Saturday, February 25, 2017

This Counter Has Managed To Pass The Super Scorecard!

Despite holding onto this counter for almost 1 year, I realised I have yet to blog about this counter. Therefore I shall do a short review on this counter since it has recently released its full year results and its share price has ran up quite a bit.

Furthermore, this counter used to pass the Enhanced Triple S Scorecard with Dividend Scorecard Portion. But now I will be doing the review using the Super Scorecard instead. It will be interesting how this counter reacts to the changes in the Super Scorecard.

Profile In Short

Captii Limited is an investment holding company that operates in the technology and telecommunication businesses in South East Asia, South Asia, the Middle East, Africa, and internationally.

It operates through three segments: Unifiedcomms, GlobeOSS, and Others. It offers content-driven mobile value-added services; mobile messaging and signaling systems, solutions, and managed services; mobile network operation support systems, solutions, and managed services; and venture investment services. The company offers telecommunications, technology, and customized solutions for telecommunications operators, service providers, and enterprises; and research and development, software engineering, system integration, project management, and maintenance and support services for the telecommunications industry. It also offers global roaming quality and service management solutions; and management services, as well as distributes information technology and telecommunications products.

The company was formerly known as Unified Communications Holdings Limited and changed its name to Captii Limited in May 2014.

Captii was founded in 1998 and is based in Singapore. Captii is a subsidiary of Worldwide Matrix Sdn Bhd.

(If you do not know what they really do, it basically state that it provides value-added services for the telecommunication industry.)

Based on The Super Scorecard (Present Price of $0.540 as of 25 Feb 2017):

As per the above pictures, the counter passed the Super Scorecard. 

So what is so good about it?

Pass the Super Scorecard - The fact that, at an even higher price, the counter continues to pass the super scorecard amazed me. This also meant that there is still room for the share price to rise before it fail the Super Scorecard.

High Cash Profit Margin - With the Super Scorecard, I am able to analyse the change in Cash Profit Margin for the last 5 years. The Cash Profit Margin has been able to maintain above 15% for the last 5 years. In addition, the last 2 years has risen above 24%! Amazing! 

No Leverage - For the last few years, Captii does not have any leverage despite the growth!

Increasing Dividend Amount - The company has paid dividend every year and the dividend amount has rise from 0.01 in 2010 to 0.025 in 2016 (There was a share consolidation of 10 for 1 in 2015).

High number of Telecommunication Users - I am not very sure if the company's services are usage-based or contract-based. But the high number of mobile users in South East Asia will have assisted with the growth of the company as well as the demand of its service.

Telecommunication Industry - Most of the customers are major telecommunication companies in each of their respective country within South East Asia. These companies remains profitable and will definitely have the ability to pay Captii when required. Therefore, there will be very low provision for bad debt over the years and its receivables will most probably be collectible within the required time frame.
Taken from http://www.unifiedcomms.com
But there are still some issues such as...

Complicated Business - Rather than being a negative point, this point is to emphasize on the lack of understanding of the company's services that it provides to its clients. Without the full understanding of its services, we may not be able to fully appreciate the services Captii provide to its clients.

High Intangible Amount - The company has a high intangible amount in its non-current asset. If written off, there could be a drastic reduction in its net asset value.

Owned by Malaysia Firm - In my opinion, Singapore investors are not really keen on companies listed in Singapore that is not owned by Singapore companies/Individuals. Captii's major shareholder is a Malaysia firm, Worldwide Matrix Sdn Bhd. Thus, this may have negatively impacted the perception of Captii.

In Short

Since Captii continues to pass the super scorecard at its current price, I will continue to hold on to it and collects its revenue. In my opinion, I believe it has a chance of being the next "PNE Industries Ltd". Do note that I have held PNE Industries for a long time and it has just been rising and rising.

Current Price: $0.540 as of 25 Feb 2017.

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

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

For those interested in getting and understanding a bit more of the Super Scorecard, I will be having a short paid seminar on 25th of March. All participants of the seminar will be able to receive the Super Scorecard after that.

