Friday, January 27, 2017

Exciting News Ahead For This Counter!

Happy Chinese New Year!

Hope everyone have a great year ahead! For many investors and traders, Chinese New Year came early asthe Singapore Stock Market is in a buoyant mood and a lot of people are making gains.

For me, I was lucky to get enough rights excess of the Sabana REIT to have an average price of $0.320. I have since sold all my Sabana REIT shares.

The other lucky shot I had was Singhaiyi Group Ltd. As I have written on 25 Jan 2017, I bought the shares at a low average price of $0.099.

A day after my article was posted, the company made the announcement that they have divested all their holdings in TripleOne Somerset for $100 Million. This is a gain in disposal of asset for at least $30 Million.
SGX Announcement
Another important fact on this transaction is that on the 2016 annual report, the company actually has $45.8 Million of junior bonds issued to the entity owning TripleOne Somerset. This junior bonds will be returned in full to Singhaiyi Group Ltd.
2016 Annual Report
Therefore, other than a gain in disposal of asset for at least $30 Million, the company will also have an increment of $45.8 Million of Cash. With so much cash, I believe the management will continue to pay down their debt or maybe issue a higher dividend.

Nevertheless, do note that these report are announced on Jan 2017, which will not be reflected in the upcoming 3rd quarter financials. It will only be reflected in the full year financials announced in May 2017.

In view of the above positive, we should also take note of the risks involved.

A major issue is the company's stake in OKH Global Ltd. When OKH Global was in trouble last year, the parent company of Singhaiyi Group (not Singhaiyi Group itself) was the white knight that came to its rescue. The CEO of Singhaiyi Group then became the Chairman of OKH Global.

The parent company has then grant Singhaiyi Group the first right of refusal to be transferred the former's stake in OKH Global to Singhaiyi Group at $0.10 per share. This will be a total sum of $50 Million.
First Right of Refusal Announcement
So what could happen?

1. The first right of refusal will end on 5 April 2017. The parent company owns over 50% of Singhaiyi Group Ltd. In the event, the parent company intend to transfer the stake to Singhaiyi Group, the minority group will have not much say in this.

2. OKH Global shares are currently less than $0.10 per share. In the event, Singhaiyi Group are transferred the shares from its parent company. It will be paying significant goodwill for the OKH Global Shares. The winning party will be the parent company. Singhaiyi Group will be at the losing end.

3. This is most probably happening regardless of what everyone else thinks.

But I am not very worried...

1. OKH Global is also in property development business and it is in the developing of logistic and industrial properties. This will create synergy with Singhaiyi Group's development business.

2. OKH Global is more involved in developing logistic and industrial properties, while Singhaiyi Group is much more involved in residential and commercial property development. Thus, there will be synergy but no competition among the 2 companies.

3. Base on OKH Global latest financials, the Net Asset Value is about $0.13 to $0.14 per share. That will be less than what Singhaiyi Group will pay for per share.

4. I believe the management will announced good results for OKH Global and share prices will increase prior to the transfer of the shares. 

In Short

Now I understand why there was a sharp increase in share price after 23 Jan 2017. It was most probably due to the sale of the TripleOne Somerset. 

Nevertheless, even with the possible negative impact of the transfer of OKH Global shares, I am still very positive on the prospects of Singhaiyi Group Ltd for the next 6 months. I will definitely stay vested for the time being unless better opportunities arises.

Current Price: $0.115 as of 25 Jan 2017.

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

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.

Wednesday, January 25, 2017

"This Singapore counter rise 30% over 3 days!"

As some of you have read, I have adjusted my investment methods this year in order to achieve my target gain of in excess of 10% for my portfolio by the end of 2017.

Other than looking at counters that pass my Enhanced Triple S Scorecard or the Dividend Scorecard Portion, I am also looking for counters with sustainable business model with catalyst that will ignite the share price significantly.

Last Friday I came across Singhaiyi Group Ltd. The share price was at 52 weeks low of 9.6 cents. By the end of Tuesday, the share price was at 12.8 cents. A 33% jump in share price within 3 days!
Profile In Short

As per their website, "SingHaiyi Group Ltd is a fast-growing and well-rounded real estate specialist with unique access to real estate opportunities in Asia and USA.

With our knowledge in real estate development, real estate investment and real estate management, we enjoy multiple income streams through our diversified portfolio of quality residential, commercial and retail assets.

Backed by a visionary and well-connected Board and management team with deep expertise, we have built a robust network and strong partnerships in Singapore, USA and Malaysia. As one of the first Singapore listed companies to build successfully in the USA, our strong local knowledge and solid connections will allow us to capitalize on future opportunities in this exciting market.

Our clear growth strategies for each geography and segment put us in good stead to capitalize on our potential for growth while exploring new opportunities."

But how did this counter caught my eye and why I decided to invest in it?

1. Expanded into USA and Malaysia

From the profile above, it is self-explanatory that the company have developments in USA and Malaysia.

In my opinion, development in USA is deem as positive in view that the current president of USA, Donald Trump, is also into real estate and the US dollar strength against the Singapore dollar.

As for Malaysia, I do not deem it as positive mainly due to the news of the excess supply of property developments in Iskandar and also the downtrend of the Malaysia Ringgit against the Singapore dollar.

However, the company mitigate this point, by not developing the properties on its own, but by investing in Malaysia Property through a fund. Furthermore, the fund is also not any other fund, but the ARA Harmony Fund III.

Therefore, I believe this is one of uniqueness of Singhaiyi Group Ltd, which differentiate itself from other smaller developers.

2. Significant Development Properties in place

Being a property developer, the company already have numerous property developments in place.

In Singapore, currently it has developed "The Vales" and "City Suites". The Vales has already sold 80% of the units prior to TOP in 1st half of 2017.

On the other hand, City Suites has only sold about 10%. But the company has tried to offload their entire share in this development since 2016, but was stopped by the Controller of Residential Property. Nevertheless, I believe the company will be able to offload their entire stake this year.

Although this maybe done at a loss, but the company will still be able to convert this whole stake into cash, increasing their cash portion significantly and escape additional charges.

In USA, the company will continue to develop Vietnam Town, as well as redeveloping an existing office building at 5 Thomas Mellon Circle, San Francisco, into a waterfront lifestyle residential property.

3. Increasingly Diversified Portfolio

Other than being a property developer in Singapore, the company also own TripleOne Somerset, which is undergoing AEI (Asset Enhancement Initiative).

It also bought Park Mall from Suntec REIT and started redevelopment in October 2016.

In USA, Tri-County Mall is also currently undergoing AEI.

After all these developments are completed, the portion of the company's rental income will increase tremendously.

4. Neil Bush as Chairman

The Chairman of Singhaiyi Group Ltd is George H.W. Bush's son, Neil Bush.

He joined the company in April 2013 and owns about 7.66% of the company as per 2016 annual report.

This relationship will have accelerated the company's continued growth in the USA, at that point, and assisted in the company's future growth!

5. Share Price at one of the lowest point over the last 5 years

Prior to the sudden rise over the last 3 days, the share price was at 9.6 cents. It is one of the lowest point over the last 5 years. At this point, the Price to Book ratio is 0.59 times.


6. Paid of $100 Million of Notes 

The company's recent announcement stated that it has fully paid of $100 Million of its notes and this is in addition to the payment of $121 Million of bank borrowings as per latest half year 2017 report. Thus, 2017 annual report will have reported lower debt borrowings and liabilities, which will have resulted in a stronger balance sheet.

7. Listing on Mainboard

The company intend to list on Mainboard. