Thursday, July 26, 2018

Updates To Big Idea 3

After my update to Big Idea 2, I decided to also do an update on Big Idea 3 after re-reading its annual report.

Big Idea 3's Chairman always give a very insightful context in his Chairman's Statement. Last year, he initiated a cautious approach, but the results turn out to be very different - which is great. Because this shows that the management is not aggressive and have a plan for the future. In fact their numbers tie in with their execution - showing successful integration of the strategy in the business.

This year, here are some extract from the Chairman's Statement that got me excited for the future:

"...As we begin a new phase of network enhancements and measured retail expansion, coupled with our overall inventory having been rightsized to our desired level of stock turnover, it is highly probable that this pace of cash generation will begin to moderate in the coming year..."

"...The luxury watch market has enjoyed a pronounced turnaround in the last 12 months - driven by a strong global economy and revived demand from Chinese shoppers..."

"...This positive uptrend continued in 2018, with like-for-like exports rising 10.1% in the first quarter..."

"...We expect the upturn to continue for the next 12 to 18 months..."

"...Despite the good news, the watch industry is still in the process of undergoing substantial change..."

"...Several notable developments in online retailing for luxury watches have taken place in 2017, and this is only the beginning..."

"...And for third party retailers like <Big Idea 3>, the only way to ensure long term success is for us to forge indelible partnerships with the right brands..."

"...Whilst the industry’s focus is on creating a digital response to the disruption that technology and e-commerce are having on the future of the watch world, our response has been to spend the past nine months rebooting our attitudes and approach towards client facing interactions. How, and how often we engage our clients, and the service experience we provide them to gain more understanding of their needs and form even greater intimacy with those customers. We do this because we acknowledge what Four Seasons founder Isadore Sharp has often repeated, “The simple idea that if you treat people well, the way you would like to be treated, they will do the same.” It is therefore our organisational desire to build a high and consistent standard in every one of our boutiques within our entire retail network, with aspirations to be the Four Seasons of the specialist luxury watch retail industry..."

That's all the highlight of the Chairman's Statement.

It basically explains the next quarter will still be positive and this environment could continue at least another 9 Months. But change will still continue to occur in this industry and companies within this industry has to be prepared.

It also state Big Idea 3 will continue with its strategy as per last year and continue the good work done.

In Short

Despite some investors doubting my choice of this company as a Big Idea 3, I still believe, with an sustainable strategy in place and an excellent management that is able to execute the plan, my choice of listing this company as a Big Idea is a correct one.

Nevertheless, in investing, numbers still speak louder than words. In addition, the last quarter of 2017, the company had performed slightly worse off than its biggest competitor despite leading it for the first 3 quarters of 2017. As of now, I will just have to continue to keep a look out on its next quarterly report.

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

If you are interested to know how to measure a moat, do sign up with us to get the latest score of  the moat of all the SGX counters now! At only $10 a month!

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Tuesday, July 24, 2018

Updates To Big Idea 2

Recently I spoken to this acquaintance that was quite knowledgeable on the Australia side of things. I always wonder why Big Idea 2 has a significant exposure in Australia. Thus, this gave me an opportunity to ask more about the property market in Australia and especially those projects relating to Big Idea 2.

Picture taken from britannica.com
Below are the information I remembered. Do note that I did not verify all the information and these are just pieces of our conversation.

1. The Australia Government made it hard to purchase properties in the country (read article).

2. Australians are not good savers and due to Basel ruling, banks are unable to lend out too much.

3. On the other hand, Australia Banks are also very conservative. During GFC, these banks had almost no exposure. However, being conservative, they also did not “go out and grab more market share”.

4. The big 4 Australia Banks also supports New Zealand. Due to regulations and restrictions, these 2 countries can already provide them A$20Bn of net profit. That is why they can continue to stay within their boundaries.

5. Australia is self-sufficient due to their huge amount of resources. They can ignore the world.

6. In Australia market, everyone is mostly after yield. No one should expect huge capital gains. It's a market for capital preservation rather than making significant gains.

In Short

With the above information, I became more aware of why Big Idea 2 is interested to invest/expose itself in Australia. This is because, overall, Big Idea 2 is a conservative company. From my understanding, its’ management does not take big risk. This knowledge have strengthen my view on Big Idea 2.

