Thursday, March 20, 2008

Cash over valuation - Adventure of the magical deal

The following story is protected material under the copyright act. All rights reserved. No part of the material may be re-produced in any form by any means without the written permission of the author – me lar (fclim). In case you are wondering, figures and names are quoted are fictitious...

Cash over valuation
- Adventure of the magical deal

1. Deciding to sell
My name is Frank and I am in my mid-30s. Like most typical locals, I stay in a HDB flat, which has an outstanding loan that would require me to work and pay off the loan for almost the next 30 years.
The fact that I need the job for the next 30 years has always been on my mind, especially having gone through some recent uncertainties, like the dot.com burst, 9-11 incident and the SARS outbreak…
Nevertheless, in early 2005, the economy seemed better and several of my ‘richer” associates started talks of investing in the local property. I am the least interested, because investing in another property (especially a private one) is beyond my means. Furthermore, I do not want to “have-to” work for another 30 years!
Then, the opportunity came, in the form of lots of flyers in my letterbox. Wow! Units in my humble hdb area is going for more than half a million. It is crazy…
The only sane decision is to sell my unit as well, there is no other better time, for me to get out of the “have-to-work-for-the-next-30-years” trap….

2. Doing the “homework”
Now, the flyers looks fantastic, too good to be true. But is it the real situation? Being a skeptical cynic, I had to check the story direct from the source – HDB. The HDB website (http://www.hdb.gov.sg/) does maintain an e-service to check out recent resale transactions, including the transacted prices. To my pleasant surprise, prices > $500,000 is real and soon the papers starting running sensational stories of breaking the record and pushing the price higher and higher.

How about the current expectations? It is still valid and sane? I started to look out for Saturday papers, where there are tons of advertisement, sometimes stating the (absurd!) expectations.

Another source where I gathered from the HDB website was the Nation Property website (http://www.nationproperty.sg/).

From the above sources, I know where I stay now. It looks like my dream of getting out the “trap” may be possible afterall…

3. Agent or maybe not?
Soon, I started sharing with my family and close friends that I’m keen to “get rid” unit. Almost everybody have reference that can “help” me! How nice… Before I know it, I was convinced by one of the “nice” friend’s friend to sign an exclusive contract, to “market” my unit. After all, the “friend” would be my best partner and “defend” my desired selling price. Nothing less and all other agents’ enquires will be “managed” by my “new found best friend”.
By the way, the exclusive contract was 3 months and it’s a “standard” term as printed on the contract.
Time passes quickly and seems like my unit is not that great after all, its on the 5th floor and not really boast a ‘fantastic panoramic view”.
In the 3 months, there were less than 5 viewings and only 1 offer, of $15k above valuation.
Maybe my dream is just a dream afterall…

4. Marketing on my own
As soon as the contract ended, I decided to take things into my own hand. Being the miser as always, I decided to find as many “free” advertisement as possible! Ha! The following “free” channels were discovered:
• ST701 (http://property.st701.com/)
• Mocca (http://www.mocca.com/)
• Nation property http://www.nationproperty.sg/
The free advertisement proved to be very much useful. Just on the 2nd day, I got a call from an agent. Sounding very professional and enthusiastic, we arranged for a viewing immediately!
The professional agent came, saw and offered me a deal on the spot – the exclusive contract again. Being “fresh from the pain”, I politely declined.
Subsequently, several other agents called. My observation is that it seems like the trainer for the agents are all the same. They all want me to sign the exclusive contract and all for the same reasons!
At the end of 3rd agent, I already made up my mind – no exclusive contract. My standard response to all agents was: “Bring the potential buyer to view, if the deal is closed, you get 1% comms. No need to view, if you do not have ready buyer. Thank you!”

5. Welcome to view my place
Without any exclusive agent, I find myself dealing with lots more phone calls. Also, I realize that some “buyers” are really “agents-in-disguise”! I now also have to sieve the ‘real’ buyers from the ‘fake’ buyers.
Nevertheless, marketing my unit became a hobby that I enjoyed as time goes by. I get to see a lot more tricks, for e.g. nobody really knows how the property market is doing. The agent will tell the buyer – “It is a seller’s market, you can’t be too picky!”. At the same time, the exact same agent will tell the seller – “Lots of enquires but little transactions, it’s still the buyer’s market”.
As time goes by, I realized that there are only 3 agents that brought “real” potential buyers to my unit. I gave them priority information and would try to adjust to their timings whenever it is possible.
However, there was an interesting agent that was not on the list of the 3 short listed agents…

6. Signs of interests
This agent was very nice and polite on the phone. However, the first viewing arranged was tricky; it had to be during office hours. Fortunately, it just happened that somebody was home on the viewing date.
So, came the agent, with the potential buyer. The potential buyer came alone and I was told he was “head-over-heels” with my unit. However, he needed to consult his spouse and son. I was skeptical, probably another one of those tricks.
Then, there was the second viewing. On a particular Thursday afternoon, I received a call from the agent, asking for an “urgent” viewing. Unfortunately, I had to attend to a “free” seminar and could not be at home. Nevertheless, I arranged someone to be home and they came, they saw and they left.
On both occasions, I did not see the agent, nor the buyer.
Finally, the 3rd call came, and the 3rd viewing was arranged on a Sunday. For the first time, I saw the agent and the buyer with the wife and the son. Well, they do look like decent people and I supposed the wife is picky just to be sure the unit is what they want.

7. Sold! Done deal!
Not wanting to appear desperate, I left the agent and the buyer alone for 3 days. Finally, I called up the agent. She said they are keen, but its too expensive. My reply was that if they are really keen, it will just get more expensive in the near future! Furthermore, if they stay out for a long time (e.g. 30 years), the average cost is just a little more…
After several phone calls and haggling (which I am very poor at), the deal was done! It was a $15k discount from what I asked for. Well, its definitely much better than the $15k above valuation that was first offered. The deal was closed at $65K above the valuation.
I can “feel” my dream coming true now…

8. Next, the replacement place
Once the option paper was signed, I launched part 2 of the project, to look for a replacement place.
To my shock, the asking price of the specific area we are keen, have gone through roof. Very run-down units with no shopping malls nearby were asking $80k to $100k above valuation.
I did not bow to the price, just like I did not accept the $15k above valuation.
We re-org and decided to go further away from the City. It’s just a couple more train stations away…
We went to areas where the asking prices were more reasonable, in the range of $30k - $50k above valuation.
We must have combed through the whole town! There were just simply too little choices with our constraints:
• Corner unit
• Walking distance to train station
• Lift landing
• More than 5th storey (in case we wanna sell again…)
• No afternoon sun facing
• Little renovation required
At some point in time, I was quite convinced we are just not being realistic…

9. No more viewing please, putting down the option fee
It is sometimes fate or destiny... After viewing at least 8 – 10 units, we decided to actually go back to the very first one that we visited.
It seems like we have been using the very first unit for all the benchmarking. And well, it seems only the first unit holds up, all the others does not seemed to match it…
Not much negotiation was done (something which I regretted later), as it was within our budget and well, we are just too tired to ask for more…

10. Dream realized!
With all the paperwork done, we have finally gotten out of the trap. But wait, I just realized that it seemed we are not totally out…
My financial planner called me up and told me that I’m not saving enough for my retirement. That is, if retirement, is possible at all…

Well, on second thoughts, retiring totally may not be a fantastic idea. I just came across an article that states there are “proof” that once people retire, they actually die sooner, rather than later…

Oh well, retirement would be another story altogether….


========= THE END ========

Copyright of Lim Fu Chin. All Rights reserved.


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Saturday, November 17, 2007

Asiatic Group Holdings - Half Year Financial Statement

Asiatic Group Holdings - Half Year Financial Statement

Outstanding piece of work! :)

http://tinyurl.com/2vk43t

(link opens another window to SGX website on the statement)

My thoughts:

1. Its a growth story... I think it is just the beginning... and I hope the management will be watchful about the corresponding increase in expenses...

2. Interesting operating cashflow... The next financial statement for 2H-08 would see whether it is sustainable...

3. Its asset is another interesting find... almost 50% of its assets (~ $33.8 mil) is fixed property / equipment. Another 25% of it (~ $16.9 mil) came from long term finance, rights and bond issues... hope it does'nt need this type of funding in future, always better to use its own cash for expansion... just my opinion...