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

Wednesday, February 22, 2017

The Super Scorecard

Many of you will know that I created the Enhanced Triple S Scorecard with Dividend Scorecard Portion to look for a way to have a consistent view of looking for undervalued counters and counters that is able to provide at least 5% dividend yield for the next year.

However, as explained in the "Different Methods of Investment" post, I engaged in other ways of investing because of the bullish feel of the Singapore Stock Market as well as the requirement to utilize the excess cash I was holding (it was just a bit too much).

Thus, those that followed me will have knew that I went for some short term investment recently (invest with a shorter timeframe of 3 to 6 months in mind) with SUCCESS!

As a result, I started thinking if it was possible to find undervalued counters via the scorecard
(1) that has the possibility of rising and making capital gain; and
(2) over a shorter period of 6 months to 1 year.

So I started my research (with a small sample size of 8 different counters - Mixed with Blue Chips to Micro Pennies) and eventually I was able to upgrade the existing "Enhanced Triple S Scorecard with Dividend Scorecard Portion" into simply the "Super Scorecard".


The following are different sections of the Super Scorecard:

(1) An upgraded version of Enhanced Triple S Scorecard - with amended and new criteria
Enhanced Triple S Scorecard
The upgraded version
Additional criteria includes Current Ratio, Cash Profit Margin and the Last 3 Year Trend, while the Debt to Tangible Book Value has also increased to 40%.

The scoring for a counter to be deem as undervalued has also changed from 8 points to 7 points, while the total points has also increased from 13 points to 15 points.

The maximum negative score has also increase from negative 3 points to negative 7 points and the Indicative Selling Range has also been removed.

The upgrade seem to have made it more lenient for a counter to pass. But do note that if the counter made losses in the last 12 months, it will receive a big penalty which will reduced it chances of passing this criteria significantly.

With that, during my research, the success rate for a counter to be deem as an undervalued stock within this section and continued to make capital gain within 6 months to 1 year is 75%.

(2) An Alternative Valuation method via the Graham Formula and the DCF Method
The Alternative Valuation
In the event, the counter do not pass the initial test of the Super Scorecard, there will be another alternative valuation methods via the Discounted Cash Flow method and Graham Formula method to determine if we can still buy this counter.

This section explains that if the counter's current share price is below 70% of the estimated share price calculated from both of the alternative valuation methods, the scorecard will inform the investor to buy the counter. This will also meant that the counter is still deem as undervalued via the Discounted Cash Flow method and Graham Formula method.

With that, during my research, the success rate for a counter to be deem as an undervalued stock based on the alternative valuation methods and continued to make capital gain within 6 months to 1 year is 62.5%. 

(3) Stable Stock Analysis
Stable Stock Analysis
This is another new section to the scorecard and it is a further extension to the initial 2 sections explained above.

Therefore, if a counter is not deem as a value stock and did not pass the alternative valuation method, it will be tested to see if it is a stable stock.

As explain in the "Different Methods of Investment" post, a stable stock is deem as a company that has a moat or competitive edge in its industry and will most likely give investors a "forever" holding period.

By passing this stable stock analysis, an investor should purchase the counter whenever it reaches or drop near its 52 weeks low price. The investor can also continue to average down or up at different point in time whenever the counter drop near or reaches its 52 weeks low price.

Do note that the major assumption here is that the counter, which will most likely be a blue chip, will have some form of competitive edge and will be able to regain the share price in due time.

No success rate is tested for the stable stock analysis. This is because any investor engaged in this form of investment method must be looking at the super long term period (such as forever). This is also proven in many theories that if you have invested in a wonderful company, the holding period can be forever.

(4) The Dividend Scorecard
Dividend Scorecard
The final section of the Super Scorecard is the Dividend Scorecard. There is no change to the Dividend Scorecard and this section does not linked up with any of the sections above.

It acts as an individual scorecard on its own.

The purpose of the Dividend Scorecard is still similar, that is to find a counter that is able to produce a dividend yield of at least 5% for the next year if the investor purchase the counter at this particular price.

