Tuesday, December 30, 2014

Greece Crisis Revisted?

Remember GREXIT in 2011?It was the only country in the PIIGS to have its debt restructured.Now, on 29th Dec this year, the Greek Parliament failed to elect a new President thus forcing a snap elections next Jan 25th.Is the memory receding Euro Crisis entering a new phase after having been in the lull for quite a while?Right now, the Athens stock market is hit by the news but the rest of Europe and the world remain pretty much nonchalant about events unfolding in the birthplace of modern democratic ideals.Polls point to a victory for the populist far-left Syriza, the party headed by Alexis Tsipras who want to keep Greece in the Euro but dump most of the conditions tied to the bail-outs - ending austerity, reversing cuts in the minimum wage and in public spending, scrapping assets sales and to repudiate much debt.Expect a game of chicken to be played out between Alexis and his party vs the European troika if Syriza win next month.More volatility ahead, I think.

Friday, December 19, 2014

My Portfolio 2014

The following is my portfolio as at 2014 (not in any order). I do not expect any more changes till next year when I come back from my holidays to review again.

Edited in the prices as at Dec 31 (after trading).

DBS  ($20.60)
SPH   ($4.21)
SingTel ($3.90)
StarHub ($4.15)
CityDev ($10.27)
SP Ausnet ($1.42)
Cityspring ($0.53)
Keppel Infra Trust ($1.065)
Olam ($2.02)
Wilmar ($3.24)
SIA ($11.60)
Keppelcorp ($8.85)
SembCorp ($4.45)
CMPacific ($0.975)
CroesusRetail ($0.925)
CDL Trust ($1.74)
AsiaPay TV Trust ($0.86)
Capital China Trust ($1.615)
Ascendas India Trust ($0.82)
Lippo Malls Trust ($0.34)
SuntecReit ($1.96)
StarHillGlobal Reit ($0.80)
SATs ($3.05)
SingPost ($1.92)
First Reit ($1.255)
KReit ($1.22)
Accordia Golf Trust ($0.75)
SoilBuild Trust ($0.79)
HPH Trust ($0.915)
OCC 5.1%NCPS 100 ($105.22)
DBS$800M4.7%NCPS ($105.50)
Olam B180129 (US$1.07)

Wednesday, December 17, 2014

Overhype Xiaomi?

Recently, I came across a report that says that Xiaomi net profit for 2013 is $56m on sales of $4.6b.This is a razor thin margin of 1.8% compared to APPLE (28.7%) and Samsung (18.7%).This probably explain why Xiaomi is able to price their phones so low in the market.

Recently Xiaomi expansion into its second most important market (India) stalled only after starting in July. Complaint by Ericsson that Xiaomi had infringed on its set of wireless patents which will see hearing in Feb 2015.Meanwhile, sales activity in India has to be halted until the outcome become clearer. Xiaomi had only a handful of patents (as it is a startup) compared to the likes of Apple, Samsung,Ericsson and even locals rivals like Huawei, Lenovo etc.I do not forsee how Xiaomi is going to be able to sell in Europe and US. Even its foray into markets like India and Indonesia will prove to be difficult (due to patents suits being lodge by competitors) despite the attractiveness of its price points.I was in Indonesia recently and was surprised to see OPPO quite visible in the local market.In India, there is also the local version of Xiaomi in the form of Micromax.

Founder, Lei Jun is in the midst of trying to raise funds for the company at a valuation of $40b based on his vision of a digital ecosystem.

I am of the opinion that Xiaomi is more hype than substance till this point.

Monday, December 15, 2014

Olam - ADM Worldwide Cocoa Business Acquisition

Olam International to acquire ADM worldwide cocoa business for US$1.3b to create a worldwide platform for leading global integrated cocoa business.

Establishes Olam as one of the top 3 worldwide cocoa processors as well as the
deZaan® ,Joanes® and UNICAO® brands adding on top a strong franchise of 2150 customers globally.The expected synergies from the economies of scale is about US$35m-US$40m.

The transaction is expected to be earnings, returns and free cash flow accretive in the first full year closing (FY2016). It is also expected to have a substantial financial impact going forward with segmental EBITDA growth of between 86%-95%, overall company EBITDA growth of between 20%-22% and Net Income and EPS growth of between 25%-30% by FY2018 compared to FY2014.

The purchase consideration of US$1.3 billion will be financed through a combination of cash and existing debt facilities.



Wednesday, December 10, 2014

Some Weath Statistics in Singapore

Came across an article recently that states that 1395 super rich  individuals own about 17% of the country wealth which equate to be about US$180b. Do not know how accurate is the info but it surely tell a distinct story.Inequality is not between the top 10% and the rest but more about a small percentage of the top 1% versus the rest.Ditto with the US, based on what I know too.

Wednesday, December 3, 2014

Intuitive Explanation for Black-Scholes Pricing Formula.

Below is a link to a reasonable good, intuitive and easy to understand explanation of the Black-Scholes Pricing Formula for a European Call Option  that I come across. Enjoy!

Black-Scholes Call on European Stock
Black-Scholes d1 d2

Tuesday, December 2, 2014

SGX 24X7 Availability????

I am not a trader so it does not really bother me whether SGX delay trading today to 1230 hours or not. However, I am very puzzled that in these days of cheap availability of hardware redundancy, sophisticated software availability capabilities, SGX is still CONFRONTED WITH THE NEED to issue an unexpected outage of half a working day. This clearly is UNACCEPTABLE in my view.Remember, running an operation 24X7 is not a new concept or requirement. Already more than 25 years ago, it is already a key requirements in most major data centers.