For details of past postings on Asiatic, please see http://tinyurl.com/28ngzd

Have fun investing...

Warm regards,
fc
http://valueinvestmentonsgx.blogspot.com

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Sunday, August 12, 2007

SGX Announcements of Asiatic

One more bookmark for you (link to SGX website):

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Saturday, July 7, 2007

Asiatic - What a 2.8 bagger! And I missed it out totally!

Dear all,

Another investment learning... wished I had more patient... enjoy reading...

Earlier this year (Jan-07), I had expressed my keenest interest and promoted this 'fellow'... For details of past postings, see http://tinyurl.com/28ngzd

After this fellow went up by about 20% in the following month (Feb-07), I actually dumped it for what I thought was another 'better' play...

Needless to say, the 'better' play does not turn out that 'better' afterall...

In the meanwhile, this good fellow continued to do great things for its shareholders... besides delivering what it promised to do in its new area of business (power generation), it continues to enhance its bread and butter business (fire protection) in a slow and steady manner...

In Mar-07, it announced plans to issue more rights and I thought about it negatively then. On hindsight, I could not understand why I was negative about it... another learning...

Anyway, here is the calculation, had I sticked with it since Jan-07 (which you already knew I did'nt)... =)

Jan-07 : Bought 30 lots @ ave price $0.21 = $6,300
Mar-07 : 30 lots would entitled to 75 lots @ $1,050 (rights + warrants)
Aug-07 : If I had not sold out, the total lots = 105, ave cost price per share = $0.08 (i.e. [7350+1050] / 105 lots).

At the current price of $0.23, it is 2.8 bagger!

As always, I am still learning....

If I could quote from a book:
"Fool me once, shame on you! Fool me twice, shame on ME!"

Have fun investing...

Warm regards,
fc
http://valueinvestmentonsgx.blogspot.com
http://tinyurl.com/28ngzd


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Sunday, July 1, 2007

SGX Announcements of Chuan Hup, First REIT, SPC, SingPost, SingRe

SGX Announcements of Chuan Hup, First REIT, SPC, SingPost, SingRe

A list of bookmarks for you (links to SGX website):

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Monday, June 18, 2007

Fun Quiz: Am I a Stock Market Junkie (yet)?

The following is an informal and fun quiz. Please do not take it as a serious guide / advice. So, just relax and have fun 'playing'...

Instruction:

Read through the following questionaire and note down the number of Yes / True as you go down the list. The scoring table is at the end of this questionaire.

  1. I check the stock market & share prices every 5 minutes or less. Anything less, I become physchologically unsecured.
  2. One of my webpage is permanently fixed on either ChannelNewsAsia Finance, Philips Stock Brokerage, Kim Eng Stock Brokerage, Yahoo!Finance, CNBC Finance, MSN Finance and / or any other website that has news relating to the stock market.
  3. I do not know what is the underlying business for the stock and anyway, I think it does not matter!
  4. I know all that is to know about SGX rules for shorting the stock market.
  5. I bought the stock with the intention to sell for a quick buck. Hey, almost everybody is doing it, isnt it?
  6. Everyday evening and / or morning, I 'researched' the shares to 'play' in the newspapers, including StraitsTimes, Business Times, myPaper, etc.
  7. Hey, I'm investing, not gambling! It is different, just that I have a short investing horizon, i.e. intra-day and / or intra-week, that's all!
  8. I take leave to stay at home to trade shares. It is a relaxing hobby. And furthermore, I might make some monies!
  9. Sometimes, I dream about a particular stock and it really run up the next day(s)! I am starting to suspect I have some kind of psychic abilities in the Stock Market!
  10. I started borrowing money so that I can continue to be in this game. Hey, it is just cash flow. I would payback, plus interest soon!

Scoring Table

How many Yes / True do you have? See the score table below:

  1. 1 - 3 : Mildly addicted, please see recommendation 1 below.
  2. 4 - 7 : Seriously addicted, please see recommendation 2 below.
  3. 8 - 10 : Extremely addicted, please see recommendation 2 below.

Recommendation 1
Please take time to consult a professional for further assessment. Some local organization that may offer help are:

  1. Care Corner Counselling: 1800-6-668-668
  2. Thye Hua Kwan Moral Society: 1800-X-Gamble (1800-9-426253)
  3. Institute of Mental Health, Community Addictions Management Programme (CAMP): 6389-2387 / 6389-2389 / http://www.camp.org.sg/

Recommendation 2
Please seriously consider recommendation 1.

Information sources

  1. FAQ About Problem Gambling - http://www.ncpg.org.sg/faq.html
  2. He Never Saw The Sun - day traders who became addicted to buying and selling stock - http://findarticles.com/p/articles/mi_m1318/is_8_55/ai_76577532/pg_1

Disclaimer: The author of this article is NOT trained in any formal physchology or stock market courses, not even the most fundamental type of courses. So, read and take the actions at your own risks.


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Sunday, June 10, 2007

Top 10 things to do when the market is not going according to your direction!

Top 10 things to do when the market is not going according to your direction!

10. Cry out loud (1-3 times maximum) and hit myself on the chest (for 10 times maximum) for being such a fool to listen to rumours.

9. Start to make plans to recover from the mess, i.e. start making the list of who to call to borrow $$$. If need to, visit Credit Counselling Singapore at http://www.ccs.org.sg/

8. Promise myself never to bet on the stock market again. Repeat this step again for as many times as I like (no maximum).

7. Go and catch a movie that has nothing to do with the stock market, possible candidates are Shrek and Pirates of the Caribbean.

6. Go for a jog in McRitchie reservoir - take in some fresh air.

5. Take the MRT train - look around and appreciate that I am already much more fortunate than many people around me.

4. Tell myself it is not the end of the world, it is just a small test that I can handle. After the ordeal, I will be a much better person and live on to tell the tales many years after.

3. Take stock of my skills, knowledge and experience - i.e. how can I help solve problem and get paid for it!

2. Go get a honest job and start earning my worth. Look into JobStreet - http://www.jobstreet.com.sg, JobsDB - http://www.jobsdb.com and ST701 - http://www.st701.com.sg

1. Draw strength from family - they still need and want me to be around, no matter how much trouble I'm in.


Bonus:
* - Re-look at the list above and arrange the items in an order that will help me!

Warm regards,
Fu Chin

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Wednesday, June 6, 2007

SGX Companies with Profit Margin More Than 35%

SGX Companies with Profit Margin More Than 35%

This is an initial list of of companies that seems 'interesting' to review. :) Of course the usual disclaimer applies... And of course, the data may not reflect the latest companies announced results.

Have fun reviewing the list...

Warm regards,
Fu Chin
http://valueinvestmentonsgx.blogspot.com

S/NoCompany nameMarket Cap ($mln)Operating Profit Margin (%)
1HONGKONG LAND HLDGS LTDUSD 10833.344399.8
2UNITED INDUSTRIAL CORP LTDSGD 4297.738167
3FORTUNE REAL ESTATE INVESTMENTHKD 4965.448162.5
4GENTING INTERNATIONAL PLCSGD 5141.991143.6
5CHINA MILK PRODUCTS GROUP LTDSGD 878.22085.5
6SILVERLAKE AXIS LTDSGD 924.82567.1
7GOLDEN AGRI RESOURCESGD 6224.11266.9
8SINGAPORE EXCHANGESGD 9030.00058.2
9ASCENDAS REAL ESTATE INV TRUSTSGD 3588.37058.1
10SPORE LAND LTDSGD 4326.00056.4
11OVERSEA-CHINESE BANK CORP LTDSGD 29701.37054.5
12EZRA HOLDINGS LIMITEDSGD 1606.60054.4
13DBS GROUP HOLDINGS LTDSGD 37848.00054
14MACQUARIE MEAG PRIME REITSGD 1166.59451.6
15CAPITAMALL TRUSTSGD 6655.05751.3
16SUNTEC REAL ESTATE INV TRUSTSGD 3157.99046.2
17CAPITACOMMERCIALTRUSTSGD 4174.81845.2
18SPOREPRESS HOLDINGS LTDSGD 6964.20043.4
19HOTEL PLAZA LTDSGD 808.00043.2
20UNITED OVERSEAS BANK LTDSGD 35797.08041.8
21JAYA HOLDINGS LTDSGD 1170.40041.4
22PINE AGRITECH LIMITEDSGD 9120.00040.4
23HONG LEONG FINANCE LIMITEDSGD 1744.68039.9
24RAFFLES EDUCATION CORP LTDSGD 1610.82038.7
25UOB-KAY HIAN HOLDINGS LTDSGD 1217.51337.8
26SINGAPORE POST LIMITEDSGD 262236.7


Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Sunday, April 29, 2007

Report on SingPost

Report on SingPost

Compiled on 29-Apr-2007 and I am vested in this company.