The current research did not test out the success rate of the Dividend Scorecard. However, you can always read about the case studies in the Dividend Series.

In Short

I have explained on the different sections listed in the Super Scorecard. But you should understand that the research is based on a small sample size of 8 and tested during the very bullish period of the Singapore Stock Market. This was also conducted after my review and understanding of the US Market. Thus, some portion of the Super Scorecard will have influences based on my understanding of the US Market.

For those interested in getting and understanding a bit more of this scorecard, I will be having a short paid seminar on 25th of March. All participants of the seminar will be able to get the Super Scorecard after that.

If you are still skeptical about it, you can always contact me and get a copy of the Enhanced Triple S Scorecard from me for free (exclude the Dividend Scorecard portion). 

Please also do remember to like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Thursday, February 16, 2017

My 10% Portfolio

1 week ago, I was informed of my new role in my company and it is taking up a lot of my time.

In addition to that, I am also revamping T.U.B Circle  (I know I have been talking about it... but it will be some time later before it is launched!), arranging upcoming possible seminars, managing portfolio and planning future collaborations. Thus, I may be slower in replying comments/email or putting up new post on my blog. But I still hope you will wait for it.

Anyway this will be the 1st post in 2017 about my portfolio.

I decided to rename it "10% Portfolio". This is to remind myself of the target I gave myself at the end of 2016.

Start of 2017
Current
Oversea-Chinese Banking Corporation
Oversea-Chinese Banking Corporation

Singapore Telecommunications Limited
Singapore Telecommunications Limited

Singapore Airlines Limited
Singapore Airlines Limited

ComfortDelGro Corporation Limited
ComfortDelGro Corporation Limited

Bukit Sembawang Estates Ltd
Bukit Sembawang Estates Ltd

M1 Limited
M1 Limited

Chuan Hup Holding Limited
Chuan Hup Holding Limited

Wheelock Properties (Singapore) Limited
Sold at 10% profit. A little too early!

Hock Lian Seng Holding Ltd
Hock Lian Seng Holding Ltd

ST Engineering Ltd
ST Engineering Ltd

Ellipsiz Ltd
Ellipsiz Ltd

PNE Industries Limited
PNE Industries Limited

Suntec Real Estate Inv Trust
Suntec Real Estate Inv Trust

LTC Corporation Ltd
LTC Corporation Ltd

Frasers Centrepoint Limited
Frasers Centrepoint Limited

Captii Limited
Captii Limited

OUE Hospitality Trust
OUE Hospitality Trust

Far East Hospitality Trust
Far East Hospitality Trust

Singapore Post Limited
Singapore Post Limited

CDW Holding Limited
CDW Holding Limited

TTJ Holdings Limited
Sold and with Profit!

Sing Holdings Limited
Sing Holdings Limited

BBR Holdings (S) Limited
BBR Holdings (S) Limited

Maxi-Cash Financial Services Corp Ltd
Maxi-Cash Financial Services Corp Ltd


Additional: Ocean Sky International Ltd


Additional: Tiong Seng Holding Ltd


In addition to the current counters in the table above, I have also bought and sold:
1. Sabana REIT - With about 20% profit
2. Singhaiyi Group Ltd - With about 30% profit 

If you are wondering why did I (the professed value investor) buy and sell within 3 months, I have actually wrote about it in this post. It is mainly due to my change in methods as well as the buoyant market. It is really hard for me to hold on to the counters when I feel the market is currently too irrational. But I could be wrong.

Furthermore, despite holding about 24 counters, I have about 20% in cash as I have reduced my positions in some counters as well.

In short, my overall portfolio has actually risen about 6% to 7% in just about 3 months. 

Looking forward, I believe with my new enlightenment in my methods, I will be able to produce similar growth results continuously for this year.

Hope you like this interview series and please do remember to like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Wednesday, February 8, 2017

An Interview with "bgting"

This is the continuation of the interview series. For the month of February, I will be interviewing "bgting" as he is known on InvestingNote platform.

As many of you knew, I am also an active user on the InvestingNote platform. Through my many conversation with the users on the platform, I have made friends with many established investors on the platform.