If I am in charge of SGX, I would have fired the CIO on the spot.

Thursday, November 27, 2014

OPEC To Choke Off US Shale Producers?

The sharp drop in oil prices is probably going to choke off a lot of investments going into the US Shale producers.The oil cartel decision not to cut production in face of weaker prices is to claw back market share from US shale producers.A lot of drilling going on in the US is on borrowed money and that will be closely scrutinized or turn off following the recent OPEC decision.This would  a test to see what really is the breakeven point of US Shale producers.If we see sustained low oil prices, some higher cost shale producers will go under.The Saudi (the kingmaker in the OPEC) is not simply being magnanimous in this instance.Meanwhile, the rest of the world who are in the non oil producing camp will continue to benefit from the extra kick generated by low oil prices in this game of chicken being played out between OPEC and the US Shale industry.

Tuesday, November 18, 2014

CitySpringTrust And Keppel Infra Trust Merger

The proposed merger of CitySpring Infrastructure Trust (CIT) and Keppel Infrastructure Trust (KIT)has been announced.KIT also announced that it will acquire 51% of Keppel Merlimau Cogen (KMC) which own a 1300 megawatt combined gas turbine generation facility on Jurong Island for a cash consideration of $500m based on a enterprise value of $1,700m.The KMC acquisition will form an integral part of the merged entity.The combined entity will be Singapore largest infrastructure-focused business entity with a market cap of about $1.9b and assets of about $4b.

Each KIT shareholder will receive 2.106 units of CIT shares for every unit of KIT share held.Keppel Infrastructure Holdings and Temasek through its subsidiary will be the two largest shareholders at 22.9% and 19.97% respectively. CIT will be the surviving trust and be renamed as Keppel Infrastructure Trust and KIT will be dissolved following completion. Current trustee manager of CIT will resign and current trustee manager of KIT will be appointed the trustee manager of the combined trust. As saving of $3.6m of management fees is expected from this arrangement.

The purchase of KMC will be financed through  non-renounceable of preferential shares to existing shareholders and private placement to institutional investors to raise up to $525m in gross proceeds.The transaction is accretive to CIT unitholders and the proforma distribution will be 3.67 cents per CIT unit higher than the current 3.28 cents.

Sunday, November 16, 2014

CourtAsia - A Fallen Stock?

A few years back, I wrote a short post on why I will give CourtAsia IPO a miss because of their previous track record of being listed in the stock exchange and was taken private when the stock price hit rock bottom.The IPO went ahead at 77 cents per share without my participation of course since I am just small fry anyway.BTW, Alibaba B-to-B business was also previously listed in HKEx and taken private by Jack Ma when the share price flounder. So, we have to use judgement on a case by case basis and not to simply generalise.

For a while there was euphoria surrounding the stock and management quickly took advantage of the environment to raise a lot of debt to finance their expansion into Malaysia and particularly Indonesia.In fact more than $300m debt was raised which is more than the current market cap of around $200m.I have to say that the courts management has been very good in utilising others people money to finance their growth expansion from debt and equity (through IPO).

However, over the last one and half years, it is clear that the company business has fallen on very hard times. The recent quarter net profit was a just a meagre $1.7m inclusive of a $3m restructuring charge.The stock price has halve to 40 cents from the IPO price of 77 cents. I wonder what the cornerstone investors were thinking when they back the IPO?

Currently it would seem to be a good entry point if you just look at the NAV value of around 50 cents. It seems offer  safety margin that most value investors like to have when they invest in a stock.However, I am still not persuaded because I am of the opinion that if the expansion in Indonesia run into hiccup, then the writeup off would be substantial and NAV will plunge.So far, court operating track record has not been good other than their  Singapore business where they can optimise the compact physical environment.  But even that, the Singapore business also seems to be running into significant problems looking at how sales plunge for like-and-like stores in the recent quarter.

Thursday, November 13, 2014

SIA Engineering vs SATS - A Comparison

SIA Engineering and SATs are both subsidiaries of SIA and involved in mainly the same core business eg aviation although SATs do derive a substantial non-aviation revenue too from food catering. I did a simple 1HFY14/15 comparison of their results.

                                      SIA Engineering                SATs
Net Profit                        $95.6m                              $90.4m
Net Profit Margin           16.5%                                10.3%
EPS                                 8.5 cents                            8.1 cents
NAV                               113.5 cents                        112.6 cents
Cash & Cash Equiv        $391.2m                            $338.4m
Debt to Equity Ratio       negligible                          0.08             

Looking at their relative EPS, it will appear that SATs is a better bargain than SIA Engineering (at least for 1HFY14/15) taking into consideration that SIA Engineering and SATs traded recently at $4.15 and $2.96 respectively.However, like to take note that SIA Engineering underperformed in the last half year relative to their past history because of some undergoing structural changes in the industry.A lot boil down to whether they can reinvent to be on top of these changes and deliver the stellar performance as in the past. As for SATs, their performance has been flat over the last few years supported by a solid dividend policy and little debt.

SAT 2QFY14/15

Revenue                                   = $442.2m
Operating Profit                       = $42.5m
PATMI                                     = $47.1m
Underlying Profit From Ops    = $47.1m
Underlying Net Margin            = 10.7%
PATMI Margin                         = 10.7%
Debt-to-Equity                          = 0.08
EPS                                           = 4.2 cents
DPU                                          = 5 cents
NAV                                         = $1.26
Cash & Cash Equiv                  = $338.4m
FCF                                           = $41.2m

Revenue decreased 2.2% yoy.Food Solutions revenue decreased by 4.7% yoy partly offset by Gate Services revenue which increased by 2.1%.PATMI decreased by 3.3% to $47.1m.