Big Idea 2 will be announcing their Full Year Results in August and I am looking forward to a better set of results.

But at the same time, I do not think there will be special dividend this year. This could potentially reduce the share price gain despite possibility of having a good full year results. 

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

If you are interested to know how to measure a moat, do sign up with us to get the latest score of  the moat of all the SGX counters now! At only $10 a month!

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

Sunday, July 22, 2018

Categorising My Big Ideas Investing Theory

I have read a few articles on Charlie Munger recently. The articles explains how he influence Warren Buffett from investing in “good business at wonderful prices” with a more activist mindset to buying “wonderful business at good prices”.

I felt similarities in the stories from the way how Simple Investor SG had influenced me to how I invest lately. Previously I have always been a more “value-oriented” investor, but even since we started Fundamental Scorecard website together, I have been looking at his Full Analysis scorecard (which includes the recent Moat scoring). Then a few months ago, I started on my Big Ideas Investing Theory which has been significantly influenced by him (as explained in Big Idea 1)

Since the start of Big Ideas Investing Theory, I came up with 9 Big Ideas – Some were long held companies and some were just purchased a few weeks ago. 

Recently, I tried to further categorize my Big Ideas into certain theories in order to understand how I could continue to breakdown and understand this Big Ideas Investing Theory. In addition, I tried to understand more about the moats lately and this article had deep correlations with Michael Porters – Porter’s 5 Forces theory.

I remembered someone told me before on reading on the book about Porter’s 5 Forces. Maybe it is time to do so! 

Before I proceed, I like to briefly explain (again) that Moats are essentially durable competitive advantage.  

Major 3 Categories of Big Idea Investing Theory: 

Widening of Moat

Widening of Moat - Companies that are still growing. It may not have a huge competitive advantage now, but you can see the increase in competitive advantage in their letters/annual report/financials. Thus, these companies may not be the top tier companies, but it could eventually reach there.

Big Moat

Big Moat – These companies are most probably big market cap firm with huge market share/global presence. They could be market leaders with HUGE market caps and it will be hard for new entities to out-muscle them within the same space. However, Big Moat also does not mean its moat will not be reduced. Thus, Big Moat companies should not consist of only a buy and hold tactics.

Undervalued Company with Huge Cash Pile 
 
Undervalued Company with Huge Cash Pile – Companies with huge cash pile and still undervalued at the current market price relates back to my older investing theories, especially so in value investing. Even though I had change in the way I invested, I still believe in investing in companies with a huge cash pile with a much lower Price to book value. The huge cash pile will allow a company to engage in actions that could push the share prices higher, such as acquire companies or give out special dividends.

It will be interesting to see how my portfolio will change in August as many companies announced their results. I do have 3 different companies within the Big Ideas Investing Theory that will announce their full year results and I am looking forward!

In Short

The purpose of writing this post is: 
1. Allow myself to further understand about my current investing strategy; and
2. Emphasized that moats are important in such an investing theory; and
3. To explain that one’s investing method could change as you progress along your investing journey. 

In addition to point 3, with so many business disruptions in the world and volatility in today’s market, we should not be afraid to change our views or investing methods. But despite these changes, our main mindset should not change. 

For me, my thoughts of fundamental investing has never change. I only enhanced the methods revolving around Fundamental investing.

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

If you are interested to know how to measure a moat, do sign up with us to get the latest score of  the moat of all the SGX counters now! At only $10 a month!

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

Monday, July 16, 2018

From “Not-So-Big idea” To Big Idea 9

My initial draft did not conclude this purchase as another Big Idea. But after completing the draft, I decided that this investment is a Big Idea.

I will not be hiding the identity for this company because, at this point in time, I will have already revealed the company name on my Facebook Post.

Big Idea 9 became the talk of the town once the cooling measures were announced by the authorities, and within the same period, a bigger rival got listed.

This was evidenced from my research as well. There were so many articles written by analyst and bloggers (Thelittlesnowball, Motley Fool, Heartland Boy, PropertyinvestSG) that it was hard to find hidden information that could possibility sway me to the “other” side.

Do note that this investment is very new and resulted in my portfolio increasing to 16 companies.

I am NOT taking a step back in my consolidation of my portfolio. I have been looking at Big Idea 9 for many weeks before I decided to invest in it. The recent share price drop of more than 50% from its peak has make it too tempting not to continue to say “No”.

