Wednesday, November 22, 2017

Review Of Value Momentum Workshop

I went together with Simple Investor for Heartland Boy's seminar on 21 Nov 2017 evening. 

I was interested in his investment theory – Value Momentum. After all, he had a picked a few exceptional winners over the last 3 years.

Before I continue, I just want to say that I did met Heartland Boy at the Invest Idol competition previously. Although both of us did not make it to the final, he did left an impression on me. I am not sure if his theory started then, but at that time, I already felt that “this guy do know his stuff”. Eventually, at this seminar, he continue to show me that he does know his stuff WELL!

Picture taken from InvestingNote's Blog - The Signal Blog
The seminar started with Heartland Boy explaining he is a self-taught investor and his “Value Momentum” theory basically came about from reading Adam Khoo’s Winning The Game Of Stocks. In his words, this theory was basically 80% fundamental analysis (FA) and 20% technical analysis (TA).

This was the first time I heard about a combination like this and I was intrigued.

Throughout the seminar, Heartland Boy explains in detail about the 8 criteria he used. The first 7 of them being FA related and the last one is TA related (Read his post here and here to understand better).

His FA theory made sense and there was similarities to what Simple Investor did on the Full Analysis Scorecard as well as what I did towards my Ultimate Scorecard.

The main difference was the TA portion and what he said made sense too! It made me wonder if I should include TA as a portion towards my Ultimate Scorecard.

Furthermore, he also went on to explain when to sell and this is something I believe I have to start learning. This year have been bullish and I believe I was able to sell at a good price for most of my counters.

Throughout the event, Heartland Boy was able to articulate precisely and clearly what he wanted to share. He was also able to came out with Singapore counters examples which many of us are able to relate to.

Finally during the Q&A session, Heartland Boy also took his time to answer every single question even for those that are not related to his seminar.

Overall, it was a good seminar and I believe I learnt quite a lot that evening.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of the SGX counters now!

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Tuesday, November 21, 2017

Reverse Take-Over Situation

When a company engages in a RTO exercise, it is not necessary a cashing out opportunity for the new owners. To them, it may be just a valuating activity.

Normally for RTO, you will hear the "circus" behind the team. There will be quite a lot of news on them so people will know this counter and push up the share price. 

But what happens if the RTO doesn’t have any "circus", especially on the fact that it is so hard to find information on the company that is intending to take over the listing? Does this meant that it is some sort of shady business? What is it all about?

That’s when the investigator in me came out.

Recently, I got caught in this mode when I wanted to invest in a company that is currently in a RTO exercise now. The propose RTO has not been completed. Thus, I will not be stating the company’s name. I will just name it “ABC”.

Nevertheless I will be putting up information on this page which are public information on SGX and the net, which you may straight away know which counter I am talking about.

In addition it is also IMPORTANT TO NOTE that ANYTHING WRITTEN HERE IS BASED ON MY ASSUMPTION. I MAYBE WRONG AFTER ALL SINCE NOT ALL INFORMATION ARE REVEALED.

So what has happened?

Here are some abstract from the announcement:




TL;DR:
  • ABC is going through a RTO exercise with Racecourse Road Properties Pty Ltd, Fifth Avenue Lifestyle Pty Ltd, Tambusu Pty Ltd and Stanley Street Projects Pty Ltd.
  • It will acquire 4 freehold properties in Brisbane and operate under a chain of properties with a concept that has been created and developed to target business owners in the beauty and wellness industry.
  • There are 2 vendors. One of the vendors is an existing director of ABC and owns about 28.4% of ABC. He will eventually become a consultant for the future ABC.
  • The properties has an estimated net asset value of A$9 million dollars.
  • New ordinary shares will be issued at $0.035/share to the vendors.

What I found out:

Googling the 4 companies name and I found out about this - http://www.fifthavenuelifestyle.com/

In fact, this website totally tallies with the information above.

Its business is in Brisbane and it is renting studios to the entrepreneurs within the wellness and beauty industry in Brisbane starting at A$295/week.

From the website, you can also see the locations for the 3 commercial properties. From the people whom travelled to Brisbane before, they stated that these are suburb area catering to the neighborhood.

In addition, I emailed the company on 16 November and they replied me through a 3rd party agent on 20 November.

Extract of the email is below:


Here are my thoughts:

Positive:

1. Rental income. Seems like a REIT model.

2. Pop-up stores seems to be work better for small business owner. Lower startup cost.

3. Brisbane Property yet to fully peak.

4. The website seem to show that the company is expanding. The extra properties will most probably come from the companies in the RTO exercise.

5. The issue share price is $0.035. This is about more than 20% premium about the current share price range.

Negative:

1. The website is designed in 2017. – Seriously?! This business was established only in 2017??

2. The existing director will become a consultant – So he can cash out and say bye bye? This does not make sense to me.

3. The number of consideration shares are not stated. In addition, it seems to suggest that the RTO will release new shares into the market and not a conversion of existing shares. It sounds more like a rights exercise. Dilution?