Monday, November 10, 2014

Super Group - Recent Analyst Estimates

Below are some of the analyst estimates after Super Group recent disappointing results.

Super Group cut to "sell" from "neutral", target cut to 90 cents by OSK-DMG
Super Group upgraded to "hold" by Maybank Kim Eng; target at $1.02
Super Group price target cut to 83 cents from $1.42 by CIMB

It would seems that my rough layman estimate of  87 cents (entry point) in a previous post is not quite far off the mark compare to the above.If you bother to scrutinise the shelves of local supermarket stores, it is obvious that the competition for 3-in-1 coffee is intense.

Sunday, November 9, 2014

Super Group

Super Group just released its third quarter results. It is not pretty.Business Consumer dipped by 6% yoy to $82m.Food ingredients increased by 3% yoy to $47.5m. Net profit dropped by 46% yoy to $10.5m due to cost pressures (palm kernel oil) and higher effective tax.EPS for Q3 is 0.89 cents and 3.84 cents YTD.NAV is at 41.37 cents.

It would seems that growth for this former consumer darling stock has all but evaporated.If we assume a annualized eps of 5.12 cents (3.84* 4/3) and a  PE ratio of 17, then a "reasonable" entry price to look at will be 5.12 * 17 = 87 cents. This would is yield a Price to Book Value ratio of 2.1.

based on the very rough estimate given above, I would still think that the stock is overvalued at the current price of around $1.06.

SIA Engineering

I am not vested in SIA Engineering but it has always been in my radar in view of its solid track record, low or little debt,consistent dividends policy and seemingly high barrier of entry business. However, the recent set of results from SIA Engineering and in fact also the last half a year is rather shocking in my view. Net profit margin has dropped by 30% to 40%.The issues if you read the fine print will point to structural change ongoing in its business. Engines improvements, extention of "on wing" life of certain models and accelerated retirement of older engines all result in a drastic drop in visits to the workshops.It appears all quite certain the trend will accelerate as you can expect more and more newer engines models coming on board that will reduce the need of more frequent maintainence.In other words, the OEMs provider have cut into SIA Engineering space.

With this ongoing structural change, previous record of SIA engineering performance is no longer a good gauge of future performance.I am of the opinion that the company will need to undergo a catharsis of change with no certainty that it can emerge the better of it than before.

Hence, I am going to leave this counter alone although there is a recent significant price drop.

Friday, October 31, 2014

US Exit QE and Japan Launch QE?

The US Federal Reserve officially ended QE3 which virtually print new money out of thin air to purchase financial assets issued by major banks in Oct 2014. After the global financial crisis in 2008/2009, the Fed has been repeatedly trying to boost the US economy (thus employment rate) on a more optimal trajectory through a host of unorthodox measures including QE1, QE2 and the open ended QE3. The jury is still out whether the Fed exited Q3 too prematuredly.After injecting trillion of dollars in the system, inflation in the US hardly budge above 2%.This run counter to contemporary economic wisdom that you will get runaway inflation when the monetary authority pump in excessive amount of money into the economy.

In the same month, BOJ through a tight vote of 5-4 announced sort of a QE in Japan to boost the flagging economy after the consumption tax hike. BOJ will raised the monetary base by US$724b a year. on top of that the Government Pension investment Fund (GPIF) will raise the domestic allocation of stocks from the current 12% to 25%. Allocation for international equities will also go up. The Nikkei 225 reacted with an immediate more than 4% jump on the same day!.Part of the equation I think factor in the BOJ calculation is the unexpected low price of oil which will persist for a while. This give the BOJ some manoeuvre room to engage in greater power to fire up the animal spirits.

personally I see rates remain low in 2015 and even 2016 but I am no prophet. However, I recall that after 2008/1009 at around 2010, you could read numerous articles in NY Times, Economist etc project that rates will go up in 2012/2013 onwards.Retrospectively, all those articles written by "experts" were mostly off the mark.In my untrained view, the GPC dwarf all other financial crisis in modern times (expect the Great Depression of course) and will take a substantially long time to heal.

Thursday, October 30, 2014

DBS Bank 3QFY14 Results

A quick summary of the above.

Total Assets                       = $424,383m
Total Liabilities                 = $385,110m
Net Assets                          = $39,273m

It can be seen that banks are highly leverage business. In DBS case, it leverage approximately   $10 for every dollar of net asset.

Net Book Value                 =$14.36
Common Equity Tier 1      = 13.4%
ROE                                   = 11.2%
ROA                                   = 0.95
NPL  ratio                           = 0.9
Cost/Income Ratio              = 44.1
Loan/Deposit Ratio             = 85.8%
SP/Avg Loan (bp)               = 22

NPL                                   = $2,525m
Singapore                          = $414m
HongKong                         =$251m
Greater China                    =$318m
South & South East Asia  =$944m
ROW                                 =$98m

It can be seen that NPL for South & South East Asia is quite high relatively.

Customer Deposit (in Currency)
Singapore  $                         =$137,256m
US$                                      =$88,016m
HKG$                                  =$29,499m
Yuan                                    =$18,952m
ROW                                   =$31,529m

Customer Loan (in Geography)
Singapore                           =$125,145m
HongKong                          =$46,848m
South & South East Asia    =$23,573m
Rest Of Greater China        =$49.097m
ROW                                   =$20,538m

It can be seen that approximately half of the loans are outside Singapore. So, DBS would be a good proxy to bet on the Asia ex Japan growth.