"bgting"stands out as one of the established investors. I am always able to gain new insights from him during our conversations. He has also been able to provide many pointers and information, which further enhanced my theories and views.

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

1. Tell us more about yourself.

bgting: I am a remisier with Maybank Kim Eng.

2. How did you get into investing?

bgting: I opened an internet trading account when I was in university. I traded for a short while but stopped as I decided I did not know what I was doing. Luckily. After I started working, I dabbled in the stock market a few times. I remember buying SIA at $12.50 using CPF, some months before 9/11. As the amount was not big, it was left in the account for around 10 years. The best thing that got out of it was probably the distribution of SATS shares. With hindsight, switching out of SIA into SATs would have done very well.

I remember having bought StarHub at maybe around $1.20 and selling around $1.90 after some months. With hindsight, holding it throughout till now, despite the recent headwinds, it would have proven to be a wonderful investment due to the dividends and capital distributions.

I only started thinking more seriously about investing after several years working.  With total ignorance, I borrowed books from the library on the topic. One book, which title I cannot remember, highly recommended "The Intelligent Investor" by Benjamin Graham. This book made the most sense to me. Then, I followed up with "Security Analysis". Armed with the new knowledge, I started picking some stocks using quantitative measures such as low PE, low P/B and low debt. I remember stocks like UOL at $2.20, Metro at $0.480, Pan United at $0.330 and Sim Lian at $0.330 before stock split into 2. This was back in 2005 when stocks were generally cheap. Unfortunately, I was not experienced enough to sell out all before the GFC although I knew stock prices were too high then. I held UOL through the crisis. It fell shockingly to a low of $1.50.

Perhaps due to beginner’s luck, these initial stock picks would have worked out quite well even if I had held them throughout till now despite all the ups and downs, including through the GFC. A lesson learned is that for most people, it is better to just occasionally buy stocks of some good companies at reasonable prices using savings from their income and hold them. Avoid buying when prices are too high. Things learned on hindsight.

After becoming a remisier about 5 years ago, I went full time into investing and trading.

3. What is your thought process when it comes to investing? 

bgting: There is a story behind every company. I read up on a company and try to understand it. The past financial figures provide an idea of the nature of the business and what are the possibilities. By following a company long enough, I will be able to form a rough story line in my mind and what to expect moving forward. When the opportunity arises, I will then be prepared to act. I am now a bit more forward looking and qualitative than quantitative.

If I am right, I hope to make some meaningful gain out of it. If I am wrong, I hope not to lose too much.

4. What is your best investment and worst investment since you started investing?

bgting: I am not too sure what is considered best investment - in terms of percentage gain, absolute gain, perfect timing, best risk / reward ratio? I just hope my next investment will be a better one, in one way or another.

I had several easily identifiable worst investments though - stocks that went to zero, such as S-chips. What could be worse?

As an example, which is your favourite song by Angela Chang (张韶涵 )?

She simply reminds me of Beauty China. Her full face portrait fronts its last annual report. (Interestingly, we can still find links to old annual reports on SGX website by searching.)


But luckily, I do not have huge positions in any one stock and so I am always able to make it back. However, “Don’t lose money” does echo loudly.

5. How many stocks do you think one should hold for diversification?

bgting: It depends. For investing in large cap companies that are already diversified in their businesses, such as JSH, JMH, Berkshire Hathaway, conglomerates that are operating like funds, there is less need to diversify. Most people are better off investing in low cost index funds for equity exposure as less time will be required to monitor individual companies.

For picking individual stocks, especially small and mid caps, I believe there is a trade-off between the amount of due diligence and diversification. To hold a more concentrated portfolio of say 5 to 10 stocks, one needs to be sure the basis is right and limit the downside. With less detailed analysis and for higher risk stocks, a larger number can help to spread out the risk. "Diversification is protection against ignorance." Ultimately, the overall portfolio return in the long term is what matters.

Currently, I hold around 30 stocks - larger positions for those that I am more comfortable with, smaller positions for those I am less sure of, to which I may add on when I have more confidence.

