to help people in this way. Thus this should be hard.
So what do you think of the above ways? Do you have other suggestion to help others?

Anyway, here is the writeup of my Contrarian Approach talk with InvestingNote and I really appreciate everyone who turn up.

For those who is interested in Super Scorecard, do read up on the Launch of T.U.B Circle. If you are interested to sign up, feel free to contact me.

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