About the company:

SingPost is Singapore’s leading provider of domestic and international postal services in Singapore. It offer one-stop logistics business solutions and through our extensive retail distribution network in Singapore, a comprehensive range of postal, agency and financial services.

1. Risks and counter actions

(a) Since the domestic postal delivery market has been liberalized on Mar-07, there has not been a credible competitor "appearing" for the domestic mail delivery. I highly suspect that the setup costs and the potential benefits of a duopoly may not be that attractive afterall. Nevertheless, the organization is continuing to enhance its mail processing capabilities to make it ever more efficient.

(b) In this E-era, I wonder if it's business value be sidelined for the next generations. In my opinion, its direct and indirect competitors include email, video conference, VoIP, wireless hotspots and e-payment for bills. Of course, the list goes on. It seems scary at first. Upon further reading of its annual report, it somehow seems to be re-making itself to be relevant. It began to offer direct mails and more importantly collaborated with international publishers (think Harry Potter) and eCommerence merchants (someone got to deliver the physical goods, ya?).

(c) Price - This is fairly subjective. 52 week range is 0.975 - 1.22. 5 years range is 0.63 - 1.27. The 200 days moving average is 1.098. With my purchase price at $1.17, it would cost about $2.24bil to purchase the whole business. For that price, the revenue (05/06) is $0.41 bil, with net profit (05/06) at $0.12bil - about 5.3%. Of course, that is 5.3% profit and an on-going business that may or may not become more profitable...

(d) Lack of established niches - Over last few years, it tried to explore and gain more lines of profit generators. So far, its efforts in finance & insurance distribution seems to be paying off. Going forward, it must keep on exploring what to offer to its customers... if it keep on doing the right stuff, I think it will learn to skillset to do it... but it is too early to tell now.

2. Ongoing Quality of Business

(a) It is a simple business - mail, retail, logistics. Not really that tough to understand from the annual report. Nothing fanciful...

(b) It still has got its monopoly (in domestic mail delivery) so far, until a new-comer appears, which may or may not happen. With the temporary monopoly, it has got pricing power that it has not yet fully exploit.

(c) Scale - Good scale with Volume, Reputation and with Reach (62 branches all over Singapore).

(d) Earning power - For the last 5 years, the results has been good. On the average, profit margin is 28.48%, ROIC is 19.9%, ROE is 31.86%. For the past 5 years it has been profitable and dividends had been duly paid to shareholders. The EPS growth over 5 years is 3.9%, net assets growth is 1.6%. The 05/06 EPS is $0.0646. The business has been generating great positive cash flow over last 5 years and it should not run into cashflow problem at time soon.

3. Management

(a) The board directors and senior management are suspected to be of highly competent people. Combined, the team has got directorship experience from various industries such as tele-communications, banking, fast moving consumer goods, invesment and there is even a MP amongst the team.

(b) Having such a good team may also means that huge salaries are required to retain their services. Based on 05/06 report, there is 1 personnel earning between 500k - 750k, 6 personnel earning between 250k - 500k and 9 personnel earning below 250k. Combined, it is less than 5% of the net profit, fairly reasonable in my opinion.

Why I bought the shares:

1. It is fairly simple to understand its businesses.

2. I expect the business to be 'safely' profitable for the next 10 - 20 years.

3. There might be a potential upside of more than its historical gains of 5%, if the current management developed skills of creating more profit generators, with its ready reach of customer base.

4. The management seems like a competent and honest lot - so far.

5. I highly suspect it will continue to pay dividends as long as it cant find a good way of allocation surplus capital, which is both good and bad. Good as in the management is honest to be giving back the surplus, rather than wasting it on non-profit generating projects. Bad, as in it will attract tax...

6. At the price I purchase ($1.17), its risk-returns is acceptable to me. This means that I prepared to accept the associated risks (of the business and / or profits going bad) for the projected return of 5%, with an on-going business which may or may not become more profitable.

Information sources

  1. Company website at http://www.singpost.com/
  2. Evaluation concepts adopted from Poor Charlie's Almanack

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Wednesday, April 18, 2007

Will my $30K grow into a $1mil gold pot? Episode 2

Will my $30K grow into a $1mil gold pot? Episode 2

Apologies for "missing-in-action" for a long while... hey 27 days in this instant-gratification, can't-wait-a-second, e-Era is like ages? Hmmm... back to the topic on hand...

=== Part 1 ===

First things first, if you have not read the first episode, you may like to do so before proceeding. Otherwise, some of the stuff may not really make sense... :)

Remember about the winning combinations of $33.8k, 12% compounded, 30 years = $1+ mil??

Well, with my limited financial intelligence (what do you expect? I'm a comp sci grad!), I could not find a financial instrument that could have that kind of consistency returns, at least over the last 10 years.... okay, I admit, I probably did not search hard enough...

The only one stock that I could verify to be possible is BRK shares, which is not that tough to figure out... Just read Mr Buffett's most recent letter to shareholders....

=== Part 2 ===

A couple of weeks ago, a good friend of mine, let's call her Mrs A, asked me for my opinions about unit trust investment... Okay, I am bias, in fact, my brain is "telling" me that Mrs G is lazy and leaving the difficult job to the fund manager, who may or may not be better at picking stock than any Tom, Dick or Harry...

However, being a nice guy, I explained to Mrs A, that I usually do not "do" unit trusts as my perception is that its returns is not really that fantastic over long periods of time (say 10 years or more)... and plucking from the air, I blabbered something like its going to be 6-8%....

However, I did promised her to look at what's in the market and see if there are exceptions... Glad that I did, sometimes it pays to be a nice guy?! :)

=== Part 3 ===

Over last couple of nights, I diligently poured over the websites and finally found 1 'independent' website (www.fundsingapore.com) which is run by an independent financial organization in Singapore...

From the website I could virtually perform a "data mining" of the performance of the unit trusts... it was a great exercise.... the only problem was I had to collate the information on the performance of the fund over the last 10 years and "annulized" back its returns... well, with a little *rusty* skills in Excel, I managed to get it up... and guess what, WOW!!!

=== Part 4 ===

If the information I gathered and my improvised formulae is correct, there are actually 5 funds which returned 11.81% to 12.79% over the last 10 years! Impressive! Not many stocks can boast about such returns over the last 10 years!

Hey wait!! This seems to fit into my winning combinations of $33.8k, 12% compounded, 30 years = $1+ mil?!?!

Okay, before I reveal these 5 funds, I must admit, there are critical flaws in the above "mini" research:

  1. I am assuming the past performance will be repeated in the future, by the fund managers. This is a risk, as we all know, the fund managers may be changed by the management, anytime.
  2. The past 10 years performance may have been influenced / skewed by the fact that these economies experienced fast-paced growth over the last 10 years, which may not hold true in the next 30 years.
  3. With my limited experience & finance knowledge, a lump sum investment into Unit Trusts does not seem to be logical as there would be not any dollar-cost-averaging effect.
  4. The data I gathered from the above website expressed return on investment as "...Bid-Bid, including the reinvestment of income...". It may mean that the initial sales charges has been ignored???!!!

So, forget about my "winning" combinations... it probably will not work for Unit Trusts... Anyway, in the current climate, where I'm quite bullish about the US economy over the next 12-24 months, I'm just not ready to put so much money (hey $30k is a lot to me!) into any product...

=== Part 5 ===

Okay the final listing... I hope you do not yawn at the funds.... enjoy the list! :)

  1. First State Regional India, 12.79% annualized returns over last 10 years.
  2. AXA Life-Fortress Fund B, 12.77% annualized returns over last 10 year
  3. Schroder Singapore Trust A, 12.69% annualized returns over last 10 years.
  4. Lion Capital Singapore Trust, 12.08% annualized returns over last 10 years.
  5. DBS Shenton Thrift, 11.81% annualized returns over last 10 years.