Reasons Why This Counter Qualifies as a "Big Idea"

(Do note that I will not be talking a lot on the financials in this post because it has been stated so many times in other blogs or write up.)

1. History

To really understand the history of Big Idea 9, you need to understand its history. The company was initially purchased by Northstar Group from Hersing Corp for $130 Million in 2013.

Then after almost 4 years, it was relisted at 66 cents which valued the company at $234.43 Million (Number of Shares = 355 Million).

At that price, it was an 80% gain for Northstar Group. Based on the number of shares, the breakeven share price for the initial purchase amount by Northstar Group is $0.366.

However, this was the price 4 years ago. For a Private equity firm that continues to own 72% of Big Idea 9, I believe the wait must be profitable.

After incorporating a 5% compounded gain over 4 years, the “supposed” minimum share price by Northstar Group will be $0.443. In fact I believe this is still too low for the private equity firms.

Nevertheless, this minimum share price is about 35% below the current share price, which in my opinion is not a huge buffer and Northstar Group will most probably not let it continue to slide further.

2. Time Lapse And Projects Secured

New cooling measures are announced on 6 Jul 2018. But the 2nd Quarter Results will be from April to June. Thus, the 2nd Quarter results that will be announced most probably in August 2018 should not reflect the sudden drop in property purchases due to cooling measures.

Furthermore, Big Idea 9's Q1 results has been great and it should flow into its Q2 results. This is similarly expressed in its latest annual report, which states that “To date, Big Idea 9 has already secured more than 20 projects to be launched in 2018, with more than 11,000 residential units available for sale. This is more than double the 4,800 units (from 9 projects) in 2017 and signifies greater growth potential for Big Idea 9 and more sales opportunities for its’ salespersons in 2018”.

3. Enblocs And QC Certification

This was bought up by SG TTI on IN under Kenny Chia's Post. I guess it stuck a chord in me and it made me re-wire my thoughts. 

From my research on the Singhaiyi post, you just need to look at the number of Enblocs completed/announced since the end of 2017 till June 2018! Just imagine the number of developments that will be continued to announced throughout the year, as well as the projects already secured by the company as stated in the point above.

Screengrab taken from newcondolaunchonline.com
Although one can argue developers can always delay the announcing of the projects, but they will still be required to sell all of the units within 7 years of completion. They have to make sure that these developments have to be SOLD one way or another. 

During the not-so-long-ago initial cooling measures, if you had invested in developers then, you will have realised the actions developers take to “escape” such measures were never beautiful.

Furthermore, as expressed in the RHB analyst report, “For one, developers have started countering the measures with “more realistic” pricing and the offers of discounts of 5-10 percent in new launches, RHB said, adding that should draw more first-time buyers. Developers were also offering higher agency commissions of 3-4 percent at some launches, compared with the typical 1.5 percent, it said. It also noted that around 200 more units were sold last week at new launches, despite the measures.

Furthermore, around 35 percent of its first quarter gross profit from the “very stable” segments of non-brokerage income, leasing and HDB resale, it said.”

This was one of the reasons that resulted in me having a lack of confidence in its long term financials. However, after writing out my thoughts, it actually gave me more confidence of the company’s long term financials.

Do note that additional cooling measures will have impact on most probably in Q4 2018 and Q1 2019 financials, but at the current price, this impact should be “a piece of cake” for the EXPERIENCED LONG TERM HOLDING INVESTORS. 

4. Future Expansion 

The point of Future Expansion has been bought up by Heartland Boy in his initiation report. I do believe this will be a major catalyst for Big Idea 9 in the few years ahead. 

Screengrab taken from Heartlandboy Blog
5. High Free Cash Flow

I always liked FCF generation companies. I believe, out of all the figures bought up by various bloggers and analyst, this was missed out.
Cashflow Statement from Annual Report
6. Property Agents Are Not Property Developers

Property Agents Services will be required, pending full digital disruption. However, one can always argue that SGCarmart has been around for the longest period of time and car dealers continue to be around. 

Furthermore, do note that an oversupply in developments/cooling measures will caused major dents in a developers’ financials, but not for Big Idea 9 which just provide the agencies services. 

In Short

Thank you for reading till the end.

