Saturday, July 29, 2017

An Interview with the Stanley of "Value Invest Asia"

I met Stanley at an meet up organised by InvestingNote previously. Both of us arrived fashionably late and I was quite surprised when he introduced himself.

This is because, at that time, I was already following Value Invest Asia Facebook Page and reading about their regular write-ups.

Through our conservation, I find out that he is also a CFA and is very knowledgeable about valuation techniques.

I also understand that he is also writing on a book - "Value Investing in Asia : The Definitive Guide to Investing in Asia" - that will only be launched in November. You can read all about it on Book Depository and Amazon. I can't wait to get my hands on it!

Let's not also forget - He has also just conducted a seminar with InvestingNote and I can't make it due to "permission not granted". Nevertheless, it seem like those that attended the session has found it to be fruitful.

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

1. Tell us more about yourself and Value Invest Asia.

Stanley: I started out investing in 2006. I was working as an engineer during that time. But I was fascinated by the investing world and so I took the CFA course back in 2009. I then joined the finance industry in 2012. Since then, I have worked in both the buy-side (fund management) and sell-side (investment advisory) sector. My last job was with The Motley Fool Singapore as an analyst. 

Earlier this year, I officially launched ValueInvestAsia.com with my two co-founders, who are also working in the financial industry. Today, ValueInvestAsia.com has about 6 writers and analysts with us, both full and part time.

The idea we have is simple. Investment banks and brokerages want to make it sound like investing is very complicated should only be left to professionals. Plus, they always have a conflict of interests on the stocks they are recommending. 

Secondly, information about Asian stocks are too scattered and it is hard for investors to have a centralized place to find information about stocks listed around Asia. Many of the information about Value Investing is also skewed towards the US market. So we want to create a space that provides investors with independent research about companies and practical guides on how to apply value investing in Asia; to let you know that investing is not as difficult as what the "professionals" want us to think. 

We believe that our best fund manager is always ourselves. Thus, the mission of ValueInvestAsia.com is to provide all investors with the information and tools to enable them to be their best personal fund manager.

2. How did you get into investing? 

Stanley: I started working as an engineer in Malaysia after I graduate. My first job I have a salary of S$500.00 per month. I was working in a manufacturing plant. About a year into the job, I found a payslip lying on the office floor. I think my finance manager must have dropped it. So I pick it up to return to her but I also took a peek at it. It was the salary slip of my direct manager who has been with the company for 20+ years. His salary shocked me and I would not reveal it here but it confirmed my desire to change industry right there and then. That is when I started learning more about investing and the finance industry. And I grew to love the idea of investing and never stopped ever since.

3. What is your investing style? Any idols?

Stanley: I am mostly a bottom-up investor and very qualitative in my analysis. I connect mostly with Charlie Munger's ideas. I like to look at quality businesses and companies with a good moat around it. I also follow the works of great Asian investors like Dato Sri Cheah from Value Partners, Mr. Wong from APS Asset and Dr. Tan from Phiem Asset. These are great Asian investors who have proven to us that Value Investing works here in Asia as well.

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

Stanley: I always start with the business. Any company I look into, I will focus on what the business is, what is its growth potential and what is the moat of the company. Only when I am comfortable and positive about the business and its potential, then I look into the valuation and see if it is worth investing in. Because to me, the choices we have in the market is almost unlimited but our capital is always limited, so why should I waste my time with lousy businesses?

5. What is your best investment and worst investment since you started investing/trading?

Stanley: I guess best might not necessarily mean the one with the highest return. Maybe I see the best as the one that played out as closely to how I envisioned it. So in that case, the easiest and best decision I made is to just investing into Berkshire Hathaway back in 2011 when it was trading very close to just 1.0 times its book value. That was quite obviously a bargain and so it was a very easy decision to make. Today, it is roughly worth 3 times compared to when I invested in it.