Oh ya, if you are wondering, I did share the above list and more with Mrs A. In fact, the full list consists of a total of 33 funds, with returns from 6.78% till 12.79% annualized returns... I do hope she benefited from the mini-research... and before I sign off, the usual disclaimer applies...

Happy investing!

Warm regards,
Fu Chin

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Thursday, March 22, 2007

Will my $33.8K grow into a $1mil gold pot?

Will my $30K grow into a $1mil gold pot?

=== Part 1 ===

Last Friday, on the my MRT trip back home, I overheard an interesting conversation between 2 guys. One of the guy is in the early 30s? (lets call him Yuppie) and the other in late 50s? (Owen) . It went something like this:

Owen: You must buy a house lar! My mother recently sold her house for more than $125k! When she bought in the 60s, it was only $6k!

Yuppie: But now housing so expensive! That generation is over liao....

=== Part 2 ===

Wow! I thought to myself from $6k to $125k! As soon as Mr. Yuppie and Mr. John alighted, I whipped out my trusty scientific calculator and start punching in... [125] [/] [6] [=] [x^y] [(] [1] [/] [42] [)] [=] and guess what is the answer... 1.07497661853...

=== Part 3 ===

Hmmm...buying the property is great!... the compounded interest rate is 7.5 percent, the only problem is I do not have so much cash to put it down to purchase an investment-grade property now... of course unless I take a loan which is out of the question.... I don't like to be in debt...

I started to play with my trusty calculator, after a few tweaks, I *think* got this winning combination... with initial investment of $33.8k, at 12 percent compounded rate, in 30 years, the sum would be a tidy $1,0126,453. YEAH!!!

=== Part 4 ===

The only thing for me to do now, is to save my 33.8k, find an investment that will likely give compounded return at 12 percent consistently for the next 30 years... then I would have my pot of gold.... hmmm..... sounds quite mission impossible.... if you have any candidates in mind, do leave me a comment....

Warm regards,
Fu Chin

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Tuesday, March 13, 2007

Chuan Hup - latest development

Chuan Hup - latest development

Dear friends,

As you might already know, I participate quite actively in wallstraits.com forum. The following is an extract of my posting about the latest development on Chuan Hup....

================================================

Originally posted by Old Friend

Hi Limfuchin san,
Understand from your previous post or your website that Chuan Hup is still undervalued at 34cts. Now, with a takeover offer at 34cts on the table (see attached link), what is your views on Chuan Hup now?
http://info.sgx.com/webcorannc.nsf/ef3ba6cb188613ea482571b2003641d3/4586df8c7ffe78654825729c003a293d?OpenDocument
Thanks in advance! :)
================================================
Dear Old Friend,

Thanks for the note.I was wondering why it halted trading, could be good news or bad news, right?

Then began my adventure....

Firstly, what I did was to do a rojak analysis comparing to its competitors (I used Courage Marine, Samudera Shipping and Singapore Shipping). It is really at face value, as in I look at only the competitors' P/E and book value.

The conclusion is quite sad... I find its comparative fair value to be only $0.21. Not wanting to give up, I dig up on the "Available-for-sale investment", which looks like a 'suspect' of hidden value. In its 2006 report, it is stated as US$218.151 mil.

When I dig further, oh my god, I do not remember that it has so many associated and subsidary companies! Directly held by the company is already 23 of them (I suspect some are just dormant companies) ! So, I zoomed in to those that I can find more and found these 3... PCI(32.69%), CH Offshore(32.12%) and Scomi Marine(28.92%).

To cut the story short, the combined net asset value of the 3 companies above is already US$214.42! Ya, so what right?

So, assuming that most of its *non-dormant* associated and subsidary companies are profitable, I highly suspect that its statement of US$218.151 is now very much undervalued.

The next question is, it is understated by how much? Due to lack of experience and knowledge, I am unable to give an accurate estimate... However, a simple simulation show that, for every US$100mil of understatement of its investment, its per share net asset value will go up by US$0.09. Also, all the 3 companies listed above are making monies...

My final opinion is that it should be worth more that $0.34... its most recent declared net asset value is US$0.2692 (about SG$0.4038)....

So, what do you guys think leh?
*yawn*

Warm regards,
Fu Chin

================================================

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Thursday, March 8, 2007

How to Cope with Financial Anxiety

How to Cope with Financial Anxiety

Dear friends,

Tips for dealing with stock-market stress

http://tinyurl.com/39p7mm

Useful article that calm my nerves....

Hope it help you...

Regards,
Fu Chin

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Wednesday, March 7, 2007

A reference for you - My current portfolio

A reference for you - My current portfolio

Dear friends,

For your kind reference, you might wannna take a peep at my current portfolio as of 07-Mar-07...

Allocation

  1. Cash & money market: 63%
  2. Shares: 37%

Singapore Stocks

  1. ChuanHup purchased at $0.33, speculative - expecting growth & dividend.
  2. First REIT purchased at $0.77, speculative - expecting dividend.
  3. QAF W091116 purchased at $0.18, speculative - expecting growth in QAF, 2 years ago.
  4. SPC $4.16 Speculative - expecting dividend.


US Stocks

  1. BERKSHIRE HATHAWAYB purchased at $3,510.00, defensive, based on past record.
  2. GLAXOSMITHKLINE PLC purchased at $54.96, speculative - expecting growth.
  3. PROGRESSIVE CORP purchased at $23.66, speculative - expecting growth.

As always, this is not a call to buy and /or sell anything at all! :)

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Friday, March 2, 2007

3 Reasons why I am still a novice investor

3 Reasons why I am still a novice investor

Dear friends,

This is the list of reason why I am still a novice investor.

Also, as you read down the list, you will discover why you should take a *huge* pinch of salt from my previous reports. If you already done so, I am gald that I am less guilty of the crime of misleading you.

3 Reasons why you should take a *huge* pinch of salt from my previous report:

1. I did not understand the business, in terms of:

  • (a) The nature of the business and how the company generate its profits
  • (b) Whether the company had a good history (at least 5 years) of generating profits and
  • (c) Whether the company had a sustainable competitive advantage (by earning power / monopoly / etc)

2. I only looked at the latest year's financials. This is really unacceptable now that I know a little more about value investing. At least 5 years of history should be studied!

3. I did not research enough and I did not know the management personally. It is most important toinvest only with honest management with high integrity.

Warm regards,
Fu Chin

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Monday, February 26, 2007

Link to an interesting website - Ask Dr Money

Link to an interesting website - Ask Dr Money

http://www.askdrmoney.com/

This is a wonderful website which I stumbled sometime back. It is very pro-consumers. Hope you find it useful! :)

Warm regards,

Fu Chin

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Tuesday, February 20, 2007

Increasing my cash position

Increasing my cash position

Dear friends,

I just like to let you know that I am increasing my cash position and my target is to have about 85% cash. So, as and when possible, I will be selling out the stocks, including those on my watchlist.

The reason for the target is to gear myself up, to be cash rich when good opportunities arises. Over the last 2 weeks, I have not been able to convince myself of any good company at attractive prices, both in the US and SGX market. Having said that, I will start buying again, when there are good companies at attractive prices.

If you are curious, I am "parking" my cash in a local insurance company's money market fund. Hopefully, the interest earned will at least beat the inflation and not cause my hard-earned monies to shrink... do email me, if you wanna to find out more...

As always, this is not a call for you to do anything at all. :)

Have fun investing...

Warm regards,

Fu Chin

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Friday, February 9, 2007

Asiatic Group - hoped that you have gained from it...

Asiatic Group - hoped that you have gained from it...

On 21-Jan-07 (Sunday Times), I speculated that 3 stocks will go up by 25%. I am not quite convinced myself then. :) Well, if you had went along with the speculation, you would be 25% richer...

Are you asking... what? Will it go up somemore? I dunno! I suspect so... Till what? Hey, I am just a novice, with only 2 years of investing experience! Further, this is just my passion and not my full time job! :)

Anyway, during my research in early-Jan 07, its trading price was around $0.19. At the end of today's trading it is about $0.24, thus an increase of about 26.3%.