4. The market value is an estimated figure and the exchange rate used is rather high.

5. No moratorium period stated. Existing directors can sell off anytime.

6. Why was the email replied via a 3rd party agent? – Extra cost, lower profit margin!

7. Revenue calculation: 295/week/studio x 15 studios x 52 weeks (assuming 100% occupancy) x 5 locations (As per website, they will open 2 more places) x 1.08 (Australia exchange rate) = S$1.24 Million - Too low! Furthermore I am assuming a very positive scenario here.

In Short

I have 1000 shares of this counter. But the total value of these 1000 shares can only buy you a few set of McDonald's meal. If you had followed me, you will know which counter I am talking about.

Although I am vested, but with all the negativity I have stated, I will not be adding to my holdings. I prefer to allow the RTO to take place first and see what is actually happening behind the scene.

Lastly I will end of with these words below…

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of the SGX counters now!

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Sunday, November 19, 2017

A "Rubbish" Company

Nowadays, my analysis of counters is fast and easy with the help from Fundamental Scorecard website. I used to require hours to analyze counters. But with the website, all I need is "time on the bus in the morning" to decide on a counter. I will even have extra time to look for additional information - especially those qualitative information.

Anyway I had wanted to write a review of all the counters I wrote in 2017. But I decided to write a review of this counter instead that I bought 2 weeks ago, during one of the morning on the way to work.

I had actually targeted this counter MANY YEARS AGO when it was still 15 cents. However, I was stubborn and only wanted to purchase it at a lower price. To my dismay, it's share price just kept on climbing. After a few months, I reach a conclusion then that its share price will never go back to 15 cents and I completely ignore it ever since.

Share price shot up!
It was only until recently that it caught my attention again, when it passed the Ultimate Scorecard and had a high score for Full Analysis as per Fundamental Scorecard website.

Profile In Short (As per SGX)

Colex Holdings Limited (aka Colex), an investment holding company, provides waste management services in Singapore. The company primarily engages in the provision of waste disposal services for domestic, commercial, and industrial waste; the sale and rental of equipment; and the repair of waste compactors. It also offers recycling, refuse disposal, and contract and general cleaning services. Colex Holdings Limited provides its waste disposal and recycling services for various clients, including commercial offices, shopping complexes, food courts, cineplexes, residential buildings, and warehouses. The company was incorporated in 1971 and is based in Singapore. Colex Holdings Limited is a subsidiary of Bonvests Holdings Limited.


How did it fare against Fundamental Scorecard?


Colex passes the Ultimate Scorecard as of 13 Nov 2017 based on a share price of $0.390.


Colex has a high score on the Full Analysis as of 13 Nov 2017 based on a share price of $0.390.

Other reasons why I purchase the counter...

1. Barriers of Entry


As per NEA website, it is stated that "NEA appoints public waste collectors (PWCs) through open tenders to serve domestic and trade premises in Singapore by geographical sectors. The tenders are open to companies that meet the pre-qualification criteria*. Successful bidders are awarded licenses to provide waste and recyclables collection services for the respective sectors over contract periods of seven to eight years.

Currently, there are four PWCs operating in Singapore. The sectors they serve are indicated on the map below. The seven sectors will be further consolidated into six sectors when the new contracts for Pasir Ris-Tampines and Bedok commence in 2018."

The barrier of entry is high in this industry;
- You have to be appointed as a PWC by NEA.
- There is a list of pre-qualification requirements by NEA in order to bid for the tenders.
- Once you are awarded the tenders, it will be a contract period of 7 to 8 years.
- There are only 4 PWCs at the moment serving 7 sectors.

Thus, in order to enter into this industry, there are very high capital expenditure cost and you must have significant experience.

Colex is currently 1 of the selected PWC serving 1 of the sectors in Singapore, and has won the tender to serve the jurong sector till March 2020.

2. Increase in Revenue, Net Profit, Operating Cashflow and ROE


Base on the information above (screenshot of Full Analysis), you can see that the revenue has been increasing over the years, expect for the latest trailing year. This has also led to the increment in net profit and operating cash-flow over the years, which also led to the increase in ROE as well.

3. No Debt

Despite having a rising ROE over the years, Colex has never taken on any debt.

4. High Insider Shareholding

78% of the shares are owned by Goldvein Holdings Pte Ltd, which is a subsidiary of Bonvests Holdings Ltd. This will be able to stabilized the share price and not allowing it to drop significantly suddenly.

5. Future Growth of Colex

Colex has recently proposed to purchase Vemac Services Pte Ltd. The latter is a company that
carries on the business of the repair and maintenance of refrigerating, air-conditioning and ventilating machinery and equipment.

It seems that, other than rubbish collection and cleaning services, Colex is intending to transform into a full fledged service company. This could potentially increase Colex recurring income ONLY IF the proposed acquisition went through.

The Risk Involved...

1. Low Dividend Yield

Despite the generation of Free Cash Flow on an yearly basis, Colex has not been really increasing its dividend.

Colex current dividend yield is still less than 3%.

2. Higher Future Cost

Salary has been a significant major cost to Colex and it is set to increase in future as stated in their 2016 Annual Report due to the Tripartite Cluster for cleaners on the revised Progressive Wage Model (PWM) for the cleaning industry.


As per the information above, it can be shown that staff cost is a significant factor towards Colex profitability.

However, when compared to one of their most direct competitor, 800 Super, the latter has a higher amount of staff cost.