The worst I would say it is also because of how I totally misread the company, rather than just based on how much I lost in the investment. One company was an S-Chip when I was still learning how to invest. It was Eratat Lifestyle. It just looked very cheap and so I bought into it. Of course, it turned out to be a fraud, which took me some time to see it. I didn't lose much on that as I escape before it collapsed but it taught me to always focus on the business of the company first, and not the valuation.
Companies I lost a lot of money in are companies like Hengdeli or Pacific Basin, both listed in Hong Kong. I just misread the macro-environment and that also taught me to not bet on a recovery of an industry, but rather just focus on great businesses.

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

Stanley: For me, I think at least 30 stocks is a well-diversified portfolio. I personally owned more but if I have to choose, I will keep it around 30.

7. Any thoughts about the current market situation?

Stanley: Personally, the current market feels quite high for me, I am not finding as many bargains now in the market. I am very careful on what I buy now. I am raising my cash position, just in case. 

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

Stanley: We actually published our yearly watch list as an e-book. You can download our 2017 Watch List here: http://valueinvestasia.com/free-ebook/ 

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

Stanley: I would say, start by learning about businesses first, rather than learning about the market. Read business magazine like Inc, entrepreneur, Fortune, Fast Company and Harvard Business Reviews. And also listen to business podcasts. Because as Graham said "Investing is most intelligent when it is most business-like". So the key first is to train ourselves to think like a business person. The investing part we can learn later, the fundamental is understanding what makes a business great.

As stated in the past few posts, there will be changes to T.U.B Circle and Super Scorecard. Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!

Sunday, July 23, 2017

This is the "Tech Firm" I invested in!

It has been some time since I wrote anything. I have ideas for articles but I do not have the time to write! My life has just been too busy lately, especially when there is an increase in workload and also preparation for my new home. 
Furthermore, "Battling on 4 fronts" has also kept me to be on my toes. At least 1 battle is over and I had 4 lots of Netlink Trust. Another battle will end soon and hopefully the outcome will be favorable.

As of now, I hope you will spent some time reading about this new counter that I added in the last 2 weeks.

I have stated that I was was looking at counters within the technology sector when I wrote that article about FANG and BAT.

So while searching for such technology counters within SGX, I decided to purchase this counter instead, which is still technically a traditional company (with 92% of the revenue coming from its traditional side of the business). But its expansion into the technology side of the business is amazing and I believe this is where the company will grow big!

Profile In Short (taken from their website)

Listed on the SGX Catalist in 2016, Secura Group Limited is a fast growing provider of an integrated suite of security products, services and solutions. As a premium security agency, they offer security guarding, cyber security, homeland security, security systems integration, security consultancy, executive protection and events security, and private investigation.

Their security printing business, through our wholly-owned subsidiary, Secura Singapore Pte Ltd, is the largest cheque printing business in Singapore. Our other security services are undertaken through our wholly-owned subsidiary, Soverus Group Pte Ltd.

As a one-stop security solutions provider, they are able to customise solutions specific to customers’ requirements. With their strong and continuous focus on staff training, and constant innovation of our products and services, they have gained a reputation for delivering quality services which have enabled us to build a well-diversified customer base.

No scorecard was done on this counter prior to purchasing it. This is because this counter only IPOed for about 1+ year and was purchased due to its growth (Should be the 1st time I am doing this) in the technology sector.

So why am I interested in it?

1. Share Price has Fallen to 40% from its IPO Price


The counter's share price has fallen significantly and is 40% below its IPO price of $0.225. The share price has been battered down due to poor results from the last few quarters. This is especially true as the last quarter reported losses.

In addition, with the hype already over for this counter, I believe the current share price is more stablised. Even if the counter is hammered by future losses, I don't think the price will drop significantly as the public float is only around 39%.

Moreover, the moratorium period is already over. If those cornerstone investors intend to sell of their stake, they will have already done that a few months ago.

2. Growth in Cyber-security Business and the Cyber-Security Bill


If you look at the breakdown of the revenue, Cyber Security actually rose 194%! 

In addition, with Singapore government implementing a new cyber-security bill, this will open up much more opportunities for this counter to grow in future. 

Companies in Singapore will not longer be able to act like cyber-security is a secondary factor anymore.