All related postings about this company can be found here: http://tinyurl.com/28ngzd


Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Tuesday, February 6, 2007

My Watchlist on 05-Feb-07

My Watchlist on 05-Feb-07

Dear friends,

As the market rallies to new heights, I am getting more worried about the next correction.

However, as I have been prudent (hopefully) with my purchases, I do hope to keep invested for the long term. However, the temptation to take profits is high...

Do share your comments / thoughts... :)

A consolidated watchlist, for your reading pleasure:

S/No

Company Name

Evaluation Date

NAV

Price Bought

Close Price

Gain / (Loss)

Report Links

1

Asiatic

05-Jan-07

$0.25

$0.197

$0.205

4.06%

Click here

2

SMRT*

19-Jan-07

$0.398

$1.14

$1.51

32.45%

Click here

3

SPC

09-Jan-07

$2.95

$4.14

$4.46

7.72%

Click here

4

Straits Trading

28-Dec-06

$3.62

$3.50

$3.84

9.71%

Click here

5

F&N

14-Jan-07

$3.07

$5.35

$5.40

NA

Click here

6

HTL

28-Jan-07

$0.54

$1.02

$1.00

NA

Click here

6

Chuan Hup

31-Jan-07

$0.471

$0.33

$0.325

(1.52%)

Click here

*SMRT - NAV as per latest results released, the detailed report to be updated soon. This stock was purchased before I started this blog. Hence, I would not have purchase it, if based on my evaluations. Hence, the performance so far is not based on the theory that I am practising since I start this blog...

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Friday, February 2, 2007

Poh Tiong Choon Valuation Report

Poh Tiong Choon Valuation Report

Evaluated on 01-Feb-2007 and I am currently not invested in this company.

About the company:

  1. Core Business: The principal activities of the Company consist of the provision of services relating to land transportation, warehousing,stevedoring, container services, hiring out of equipment, leasing and general contracting
  2. Date of Listing: Apr -1999
  3. What I like about this company: The company's management are also substantial shareholders (i.e. their fortunes also tied to company performance). Management is very experienced in its industry, since 1950s. Transportation industry - I like its predictability... market up or down still need transportation. The only risk here is that I do not know how much does the transportation component contribute to PTC revenue and profit.
  4. What I do not like about this company: Seems to be lacking of independent / external directors. Only 24% of the assets is in Cash and A/R. Majority of the rest (63.53%) is classified as Plant, Property & Equipment. Revenue increased by 14%, but profit decreased by 53% because of higher diesel and interests costs and setting up of newly formed subsidaries.
  5. Competitive advantage (if any): Logistical know-how in its industry? I am really not sure if this make sense. Let me know your comments...

Valuation Statistics (base on 1H06 financial report)

  1. Earning Per Share: $0.0072 (annualized)
  2. Price/Earnings ratio : 25.30 (annualized)
  3. Operating Profit: 3.13%
  4. Return on Equity Ratio: 2.34%
  5. Current Ratio: 1.52
  6. Cash & Receivables per share: $0.089
  7. Debt/Total Equity Ratio: 1.04
  8. Net Tangible Assets: $0.1792

Conclusion

  1. Price: $0.20 (02-Feb-07, PM)
  2. Est Fair Value: $0.2152 (highly subjective)
  3. Maximum Price I would purchase at: $0.15 (highly subjective)
  4. Price to Est Fair Value: 92.93%
  5. Final word: Not very appetizing to me... and just me only. Differing views are very much welcomed...

Information sources

  1. Link to 1H06 report on SGX (pdf file): http://tinyurl.com/3bnhn3

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Thursday, February 1, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of Chuan Hup

Evaluated on 31-Jan-2007 and I am currently invested in this company.

Note: Exchange rate assumption: 1 USD = 1.5 SGD

About the company:

  1. Core Business: It was founded in 1970 as a tug and barge service provider for the PSA. On 30 September 2005, it completed the sale of its marine businesses to Scomi Marine Bhd. It is now a a pure investment holding company with substantial interests in the marine, electronic manufacturing services and property sectors.
  2. Date of Listing: Dec-1983
  3. What I like about this company: It has got very diversed investments, across marine, services and properties sectors. In my opinion, with the risks spreaded out, it is very unlikely that its investments will all turn sour at once. Also, I like the chairman (non-exec). Furthermore, one of the exec directors (previous MD) is also a substantial shareholder. Its profits and net tangible assets has been increasing steadily last 4 years, before it decided to sell away its marine operations.
  4. What I do not like about this company: It is in its initial years as a full investment holding company. Thus, there is no historical performance to benchmark it against.
  5. Competitive advantage (if any): None at the moment, this is risky bet... I am betting it to be a great instutitional investor.

Valuation Statistics (base on 1Q07 financial report)

  1. Earning Per Share: S$0.018 (annualized, converted from USD)
  2. Price/Earnings ratio : 18.06 (annualized, excl subsidary dividends, not calculated in 1Q)
  3. Operating Profit: 52.27% (excluding other income)
  4. Return on Equity Ratio: 0.0039
  5. Current Ratio: 3.97
  6. Cash & Receivables per share: S$0.12 (converted from USD)
  7. Debt/Total Equity Ratio: 0.08
  8. Net Tangible Assets: S$0.381 (converted from USD)

Conclusion

  1. Price: $0.33 (31-Jan-07)
  2. Estimated Fair Price: $0.471 (highly subjective)
  3. Maximum Price I would purchase at: $0.377 (highly subjective)
  4. Price to Estimated Fair Price: 70%
  5. Final word: To me, this seems to be another great business to own.

Information sources

  1. Chuan Hup company website at http://www.chuanhup.com.sg/
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Monday, January 29, 2007

Value Investment on Singapore Stock Exchange - My Watchlist on 29-Jan-07

Value Investment on Singapore Stock Exchange - My Watchlist on 29-Jan-07

Dear friends,

A consolidated watchlist, for your reading pleasure:

S/No

Company Name

Valuation Date

NAV

Close Price

Max Price

Invested?

Report Links

1

Asiatic

05-Jan-07

$0.25

$0.21

$0.28

Yes

Click here

2

SMRT

19-Jan-07

$0.38

$1.45

$0.62

Yes

Click here

3

SPC

09-Jan-07

$2.95

$4.42

$4.71

Yes

Click here

4

Straits Trading

28-Dec-06

$3.62

$3.80

$4.37

Yes

Click here

5

F&N

14-Jan-07

$3.07

$5.35

$3.76

No

Click here

6

HTL

28-Jan-07

$0.54

$1.02

$0.95

No

Click here

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Sunday, January 28, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of HTL International

Value Investment on Singapore Stock Exchange - Valuation Report of HTL International

Evaluated on 28-Jan-2007 and I am currently not invested in this company.

About the company:

  1. Core Business: Manufacturer of leather sofas and leather upholstery hides since 1976, with facilities in China, Malaysia and Singapore.
  2. Date of Listing: 1993
  3. What I like about this company: Its Revenue, Profit and EPS has been increasing steadily over the last 5 years. Its customers are mainly from overseas, with Europe and North America accounting for more than 70% of sales. The management are also the substantial shareholders. The management focus on the development of its 'skills and capabilities' (know-how) of its business.
  4. What I do not like about this company: Inventories form about 54.8% of its current assets and I am not sure if it is the norm in the industry.
  5. Competitive advantage (if any): Global footprint, serving it as a natural barrier to entry of its business?

Valuation Statistics (base on 3Q06 financial report)

  1. Earning Per Share: $0.129 (annualized)
  2. Price/Earnings ratio : 7.83 (annualized)
  3. Operating Profit: 10.17%
  4. Return on Equity Ratio: 18.00
  5. Current Ratio: 2.62
  6. Cash & Receivables per share: $0.27
  7. Debt/Total Equity Ratio: 0.684
  8. Net Tangible Assets: $0.537

Conclusion

  1. Price: $1.01 (26-Jan-07)
  2. Intrinsic Value: $1.18 (highly subjective)
  3. Maximum Price I would purchase at: $0.95 (highly subjective)
  4. Current Price to Max price I would buy at: 106%
  5. Final word: This seems to be a great business to own. I would like keep it in my watchlist. At 106% of Price to IV, it would be slightly expensive for me to consider any purchase at the moment.