6. What do you think of short term trading? 

bgting: I suppose this means speculating for profits on short term price changes. There will be winners and losers, so this is closer to a zero sum game. In contrast, long term investing is not zero sum as companies exist to make profits and pay dividends.

I think short term trading is not an appropriate activity for most people. For full time traders and the pros, they are making a living out of it. It won’t be easy to beat them. For others, it is probably more like an interesting and exciting pastime. To be serious in it, need to become proficient like the pros.

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

bgting: I’d say too many to list as I keep watch on many of them. For me, it is identifying the companies I like and waiting for prices to drop, or keeping watch for opportunities due to some events, which may pop up anywhere. For example, recently, Sabana REIT price dipped due to rights issue. A year or so ago, there was ARA and Jardine C&C rights issues.

Unfortunately, with limited funds, it is a game of guessing which one moves fastest within a certain timeframe.

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

bgting: It will be good to start early. I started rather late. The earlier one starts, the more time the returns can compound. It is also better to make mistakes early in life using smaller sums of money. Larger sums can then be managed later in a breeze.

Even if one is not interested in the topic, one still needs to know enough to understand what financial advisers are talking about to make investment decisions. I believe the knowledge on investing and finance could also prove useful at some point for many people’s careers.

I recommend reading "The Intelligent Investor" by Benjamin Graham, which is written for the laymen.

As Warren Buffett said in its preface :
“To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must supply the emotional discipline.”

There are now many good websites and blogs on investing. It is not difficult to gain the knowledge to avoid having to learn it the hard way.

Hope you like this interview series and please do remember to like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Tuesday, February 7, 2017

Different Methods Of Investment

Although I stated that in this post and then this post that I will not engage other kind of investing (except for those written), but due to the buoyant state of Singapore Stock Market currently, I went ahead to try a few other methods - with some success.

1. Super Scorecard

For those that have read my articles, you will have knew that I have created my own unique way of investment. I started with Triple S Scorecard, then I improved it to Enhanced Triple S Scorecard, and I added Dividend Scorecard Portion.

So now, I have further upgrade it to the Super Scorecard.

In my opinion, this is an improvement because:
- The expected waiting time for a value stock to make a gain is shorten from 2 years to 6 months / 1 year.
- This scorecard also allows alternative valuation methods such as DCF method and Graham Formula Method.
- It encompass Dividend Scorecard Portion as well as a new session, the Stable Stock Analysis (discuss below).  

Anyway I will most probably write a whole new post on Super Scorecard by next week. Hope you will look forward for it.

2. Stable Stock Analysis a.k.a "The Warren Buffett Method"

This is a method I heard from a friend and then I realized I had been practicing it constantly too.

Basically, he talked about investing in SGX due to its monopoly situation in Singapore. It will never go bankrupt or without business. It is similar to how Warren Buffett will invest. Thus, he constantly buy and accumulate the counter at different timing regardless of the price. To him, SGX is a business with a moat that can almost last forever.

However, it will be very hard to find similar kind of business with such economic moat and allows us to have a "forever" holding period.

So I decided to do some amendments to this investment method by using financial figures and numbers to justify. This method will be meant only for Blue Chips with some form of competitive edge.

The method requires the investor to buy the Blue Chip in batches whenever it reaches or drop near its 52 weeks low price if it pass the following criteria:
- A market capitalization of $1.9 Billion;
- has a share price of at least $1.20;
- must maintain profitable for the last 5 years and the last 12 months.

In addition, for investors whom are using this method, there will be assumptions to this theory which investors must take note:
- We assume that this Blue Chip has some form of competitive edge and will be able to regain the share price in due time.
- We must also be prepared to hold these counters for a long time.

One example of investing using this method will be my purchase of M1 Ltd.

3. Bottom Fishing

Since the market is in such a buoyant mood, I an currently having a hard time finding good value counters. Therefore, during these happy times, I always screen for counters that are at their 52 weeks low price.

This is to search for counters that are battered down wrongly by investors, or counters that are already at very low prices but seems to be turning around soon.

