SPH Q3FY2016

Operating Revenue                    $291,579K
Operating Profit                         $60,770K
Investment Income                    $18,672K
Profit After Taxation                 $61,980K
Net Profit Attr To Shrs              $52,656K
EPS                                            3 cents
NAV                                           $2.11
Cash & Cash Equiv                    $278,460K

Comment: Results of Q3FY2016 impacted by impairment of goodwill and intangibles amounting to $28.4m for the magazines business due to unfavourable business conditions.Excluding impairment charges, operating profit would have fallen by $17.1m.

FirstReit 2QFY2016

Revenue                             = $26.6m
NPI                                    = $26.3m
Distributable Income         = $16.2m
DPU                                   = 2.11 cents (2QFY2015 2.07 cents)
Total Debt                          = $456.7m
Gearing                               = 34.4%
NAV                                   = 103.12 cents

Remarks.In the press release, it stated that the issue of $60m subordinated perpetual securities at a fixed distribution rate of  5.68% for the first 5 years will reduce gearing from 34% to 30% as the proceeds will be used to reduce debt and increase debt headroom for further acquisition. I find this sort of statement misleading as perpetual securities are still considered as a form of debt, in my view.Definitely, a gearing of 30% without any perpetual securities is quite different from a gearing of 30% with $60m perpetual securities. I believe FirstReit is not the only REIT that is doing this, a number of reits have raise perpetual securities to get around borrowing from banks.

Currently, the manager hold about 5.67% of the total number of units issued. Each quarter, 70% of the management fee is paid with units and the remainder 30% paid with cash.

SoilBuild Trust 2QFY16

Gross Revenue                                                = $19,570K

NPI                                                                  = $17,325K
Distributable Income                                       = $14,727K
DPU                                                                 = 1.565 cents
NAV                                                                 = 79 cents
Leverage                                                          = 35.9%
Average All-In Interest Ratio                           = 3.44%
Interest Cover                                                  = 5X
Weighted Avg Debt Maturity                           = 3.4 years
WALE                                                              = 4.6
Secured Leverage                                             = 15%
Occupancy                                                        = 92%

Olam

Observed recently that Olam has buy back close 20m of its own shares over the last 2-3 months.That is a whopping $36m worth of purchase in cash (assume a price of $1.8/shr).Since Olam already as a small float of less than 20% after the buyback initiated by Temasek a while ago, I wonder why they are doing this? Is it because some major shareholders is/are unloading?or it is something else?I doubt it is the minority shareholders that is unloading because they did not let go at $2.2 (from the Temasek offer) a while ago.

Remember, a while ago, Temasek sold 20% of their shareholding to Mitsubishi Lifestyle at $2.7 apiece.Right now, the two largest shareholders are Temasek and Mitsubishi. This is followed by the Kewalram family, CEO and its senior management staff.

I am still vested with Olam and will follow on this with interest. The positive thing about Olam right now is that they have prune away a substantial part of the unprofitable business and interest rate on debts have come down with Temasek backing.

CMPH & SilverLake Axis

I have recently received the cash  for the unconditional GO offer at $1.02/shr for a total of 21550 shares.It was  a good investment for me at I purchased at an average price of around 60 cents/shr excluding dividends. All in all, I held these shares for an average period of 5 years.I stumbled upon CMPH by chance 5 years ago after reading some comments from some forumers.

I have since then reinvested the amount into Silverlake Axis at an average price of 49.5 cents/shr.Why SilverLake Axis? when there are some attacks on its corporate practice relating RPT last year. Firstly, I think the business is still sound and price has come down to more realistic levels.The company do not carry a lot of debt and the business itself has a reasonably good moat for the time being unless fintech take on in  a very big way displacing traditional banks which I doubt.There is some upside as the company hold 27m shares in GIT which is listed in the Shenzhen stock exchange. GIT currently trade around 70 rmb/shr. Silverlake is entitled to sell 8m GIT shares from 24 June 16 onwards. Silverlake do give regular dividends and the value of ringgit is unlikely to depreciate sharply against the $S from the current ratio of 3:1.Lastly, the company has been doing a lot of buybacks which at least indicate to me that the management is willing to spent cash on its own shares in a big way.

The P/B ratio of around 7 doesn't look attractive but I think I prefer to look at its earning generative ability also. Commodities companies can carry a lot of assets but if these assets cannot generate regular earnings, they will depreciate and be written away pretty fast.Just look at Oceanus to see how pitiful things can get.I was lucky to exit it years ago from this speculative foray with a small loss after I noticed the PRC CEO did not even bother to turn up for the AGM but keep selling his shares in the market.

KepInfraTrust - Basslink

Just read the news that  Basslink has return to service after being down since late dec 2015.This is indeed good news.It also tell me that repairing undersea cable is not a trivial affair.Currently, KepInfraTrust do not rely on Basslink Cashflow for DPU but rather used it to pay down debt it own for the asset.

NOL Is Gone, What's next?

Today is a sad day in the history of corporate Singapore. A national icon is officially
gone. The offer for NOL by the French shipping group has turned unconditional.There are grave implications. Without a strong anchor shipping line, Singapore position as a shipping hub will be eroded in the longer term or completely diminished.

According to the outgoing CEO Ng YC, NOL was reluctant and slow to adjust to changes
where shipping services are increasingly commoditized. NOL relied on premium services and it cost structures are higher than its peers.

Let me share a story. In the early days of ecommerce in China when Alibaba was still just one of the guys, Ebay bought a company called EachNet which was rapidly establishing itself as the leader in ecommerce in china. Its CEO was  a US ivy league trained PRC.On a interview with a broadcasting programme, he openly snide at JaMa's approach of not charging its suppliers on its site as it would lead to a deterioration of service and quality as any 'Tom, Jack or Harry'  could be a supplier on Alibaba's Taobao site. On the other hand Eachnet imposed a charge on its supplier to host itself on its site,so it will provide a impetus for quality and control.
The rest is history.

Currently, Uber and Didi is locked in a ferocious struggle in China as both seek to grow as fast as possible to achieve scale over its competitor at the cost of losing billions a year. JackMa and Tencent are using the same tricks of running your competitor into the ground by showing who can 'tahan' the bleeding longer. Uber is no Eachnet but is still losing ground at this stage to Didi.

The moral of the story is that quality of  management matter. NOL problem is that it was not able to appoint the right people to run the company like its own baby where everyday you go to sleep worrying when will your competitor eat you up for lunch.That why you see Ng YC can still smile and tell a story for press interview.Frankly, no saf or civil servant should be 'parachuted' to run a listed company without spending at least 8 to 10 years working through the ranks and go through some excruciating business cycles. What more is that they have a CFO whose time is split between his CFO and MP roles. You don't do that when your company is in dire straits and require your utmost attention. You don't do justice to your shareholders,employees and customers.

Now NOL is gone. What's next? Keppel, SembCorp, SIA, SGX, Singpost etc are all potential targets.

For me, I had the good fortune to divest NOL when it was above $2.