But on a deeper look, it can be analyse that 800 Super's revenue growth is much faster than its growth in staff cost as the ratio got smaller. For Colex, the ratio has been increasing which meant that the increase in revenue is much slower than the growth in the staff cost.

3. 800 Super Highly Possible In Winning Pasir-Ris Bedok PWC Contract



As per the thread on Valuebuddies and article on the Edge, 800 Super will have a high chance of getting the Pasir-Ris Bedok PWC Contract.

This will meant that Colex will have lost a short term catalyst for the share price.

In Short

If you invest in Colex now, you should be expecting a stable company but with a slow rising share price. If you are looking for significant short term gain or one with possible explosive share price, I guess you are looking at the wrong counter.

Do note that there are significant risks ahead for Colex, especially when it comes to staff costs. Net profit could suffer and "propaganda news" will have push the share price down.

Nevertheless, in view of the positive points that I pointed out, I decided to go ahead and purchase the counter!

In addition, although the 3rd Quarter results are not out yet, but there has been a financial disclosure that its net profit for the current quarter has gone down.

Current Price: $0.400 as of 19 Nov 2017.

Please do your own due diligence before you invest in this stock. 

Do note the author is vested in this counter/company at an average price of $0.408.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of the SGX counters now!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.  

Wednesday, November 8, 2017

It Is About Time Someone Wrote About This Company...

Being a blogger and yet an investor of this company, I met Reyna at the Invest Fair 2017. She is the Financial PR rep office of The Trendlines Group Ltd (aka Trendlines).

Even though she is not a direct rep of Trendlines, she was able to answer my questions very clearly. This was unlike the other companies there whose employees are unable to answer some of the simple question I posted.

She impressed me with her understanding of the company and I immediately went back and bought Trendlines' share – a small portion but this is a start.

Then 1 week later, she actually invited me to Trendlines' management briefing. I agreed straight away.

So guess what happens after the briefing?

I bought more of Trendlines after the briefing.

The reason is because despite having 2 CEOs, Todd Dollinger and Steve Rhodes, they seem to be able to complement each other very well. In addition, they were upfront, honest and were able to articulate their strategy very well to the audience that day.


Profile In Short (As per their website)

The Trendlines Group is an innovation commercialization company. Trendlines invents, discovers, invests in, and incubates innovation-based medical and agricultural technologies. As intensely hands-on investors, they are involved in all aspects of our portfolio companies from technology development to business building. They invest principally through their incubators: their two Israeli government-franchised incubators, Trendlines Medical and Trendlines Agtech, their Singapore incubator, Trendlines Medical Singapore, and their in-house innovation center, Trendlines Labs. Simply stated, they create and develop companies to improve the human condition.

How did it fare against Fundamental Scorecard?

No information via the Ultimate Scorecard due to the company being listed less than 5 years.

Then why did I still buy them?

*Didn’t you already said that you should stick to your Ultimate Scorecard strategy in the previous post!

1. CEOs have been buying

Both of the CEO have been buying the shares of Trendlines since the start of 2017.

2. Strategic Review and Dividend Policy

The CEOs decided to reduce their salaries as an example of expense reduction. I will say this is very very interesting and they set an example across the company.

Trendlines also propose a dividend policy. As much as I will say their dividend policy is a bit confusing, but it is better than having none! The shareholders have been asking the company to pay dividend since they were listed, and at last, their wishes were answered!

3. Consistent Updates of Their Portfolio Companies

Seriously, if you are really interested in their portfolio companies, then you should go and read their updates. Trendlines do update on a monthly basis on their “Most Valuable Portfolio Company” and “10 Companies to Watch”.

Once you read their updates, you will be amazed to know what their portfolio companies are making!

4. They have Almost “No Liabilities”.

In their 2nd Quarter, the company provided a FAQ.

In the FAQ, they explain that, “…Although reported as debt, about 99% of our long-term liabilities are non-recourse and, as such, are conditional debt– coming due and payable in cash only when certain value-building events occur. Our two largest items in this section, loans from the IIA and deferred taxes, only come due upon successfully exiting portfolio companies. If we write off or write down a portfolio company, the part of our long-term liabilities attributable to that portfolio company is also written off or written down.

There are three main long-term liability items:

1. Roughly $2 million of our long-term liabilities as at 31 December 2016 are the long-term portion of Deferred Revenues, which, as explained above, represent our commitment to provide two years of services to some portfolio companies in exchange for shares that we received.

2. Just over $4 million of our long-term liabilities as at 31 December 2016 are made up of Loans from the IIA. This debt is primarily comprised of non-recourse loans received from the IIA under an old funding program, and are presented at fair value. Each loan was granted in regard to a specific portfolio company and is only repayable if we exit from that specific portfolio company for which the loan was received. This method of funding by the IIA is no longer in effect and IIA funding is now given as a grant directly to the portfolio company and not through our balance sheet.

3. The largest part of our long-term liabilities is Deferred Taxes, which at 31 December 2016 was approximately $12.5 million. Deferred taxes derive mainly from the difference between the carrying value and tax basis of our portfolio companies and are recorded mainly when there is an increase in the carrying value of our investment in portfolio companies. These taxes only become due upon a taxable event, when we sell all or a portion of our holdings, such as in the event of an exit. When the value of a portfolio company increases or decreases, the corresponding deferred tax liability will increase or decrease accordingly. If we write off or write down a portfolio company, the deferred taxes attributable to that portfolio company, are also written off or written down.”