These counters will most probably experience a temporary dip in performance or a continued long period of under-performance.

In order to justify the investment in the particular counter, the investor must be able to find enough catalysts or positive points in the company's business prior to investing in it.

One of this counter I recently found and made gains on is the Singhaiyi Group Ltd.

4. Special Situation

Special situations, such as rights issue and sales of core business, may allow a counter to be temporary wrongly price and allow investors to make a quick buck.

One scenario will be the recent right issues from Sabana REIT. With its excess rights being priced at such discount, any extra right issue received by the investor will reduced his average share price drastically.

5. The "it can never go lower" Investment

This is a special method that I found from an InvestingNote user. He only buys counters that are priced at $0.001 and $0.005.

This method stuck me at the core. Most of the stocks priced at such low prices are due to have many negative news or just VERY BAD NEWS.

However, the theory is that by buying a counter at $0.001, it is at a price that can never fall much more and any $0.001 rise in price will definitely be at least a 100% return. 

The main worry for an investor should be considering if the counter could eventually be suspended or even liquidation. Thus, it is very important to do your due diligence prior to your investment based on this method.

I have yet to try this method as I have yet to find a possible target at this moment.

In Short

Other than the above methods, there are most probably many other ways to invest in the Singapore Stock Market. I will sometimes use a combination of methods as well. Each method does not necessary run solo. 

So these are the methods that I have tried and tested and heard. Hope this article will give you some new insights to different investing methods.

Please also do remember to like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Thursday, February 2, 2017

This Singapore Counter Is Learning To Fly In The Next Few Months!

My quirky investment methods has bought me another interesting counter.

By exploring different ways of screening for counters, I chanced upon Ocean Sky International Ltd.


What caught my attention was the business activities - Ocean Sky International Ltd - stated on the SGX Website!

"Ocean Sky International Limited, an investment holding company, through its 100% interest in Ang Tong Seng Brothers Enterprises Pte. Ltd., provides building and civil engineering contracting services primarily in Singapore and Southeast Asia. The company offers engineering services, such as earthwork, roadwork, drainage work, basement work, and structural works comprising demolition and underground infrastructure works, as well as other general building works. It also invests in, develops, and manages properties. The company was incorporated in 1988 and is headquartered in Singapore."

I remember Ocean Sky International Ltd (OSI) was in the apparel business. So why is it in the construction business now?

I decided to dig and dig and I came up with this timeline...

07 Jan 2013 - OSI disposed off its apparel operations.

30 Sep 2013 - Cash Offer by Ezion Holding Limited

12 Feb 2014 - Failed Acquisition by Ezion Holding Limited (Yes, a whole year of negotiation)

25 Mar 2015 - Proposed Acquisition of Link (THM) Holdings Pte Ltd and 2:1 Share Consolidation

27 Feb 2016 - Transfer from Mainboard to Catalist

25 Mar 2016 - Lapse of the Long Stop Date of the proposed acquisition of Link (THM) Holdings Pte Ltd (Yes, another failure!)

29 Aug 2016 - Effective Date of Transfer to Catalist is 1 Sep 2016

21 Sep 2016 - Proposed Acquisition of the remaining 70% of an associate (Ang Tong Seng Brothers Enterprise Pte Ltd) and Proposed Share Consolidation 2:1 (YES, AGAIN)

21 Nov 2016 - Share Consolidation Completed (224,720,522 New Shares)

30 Nov 2016 - Completed Acquisition of the remaining 70% of the associate. (So fast!)

At this point, I am amazed by the various failed attempts over 2 years and the eventual complete acquisition of the associate, Ang Tong Seng Enterprise Pte Ltd, at last after a full 3 years.

However,  it is important to note that the fast execution of the acquisition of the remaining 70% of Ang Tong Seng Brothers Enterprise Pte Ltd, was because the former was a related party of OSI. The CEO of OSI was one of the key management of Ang Tong Seng Brothers Enterprise Pte Ltd. Furthermore, it was important to note that the number of shares will be increased to 324,940,302.

If you knew me, you will have guessed that I will have given up on this counter since the complete acquisition was a related party.