Big Idea 9 is actually APAC Realty Limited.

Before I conclude, I must highlight that all big ideas have its risks. For APAC Realty Limited, its recent purchase of the new building will definitely impacted its cash holdings and its balance sheet will most probably be worse off.

Nevertheless, in view of the various positives and the significant share price drop, I had decided to invest in APAC Realty Limited and make it one of my big ideas.

Moving forward, it is important to continue to purchase the shares in batches as I believe the road ahead could be rather volatile for the company before it goes on a huge uptrend.

One of the major catalyst is the most probably on the company's ability to break out of Singapore and diversifying its revenue in different geographical regions. After all, the cooling measures will only impacts property developments within Singapore. 

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

If you are interested to know how to measure a moat, do sign up with us to get the latest score of  the moat of all the SGX counters now! At only $10 a month!

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

Friday, July 13, 2018

Big Idea 8

Although I have revealed my portfolio and the remaining of my Big Ideas recently, but I have been wanting to writing about this company that I purchase since June 2018 – my Big Idea 8.

I had previously stated I will reveal the company on my Facebook Page post upon reaching 20 likes for that post. It hit 68 likes in almost 3 hours. I was flattered.


Despite the short vested period, I have actually known this company since I started practicing value investing. In fact, I will say this company was initially made famous by Bigfatpurse (Currently known as Dr Wealth) at that point in time.

Reasons Why This Counter Qualifies as a "Big Idea"

1. Understanding Of The Total Asset and Return of “Operating Assets”

Return of Asset of the company based on the latest annual report is 7.65% (Net Profit of $4.5 Million vs Total Asset of $58.9 Million).

Nevertheless, it is important to identify what the assets are made up of before making any assumption if the ratio is good.

Out of $58.9 Million of the Total Asset:

$17.2 Million belongs to investment property;
$8.2 million belongs to financial assets, and
$27.3 Million belongs to Cash and Cash Equivalent.

Thus, the remainder are operating assets amounting to $6.2 Million.

This meant that with only an operating assets of only $6.2 Million, the company is able to generate a net profit of $4.5 Million. This meant that the “Return of Operating Assets” is actually a whopping 72.5%!

This meant that majority of the assets are generating low return and investors will deem this as the management do not know how to use the cash.

But in my opinion, despite the low return, these assets will still be able to generate a return for the investors for the long term. A return of cash in form of dividend will most probably be a 1 time boost for the share price, which will not have a long term effect. Furthermore, these assets are also not really crucial to the company and can be converted to cash if required/necessary or when opportunities appears.

2. Improving Financials


A picture speaks a thousand words. Take a good look at the figures.

3. Undervalued Despite Price to Book near to 1

The Chairman’s statement is what I deem as the most important portion of the annual report.

In its latest annual report, the Chairman statement stated that:

“The Group adopted the cost model to measure its investment property. The carrying value, including the self-occupied freehold office unit, was S$19.144 million as at 31 March 2018. Fair market value as determined by Colliers International Consultancy and Valuation (Singapore) Pte Ltd, was S$33.65 million. The excess of fair market value over carrying value was not recognised in the Group’s balance sheet. The property is unencumbered.”

If investors do not dig deeper into the financials, he will not know that the investment property is currently valued at cost – which is a missed conception.

4. No Debt

The company do not have any debt and holds very little liabilities. This can also infer as the company is able to leverage up if it wants to.

5. Strong Business Model with a focus on R&D 

From my readings, the company have a focus on research and development and seem to be working with some NASDAQ listed companies.

As per Chairman Statement in the latest annual report, it has also stated that “two patents on 4x4 wave 2 wireless module we filed in FY2018 in China were approved in April 2018, giving us a good platform to market our proprietary products”. This meant that it could possibly expand its footing in China.

These are potential catalyst that can push the revenue to greater heights in future.

In Short

Many of the information stated above can be found from articles in NextInsight, threads in Valuebuddies, and Simple Investor FB page.

Prior to my purchase of the company, I was still a bit skeptical about purchasing this company. It was through many of the readings, and verification of each reading that convinced me of purchasing this company, and listing it as a Big Idea.

In my opinion, Big Idea 8 is a company with a widening moat.

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

If you are interested to know how to measure a moat, do sign up with us to get the latest score of  the moat of all the SGX counters now! At only $10 a month!