At the end of the day, many of the liabilities are repayable only when they exit an investment or sold off a portfolio company.

So if there is no exit, there will be no liabilities payable. Furthermore, it seems that their exits have been very profitable.

During the briefing, it was stated rather explicitly that, in the event Trendlines intend to exit/written off a portfolio company, it will be done at a very early stage so that not a lot of liabilities are recorded.

5. Strategic Partner

Trendlines also have a major strategic partner in B Braun Melsungen AG.

As per Wikipedia, “B. Braun Melsungen AG is a German medical and pharmaceutical device company, which has offices and facilities in more than 50 countries. Its headquarters are located in the small town of Melsungen, in central Germany. The company was founded in 1839 and is still owned by the Braun family.”

6. Trendlines Innovation Labs

Other than the portfolio company, Trendlines also have its own innovation labs. Any product that is created by the lab will not be able to be shown in the balance sheet as there is no value to it yet.

However, once it has signed up some contract or sold some royalties, they will the information recorded in the balance sheet.

This also meant that there could be hidden value in this company that has yet to be revealed.

7. Expansion into China

Trendlines have currently expanded into China. In my own opinion, China has been a very innovative country with the uprising of BAT. However, in my own opinion, for medical devices, they seem to be still lagging behind. I believe this will be the next catalyst for Trendlines in the next few years.

But what about the risk?

The main risk we should take note of is that the how the valuation of each portfolio company is calculated. 

Although this was explicitly explained during the briefing and within the FAQ, but I still have my reservations. On the other hand, based on Trendlines's management experience, it seems like they were mostly able to make a significant gain on their exits.

Another concern I have is if any of the portfolio company that were write off were explicitly stated.

In Short

My conclusion on Trendlines is that it is hard to measure the company quantitatively due to its hidden value. But qualitative-wise, the company does have many positive points and it seems to be expanding in an exponential way.

Finally it is important to note that their product are eventually biomedical/bioagri products, which will definitely have a use if it is produced and market in the right way.

And... I bought more of this counter today!

Current Price: $0.165 as of 8 Nov 2017.

Please do your own due diligence before you invest in this stock. 

Do note the author is vested in this counter/company at an average price of $0.153.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of the SGX counters now!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote

Monday, November 6, 2017

There Are No Gurus...

Before I start talking about the main topic, let me conclude a happy event this month. Simple Investor SG and I had just completed our 2nd Value/Growth Investing Workshop. Although the room is a bit tiny, but everyone turned up. There was even an uncle that came all the way from Hong Kong, which was a nice surprise!

Back to the main topic...

This post is basically inspired by SG Thumbtack Investor's article.

He talks about people reporting huge gain this year and explains that if it was just a 1 year huge gain, investors should not be not happy. This is because they forgot about the power of compounding. He went on to explain that if an investor makes 20% every year for the next 35 years, he will make more money than someone who has inconsistent gains ranging from negative 10% to 60% every 5 years.

On the other hand in a Facebook group, BIGS World, there were people questioning about the probability of making 20% every year. But Brian posted a picture stating these superinvestors did.


This led me to the next question - What did they have that so many of us didn't?

I guess the answer is Discipline.

We lack the discipline that these superinvestors have. These superinvestors tend to have a fixed strategy and focus on it consistently.

However, many of us do not have this formof discipline and tend to be tempted about other forms of investment strategy.

Even for me, despite a bull year, I had make mistakes too.

1. Secura Group - I purchased this counter at 137 cents with conviction that I made the right choice, EVEN WHEN IT FAIL ULTIMATE SCORECARD. However, when the counter keep dropping, I continue to BELIEVE THE STORY I CREATED on this counter. Even after its GM and CEO was sacked/resign, I continued to believe MY OWN STORY. When the latest financial report finally showed the turnaround in profit I was looking for, it has to comment that there will be impairment for their recent acquisition of RSPL. So I decided I will end my love for Secura Group asap!

2. Traditional Blue Chips - Anyone who held traditional blue chip counters like M1, Singpost, Starhub, ComfortDelGro or SPH will be having a very "red" year. Generally, traditional blue chips did not do well this year with so many disruption coming from all around the world. Out of the 5 counters, I used to own 2 of them and I am still currently holding on to ComfortDelGro. Similarly, if only I stick to my Ultimate Scorecard strategy, my gains will have much more this year.

In short, I was lucky to have quite a few of counters rising more than 20% and about 2 multi-baggers this year. These gains offset my losses and also contributed to my last count of "18%" portfolio gain. If I have stick to my Ultimate Scorecard strategy, my gains will definitely be much more.

Thus, with this lesson learnt, I hope 2018 (in 2 months time) will be better.

Finally, I will end with this sentence - always know that "there are no gurus". Once you start thinking that you are, that is where you start making mistakes.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of the SGX counters now!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote

Wednesday, November 1, 2017

Looking Forward To This Challenge!

It has been some time since I talked about any counter. So I decided to talk about a counter I recently purchased. Before I go into the details of the counter, let me explain what had happened recently.