StarHillGlobal Reit 3QFY14

Gross Revenue                            = $48.6m
NPI                                             = $39.6m
DPU Available For Distribution   = $28.6m
DPU                                           = 1.27 cents
Total Debt                                   = $859m
Gearing                                       = 29.1%
Interest Cover                             = 5.1
Avg Interest Rate                        = 3.15%
Unencumbered Asset Ratio        = 80%
Avg Debt To Maturity               = 3.6 years
NAV (Adjusted)                          = $0.92 cents
Total Assets                               = $2,946,513,000
Total Liabilities                          = $938,642,000
Net Assets                                 = $2,007,871,000
Free Float                                  = 55% (exclude YTL &AI

Monday, October 27, 2014

CDL Hospitality Trust 3QFY14

Revenue                         = $40,113m
NPI                                 = $33,823m
Debts/Asset Ratio          = 30.2%
Total Assets                   = $2,316m
Interest Cover                = 8.3
DPU                               = 2.61 cents (3QFY13 2.63 cents)

Singapore Hotels
Occupancy          92%
ARR                    $209
RevPAR              $192

AscendasIndiaTrust 2QFY14/15

Total Property Income                          =  Rupee 1,553m
NPI                                                        =  Rupee 929m
Income Available For Dist                   =  $12.9m
DPU                                                      =  1.25 cents
NAV                                                      = 62 cents
Interest Cover                                         = 4.3
Gearing                                                   = 22% (taken acct of adjusted computation Gross Borrowing  +/- derivative financial instruments assets or liabilities)
Percentage Fixed Rate Debt                   = 100%
Average Cost Of Debt                            = 6.5%
Effective Borrowings                             = $236m

Currently at S$1 to INR 48.

Friday, October 24, 2014

CapitalRetail China Trust 3QFY2014

Revenue                                         = RMB 253,708,000
NPI                                                 = RMB 159,326,000
Income Available For Dist            =  $19,484,000
DPU                                               = 2.35 cents (2.13 cents for 2Q2013)
NAV                                               = $1.47 (net of dist)
Gearing                                           = 30.8%
Net Debt/EBITDA                          = 5.9
Interest Cover                                  = 5.4
Avg Term To Maturity                   = 2.16
Avg Cost Of Debt                           = 3.47%

Tuesday, October 21, 2014

SoilBuild 3QFY2014

Revenue                                 = $16,916,000
NPI                                         = $14,193,000
Distributable Income              = $12,539,000
DPU                                        = 1.546 cents
Borrowings                              = $289m
NAV                                        = 80 cents
Aggregate Leverage                = 30.3%
All-In Interest Rate                  = 3.08%
Interest Cover                          = 5.1
Weighted Avg Debt Maturity  = 2.0 years
S&P Ratings                            = BBB-

SuntecReit 3QFY2014

Gross revenue                                  = $71.5m
Net Property Income                       = $48.8m
Income Available For Distribution  =$58.3m
DPU                                                  = 2.328 cents

Total Assets  =   $8,365m
Total Debts   =   $3,087m
Net Assets     =  $5,144m
NAV              = $2.033

Outstanding Debt     = $2.907b
Debt-to-Asset Ratio = 34.4%
Interest Cover          = 4.6

Corporate Rating = "Baa2"
Average All-in Financing Cost  = 2.42%

Friday, October 17, 2014

FirstReit 3QFY2014

Gross Revenue                                    $23,843,000
NPI                                                      $23,452,000
Distributable Income                           $14,688,000
DPU                                                     2.02 cents
NAV                                                     96.99 cents
Gearing                                                 below 35%

No refinancing needs till 2017.It provide an yield of 6.8% based on annualized dpu at a share price of $1.19/..

Thursday, October 16, 2014


Property Income                               = $47,628K
Net Property Income                        = $38,524K
Share Of Results Of Associates        = $14,401K
Rental Support                                  = $12,655K
Income Available For Distribution   = $52,027K
DPS                                                    = 1.85 cents
All-In Interest Rate                            = 2.2%
Weighed Avg Term Of Expiry          = 3.5 years
Interest Cover                                     = 5.1
Percentage Fixed Of Debt                  = 72%
Total Borrowing                                 = $2,888m
NAV                                                   = $1.39
Aggregate Leverage                            = 42.1%

SPH FY2014

 Profit & Loss (Before Taxation)

Newspaper & Magazine              $246,381,000
Property                                       $239,397,000
Treasury & Investment                $30,419,000
Others                                           $12,194,000

Newspaper & Magazine segment decrease by 16% yoy and now form slightly less than half of overall PBT.Decline was basically due to lower advertisement revenue.Partial divestment in 701Search result in a gain in Others segment.Hardcopy ST circulation decrease  but digital increase yoy.Seletar Mall is target to open in Nov 2014.Final Dividend of 14 cents declared for FY2014.

With a total dividend of 21 cents at a current price of $4.16 per share, it is operating more like a pseudo bond of 5%.Do not expect too much in term of price appreciation, just get your 5% and hope and business fundamental do no deteriorate too much from here.

Saturday, September 20, 2014

The $50m Dollar Man!!!

This is the $50m dollar Man!!!!He wrote in his weibo blog, "looking forward to $50m in my Cash Vault!"