However, I bought OSI on 1st of Feb 2017.

BUT WHY?

The reasons as per below:

1. Margin of Safety

Balance Sheet of 3rd Quarter 2016
Investment Property - This is a piece of freehold land in Cambodia, that they have rented to a lessee for 20 years at US$720k per year from Jan 2013. This will have provided OSI with a total cashflow of US$11.5 Million for the next 16 years.

Investment in Associate - This figure post acquisition should be S$10 Million as per announcement based on the net tangible figure. In addition, it also reported that the net profit for 2016 is S$2.5 Million, which is equivalent to US$1.85 Million (US$1 : S$1.35). Therefore, for this figure we can estimate it as US$9 Million ($10,000,000 / 1.35 + $1.85 Million).

Fixed Deposit - This amount should be deducted fully due to the cash payment of S$9.6 Million to Mr Ang Boon Cheow Edward and Mr Wong Siew Hui. The excess should be able to cover the total liabilities figure.

Cash and Bank balances - No Change.

All Liabilities - Deem to be cleared using the excess cash from the Fixed Deposit.

Net Asset per Share -  (US$11.5 Million + US$9.0 Million + US$7.968 Million) / 324,940,302 = US$0.0876

This will be equivalent to S$0.118, which is a 36% of buffer against the share price of $0.076 at the end of 31 Jan. 

2. Continuous of Earnings

Do note that Ang Tong Seng Brothers Enterprise Pte Ltd has been earning US$2.0 Million in 2014 and US$2.3 Million in 2015 as per 2015 Annual Report. In 2016, although it is lower, the business has reported a net profit of S$2.5 Million.

3. Civil Construction Business

I am on the lookout for more Civil Construction Business to invest in, after divesting all of my TTJ Holding Limited shares. My belief is that, due to the continuation of the poor business environment, the civil construction business will continue to increase in 2017 and 2018. Since Ang Tong Seng Brothers Enterprise are in the civil construction business, the company will stand to gain.

4. Sales Shares at $0.132 per share

For the acquisition, "The Board wishes to announce that 93,061,224 and 7,158,556 Consideration Shares have been allotted and issued to Mr Ang Boon Cheow Edward and Mr Wong Siew Hui respectively at the issue price of S$0.132 on 30 November 2016 in accordance to the SPA. The Cash
Consideration has also been paid by the Company to the Vendors in accordance to the SPA."

The shares given to Mr Ang Boon Cheow Edward and Mr Wong Siew Hui, in excess of the Cash Consideration of S$9.6 Million, was issued at $0.132.

5. Moratorium of 6 Months

"Mr Ang Boon Cheow Edward has under the SPA undertaken to subject his 93,061,224 Consideration Shares under a moratorium, for a period of six (6) months from the date of Completion, on the sale, transfer, assignment and/or disposal of any of his Consideration Shares and provide a written undertaking to the Company and the Company’s sponsor for such moratorium, provided that he shall be entitled to sell any of his Consideration Shares in the event of any of the following events occurring:

(a) a general offer for all the shares of the Company under Rule 14 of the Takeover
Code;
(b) a reverse takeover under Rule 1015 of the Catalist Rules; or
(c) any change in control of the Company."

Therefore, within the next 6 months from completion, the CEO will not be selling any of his shares.

In Short

This investment is kinda of like a bet. The reasons 1 to 3 satisfy my view that the balance sheet will not deteriorate and I have a margin of safety BUT it will not allow the share price to fly.

In my opinion, the share price will only fly in the event the scenarios below are played out. 

Note that on 30 November 2016, the company has already completed the acquisition of Ang Tong Seng Brothers Enterprise Pte Ltd. 

Therefore, for the full year financial report out around end of Feb, I should be expecting a better result, possibility a net profit, and a totally different balance sheet then. I am also expecting the company to announce its book order then and amazed the public.

If these events happens, Ocean Sky International will be flying.

Current Price: $0.093 as of 02 Feb 2017.

Please do your own due diligence before you invest in this stock. The current price is due a purchase of 100 shares.

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

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