Sunday, May 31, 2015

My Views on Singapore O&G Ltd IPO

Do you know about the Singapore O&G Ltd IPO? 

If not, you can read it on the following links that I found and read:


A Path to Forever Financial Freedom - Singapore O&G Ltd IPO - Thoughts

Singapore IPOs - Singapore O&G Ltd

As well as, on forum threads like Valuebuddies and Hardware Zone.

After reading these posts, you should have an idea of what this Singapore O&G Ltd IPO is about. I will not be talking about all the facts stated in the blogs above as it will be repetitive. I will just be talking about my own views of this listing and my action.

I have heard concerns such as "Why do they want to list it if its so good?", "CEO only holds 4%" and "Dependable on the doctors", but I will still be BIDDING for this company because of:

(1) I believe this listing of the company is an exit strategy for the doctors. Imagine you are a very good doctor, but your son is an accountant, so who is going to take over your clinic? All these hard work will go into waste. Thus, with all clinics coming together as one, listing the holding company and the doctors getting their relative shares from the listing, will create an exit strategy for them. They will also be able to pass these shares to their kids or spouse in future (if they pass on). It's an excellent solution for them.

(2) With the holding company managing the accounts, the doctors just need to concentrate on their main work. This will create efficiency among the clinics.

(3) There could be referral as well. What a doctor do not know, another within the holding company maybe able to help. In this way, it acts like a "hospital" but its actually still a private clinic and the holding company is still earning the revenue.

(4) Doctors are the directors and shareholders. They will be working with the same view as the investors. The doctors that contribute the core revenue also holds more shares, so they will have more voting rights and dividends. Thus, they will not perform lower despite having a "shared" revenue business model.  

(5) Looks like almost everyone is having a go at this IPO. If I get it, the shares will definitely jumped. Even if I don't, the loss is only the ATM fee. The opportunity cost is too low.

Strategy

To Bid now and to continue to buy later (if dividends is able to hold above 5%). After 1 year, to consider selling as it is possible some of the doctors may leave the company (but still continue to be a shareholder). If that happens, the doctor will not be value-adding to the company but diluting the "dividends".

I know that being a value investor should not really think of buying IPO and consider to hold the stocks for only 1 year. But do not the strategy is tentative and nothing is decided yet. Just hope that I will receive some of the shares I bid.

Friday, May 29, 2015

Lets Talk about Telcos, AIIB & ICT Tenders, Investment Thoughts...

Telcos: M1, Starhub, Singtel (Part 2)

You can read about Part 1 here which I wrote on 24 May 2015.

However, things didn't go that well for me. I had itchy hands and got myself some lots of Singtel (@4.220) and Starhub (@4.05) on 25 May 2015 as I felt the drastic drop is enough.

Never did I expect Telcos to continue to drop and so drastically. My over-confidence in my view blinded my vision and now my portfolio is "Telcos" heavy (I already had some M1 very long time ago).

However, I came across an article by Assi AK. In my opinion, it tell us to question our initial actions and if the investment will still do its job.

So why did I enter into these 2 trades (Starhub & Singtel)?

1. For Dividends.
2. Blue Chips Stable company in view of recurring income.
3. Current Drop is due to 4th Telco News and maybe the "Big Boys" selling their shares.

With the above reasons, I believe Telcos stocks are still good to hold. I bought them for the long term and for the dividends as well.

So for those in a rush to sell their stocks, please think about why did you initially buy them? If the company is still doing well, why rush to sell them?

You can always think the other way - Be a Contrarian - This may end up be an opportunity for you to enter instead.

I also came across another article on when to sell a stock.

ICT Tenders -  For 4th Telcos and AIIB

Not too sure if this is a coincidence - But Singapore Government has just release news that it will launch S$2.2b in ICT tenders to realise Smart Nation vision.

This seems to be in line with the launch of AIIB and Japan investment, as well as the news of a 4th Telco entering the Singapore Market.