Information sources

  1. HTL company website at http://www.htlinternational.com/
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Friday, January 26, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of Singapore Exchange (revised)

Value Investment on Singapore Stock Exchange - Valuation Report of Singapore Exchange (revised on 28-Jan-2007)

As correctly pointed out by 3 blog readers (thanks folks!), the original post contains several data errors. Thus this posting is revised (original values in red, revised values in blue) to reflect a more accurate valuation. After correcting the data errors, the final word and conclusion is the same as the previous stand.

Evaluated on 25-Jan-2007 and I am currently not invested in this company.

About the company:

  1. Core Business: SGX owns and operates the only integrated securities exchange and derivatives exchange in Singapore and their related clearing houses.
  2. Date of Listing: Nov-2000
  3. What I like about this company: Its has monopoly over the singapore exchange! It is also diversifying its revenue sources, in terms of product types and geographical areas.
  4. What I do not like about this company: My personal opinion is that the current market is rallying, without much fundamental reasons. Thus, I am quite worried about when the next downturn will come about.
  5. Competitive advantage (if any): Of course! It is the only 'player' locally!

Valuation Statistics (base on 1H07 financial report)

  1. Earning Per Share: $.021 (projected, excl once-off gains) (correct value is $0.21)
  2. Price/Earnings ratio : 63.80 (annualized value is 32.14)
  3. Operating Profit: 58.6%
  4. Return on Equity Ratio: 38.9 (annualized)
  5. Current Ratio: 0.31 (correct value should be 1.68)
  6. Debt/Total Equity Ratio: 0.39 (correct value should be 0.78)
  7. Net Tangible Assets: $0.452 (correct value should be $0.5425)

Conclusion

  1. Price: $6.75 (25-Jan-07)
  2. Intrinsic Value: $0.981 (highly subjective) (revised to $1.60)
  3. Maximum Price I would purchase at: $0.785 (highly subjective) (revised to $1.28)
  4. Current Price to Max price I would buy at: 688% !!! (revised to 421%)
  5. Final word: At a 688% or 421% price to IV ratio, it must be one of the most pricey stock! I would defintely hesistate to purchase at this point in time.

Information sources

  1. SGX company website at http://www.sgx.com/
  2. SGX Financial Statements for the Quarter Ended 31 December 2006 at http://tinyurl.com/22s9jk (pdf file)

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Wednesday, January 24, 2007

Next posting will be likely on 27-Jan-07

Next posting will be likely on 27-Jan-07

Hi everybody,

Apologies for not posting this week so far.

I'm on overseas trip and have limited internet access. Thus, the next posting will most likely appear on 27-Jan-07.

Warm regards,

Fu Chin


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Friday, January 19, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of SMRT Corp

Value Investment on Singapore Stock Exchange - Valuation Report of SMRT Corp

Evaluated on 1ï¼™-Jan-2007 and I am currently invested in this company.

About the company:

  1. Core Business: Public transport - provision of train, bus and taxi services.
  2. Date of Listing: Jul-2000
  3. What I like about this company: Its has got a stable earning basis, being a public transport service provider. Revenue and Net Asset Value improving throughout last 5 years. Profit and Earnings Per Share improved in 2002-2005, but there was a dip in 2006, likely due to increase in oil prices.
  4. What I do not like about this company: About 77% of its total assets is vested in Property, plant and equipment. I am not too comfortable with its bond issuing activities, because I do not understand the bond issuing concept. Probably need to re-visit this again some time later...
  5. Competitive advantage (if any): Being 1 of the only 2 MRT operators, it sure has its advantage!

Valuation Statistics (base on 1H07 financial report)

  1. Earning Per Share: $0.078 (projected)
  2. Price/Earnings ratio : 17.82 (projected)
  3. Operating Profit: 19.80%
  4. Return on Equity Ratio: 10.16%
  5. Current Ratio: 0.68 (as mentioned in above, something I do not like)
  6. Debt/Total Equity Ratio: 1.37
  7. Net Tangible Assets: $0.384

Conclusion

  1. Price: $1.39 (18-Jan-07)
  2. Intrinsic Value: $0.77 (highly subjective)
  3. Maximum Price I would purchase at: $0.62 (highly subjective)
  4. Price to IV: 180%
  5. Final word: At a 180% price to IV ratio, it is too expensive for me to make a purchase! Thus, I would not consider buying this stock at this point. Having said that, this is one of those recession-proof stock, which I would love to hold, when it is less expensive.

Information sources

  1. SMRT Corp website at http://www.smrt.com.sg/
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Tuesday, January 16, 2007

Value Investment on Singapore Stock Exchange - Invest in high dividend companies and sell out?

Value Investment on Singapore Stock Exchange - Is it a good idea to invest in high dividend companies and sell out upon receiving the dividends?

One of the blog readers asked me about the query above and I thought you might be interested in our email exchange below.

Warm regards,
Fu Chin
Value Investment Blog
www.valueinvestmentonsgx.blogspot.com

=============================

Date: Mon, 15 Jan 2007 06:05:36 -0800 (PST)
From: Fu Chin
Subject: Re: http://valueinvestmentonsgx.blogspot.com
To: Lim Benjamin

Hi Benjamin,

Thanks for the compliments. :)

The information you mentioned about the dividends might be found in any of the Share Investment booklet. It costs about $6 per issue. =p

I was trying to practise what you mentioned about chasing for the dividends of companies. What I experienced is that it is time consuming and the trading charges actually eat a lot into my profits from the dividends. ;-)

Also, more importantly, I think the next company I buy might just not pay good dividends the next year?

This is a good quesiton, do you mind if I share this email exchange on my blog? Of course, I will remove your email particulars...

Thanks again for your feedback and queries. :)

Warm regards,
Fu Chin
Value Investment Blog
www.valueinvestmentonsgx.blogspot.com

--- Lim Benjamin
Dear Fu Chin,

I like to read your blog about the above.

I was just wondering whether will you have any ideas about the following:

1. Top 10 highest paying dividend companies based on 2006 till now - company names, dividend yield, dividend ranking, stock price appreciation potential.

2. And whether is it a good idea to invest in these top paying dividend companies and subsequently when we receive the companies' dividend, immediately sell out the shares and go for next highest paying dividend company. Is this a good investment strategy?

Please advice. Thanks.

Regards
Benjamin


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Sunday, January 14, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of Fraser and Neave Limited

Value Investment on Singapore Stock Exchange - Valuation Report of Fraser and Neave Limited

Evaluated on 14-Jan-2007 and I am currently not invested in this company.

About the company:

  1. Core Business: Property, Food and Beverage, and Printing & Publishing industries, founded in 1883.
  2. Date of Incorporation: Jan-1898
  3. What I like about this company: Its Revenue for the last 10 years has been an upward trend. Even during the difficult years (1997-1999), it continued to be profitable. Its Net Asset Value has also been increasing in the last 10 years. It has got well diversified operations in 20 countries. Company is focused in increasing its value and its Earning Per Share.
  4. What I do not like about this company: Seems to be increasing investment into property-related operations. Its long standing chairman is stepping down and the new chairman, although not new to the company, has yet to be tested in the new capacity. It has listed $286mil as intangible asset.
  5. Competitive advantage (if any): Strong leader in its chosen industries, namely Food and Beverages, Properties and Printing and Publishing.

Valuation Statistics

  1. Earning Per Share: $0.271
  2. Price/Earnings ratio : 17.27
  3. Operating Profit: 15.2%
  4. Return on Equity Ratio: 8.87
  5. Current Ratio: 1.24
  6. Debt/Total Equity Ratio: 1.41
  7. Net Tangible Assets: $3.07

Conclusion

  1. Price: $4.68 (12-Jan-07)
  2. Intrinsic Value: $4.43 (highly subjective)
  3. Maximum Price I would purchase at: $3.76 (highly subjective)
  4. Price to IV: 106%
  5. Final word: At a 106% price to IV ratio, I would not be purchasing this yet. I would be very keen to keep track of its business performance in 2007 and wait for a good time to be invested in this company.

Information sources

  1. Jurong Technologies company website at http://www.fraserandneave.com/
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Click to read full article!

