Thursday, December 31, 2015

The Value Portfolio - Recent Actions and Views - Post 5

I am lucky enough to be in time to post my last blog post in 2015 - A review of my portfolio.

My overall portfolio has not done well - it was down an average of about 5%. However, looking on the bright side, it is still better than how the STI performed over the year.

The following are stocks in my portfolio:

3) PNE Industries Limited
5) LHT Holdings Limited
10) Suntec Real Estate Inv Trust
11) Oversea-Chinese Banking Corporation
12) CH Offshore Ltd
13) Maxi-Cash Financial Services Corp Ltd
14) ST Engineering Ltd
16) PSL Holding Ltd
18) Hock Lian Seng Holding Ltd
19) United Industrial Corporation Ltd

Bought United Industrial Corporation Ltd - This is a surprise addition to my portfolio. It was an asset play and the NAV, based on the 3rd Quarter Results in 2015, was $4.19 vs the price of $2.81 at that point in time, This is a huge discount and I was tempted.

At that time, I am looking for an asset play stock with deep value discount, after missing out on IPC Corp Ltd and its capital reduction payout as the price shot up. 

Then I found United Industrial Corporation Ltd and Second Chance Properties Ltd on 2 separate facebook posts. I decided on United Industrial Corporation Ltd due to the deep discount it has and the debt to equity is much more acceptable for me.

On my previous write ups:

For 2016, as a promotion for the Triple S Scorecard and my online course (should be up in the mid January period), I will be doing more of the company stocks review write up, especially those in my portfolio. 

I hope this will be able to better spread my learning to others via these write ups and people can understand much more about the Triple S Scorecard. Of course, hopefully more people will sign up for the online course too.

If you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page

As for the course, contact us for more details if you are interested.

Do like our facebook page too...

Thursday, December 17, 2015

Rising Interest Rate and A Stronger USD $

On 16 Dec, Fed increases the interest rate in USA. 

In this modern world, this increment in interest rate will eventually cause the Singapore Interest rate to increase as well. There is a whole lot of information on the net explaining this link

This rise in interest rate will also result in a strong USD dollar in future.

So how will this affect the companies in Singapore?

Higher Interest Rates:

1. Those companies that uses leverage to grow will be in for a tough time. Their debt will balloon and they will need to pay higher finance cost.

2. Companies with debts on fixed interest rate will not be affected as much.

3. Companies with huge cashload will gain more interest earning.

4. Companies earning rental from properties that are mortgaged to banks, may have huge opportunity costs. If their actual rental yield is not higher than the yield that can be earned from the safer investment, such as treasury bonds, these companies will lose out.

Higher USD$:

1. If a company's item is sold in USD$, and if the financial reports is in SGD$, it will earn a gain in foreign exchange.

2. On the other hand, if a company's item sold or revenue earned in SGD$, but its financial reports are in USD$, it will report a lose in foreign exchange.

3. Note that many of the Singapore firms sell their items globally or in many countries, but only those that sells their products in USA will tend to gain from a higher USD$ (And if they report in SGD$).

Basically as you can see, many companies will be affected by this interest rate rise and it may be a good thing for them too.

To assist you to find good companies, I have come up with the Triple S Scorecard.

If you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Oh and we will have a online course in the works... contact us for more details if you are interested.

Do like our facebook page too...

Thursday, December 10, 2015

Why The Triple S Scorecard Do Not Have The "ROE" Criteria?

After reading this article from the fifth person, I was wondering if it is the right move to not include the ROE as a criteria.

In my initial Scorecard, I did include an analysis of ROE as a criteria. But I remove it for the Triple S Scorecard because of the chapter 21, Market Consistently Underprices Quality, in Show Me The Money Book 2. It basically states mean reversion of ROE does have over a long time. A good ROE will drop and a bad ROE will rise over a long time. (I maybe wrong in my interpretation).

Nevertheless, the question came to my mind after reading the article from the fifth person.

While researching on ROE, I found that ROE can be broken (or remembered) into the Dupont Analysis.


ROE can be broken into Asset Turnover, Operating Margin and Financial Leverage.

If you remember the criteria in the Scorecard, I emphasize that the I do not want a company to have significant liabilities (total liabilities to equity must be less than 2/3) or have a debt to equity ratio of more than 30%. Therefore, I expected the financial leverage of the firm to be low.

In addition, I expect the profit margin to be at least 5% for a period of time. This will allow the operating margin to be at least 5%.

However, there is no way of knowing Asset Turnover.

In this way, there is no way to know if a company that pass the Triple S Scorecard is a stock with high ROE.

Then, we can also look at another formula - ROE / PB

This formula is emphasize as the magic formula in Chapter 9, The "Magic Formula" Still Works, in Show Me The Money Book 2. The chapter stated that a stock that has a high score in this formula will most probably rise within a year.

In addition, this formula is also explained as - ROE / PB = Earning Yields = 1 / PE

With the above explanation, although Triple S Scorecard do not have ROE, but it calculates PB, PE and Earning Yields. It require PB and PE to be low, while Earning Yields to be high in order to score points.

Thus, if the ratios score its respective points, it will mean that ROE for that company should be high, or at least should be of a certain amount that is above the average.

In conclusion, with the breakdown of the 2 formulas above, we can safety assume that a company that pass the Triple S Scorecard has high ROE. With this conclusion, I will not be putting any additional criteria for ROE in the Triple S Scorecard.

To assist you to find good companies, I have come up with the Triple S Scorecard.

If you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Oh and we will have a online course in the works... contact us for more details if you are interested.

Do like our facebook page too...

Monday, December 7, 2015

Recent Views on Investment Environment (As of 07 Dec 2015)

It's been a while since I did a write up on the investment environment.

So far...I only have 1 word for it - BAD.

This conclusion is formed due to 1 reason - The Oil Price Is Still Falling.

This is mainly due to supply and demand factors:

1. Oversupply due to USA increasing its shale oil output and other oil production. Thus, the usual suppliers like Saudi Arabia start to sell to Asian powerhouse instead. 

2. Instead of cutting supplies like usual, OPEC is trying to defend the market share instead oil price. Further increasing the supply of oil.

3. Increase of the use of alternative energy sources. So lesser countries will use oil as a source of energy.

4. With the increase in supply, demand remains the same. So the price keep falling.

So how has that affected the world?

1. With the oil export dependent countries having deficit, their sovereign wealth funds have withdrawn money from asset managers. (Read news

2. With this withdrawal of funds, shares have not been very volatile. 

3. Oil services companies have been having lesser jobs. Many of them have a poor 3rd quarter results.

4. Delays in oil rigs. The spat between Sembcorp Marine and Marco Polo is out in the world for everyone to see.

The world has been very unstable from the ripple effect from this falling oil prices.

Couple by the other factors such as falling property prices, falling commodity prices  and falling freight price, the world is really in a mess.

To emphasis this point, recently I heard rumors that there are many 2nd hand Oil Rigs around the world that are selling much cheaper than a new oil rig. A new oil rig is about $200 million. A used one is only about $50 million. In this market, why will people want to pay more for an oil rig? I even heard someone said Gulf zone is a graveyard for oil rigs.

Anyway the above are just hearsays without facts. However, rumors must always start somewhere and there maybe some facts in it.

Furthermore, many offshore services are going into bankruptcy. (Read news here)

There are no "only losers" in an industry. The Asian Refinery seem to be the winners here. User of oil  are also the winner as the price goes lower. (Read news here).

On the other hand, with the money supply increasing (Euro-zone is still doing QE), there must be a place where the money is parked - Do remember money is a flowing commodities, unless people started to save them in banks.

The losses in the oil and gas market seem to have shifted to the IT Industry.

It seems like there maybe a bubble growing within the IT Industry as stated by value edge.

A discussion with my friends concluded that IT companies actually has "Nothing". They do not have fixed assets to sustain the share price. Furthermore, many IT Companies are dependent on their employees. If the employee leaves, the IT company may just lose its edge.

In Short

The downfall of the oil and gas industries has created a bad investment environment currently. You will most probably be sitting on some paper losses within your portfolio if you are an long term investor (If you are a trader, hopefully you had actual gains). Therefore, I suggest that if you should continue to invest, do pick those companies that has a good viable business model and a strong balance sheet to ensure that they can endure the tough times.

Oh... and the next Feb meeting is on the 15 / 16 Dec... Be prepared.

To assist you to find good companies, I have come up with the Triple S Scorecard.

If you are interested in my "Triple S" scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Oh and we will have a online course in the works... contact us for more details if you are interested.

Do like our facebook page too...

Thursday, December 3, 2015

Leisure Reading Articles for the Singapore Strategy in 2016

Sorry for the lack of articles lately as I am preparing for the course and have been busy too...

This post is just informing you that I have 4 articles from the banks on hand:

 - Credit Suisse Asia Pacific Strategy for 2016

- OCBC Investment Research on Singapore Strategy for 2016

- RHB Singaore Smart Nation Article

- RHB Singapore Strategy for 2016

If you are interested in all the 4 articles, do email me at theuniquebunch@gmail.com or use the email contact box beside this post.

Nonetheless, these articles are public information and you can find on the web.

These articles are just for leisure reading purposes and I am not endorsing their views in the paper. Please still do your own due diligence.

If you are interested in my "Triple S" scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Oh and we will have a online course up soon... contact us for more details if you are interested.

Do like our facebook page too...