Oh... and to show how serious Singapore is about cyber-security, the government even set up the Cyber-Security Agency in 2015 (I don't even know that).

3. Secura Training Academy appointed by SkillsFuture Singapore

The counter's Secura Training Academy has been appointed by SkillsFuture Singapore as public and in-house Approved Training Organisation (ATO). 

This meant that Singaporeans is able to tap on government funding for SkillsFuture training annually till 2020. 

Therefore, if more Singaporeans use their SkillsFuture funding towards applying training programs in Secura Training Academy, the latter will definitely stand to gain significantly.      

4. Detachable Warrants with Exercise Price at 35 cents

When this counter IPOed, it actually accompanies with 2 detachable warrants expiring in Jan 2019 and at exercise price of 35 cents each. However, if the share price is not close to 35 cents, the management should not have expect investors to exercise these warrants. 

Thus, the management must have believe in the company's ability to grow, so that prior to Jan 2019, the share price should be at least near 35 cents.

But there are also some issues...

1. Peter Lim Factor

I believe I have said before. Rich people can allow a company's share price to fall significantly. They can wait for the company to have a turnaround year and for the share price to rebound.

But retail investors like us, we cannot really wait. Even if we say I am a"long term investor", your emotions may not be able to wait.

2. Growth In Operating Expenses as well

In the first year, the net profit was not as high is due to the cost of IPO expenses. But in the latest quarterly reporting, the losses were due to the high administrative expenses as well as high selling and distribution expenses.

The explanation is as per stated in the report:

- "Distribution and selling expenses attributable to the acquisition of the SSPL Group and RSPL amounted to S$1.07 million and S$0.25 million respectively in FY2016. This mainly relates to the payroll cost and commission incurred by the sales and marketing department and the amortisation of customer relationship arising from the fair valuation of the SSPL Group amounting to S$0.22 million."

- "Administrative expenses increased by 67.8% or S$2.35 million, from S$3.46 million in FY2015 to S$5.81 million in FY2016 due mainly to the cost incurred by the Company in relation to continuing listing and related fees, professional fees for merger and acquisition and increase in staff cost as a result of formalising the corporate functions to support the Group’s expansion plans."

Thus, if the company is unable to reduce expenses, then we should be expecting the share price to fall further.

3. The Main Competitor

As per wikipedia: - "Ademco Security Group is a Singapore-based security services company that sells monitoring services, manpower security services, unified security management, and enterprise security software. The company has approximately 8000 corporate and government clients across Asia, including Singapore, Malaysia, Philippines, Indonesia, Thailand, Vietnam, India, and China’s major cities. It established Singapore’s first private wireless mesh network for security clients in 1998. It currently employs 400 in Singapore and its branch locations in six other countries. It reported 2013 revenues of S$28 million."

I believe this company is Secura Group's biggest competitor. 

In Short

For Secura Group to really perform well, I believe it has to expand significantly within the cyber-security space and it has to reduce its administrative expenses significantly.

So here is the post on the "technology" company I was stating. Hope it did not disappoint you.

Current Price: $0.136 as of 23 July 2017.

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

Do note the author is vested in this counter/company at $0.137.  

As stated in the past few posts, there will be changes to T.U.B Circle and Super Scorecard. Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!

Monday, July 17, 2017

Cryptocurrency - For The Daredevils Only

Having read about cryptocurrency on Straits Time (1 and 2), I think it is widely misrepresented. 

There are some truth in these articles but I believe the concept of asking people to invest in this product is simply just wrong as of NOW.

Reasons being:

1. Marketing being root of all evil.

I think cryptocurrency is a disruptive technology on cash. But people seem to have misunderstood the use of cryptocurrency.

It started as a form of payment and not investing. But a lot of websites started marketing it as a form of investment product (due to cryptocurrency being subjected to free market forces) and people started to buy to keep.

But it is technically useless if a cryptocurrency becomes super expensive.

If a bitcoin is $2k currently, what can you use to pay it? Use bitcoin to buy diamond? Or buy a loaf of bread?