Nevertheless, with the infrastructure being enhanced nation-wide, this will benefit all Telcos (rather than only the new Telco) and also us, The Consumers.

Companies responsible for these developments will definitely rise in the long term - You can always target them now (but you will need to guess who it will be?) or wait till announcement to rush in to buy.

Investment Thoughts

I just like to share 2 interesting articles to read -:

1. How Many Stocks You Should Own In Your Portfolio? - It basically explains how should you determine the number of stocks you should hold. I guess you don't have to follow religiously, but it will give you an idea of  how many stocks should be in your Portfolio.

2. Market Change. So Should You. - This article explains that MARKETS ALWAYS CHANGE. Our strategy should change too. In my opinion, I believe we can be flexible in some of our factors when we are analyzing our stocks, but our core value should not change. An example is ISDN which I am vested in.

Sunday, May 24, 2015

Lets Talk about Telcos, AIIB, Japan Investment...

Telcos: M1, Starhub, Singtel

Over the last week (18 to 24 May 2015), the 3 local Telco prices dropped drastically. One of my friend was asking if he should pick up some of M1 stocks that time.

I told him - 

M1 has been a local company all along (only serving the customer in SG). Therefore, with the 4th Telco coming in, it is very bad being a local player serving mainly HP and Fibre Boardband customers. 

In addition, M1 holds little cash (Similar to Starhub) and their high dividend yield is mainly feasible due to the recurring business. Despite being the first company serving the Fibre Broadband market, I believe Singtel is catching up.

Thus, M1 recently announced an investment in Oman. This middle east market to me is unproven. Unlike UAE, Oman is not as developed (Correct me if I am wrong).

In view of the above, the market may have react too by the selldown of the stocks. However, in my opinion, this sell down is too drastic as many facts are still unproven. Dividend Yield should continue remain 4% to 5% for at least 2015 & 2016 and price will also continue to rise back (but at a slower rate). 

(Vested)

In addition to M1, Singtel and Starhub has fell as well (4th Telco effect or maybe market reaction to all Telcos). In my view, this was an opportunity for people to accumulate more or collect some of the Telco shares rather than selling them.

AIIB: A rival of IMF, World Bank, Asian Development Bank

As per Wikipedia, The Asian Infrastructure Investment Bank (AIIB) is an international financial institution proposed by the government of China. The purpose of the multilateral development bank is to provide finance to infrastructure projects in the Asia region. AIIB is regarded by some as a rival for the IMF, the World Bank and the Asian Development Bank (ADB), which are regarded as dominated by developed countries like the United States. The United Nations has addressed the launch of AIIB as "scaling up financing for sustainable development" for the concern of Global Economic Governance.

How I see it:

1. China is trying to overtake USA as the big brother of the World. This is another step in trying to spread their power to other countries.

2. This is definitely a political move. IMF has been helping Europe with their Crisis. AIIB should be setup with the similar purpose - to help Asia and be a "Big Brother" to Asia.

3. Unlike the past where countries attack and conquer to gain a foothold in another country, now countries "help" one another and "owe" favours to one another.

4. It is interesting to see how much cash China has. 

5. Targeted mainly at developing countries, note the word "infrastructure". Any companies which are in the developing countries should gain from it.

For us, investors, I feel that AIIB is not a bad thing. It will start investing in many of its member countries and help them develope. Whichever company that is in the country that AIIB invest in will have the first mover advantage. In my view,  Singapore's Technology, Construction, Infrastructure and Engineering companies that already has overseas establishment in developing countries should be able to gain from it in future.

Japan: Unveils $110 Billion to Fund Asian Infrastructure

What game is Japan playing? Read Article.

As usual to the above, this move is EXTREMELY POLITICAL (a way of helping USA to counter China).

However, this is weird as it meant that Japan will need to print more money to fund this investment overseas rather than locally. They seem to be still in a downturn right?