Gain of 30% within 3 Months

Based mainly on the recommendation of the Ultimate Scorecard, I purchased Miyoshi Limited at $0.066 in August 2017 without going as in-depth as I wanted to.

At the end of Oct 2017, I sold all of Miyoshi Limited at $0.085 per share – a 30% gain within 3 months.

I understand I told many that the Ultimate Scorecard required users to hold at least 4 months, but if you already had enough gain, why not just sell it? 

Change of Investment Strategy

I have also posted on InvestingNote recently that I made some observations of my portfolio.

At last count, my overall gain is about 18+% for my portfolio as a whole. But I have actually 4 sub-portfolios and their respective gains are 13%, 14%, 33%, and 17%.

At the start of 2017, the sub-portfolio with 33% gain had over 60% in pennies (below $1, in fact below 60 cents) and “unknowns” that passed my scorecard method.

Next, the sub-portfolio with 13% gain consist of 70% blue chip at the start of 2017.

The other 2 sub-portfolio with 14% and 17% gains are mixed portfolio. The only difference between them was that the 17% sub-portfolio started with a bank counter.

Therefore, 2017 seems to be a pennies bull year. Any investor that started with pennies and held onto them will have a great performance this year.

However, I have also been observing that many counters are taking their turns to rise to “new highs”. This actually worries me, because many of them are rising without specific reasons. I have doubts that this will continue after the 2nd half of 2018. Thus, I decided to go into 2018 with a new strategy.

*Do note that at the start of 2017, I also told my friends that 2017 will be a crisis year. But that didn’t happen. Thus, my prediction may be wrong after all.

The new strategy is to focus more on income investing and be less adventurous.

The breakdown of the portfolio is expected to be the following (Do note that this act as a guide for me only and I do not follow it strictly):

  • 30% will go into counters giving at least 4.5% dividend.
  • 15% will go into blue chip counters.
  • 25% will go into counters that passes the Ultimate Scorecard via Fundamental Scorecard website.
  • 10% will go into counters that purchase due to “a certain story”.
  • 10% will go into US and HK counters.
  • 10% will be kept as cash.

With the above changes in mind, it is important to note that they had influenced me on my purchase of Challenger Technologies Limited (aka Challenger).


Profile In Short (From their website)

With over 35 years of IT retail under its belt, Challenger is Singapore’s only homegrown consumer electronics chain with an extensive network of 38 stores island-wide serving over 1 million ValueClub members to date. Its latest flagship store spanning 14,000 sq ft is now open at Bugis Junction #B1-26. For customers who prefer to shop online, Challenger's Hachi.tech marketplace is the 24/7 option - simply choose between local delivery and convenient in-store pickup.

How did it fare against the Ultimate Scorecard?

Challenger's the Ultimate Scorecard via Fundamental Scorecard Website
Challenger passes the Ultimate Scorecard as of 23 Oct 2017 based on a share price of $0.435.

These are the reasons I bought the counter…

1. Passes the Ultimate Scorecard and Change in Investment Strategy

The Miyoshi incident gave me more confidence of the picks by the Ultimate Scorecard. In addition, I wanted to look for counters that provided dividend yield of at least 4.5%. Thus, when Challenger passes the Ultimate Scorecard and have been giving out a dividend yield of about 5% consistently, I decided to take a deeper look.

2. Proactive Management Action

Since the start of the year, Challenger has been closing down poor performing stores. From Q1 2016, it state that it has 48 stores. As of Q2 2017, it has reduced to 38 stores.

Competition from online portals are VERY REAL and this action from the management shows their proactive-ness.

I believe the management are also shifting the stores around to lower their rental. This can be assumed from their latest new lease at Paya Lebar Quarter commencing in Q3 2018.

3. Improvement in Revenue/Store

Period
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Revenue ($’Mil)
88.9
89.6
74.4
83.4
88.9
77.8
No. of Stores
48
44
44
43
40
38
Rev/Store ($’Mil)
1.85
2.04
1.69
1.93
2.22
2.04

From the figure above, you can see that Challenger’s revenue per store is actually improving since the low period of Q3 2016. Nevertheless, this should not be taken as an improvement in sales of each Challenger Store, but on the indication that how its external sales (online channels, signage projects and call center services) has been assisting to push up the overall revenue. Thus, this also highlights how the proactive actions of the management helped with the company's top line.

4. High ROE Consistently and Without Debt

Information Taken from Challenger's Full Analysis Scorecard via Fundamental Scorecard Website
From the above table, it is shown that Challenger has been able to achieve a high ROE of above 20% from 2008 to 2015, despite not having much debt.

5. Shareholders In Line with Retail Investors

70% of the shares are owned by CEO and insiders. This will provide support to the share price and ensure the shareholders’ direction is in line with the retail investors.

6. Branding Power

Recently when I was shifting into my new house, I realised Challenger is at the top of my mind whenever I thought buying computer/network items and its related products. This made me thought of the branding power Challenger has in the minds of Singaporeans.

Nevertheless, to maintain this “Branding” power, Challenger has to have a significant number of stores operating throughout Singapore.

It seems like the proactive management also understand this aspect and has been “shifting some of the stores” around to ensure the rental remains reasonable and Challenger remains at the top of the mind of Singaporeans when it comes to certain electronics.