Monday, September 8, 2014

China Merchant Pacific - Jiurui Expressway

CMPF today hold a EGM to approve the acquisition of Hong Kong Honest Queen International Investment Limited which is the holding company of Jiurui Expressway Co.It was overwhelming majority approved.

It will issue 119,374,987 shares at 0.985 apiece which will raised approx. RMB580m. In addition, it will pay an additional RMB117m cash for a total consideration for a total of RMB697m for the purchase. The issued share will be about 16% of total ordinary share capital issued.

Net Asset Value after purchase will be at HK$5.82. EPS will be at 52.09 HK cents.Gearing will be at 30%. All are calculated based on full diluted convertible bond conversion.

Jiurui is a 48km expressway in Jiangxi with toll lease lasting till dec 31 2040.

The current deal look much more attractive than the previous proposal that was dropped due to some issues with getting approval for the NZ property business that was also packaged in the proposal.

Monday, September 1, 2014

CroesusRetail Trust Private Placement

CRT yesterday announcement a private placement of 78,900,000 units fixed at a price of 0.915 cents.It will raise $72.2m with net proceeds of about $70.2m after deduction of underwriting, selling and other related fees associated with this placement.The placement price is at a discount of 8.5% over the average volume weighted price of 0.995 cents just prior announcement.It is at a 3.2% discount over the adjusted volume weighted average price of 0.9455 cents after taking into consideration of dividend of 5.4 cents payable in Sept 2014. The dividend include the portion from 1 July 2014 to the day just prior issue of placement.

About $62.2m of the net proceeds will be used to partially fund the purchase of One's Mall.After acquisition of One's Mall, DPS  will be at 9 cents with NAV at 75.16 cents.Aggregate leverage will be at 50.5%.

Tuesday, August 19, 2014

Are US Stocks Expensive?

There has been numerous debates since the start of this year regarding the rise of US stocks eg S&P 500.Many "experts" think that S&P is very expensive now relative to historical data. They used Robert Schiller CAPE index which now stand at 25. This was exceeded only three times since 1881 in 1929, 1999 and 2008. They preceded the Great Depression, dotcom burst and GFC respectively.Historical the CAPE for S&P run around 15.21 in the 20th century.

However, there is another camp that look at the data differently. To them, the S&P index PE is at 16.2 based on 2014 earnings. S&P earning per share is at $120. You typically need to get to PE at around 20 for sign of bubbles.So, to them, there are still a lot of legs of the current bull run.

What is my take? frankly, I do not know because I am not an expert and experts made all the wrong calls most of the time anyway. However, I do know of two things. The S&P now rely on a lot of overseas earnings compare to the previous decades. The emerging countries in particular China has grown by leaps and bounds and are now very important to S&P earnings. That is probably the reason why since 2009, Main Street is not doing well compare to Wall Street in the US. Main Street focus on the local US economy whereas Wall Street focus on corporate profits. Next, is that the low interest rate environment do push down the cost of debts and drive up earnings.

Sunday, August 17, 2014

Keppel Corp

Well, Keppel Corp is in the limelight again during PM Lee NDR speech.This time, it is about how a few non-graduates made it good in Keppel Shipyard climbing through the ranks despite being non-degree holders and how Keppel management pushed and supported these people along the way to achieve their maximum potential (which many degree holders will not be able to unfortunately). Keppel was in the limelight during a previous NDR where PM again describe with some pride how Keppel built rigs were being used to launch the rescue operations during the BP oil spill in the gulf of Mexico.

Well, I think the few people handpicked by PM are the exceptions rather than the norm as Singapore clearly lack an environment where the non-degree holders can excel in their vocations by choice or otherwise. The fact that Keppel was mentioned on both occasions point to the dearth of organizations locally able to provide the platform to foster such an environment where engineering and vocational competencies are highly valued.If you fire 100 shots at a target, one or two will hit bulleye. NNonetheless, what is needed are 30 targets for every 100 shots fired and we get 30 bulleyes.

However, I am not totally convinced that what Keppel is doing is really 'high-tech' where it is difficult for competitors to catch up and overtake.My gut feel is that what they are doing is integrated engineering ie putting different pieces together on schedule and under stringent safety requirements.The Chinese shipyards are also building submersible and jack-up.They may not have the same quality but it may be a matter of time.Of course, Keppel have the strategy to build their rigs near their customers but their is no intrinsic competitive edge as a financially strong enough competitor can also muscle in to do likewise.I am not certain that there are tons of internally developed IP, processes etc that go along with the building of jack-ups, sub-mersible that make it difficult for the competition to acquire or duplicate based on my observation that Chinese shipyards also can deliver, may not on schedule or with the same quality at this stage.I will be most glad to be proven wrong on this, though.

Hence, I have not added more shares on Keppel beyond what I currently have.I am not as optimistic as PM on Keppel long term prospect.Again, I do not mind being wrong on this too.

Thursday, August 14, 2014

EcoHouse - When it rain, it pour

Now it is reported in yesterday TODAY that the Brazilian Embassy claimed that they have NO dealings with Ecohouse and was not even aware of it until complaints lodged by Singaporean investors against the UK based firm.

“In view of allegations by Singapore investors regarding EcoHouse Group, a company linked to executives in the UK, the Embassy of Brazil would like to state that the Embassy had no prior knowledge of the existence of EcoHouse’s operations in Brazil,” the embassy said in response to TODAY’s queries

On its website, EcoHouse claims that it was chosen by the Brazilian government as “the only UK company to date officially authorised to build developments under Minha Casa, Minha Vida”, which aims to provide three million homes for the country’s growing middle class.