2. Bubble Creation

In addition it gets too expensive, the product will create a bubble. A very dangerous bubble because it is not backed by physical asset, but just technology.

Many people say blockchain cannot be hacked or data cannot be steal. But we cannot expect the same 10 or 20 years down the road.

Who will have thought of that Uber can disrupt the Taxi Industry? If you ask a Comfortdelgro investor 5 years ago, he will have tell you "No way lah! This will not happen!".

Anyway, due to the free market forces being in play, wild swings occur to the prices of cryptocurrency (Read this blog post here). Due to the wild swings, many of the people that bought cryptocurrency are speculators rather than investors.

3. Not widely recognized, government intervention required.

Cryptocurrency is not widely recognized.

For it to be useful, it has to be widely recognised. For it to be widely recignised, we need government intervention such as Japan making bitcoin a legal form of payment system on April this year.

But if more and more people use cryptocurrency, its value will drop. Increase in demand will result in drop in price.

This maybe catastrophic.

Think economics, the cryptocurrency is at its high price due to its niche market acceptance. With government intervention and regulations, things can be catastrophic especially for those holding on to it now. 

But I am a traditional guy (I have yet to use Grab and Uber once) so I could be all too skeptical in this aspect. Furthermore being a value investor, I am not really that much of a risk-taker.

Do note I do not discredit the aspect of a cryptocurrency being a long term potential play. But the "long term" may really be too long and money could potentially be placed elsewhere to have a much more safer and guaranteed return.

As stated in the past few posts, I still owe the readers on a tech firm I invested in as well as there will be changes to T.U.B Circle and Super Scorecard. Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!

Sunday, July 9, 2017

Battling On 4 Fronts

Other than busy with changes in T.U.B Circle and Super Scorecard, I have also gotten my keys to my HDB BTO flat. Thus, these few weeks I will be extremely busy and I apologize for a lack of updates in this blog.

But don't worry, as the post on the upgraded scorecard and the post on the new "technology" counter that I invested in will be out soon!

Nowadays, market has been stagnant and at times, seems to be on the downtrend. Many of my watchlist counters' prices are at very tempting level for me to enter. But my portfolio is currently already engaged in 4 different "battles"!


Battle 1 - Netlink Trust IPO Application
This is the first time I tried applying for placement shares. Thus, I have to allocate some cash for this battle. If I am not allocated any placement shares, then I will apply for the public offer.

If this was a week earlier, you will hear me saying that I will not be applying for this IPO. However, this IPO seems like it will be "very hot" and I believe the share price will shoot up on its debut.

On the other hand, if I lose this battle (which meant that I did not get any IPO shares), I will just loss some application fees.

Thus, this battle is worth the fight as the potential upside is very high!

Battle 2 - CDL Hospitality Trust Excess Rights
When CDL Hospitality Trust announced their rights issue, it gave me a view that this could be a very similar opportunity to the one I experiment with Sabana REIT. The spread between the rights issue price and the share price at that time was rather huge.

I purchased the mother shares, which will allow me to apply for the rights issue and also the excess rights.

My belief is that CDL Hospitality Trust's share price will return to the norm eventually (Read Bullythebear's post), and if I am able to get all my excess rights, the upside could be huge!

However, if I loss this battle (which meant that I did not get any excess rights), I will be stuck with some of CDL Hospitality Trust's mother shares. This does not seems that bad as well.

Battle 3 - $ To Average Down ComfortDelGro and M1

ComfortDelGro share prices has been on the downtrend lately, falling all the way to 52 weeks low. I did not really know why did this happens. But many blame it on Uber and Grab disrupting their taxi business.

M1 has also been on the downtrend and is expected to be continue this way due to these 2 announcements (such as 1 and 2) by MyRepublic. Furthermore, if the strategic review by SPH, Keppel T&T and Axiata Group Berhad did not materialized then we should expect M1 to fall MUCH MORE.

Therefore, if these 2 blue chips continue to drop in price, I must have enough money to average down.

I will loss this battle if I do not to have not enough money to average down when the time comes.