But nothing is perfect…

Online Competitors and Reducing Revenue

Despite revenue per store improving, Challenger’s top line has been reducing (as per the Full Analysis Scorecard above). This is mainly due to Taobao, Qoo10, Lazada, Amazon and even Carousell. These online platforms have been “eating” away Challenger’s market share by allowing various resellers and manufacturers to sell SIMILAR ITEMS as Challenger, but at a much lower price.

Challenger has since setup their own online platform – Hachi.tech. But it still remain to be seem if this is a long term solution for Challenger to compete with theirs other Online platforms.

Even when there is only 1 risk stated, this risk has the ability to totally remove "Challenger" from the face of Singapore.

In Short

Challenger need to do more to CHALLENGE the online portals, possibility in areas such as user experience. If not, its future remain bleak.

However, its clean balance sheet and strong cash flow will still be able to support its business for the time being. Hopefully its proactive management is able to find a new revenue stream and up its game!

Finally, do note that the 3rd quarter results that will be released this coming Friday. Hopefully it will be a good one!

Current Price: $0.450 as of 1 Nov 2017.

Please do your own due diligence before you invest in this stock. 

Do note the author is vested in this counter/company at $0.425. 

If you are interested to know more about the Ultimate Scorecard/Full Analysis Scorecard or the Fundamental Scorecard Website, do click on this LINK to sign up for our 2nd Value/Growth Investing Workshop! (Left only 5 tickets! Grab them now!)

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Tuesday, October 31, 2017

Interview with "Reader Who Uses The Scorecard Method"

I will like to apologize for the delay in posting. I had wanted to do a "Reasons to come for the Investing Workshop" post on Sunday, but it ended up sounding too HARD-SELLING, thus I reverted it to draft instead. However, the short publication got "crawled" into my InvestingNote page and some people seem to be quite turn off by it. I guess I made the right choice in turning the post into draft.

Anyway back to the main topic... 

This will be an interview with the "Reader" whom had supported me since late 2016. Not only has he read my blog regularly, he has also came for my seminars numerous times and followed my scorecard method since the "Enhanced Triple S Scorecard" days.

The reason I interviewed him was because I felt he was a bit different from the regular investors. Most investors seems to focus on news, financials or charts. But from my conversion with him, he get inspirations from observing "businesses around him" (Something I did at the start too) and understand how some of the businesses operate. I felt this was an X-factor that can make him a very good investor in time to come.

As for me, I am just glad that my sharing has helped people to invest.

Without further ado, let's get straight to the interview questions and his answers!

1. Tell us more about yourself.

Reader: I am 30 this year and working in the Public Service. Even though I had a relatively comfortable childhood, living below my means has been really helpful in my investing journey thus far (I've only been investing for about 2 years).

2. How did you get into investing?

Reader: I was inspired after looking at my parents' CDP statements.They had mainly blue chips, some of which they have held since the 1990s. The dividends which they had been collecting over the past decades inspired me to start investing.

3. What is your thought process when it comes to stock-picking?

Reader: My approach is very much skewed towards income investing. Besides dividend yield (which can be quite misleading), I also usually look at the payout ratio, EPS growth and other relevant metrics. I also try to read more about different business sectors to get a better understanding of how likely the company is able to grow due to the disruption in various industries these days. Some of the blogs which have inspired me are paullow investment journey, a pen quotes and thumbtack investor.

4. Understand that you have been using the scorecard since the Enhanced Triple S Scorecard days, how have it helped you in your investing method?

Reader: The scorecards have made me realise the importance of cash flow and cash holdings of the company with the metrics like free cash flow and ratios like P/FCF.

5. Understand you are also a Fundamental Scorecard website subscriber, how has it benefited you so far?

Reader: The fundamental scorecard has streamlined the process, where previously subsribers would need to input the figures on their own, now there is a one stop portal where you can see stocks that score highest on the Ultimate Scorecard and Full Analysis easily. I would recommend it especially if you are too busy to do your own analysis.

6. So far, what is your best investment and worst investment since you started investing/trading?

Reader: My best investment would probably be KSH Holdings which got me about 50% gains and I have sold it some time back. Although it did not pass the super scorecard at that time, I decided to invest in KSH because of their consistent dividends and cash flow.

Worst investments... so many to choose from. Probably Starhub or Singpost which taught me the importance of cutting losses and not to 'fall in love' with any stock even if they are 'blue chips'. Left my positions with about 10-15% losses (less after dividends).

7. Able to reveal which stocks are currently on your watchlist?

Reader: I've been looking at some real estate stocks such as Straits Trading and Low Keng Huat as well as healthcare REITs like First REIT and Parkway Life REIT.

8. Finally, any advice for newbie interested to get into investing/trading?

Reader: Although I'm probably not qualified to give anyone investing advice, when I just started investing, I was reading financial blogs and newspapers (you can read many financial newspapers for free at NLB). I believe in continuous learning and still read a lot of financial blogs till today. I think the most important part of investing is controlling your emotions (and also don't use leverage for investments).