Obviously someone is not telling the truth when taken together together with the recent Brazilian Embassy statement.

About 800 to 1500 local investors have collectively ploughed more than $70m into three housing projects.

The company was recently put on the Monetary Authority of Singapore’s (MAS) Investor Alert List, which lists unregulated companies that may have been wrongly perceived as being licensed or authorised by the MAS. Last year, Shenton Wealth holding, Dolphin Capital Asia  and a few others similar type of firms are also put on the MAS alert list.

Monday, August 11, 2014

Ecohouse Shutters Its Doors

Just read in the ST today that Brazilian property developer Ecohouse has apparently shuttered its office in Singapore. The firm was recently placed on MAS alert list and since start of last week, the office in Suntec Tower has been closed. Calls to the office remain unanswered. These are tell tale signs of a fly by night operation.

It was reported that the firm managed to net $70m for three projects. I worry for those investors especially if their money are hard earned. They will most likely have to kiss good bye to their so called "investment". They forgot that sometimes investments that look real and maybe be real can turn out to be scams later on for various reasons. Most hedge funds operating with HIGH RISK are not even able to return 20% per year.

Last year, Shenton Wealth Holdings and a few others were similarly place on MAS alert list.In any case, MAS recent announcements to tighten and regulate investment schemes like landbanking, gold buyback etc will lead to the rapid demise of  a lot of these firms.

If you have to invest to beat the meagre returns given by the banks, do it with your eyes open.

Wednesday, July 30, 2014

SoilBuild 2QFY2014

Revenue                                 = $16,708,000
NPI                                         = $14,042,000
Distributable Income              = $12,134,000
DPU                                        = 1.5 cents
Borrowings                              = $295m
NAV                                        = 80 cents
Aggregate Leverage                = 30.3%
All-In Interest Rate                  = 3.08%
Interest Cover                          = 5.4
Weighted Avg Debt Maturity  = 2.0 years
S&P Ratings                            = BBB-

Tuesday, July 29, 2014

StarHillGlobal 2QFY2014

Gross Revenue                            = $48.4m
NPI                                             = $39.2m
DPU Available For Distribution   = $26.9m
DPU                                           = 1.25 cents
Total Debt                                   = $870m
Gearing                                       = 29.4%
Interest Cover                             = 5.0
Avg Interest Rate                        = 3.22%
Unencumbered Asset Ratio        = 79%
Avg Debt To Maturity               = 3.2 years
NAV (Adjusted)                          = $0.92 cents
Total Assets                               = $2,962,787,000
Total Liabilities                          = $949,585,000
Net Assets                                 = $2,013,202,000
Free Float                                  = 55% (exclude YTL &AI

Sunday, July 27, 2014

Food For Thought - Black Swan Event

Two years ago, we were all going about our daily business, blissfully unaware that our planet almost plunged into global catastrophe.
A recent revelation by NASA explains how on July 23, 2012, Earth had a near miss with a solar flare, or coronal mass ejection (CME), from the most powerful storm on the sun in over 150 years, but nobody decided to mention it.

The power of this ejection would have raced across space to knock us back to the Dark Ages. It’s believed a direct CME hit would have the potential to wipe out communication networks, GPS and electrical grids to cause widespread blackout. The article goes on to say it would disable “everything that plugs into a wall socket. Most people wouldn’t even be able to flush their toilet because urban water supplies largely rely on electric pumps.”
Just 10 minutes without electricity, Internet or communication across the globe is a scary thought, and the effects of this event could last years. It would be chaos and disaster on an epic scale.
“According to a study by the National Academy of Sciences, the total economic impact could exceed $2 trillion or 20 times greater than the costs of a Hurricane Katrina.

So can we breathe a worldwide sigh of relief? Well, not quite. Physicist Pete Riley, who published a paper titled “On the probability of occurrence of extreme space weather events,” has calculated the odds of a solar storm strong enough to disrupt our lives in the next 10 years is 12 percent.

However, the CME that almost battered us was a bit of a freak occurrence as it was actually two ejections within 10 minutes of each other, plus a previous CME had happened four days earlier to effectively clear the path. Phew!!!!!

Friday, July 25, 2014

HPH Trust 2QFY2014

Revenue                                = HK$ 3063.0m
Operating Profit                     = HK$874.1m (decrease 8% yoy)
Profit Attrib to Shareholders = HK$ 368.4m (decrease 12% yoy)
EPS                                        = HK 4.23 cents
Net Assets                              = HK$ 85,513.8m
NAV                                       = HK$ 7.17
DPU                                        = HK 18.7 cents (1HFY2014)

Thursday, July 24, 2014

AscendasIndiaTrust 1QFY2014/2015

Total Property Income                          =  Rupee 1,520m
NPI                                                        =  Rupee 899m
Income Available For Dist                   =  $11.8m
DPU                                                      =  1.15 cents
NAV                                                      = 60 cents
Interest Cover                                         = 4.3
Gearing                                                   = 22% (taken acct of adjusted computation Gross Borrowing  +/- derivative financial instruments assets or liabilities)
Percentage Fixed Rate Debt                   = 100%
Average Cost Of Debt                            = 6.5%
Effective Borrowings                             = $233m

Currently at S$1 to INR 47.6. This is the first quarter after a long time where SGD depreciated against the INR compared to the previous quarter.I hope the decline in the INR has been arrested.