Thus, I must pace myself correctly when I average down.

Battle 4 - $ To Averaging Down The Rest Of My Portfolio


Other than the counters stated above that has been on the downtrend, other penny counters in my portfolio such as Singhaiyi and Ocean Sky International has also been falling in price.

I will also need to allocate some cash for me to average down these counters. Similarly, I will lose this battle if I do not have enough money.

Therefore, in additional to pacing myself, I may also have to sell some counters to increase my warchest.

Eventually, these are just 4 battles. My portfolio is the war. 

You can lose some battles but you must win the war!

As stated in the past few posts, there will be changes to T.U.B Circle and Super Scorecard. Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!

Tuesday, July 4, 2017

FANG and BAT - A Must Know In 2017

Do you know what is FANG and BAT? Do you know them?

If you are currently reading this via my facebook page, you will already be using one of them.

FANG is currently the acronym for four high performing technology stocks in the US market – Facebook, Amazon, Netflix, and Google (now Alphabet, Inc.).

On the other hand, BAT is currently the acronym for the 3 top technology stocks in the China market – Baidu, Alibaba and Tencent.

I believe the following technology stocks should also be mentioned – Apple, Microsoft, Tesla, JD.com and Netease.

If you still do not know any of them, you should know them now. After all, I believe one way or another, you will have already used them directly or indirectly.

This is the year where everything seem to be involved with technology. After all, technology brings about efficiency.

Furthermore, I believe, from the way these companies are innovating and improving, it is really hard to really come up with a share price for each of them. After all, the only constant for FANG and BAT right now seem to be “change, grow and improve”.

Thus, this brings me to a point that maybe it’s time I should look more into technology stocks in Singapore or Overseas.

I have been trying to skip them since it is hard to really know about their revenue generation strategy. But I believe this is the time to start opening up my narrow mind and accept the greater possibility.

As of now, I am already targeting a Singapore stock with some technology expertise, which I will reveal in my next post probably.

As stated in the past few posts, there will be changes to T.U.B Circle and Super Scorecard. Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!

Monday, July 3, 2017

3 Things I Learnt About REITs Masterclass

When I was approached by Chlorophyll Inc to help them review about their REITs Masterclass course, I am actually quite reluctant. This is because I do not really invest in REITs and I am more interested in capital gain.

Furthermore, B has also gave his review. Therefore, I wondered what else could I offer to the readers?

Nevertheless, I decided to give the course a try in order to become a more "complete investor" and also hopefully to provide the readers with another perspective of the REITs Masterclass course.


Since I had completed the course, here are 3 things I learnt about REITs Masterclass:

1. Not Only About REITs Investing

Even though this course is focus on how to choose the best REITs to invest in, but the information taught can be easily use on non-REITs investing as well.

As the course teaches you how to look at REITs from its business model and structure, this can be also used in how we analyse the companies from its business point of view, rather than solely from the numbers.

2. How To Use Existing Available Free Resources To Get Ahead Of Others

The course teaches us to learn to use the available free online resources to understand more about each respective REIT. A step by step approach is also explained in the video.

An example is using Booking.com to analyse the hospitality REITs. Mind-Blowned!


3. Learn More About Overseas REITs

If you thought that REITs Masterclass only discuss about Singapore REITs, you are absolutely wrong. This course actually also discusses about various overseas REITs. This will really broaden an investor's mindset and provide another possible channel for REITs investor to invest in.

I am glad that I have gone through the REITs Masterclass course as I believe I have, at least, brush up my analytical skills when I look at the qualitative aspect of each businesses.

If you are interested, do click on this LINK to sign up. You can also put in the coupon, TUBINVEST at the course landing page.

Currently there is a promotion going on for a limited number of sign ups. So if you are interested, do take action now!

Please understand that this is a sponsored post and I will earn a small commission if you click on the above link. But there will not be additional fees!

As stated in the previous post, there will be changes to T.U.B Circle and Super Scorecard. Please like our Facebook page (T.U.B Investing) and follow me on InvestingNote for the latest updates!