Value Investment on Singapore Stock Exchange - A wise piece of advice (non-stock related)

Value Investment on Singapore Stock Exchange - A wise piece of advice (non-stock related)

After reading the earlier postsings, a good friend of mine decided to share with me a piece of good advice.

It is very wise and I cannot help, but seek his permission to publish it and share it with you...


-----Original Message-----
From: Fu Chin [mailto:limfuchin@yahoo.com]
Sent: Friday, January 12, 2007 5:14 PM
To: jasonn@xxxxxxxx.xxx
Subject: Re:
Yo Boss,

Thanks for replying man! :)

Your reply means a lot to me, taking into consideration how busy you are! =p I will definitely heed your wise advice!

To assure you....46% of my investment pot (~10k only) is now in the form of cash.

In the market now, there seems to be no good bargain buys!

Once again, I really appreciate your kind replies and please keep them coming.

Do you mind, if I post your reply into my blog? I DO NOT want people to lose their S-class, house and most importantly their WIFE & KIDS, after reading my blog! :)

Thank you boss! :)

Warm regards,
Fu Chin

--- Jason <jasonn@xxxxxx.xxx> wrote:
Hello brother

I saw many of your postings regarding investment in stocks and shares……

Brother…..not trying to be a wet blanket…but be very very very careful……

I remembered the years 1995 to 1997 …market was hot, everything’s hot…property etc…I was only 30 years old, already made my 1st million…money was good. I invested or rather speculated in the share market.


I was reckless….burnt myself badly ….lost a Mercedes S class equivalent amount of money…became heavily geared, credit cards maxed out..

Would have lost my terrace house which I am staying now if not becos I decided to bite the bullet and cut losses….nearly lost my marriage too.

Just a brotherly advice…..if u are careful, did your homework, investment mindset instead of speculative, by all means invest within your means…

Otherwise….be careful. Trade within your means.

I facilitated marriage prep classes and attended building strong marriages classes last time …..
5 components :

- Roles of husband and wife

- Conflict management

- Communication

- Sexual Intimacy

- And most importantly “Financial Management” in a marriage….

In all my experience with the couples or my own marriage …financial management is the most critical.

In everything…..seek the advice of your spouse…..a marriage needs to be transparent and both husband and wife must be comfortable with the investment …..

It was a painful path for me the last time…….which is why i felt compelled to write this email to you.

Thanks!

Scream for me if u need someone to talk to…or scream at me if u think I am talking nonsense!

Jason
========================================


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Thursday, January 11, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of Challenger Technologies

Value Investment on Singapore Stock Exchange - Valuation Report of Challenger Technologies

Evaluated on 11-Jan-2007 and I am currently not invested in this company.

About the company:

  1. Core Business: IT products and services retailer (11 stores in Singapore) and electronic signage services.
  2. Date of Listing: Jan-2004
  3. What I like about this company: It is cash-rich, with about 46% of its total assets is cash. Revenue, Earning Per Share and Net Asset Value has been slowly increasing since 2003. The CEO is also one of the substantial shareholders, thus the company's fortune is closely tied to his own fortune. :)
  4. What I do not like about this company: About 32% of its total assets is carried as inventories. I may be wrong, my impression is that value of high-tech goods tends to depreciate pretty quickly and I am not too comfortable that. I wonder how fast does its high-tech inventory moves out of the stores.
  5. Competitive advantage (if any): One stop shop for customers?

Valuation Statistics (base on 3Q06 financial report)

  1. Earning Per Share: $0.029 (projected)
  2. Price/Earnings ratio : 7.02
  3. Operating Profit: 5.57%
  4. Return on Equity Ratio: 33.76 (projected)
  5. Current Ratio: 2.59 (current assets is more than short-term debts)
  6. Debt/Total Equity Ratio: 0.55 (total debt is less than total equity)
  7. Net Tangible Assets: $0.086

Conclusion

  1. Price: $0.20 (11-Jan-07)
  2. Intrinsic Value: $0.23 (highly subjective)
  3. Maximum Price I would purchase at: $0.16 (highly subjective)
  4. Price to IV: 88%
  5. Final word: At a 88% price to IV ratio, I am not very tempted to buy, it does not give me a good enough margin of safety. Personally, I think it is in a very competitive and price-sensitive business, which is not something I like.

Information sources

  1. Challenger Technologies company website at http://www.challengerasia.com/
  2. Its investor relation website at http://ir.asia1.com.sg/challenger/

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Wednesday, January 10, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of Jurong Technologies

Value Investment on Singapore Stock Exchange - Valuation Report of Jurong Technologies

Evaluated on 10-Jan-2007 and I am currently not invested in this company.

About the company:

  1. Core Business: Provides Electronics Manufacturing Services ("EMS") to local as well as overseas electronics Original Equipment Manufacturers ("OEMs") since 1988.
  2. Date of Listing: Apr-2000
  3. What I like about this company: Its Revenue, Profit, Net Asset Value and Earnings Per Share has been increasing for the last 5 years, from 2001 - 2005.
  4. What I do not like about this company: For the first time in the last 6 years, 2006 may see the company's revenue declining. Although the Q306 financial report mention it more as a difference in the business model, i.e. from Turnkey Buy/Sell to Consignment, I would still not look at it favourable. Thus, 2007 may be an important year for the management for it to find more streams of revenue for the company. Also, it is expanding and building manufacturing facilities in Suzhou, Tianjin and Brazil, which seems to me like a high risk venture, with its cash tied up in the fixed assets.
  5. Competitive advantage (if any): No comments.

Valuation Statistics (base on 3Q06 financial report)

  1. Earning Per Share: $0.259 (projected)
  2. Price/Earnings ratio : 7.3
  3. Operating Profit: 6.32%
  4. Return on Equity Ratio: 25.03
  5. Current Ratio: 0.98
  6. Debt/Total Equity Ratio: 1.9
  7. Net Tangible Assets: $0.471

Conclusion

  1. Price: $1.10 (10-Jan-07)
  2. Intrinsic Value: $1.76 (highly subjective)
  3. Maximum Price I would purchase at: $1.15 (highly subjective)
  4. Price to IV: 62%
  5. Final word: At a 62% price to IV ratio, it may seem like a good buy. However, I do not really understand this business and thus, I do not have high confidence in its future earnings. Thus, I would not consider buying this stock at this point. Having said that, I would be keen to keep track of its business performance in 2007.

Information sources

  1. Jurong Technologies company website at http://www.jurtech.com/
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Tuesday, January 9, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of Singapore Petroleum Company Limited

Value Investment on Singapore Stock Exchange - Valuation Report of Singapore Petroleum Company Limited

Evaluated on 09-Jan-2007 and I am currently invested in this company.

About the company:

  1. Core Business: SPC is a regional oil and gas exploration and production, refining, terminalling and distribution, marketing and trading of crude and refined petroleum products. It is an associated company of Keppel Oil & Gas Services Pte Ltd, a wholly-owned subsidiary of Keppel Corporation Limited.
  2. Date of Listing: Oct 1990
  3. What I like about this company: Firstly, more than 50% of its assets can be liquidated easily. Over the last 4 years, its revenue has been improving, although 2006 performance is unlikely to be as good as 2005, due to the flutuation in oil prices. It has got a competent management. It is also committed to expanding its Exploration and Production business.
  4. What I do not like about this company: Although it also has regional operations, but more than 90% of sales comes from Singapore based customers. I personally do not like it's high dependence on the flutuative nature of the oil prices.

Valuation Statistics (base on Sep-06 financial report)

  1. Earning Per Share: $0.558 (projected)
  2. PE ratio : 7.07 (projected)
  3. Operating Profit: 4.48% (projected)
  4. Return on Equity Ratio: 35.8
  5. Current Ratio: 1.39
  6. Debt/Total Equity Ratio: 0.88
  7. Net Tangible Assets: $2.95

Conclusion

  1. Price: $4.16 (09-Jan-07, PM)
  2. Intrinsic Value: $5.89 (highly subjective)
  3. Price to IV: 71%
  4. Final word: At a 71% price to IV ratio, I would consider purchasing it!

Information sources

  1. Singapore Petroleum Company website at http://www.spc.com.sg/
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Monday, January 8, 2007

Value Investment on Singapore Stock Exchange - How do one derive the Intrinsic Value during stock evaluation?