Revenue                         = $37,850m
NPI                                 = $31,334m
Debts/Asset Ratio          = 29.5%
Total Assets                   = $2,345m
Interest Cover                = 8.4
DPU                               = 5.25 cents (1HFY2014)

Singapore Hotels
Occupancy          86.1%
ARR                    $211
RevPAR              $181

Wednesday, July 23, 2014

CapitalRetail China Trust 2QFY2014

Revenue                                         = RMB 249,888,000
NPI                                                 = RMB 167,595,000
Income Available For Dist            =  $21,253,000
DPU                                               = 2.59 cents (2.38 cents for 2Q2013)
NAV                                               = $1.48 (net of dist)
Gearing                                           = 29.8%
Net Debt/EBITDA                          = 5.2
Interest Cover                                  = 5.5
Avg Term To Maturity                   = 2.32
Avg Cost Of Debt                           = 3.60%

Shoppers traffic up 5.5% and tenant sales' up 13.6% yoy. I expect performance to improve yoy as Minzhongleyuan was not contributing for 3QFY13 to 1QFY14 due to AEI works.I vested in this counter earlier this year or late last year at around $1.3 as the financial look decent to me at that time.

Tuesday, July 22, 2014

SuntecReit 2QFY2014

Gross revenue                                  = $68.1m
Net Property Income                       = $46.1m
Income Available For Distribution  =$56.6m
DPU                                                  = 2.266 cents

Total Assets  =   $8,341m
Total Debts   =   $3,032m
Net Assets     =  $5,309m
NAV              = $2.069
EPS                = 1.242 cents

Outstanding Debt     = $2.878b
Debt-to-Asset Ratio = 34.1%
Interest Cover          = 4.3

Corporate Rating = "Baa2"
Average All-in Financing Cost  = 2.62%

SATS 1Q FY14/15

Revenue                                    = $435.2m
Operating Profit                        = $39.7m
PATMI                                     = $43.3m
Underlying Profit From Ops     = $43.4m
Underlying Net Margin             = 10%
PATMI Margin                         = 9.9%
Debt-to-Equity                          = 0.08
EPS                                           = 3.9 cents
NAV                                         = $1.30
Cash & Cash Equiv                   = $395.1m
FCF                                            = $31.1m

Key costs are Staff Costs ($203.9m) and Raw Materials (85.3m) . Share of after tax profits from associates/JV dropped 16.8% arising from lower cargo volumes.

Monday, July 21, 2014

Keppel Infra Trust 2QFY2014

Revenue                                        $16,430K
Net Profits                                     $3,341K
Net Assets                                     $604,942K
Cash & Cash Equiv                       $40,264K
EPS                                                0.53 cents
Adjusted NAV                               $0.93 (Adjusted)
DPU                                               3.13 cents

KReit 2QFY2014

Property Income                               = $47,346K
Net Property Income                        = $39,191K
Share Of Results Of Associates        = $14,244K
Income Available For Distribution   = $53,220K
DPS                                                    = 1.90 cents
All-In Interest Rate                            = 2.2%
Weighed Avg Term Of Expiry          = 3.6 years
Interest Cover                                     = 5.2
Percentage Fixed Of Debt                  = 67%
Total Borrowing                                 = $3,117m
NAV                                                   = $1.40
Aggregate Leverage                            = 42.8%

Thursday, July 17, 2014

Unrated Bonds

I like to ruminate about the above a little since during the recent CHC trial, one of the accused, Chew EH brought up the case of GIC investing in tencent,lenovo and Vanke unrated bonds to buttress his case that for CHC to invest (through an investment vehicle owned by Chew) in xtron unrated bonds is ok.

Now, all the three Chinese companies are big well known international names with a profitable business (at least at this point). their bonds may be unrated because they did not want to get a rating for a variety of reasons. But that does not necessarily mean that their bonds are very risky akin the junk bonds prevalent in the market place.Yes, there is risk (as with any investment) but at least they have profitable business and positive cashflow demonstrated over many years to back them up.

However, in xtron case, there is no valid business model, no profit, negative cashflow, almost no invested capital, few or  no fulltime employed personnel etc.

So the comparison is entirely inappropriate, in my view.

Tuesday, July 15, 2014

SPH 3QFY2014

Operating Revenue                                        = $309,725,,000
(Newspaper & Magazine)                              = $239,532,000
(Properties)                                                     = $50,976,000
(Others)                                                          = $19,217,,000
Operating Profit                                             = $98,391,000
Profit After Taxation                                      = $89,632,000
Cash & Cash Equiv                                        = $660,283,000
Net Profit Attributable to Shareholders         = $81,302,000
EPS                                                                = 6 cents
NAV                                                              = $2.17

Revenue for Newspapers & Magazine slide $19.7m (7.6%).Advertisement & Circulation revenues declined by $16.2m (8.2%) and $2.9m (5.8%) respectively.revenue from Property segment inched up $0.8m (1.6%).Other businesses grew by $3.7m(23.8%) led by online classified and radio business.

First Reit 2Q2014

NAV                              = 97.03 cents
DPU                               = 2 cents
Annualized DPU            = 8.05 cents
Total Assets                   = $1,142,819,000
Total Liability                = $442,730,000
Total Borrowing            = $375,800,000
Gearing                          = 32.9%
Gross Revenue               = $23m
Net Property Income      = $22.7m
Distributable Income       = $14.4m
Cash & Cash Equiv        = $28,070,000

Tuesday, July 8, 2014

Germany vs Brazil 7-0 Now

I am totally stunned but absolutely delighted!