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

Sunday, July 8, 2018

My 15% Portfolio - Changes After 2 Quarters

It is the time to review "My 15% Portfolio". The previous review in the 1st quarter can be read here.

However, do note that despite aiming for a 15% gain this year, the market has not been kind to me. The current change in my portfolio is VERY FAR from it and it will be revealed later on.

Do note that this portfolio was inherited from the portfolio at end of 2017 and their respective share price was restarted on 26 Dec 2017.

Thus, any gain or losses was just based on the price changes over the last 6 months.

Prior to taking a look at the changes in my portfolio, let me emphasize on the following:

1. This portfolio review is calculated from 26 Dec 2017 and the aim is to review the total portfolio gain after 1 year.

2. The counter's initial share prices are their respective share prices on 26 Dec 2017.

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

4. At times, if stated, the gain could include dividends.

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

End of 1st Quarter 2018
End of 2nd Quarter 2018
Singapore Telecommunications Limited
Singapore Telecommunications Limited
Chuan Hup Holding Limited
Chuan Hup Holding Limited
Captii Limited
Captii Limited
NikkoAM-StraitsTrading Asia ex Japan REIT ETF
Sold All At 2% Loss
Japan Food Holding Ltd
Japan Food Holding Ltd
Netlink Trust
Sold All At 5% Loss
The Trendlines Group Ltd
The Trendlines Group Ltd
Challenger Technologies Ltd
Sold All At 15% Gain
Colex Holding Ltd
Sold All At 25% Loss
TSH Holding Ltd
Sold All At 20% Loss
Starhill REIT
Starhill REIT
HongKong Land USD
HongKong Land USD
GRP Ltd
Sold All At 20% Loss
ABF SG Bond ETF
Sold All At 2% Loss
M1 Ltd
Sold All At 1% Gain
Ellipsiz Ltd
Ellipsiz Ltd
Starland Holdings Ltd
Sold All At 30% Loss
Sysma Holdings Ltd
Sysma Holdings Ltd
CWX Global Ltd
Sold All At 20% Loss
Singhaiyi Group Ltd
Singhaiyi Group Ltd
The Walt Disney Company (USA Counter)
The Walt Disney Company (USA Counter)
Quarterhill Inc. (USA Counter)
Quarterhill Inc. (USA Counter)
Win Hanverby Holdings Ltd (HK Counter)
Win Hanverby Holdings Ltd (HK Counter)
Powershares QQQ ETF (USA Counter)
Sold All At 5% Gain
Goldpac Group Ltd (HK Counter)
Sold All At 3% Gain
Cowell E Holdings Inc (HK Counter)
Sold All At 15% Loss

Additional: The Hour Glass Limited

Additional: Powermatic Data Systems Limited
In addition to the current counters in the table above, I have also bought and sold:

Dutech Holdings Ltd - About 5% Gain

I have stated previously that I am moving into a more focused strategy and created a list of 9 Big Ideas that contributed more 60% of my portfolio. With that change, I have reduced the numbers of companies in my portfolio from 26 to 15. My portfolio is currently down about 7.84% since 26 Dec 2017. I am currently holding on to about 17% cash.

Reasons for the drop in the portfolio were due to the following:
1. Singtel and Ellipsiz are 2 of my biggest holdings and they are on a downward trend;
2. My current overseas counters are also in the red very badly. 2 out of the 3 overseas companies have lost more than 20% on paper.
3. Only 2 out of 9 of the Big Ideas are green. The rest are red.
4. Trade war rumors and cooling measures have also caused the market to fall, and indirectly affecting my portfolio.

In Short

The market has not been nice to the retail investors. Many reasons or excuses could be used to explain on why did this happens. But if we believe in our method and due diligence, we should always be able to sleep well at night.

Last night, when cooling measures arrive, I was still able to sleep well because I did my homework.

Here are some past articles I wrote this year about the initial short market correction:

Steps To Take In A Market Correction

More Thoughts From This Market Correction

And also a post on the Ultimate Scorecard method I use as well as some words or wisdom:

The Ultimate Scorecard Criteria In "Words"

Words of Wisdom and Big Idea 2

Hope these articles will assist you to sleep better during these "sleepless" nights.

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

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of all the SGX counters now! Only about $10 a month!

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