Conclusion on AIIB and Japan's Move

Investors like us should be VERY HAPPY to see such moves make by major countries. This meant that a lot of cash will be flowing into Asia. Shares should be shooting up for the next few years (Look at how quantitative easing has pushed up the US Market). As stated above, SGX-listed Technology, Construction, Infrastructure and Engineering companies that already has overseas establishment in developing countries should be able to gain from it in future.

However, please do not anyhow invest - DYODD.

Next up: I know I kept talking about this and yet to blog about it - A trilogy about my new portfolio...

Sunday, May 17, 2015

Macquarie International Infrastructure Fund (MIIF)

Macquarie International Infrastructure Fund (MIIF) recently announced on 15 May 2015 they will be delisted at 0.0825 per share.

As per Business Times, "... The total proceeds to be distributed to shareholders following the proposed divestment are expected to be approximately 8.25 Singapore cents per share..."

This is rather sad news for me as I got some of MIIF at $0.085 on 11 May 2015.

My argument at that point is

1. Sellers only need to sell an EXPRESSWAY. It is not a factory or machines or product but an expressway that definitely people must use daily. Not much maintenance is required. It is not very hard to sell it unless the China Govt is in the way.

2. RMB is rising upwards. Buyers stand to gain!

3. Macq office only owns 11% at most 15%, if they sell at a price too low, other shareholders can reject to the proposal.

4. More possible gain scenarios that loss situations.

Anyway, what is done cannnot be undone.

Lesson learnt: Do not get a stock that is going to be delisted. It more of a gamble than investment,

Next up: A trilogy about my new portfolio... (Sold many of my stock holdings and going to start a new portfolio with the remaining stocks.)

Sunday, May 3, 2015

Enlarge Your Pie

Recently while using the SGX's Stockfacts, I just realised there are actually film productions companies listed in it.



There is one that caught my eyes - mm2 Asia Ltd (Another is Alibaba Pictures Group Limited - but it's a China related HK company. So it's out.)

As per SGX, "mm2 Asia Ltd. produces movies and TV/online content in Singapore, Malaysia, Hong Kong, Taiwan, and the People’s Republic of China. It also distributes third party movies. The company was founded in 2008 and is headquartered in Singapore."

Due to its role as a production house for "Ah Boys to Men 3" and a LKY related film, as well as various news report on the net, mm2 Asia Ltd has almost doubled it's IPO price.

However, I feel that this rise in share price is due to recent hype. The reason being movie productions is a trial and error business. You never know when your next film is a box office or a flop. Not any movie is an "Avenagers" or "Ah Boys to Men". Furthermore cost is an issue when it comes to big productions. 

"Movies" being the END-product is dependent on consumer taste and preferences. It cannot guarantee a consistent stream of net income for the investor and thus no guarantee of dividend. But if you look deeper, these END-products that will have a service supporter (in my own words - a service or that is created due to the END-Product) or a component of these END-product.

The Cycle

End-product gets created > A Service supporter is created or existing service supporter gain more revenue > End-product gets popular > Component companies gain more revenue > Other Brands Comes in to create similar End-product > Component companies get even more business > Service Supporter has constant stream of revenue.

In the above cycle, the END-product company may lose market share but Service Supporter Company and the Components company will gain businesses instead.

Thus, if mm2 Asia Ltd is producing movies (END-product), I will rather invest in Golden Village (Service Supporter) instead. However, Golden Village is not listed. An option is invest in its parent companies -  it is 50:50 joint venture by Golden Harvest of Hong Kong and Village Roadshow of Australia.

Another example is Eurosports Global Ltd - a retailer of Mazda Cars in Singapore. However I rather invest in Wilson Parking (Service Supporter) than to invest in Eurosports Global Ltd. Once again, Wilson Parking is not listed. Another Car Park management that is listed is LHN Group Limited (Please do your due diligence if you intend to invest).

Hope you understand and like what I wrote here - Enlarge Your Pie by investing in a service supporter of a END-product or a components manufacturer of a END-product.

Next up I will be writing a trilogy about my new portfolio... Stay tuned.