Value Investment on Singapore Stock Exchange - How do one derive the Intrinsic Value during stock evaluation?

There was an interesting discussion about how the Intrinsic Value of business is calculated, in one of the earlier posting (click here to view the discussion).

For your benefit, you might be interested to review the approach and give me your opinions / comments!

Firstly, there are many ways to calculate the intrinsic value of stocks and from my limited experience, the company's earning power (revenue & profit) plays an important part. I am pretty sure the follow approach is not the most accurate / appropriate way... :) So, if you must, please use with care.

In essence, I look at 3 parts of the company's financials:
(a) Net Tangible Assets, it is the value of total assets minus intangible assets and total liabilities (NTA & EPS are commonly available in company financial statements)
(b) Earning Per Share, how much profit the company made for each share of the company (I multiple it by 5 for the next 5 years, this is assuming I will hold the stock for the next 5 years)
(c) My personal level of confidence of the company maintaining or increasing its NTA and EPS (expressed in ratio / percentage).

The formula of the maximum price that I would purchase at is (a) X (b) X (c).

Of course, I ignore some other factors like potential growth, etc. Instead, I consider it as part of the item (c). As this part appears to be the trickiest, you may wish to look at the examples below.

Asiatic Group's safety equipment division, a company reviewed earlier.
During my Army time, I had to check and ensure that all the 20-odd fire extinguishers are serviced regularly and replaced, if need to. Thus, it seems like a good type of recurring business for the above business., especially for the safety equipment division.

For another example, if you see another comment posted by Ken Chee (Click here for link), he mentioned about talking to the management, competitors, suppliers, ex-staff, customers, etc, directly. This is definitely a good approach as well, which paid off handsomely for him!

Also, my confidence level is expressed as a percentage or ratio, so, if I am extremely happy about the company and the market condition is like now (seems like most stocks are expensive now!), I may go up to 100% or 1.0. However, in most cases, I give at least 20% safety margin, i.e. 80% or 0.8. The safety margin (or discount) increases as my confidence and / or knowledge of the business decreases.

This means if I find (a) X (b) is $1, I will only pay maximum $0.80 for it (most of the time).

Please give me your comments and happy investing! :)

Warm regards,
Fu Chin
Value Investment Blog
http://www.valueinvestmentonsgx.blogspot.com/


P/S: As always, this is not a recommendation to buy or sell anything and investors should always do their own analyses when considering investing decisions


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Saturday, January 6, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of Genting International PLC

Value Investment on Singapore Stock Exchange - Valuation Report of Genting International PLC

Evaluated on 06-Jan-2007 and I am currently not invested in this company.

About the company:

  1. Core Business: Operating Integrated Resorts (including casinos, of course)
  2. Date of Listing: Dec-2005
  3. What I like about this company: Firstly, it is cash-rich with little outstanding debt, imaginable I guess, since it is running casino operations. It has got diversified operations in Europe, Asia Pacific and Malaysia.
  4. What I do not like about this company: Since it was only listed in Dec-2005, the simulated EPS over last 5 years has been increasing from $0.002 to $0.006 (minus once-off type of gains). Also, there was a recorded once-off investment gain of 82.5mil in 3Q05 and an investment lost of 27.6mil in 3Q06. Personally, I do not like the volatility.
  5. Competitive advantage (if any): Well, being only 1 of the 2 casino operators in Singapore, do you consider it to be a competitive advantage? Development of the Marina IR is set to begin in 2007 and end in 2009. The IR is targeted to start operation in 2010.

Valuation Statistics

  1. Earning Per Share: $0.004 (projected, base on Sep-06 financial report)
  2. PE ratio : 210.2
  3. Operating Profit: 0.208%
  4. Return on Equity Ratio: 1.36
  5. Current Ratio: 10.124
  6. Debt/Total Equity Ratio: 0.052
  7. Net Tangible Assets: $0.241

Conclusion

  1. Price: $0.925 (05-Jan-07)
  2. Intrinsic Value: $0.26 (highly subjective)
  3. Price to IV: 352%
  4. Final word: At a 352% price to IV ratio, I would not consider it

Information sources

  1. Genting International company website at http://www.gentinginternational.com/
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Friday, January 5, 2007

Valuation of Asiatic Group

As promised, this is the satistics of the Asiatic Group.

  1. Date of evaluation: 04-Jan-07
  2. Price: $0.19
  3. Current Ratio: 0.76
  4. Debt/Total Equity Ratio: 0.96
  5. Operating Profit: 7.4%
  6. PE ratio: 9.3
  7. Net Tangible Assets: $0.25
  8. Earning Per Share: $0.02 (projected)
  9. What I like about this company: Please see previous post.
  10. What I do not like about this company: Please see previous post

Best of luck to your investing!

Warm regards,

Fu Chin

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Thursday, January 4, 2007

Just purchased another valuable gem on SGX - Asiatic Group

Some of the things I like about this company includes:

- The founders (aka boss) are still substantial shareholders...

- Core business deals in in Fire Protection and Power Supply which is of recurring and / or maintenance nature, ie. need to be replaced after serveral years...

- Has an interesting and futuristic division on the Fitbone Technique (cosmetic & orthopedic surgery).

- It has been profitable for the last 5 years and its NTA has been increasing steadily over last 5 years.

- It has entered into green-field power plant projects with the aim of developing a new recurring incomestream. In June 2005, its wholly-owned subsidiary, Colben System Pte Ltd (“Colben”), signed a 10-year power purchase agreement with Electricite Du Cambodge (“EDC”), a state-owned utilities company, to develop two power generation projects (a 5MW plant in Sihanoukville and a 10MW plant in Phnom Penh) under a build-own-operate arrangement. The plants are scheduled to start operations towards the end of 2006.

The 1 thing I do not like about this company is that there was a drop in revenue in 2006, compare to 2005. This is due largely to the fall in sales from its Controlled Power Supply division, which had benefited from the completion of a number of major projects in the previous year.

Overall, I still like it! So, I bought in today at $0.19, I belive the intrinsic value to be $0.28... :)

More statistical details tomorrow or maybe the day after... watch this space! :)

Best of luck to your investing!

Warm regards, Fu Chin

P/S: As always, this is not a recommendation to buy or sell anything and investors should always do their own analyses when considering investing decisions.


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Valuation of STRAITS TRADING COMPANY LTD (STR.SG)

  1. Date of evaluation: 28-Dec-06
  2. Price: $3.50
  3. Current Ratio: 0.9
  4. Debt/Total Equity Ratio: 0.5
  5. Operating Profit: 9.8%
  6. PE ratio: 17.8
  7. Net Tangible Assets: $3.62
  8. Earning Per Share: $0.37 (projected)
  9. What I like about this company: It has a capable management team with broad and in-depth experience in its core business. Also, the last land valuation of its main building was done in 2003. The next revaluation (2006, to be reported in 2007) should see a higher valuation, and thus an increase in NTA.
  10. What I do not like about this company: 70% of its income comes from its core Tin mining business, although in recent years, it is diversifying in to property & hotel.

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


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Introduction

Dear friends,

Thank you for visiting this blog!
The purpose of this blog is to share with you, the fantastic concept of value investing...

The plan is to publish weekly, my personal evaluation on 1 stock on the SGX (Singapore Stock Exchange) , based on my findings / research from the annual companies reports.

Since I am still learning, you are more than welcome to give your comments and critiques on my evaluations. I would be most happy to learn from your inputs!

My investing journey dates back to Nov-2004, when I had my first taste of online trading. It was fasinating and captivating. In fact, I was hooked. :)

Just like the crowd, I acted on "research" - from newspapers articles. As you might have already guessed, my earlier purchases did not fare really well. In fact, one of them is still negative 50%.

Then, somewhere in Jan-05, I stumbled upon the concept of value investing. In short, the concept is to buy the stock at a discount. If my valuation of the stock is $1, buying it for $0.80 immediately gives me a 20% discount, which is also known as the safety margin.

Of course, my weekly posting of my valuation is by no means complete and accurate. Thus, opinions based on information and comments mentioned via this website cannot be guaranteed. You should always conduct your own research before making investment decisions.

Good luck to your investment journey! :)

Warm regards,
Fu Chin


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