Monday, July 7, 2014

Investment Risk - EcoHouse

Just read in today ST that MAS has flagged Ecohouse under its MAS watchlist. Previously Shenton Holding etc was also flagged similarly. The recent action by MAS is triggered by some investors complaining that they could not get back their capital upon the maturity of their contract in the investment of some Brazilian low cost community housing development project. The deal was to promise 20% return per year on a fixed capital outlay over one year that was subsequently extended to three years.

According to the ST report today, EcoHouse said in a February interview: "We do not 'guarantee' the return. Nobody should. Our investment provides a fixed rate of return, paid upon the completion and sale of the property. The contractual worst-case scenario due to our escrow facility is that the investor ends up with land and property in Brazil worth more than they have paid."

I DO NOT think the above statement depict clearly the worst case scenario. Imagine the below:-

1) Brazilian property crash (highly likely after a mega event like world cup 2014), you will end up losing your capital

2) Brazilian currency get devaluated rapidly (think BRIC). Likely if you witness the rapid devaluation of rupees, rupiah recently. You will end up losing your capital.

3) The housing project may be left unfinished. You end up 'stuck' with something that you CANNOT get rid of event at a huge discount Again here you lose your capital.

4) You may incur huge cost if you will to get rid of the unsold project. In this case, you still lose your capital.

So, do not be comforted by such assurances that you have legal claim on the land and property should things turn out awry.

In general, DO NOT invest in something you cannot control or monitor at least transparently.In ecohouse case, they let investors take the risk, if they end up making money, you may get your 20% return. If something go awry, the investors will be left holding the hot potatoes.

Finally, if their low cost community housing project can be so profitable as to guarantee 20% return per annum, why they need to come half way around the globe to get your funding incurring substantial marketing expenses?????

Friday, June 13, 2014

Monday, June 9, 2014

Some Statistics on Taobao

I was viewing a programme that discussed about China's e-commerce especially Taobao in view of Alibaba upcoming IPO. Here are some interesting "statistics" throw up by one of the learned  participant.

Current there are about 6m-8m merchants on Taobao out of an estimated 36m merchants in total in  China. So Taobao has a market share of 20% of all available merchants in China.Out of all the transaction volume in Taobao, 60% relates to clothing, apparel, shoes etc. About 80% of the merchants are not making any monies but Alibaba profits margin are about 40%.Traditional apparel player like Li Ning have closed a few thousand outlets due to competition from Taobao and other online stores. I remember (I hope correctly) that temasek invested into Li Ning not too long ago when Li Ning was facing financial difficulties.Hope it will turn out ok.

So it seems that the platform is squeezing all the blood leaving little for the agents situated on the platform! The other e-commerce platform player JD.com that just listed in Nasdaq (making the founder a multi-billionaire instanstaneouly) barely break even in the most recent financial year.

Sunday, June 8, 2014

CPF Min Sum- Some thoughts

Recently, there has been considerable angst generated by the increased of the CPF min sum to $155K. This is perfectly understandable as I believe(based on guts instinct) at least half of the cohort reaching 55 will not meet this min sum if you take into account of all the self-employed, under-employed, unemployed, retired etc.However, as a diy investor, I like to look at the compounding of the CPF min sum if one were to leave it untouched at 65,75 and 85  compounded by 4%.

At 65, it will be $229,437.86
At 75, it will be $339,624.09
At 85, it will be $502,726.61

If compounded by 5%,

At 65, it will be $252,478.67
At 75, it will be $411,261.14
At 85, it will be $669,901.07

Of course, whether there is actually money left in the kitty or the goalposts may have shifted again is a totally different question 10,20 or 30 years down the road for a newly reached 55 year old.


Friday, May 30, 2014

French Lottery Winner

I was very heartened to read the below!

PARIS - Amid all the gloom over a stagnating economy, serial scandals and a surge in support for the far-right, France finally had a good news story to celebrate on Friday.
A man who scooped more than 72 million euros (S$122.8 million) on the Euro Millions lottery has decided to give 50 million of his jackpot to charity.
In what the Le Parisien tabloid hailed as "an incredible act of generosity," the unidentified winner from the Haute-Garonne area of southwestern France has said he will share his giveaway between around ten NGOs working on behalf of the disadvantaged.
Francaise des Jeux (FDJ), the organisation that runs the trans-national lottery in France, said the winner had asked to remain anonymous but media reported that he was single, in his 50s and does not have have any children.
"He has a strong sense of social solidarity and he believes in generosity," an FDJ spokesman said.

Wednesday, May 28, 2014

SingPost And Alibaba

SingPost And Alibaba announced a strategic investment by Alibaba Investment Limited into Singpost under which AIL will pay $312.5m for 30m ordinary shares held in treasury and another 190m new shares. Upon completion, Alibaba Investment Limited will command about 10.35% in SingPost. The new shares issued will be at a price of $1.42 which about 8% t the last traded price of $1.54.

I view this as positive for SingPost effort to grow the e-commerce space in SEA with a formidable backer in Alibaba.

Wednesday, May 21, 2014

SAT 4QFY2014

Revenue                                    = $434.6m
Operating Profit                        = $41.7m
PATMI                                     = $42.6m
Underlying Profit From Ops     = $43.5m
Underlying Net Margin             = 10%
PATMI Margin                         = 9.8%
Debt-to-Equity                          = 0.08
EPS                                           = 3.8 cents
NAV                                         = $1.27
Cash & Cash Equiv                   = $339.6m

Key costs are Staff Costs ($188.8m) and Raw Materials (91.8m) . A mediocre quarter, in my opinion.Dividend was cut from 10cts to 8cts.