If you are interested to know more about the Ultimate Scorecard or the Fundamental Scorecard Website, do click on this LINK to sign up for our 2nd Value/Growth Investing Workshop

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Tuesday, October 24, 2017

Fundamental Scorecard = Mechanical Investing

I had learned about a new term after reading about Lazy Singaporean's Blog Post - Is mechanical investing a form of index investing?

It was the first time I came across this term, "Mechanical Investing".

After I googled, I found that Investopedia state that mechanical investing is a form of "buying and selling stocks according to a screen based on predetermined criteria, usually with the help of technical indicators such as relative strength or momentum. This method allows traders to enter transactions without emotion and backtest their strategies by using historical data from any time period."

It seems that without any prior knowledge of this term, I have been following mechanical investing via my scorecard method.

Although I am not a trader, but I have been practicing "buying and selling stocks according to a screen based on predetermined criteria" via the scorecard method. I have also "backtest these strategies by using historical data from any time period". Thus, I believe I have been following mechanical investing subconsciously.

Other pointers in the Lazy Singaporean's post is also worth mentioning:

1. Mechanical investors do not care about the industry, news and anything outside the factors listed. As long as it meets the criteria, they buy it.

TUB: For me, I have yet attain the enlightenment of deserting all emotions, news and industry and solely following on the Ultimate Scorecard picks in the Fundamental Scorecard website. But if a counter passed the Ultimate Scorecard, it does provide me with a HUGE sense of comfort to just go ahead to buy the counter without the need to do indepth fact finding. 

2. However, we could go one step further by creating our own index, which might or might not beat the broad index over time.

TUB: Fundamental Scorecard website has a surprise coming for its members soon next year. And it is deeply link to the above sentence. 

3. This is where it gets interesting, because such mechanical investing approaches have been actually proven to beat the market over the long run.

TUB: This post discusses about very successful investors, such as Walter Schloss, Joel Greenblatt, James O'Shaughnessy and Joseph Piotroski, following mechanical investing. I have not yet reach their level yet. Based on the latest post of my portfolio, for the 1st 9 months I have achieved 13.6%. It is not amazing, but to me, this is a good start if I could have 13% for each of the next few years.

In short, I really believe the Fundamental Scorecard website is promoting mechanical investing. This will definitely help retail investors in ignoring the "noises" and concentrate on the facts of each counter.

If you are interested to know more about our Fundamental Scorecard website, do click on this LINK to sign up for our 2nd Value/Growth Investing Workshop! We will be discussing about our Fundamental Scorecard website during the seminar!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Thursday, October 19, 2017

Life After Getting Your Own House

I just started to live in my new house for a few days. And what follows was unpredictable.

Housework, cleaning, buying stuff, cooking, arranging for rectification, putting mahjong paper and then it repeats.

I no longer have any time for reading and much less for blogging. Over the last few days, I only looked at the stock market for about 10 to 15 mins each day.

Then one day, Simple Investor SG messaged me "Market drop suddenly".

Although I do not have enough time, but I still looked at the market for 5 seconds. Then I saw the STI at 3,334.91. I replied Simple Investor SG, "inform me only if STI was at 3000". Then I went back to my housework.

It is only on a afterthought that I realised why did I have this "super heck care" attitude?

There are a lot of reasons behind it.

1. Experience - I guess having been through a few number of hiccups, I don't think a minor correction will affect me. Furthermore, I have already allocated a percentage of cash that to reinvest in the market.

2. Already In-The-Money - As per my latest portfolio update, I am already on a 14% gain this year. Thus, I have more buffer for my portfolio to fall if necessary.

3. Ultimate Scorecard - I have a number of counters that has passed the Ultimate Scorecard. Thus, this kept me calm even in the mist of correction. The reason is because I know that for a counter to pass the scorecard it must have a certain number of abilities. Furthermore, if required, I can also keep the counter for a longer period.

In short, I believe my limited time in future must be used more effectively. Therefore, there will be more usage of fundamental scorecard website, less analysis of individual counter.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do click on this LINK to sign up for our 2nd Value/Growth Investing Workshop!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Friday, October 13, 2017

Our 2nd Value/Growth Investing Workshop

Building on the success from our 1st Value/Growth Investing Workshop, Simple Investor and I will be conducting our 2nd Value/Growth Investing Workshop on the 3rd November 2017.


You can read about our 1st Value/Growth Investing Workshop from these bloggers whom came for it.

Write up by Brian of 3F:

Write up by Christopher of Growing Your Tree of Prosperity:

Write up by Richard of Invest Openly:

In additional to their feedback, we have also gotten other feedback from the participants. And so we will be presenting the investing workshop a bit differently this time and we believe it will be BETTER than the 1st Value/Growth Investing Workshop.

Rather than quantitative, it will be more qualitative. Be it newbie, or experience investors, I believe you will definitely gain something.

Furthermore, my friend, Poh Lin, will be sharing another useful topic on insurance that day. Do come if you are interested.

The details of this investing workshop is as follows: -

Date: 3 November 2017, Friday
Time: 7.00pm to 9.30pm
Location: International Plaza, 10 Anson Rd, #36-05A, Singapore 079903
Price: $20 

We will also be showing our valued website, Fundamental Scorecard, that day and explain on how the website assist us on our investment decision on a regular basis.

If you are interested in this workshop, do click on this LINK to purchase the tickets.

For those who had already purchase the tickets, thank you for your support!

We looked forward to your participation!

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of all the SGX counters now!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Sunday, October 8, 2017

Another Unique Method - Bottom Fishing

How should a regular retail investor hedge against a raging bull run? If you feel the market is going to turn and you don’t want to SHORT, what can you do?

I am generally a LONG only investor managing a very low 6 digit portfolio figure. I don’t SHORT and I also don’t know how to short.

I have the belief that Mr Market is slightly overheated. However, even if I think it will crash, I still believe in staying vested rather than timing the market. This is because over the long term, I DON'T KNOW WHEN MR MARKET WILL CRASH.

(The joke is on me. I always felt that 2017 will crash, but look at how fast it has rise! Lucky, I continue to stay vested.)

I have the opinion that there are many other retail investors out there with the same thoughts. So I hope sharing of this method will enlighten them.

Do note that I have spoken about this method before in this post before. But since the bull run have been very strong, I like to emphasize on this method again.

I call this method “Bottom Fishing”.


1) Find Counters at 52 weeks Low Share Price

Basically it meant that you invest in the counters that are at their 52 weeks low share price, coupled with a variance of up to 5%.

This is also based on the assumption that for a counter to hit its 52 weeks low share price, it is already at a very low price. In the event Mr. Market decide to crash, the counter may not fall as much as compared to other counters.

Furthermore, the 5% variance is for the investors to have more selection.

2) Check the 52 weeks Low Share Price Against Share Price Over The Last 3 to 5 Years 

After finding a list of counters at 52 weeks low share price, the next thing I normally do is to check the general trend of the share price for the counter over the last 3 to 5 years.

If the current share price is also close to the lowest share price over the last 3 to 5 years, then I believe that in the event Mr Market crashes, the counter will fall even lesser than expected.

3) Find Out the Reason/s Why The Counter is at 52 weeks Low Share Price

For the 3rd step, it is important to understand and evaluate the reason or reasons that caused the counter to fall to its 52 weeks low share price. Thus, you will need to read up on the counter as much as possible to understand why the share price has fallen so much.

At this point if you are uncomfortable with the counter, MOVE ON.

4) Check For Any Possible Catalyst Or If The Counter is Fundamentally Strong

Once you understand why the share price has fallen to its 52 weeks low share price, you should also check whether if there is any form of catalyst for the share price to rise back in the short term. If not, do also find out if the counter is fundamentally strong (I normally uses the Ultimate scorecard to check on its fundamentals).

It is only after you have done with all the checks, and you are satisfied with the answers, then you can buy the counter.

I personally believe in this method and I did that once with the REITs (Read here).

In a way, this method works better for REITs because of the following:
  • Its share price is generally range bound unless it did some right issues or its tenant cannot pay.
  • In addition to the low share price for the REIT counter, the dividend yield provided more “buffer” if the share price continue to falls. For example, if the dividend yield is 5%, that means your counter will be able to fall 5% more since the drop in share price can be covered by the dividend.
  • Finally, for REITs, its business model is rather stable. Their revenue is rather predictable and their balance sheet is reasonably strong due to their huge fixed assets. I believe there is also a guideline on the amount of debt a REIT can take on. Thus, this limited the debt a REIT can take on if it becomes too aggressive.
Therefore, if you also have the belief that the market is slightly overheated and you want to take some precaution, you can also try out this method.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of all the SGX counters now!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Wednesday, October 4, 2017

A Matter of Questionable Management

Singhaiyi Holdings Ltd (Singhaiyi) was a great call previously by me. I average upwards when it announces an exceptional Q1 2017.

However, its recent purchase of Sun Rosier is a bit hard to accept. There were explanations that their purchase price was too high. Nevertheless, I decided to hold on to them as I believe the management may have a different view.

But I realized Singhaiyi missed out reporting that it was awarded a public tender of a string of commercial units from OKH Global Ltd (OKH) when they were the only bidder.

Announcement made by OKH on 11 Jul 2017
No announcement by Singhaiyi on 11 Jul 2017
For those that do not know, Singhaiyi and OKH technically are owned by the same parent company - Haiyi Holdings Pte Ltd. 

This meant that this was actually a related party deal. From my experience, I doubt any related party deal will be fair to the minority shareholders. Furthermore, not announcing the "award" makes it looks like Singhaiyi maybe on the losing end.

To justify the deal, I tried looking into the announcement. But more questions follows.

For the information above, without knowing the size of the property, how will I know the current market value stated in the report are reasonable? 

Although there are ways to check the property size (like reading pass annual reports), but I just felt there was no need to. It just seems to me the management just wanted to hide some fact.

In addition, the following section gave me the facts to finalized my thoughts:


Seriously?!?! 1 BID!?! 

In Short

The purchase of Sun Rosier had already made me felt Singhaiyi will not be sharing the gains with us - the minority shareholders. Coupled with the lack of announcement of winning the public tender, these actions just made me uncomfortable holding onto this counter.

Nevertheless, it is important to note that the company may still have a good financial year 2017 due to the initial gains in Q1 2017. 

But I just had too many questions about how Singhaiyi is being managed. Thus, I decided to just sell off all my holdings.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of all the SGX counters now!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.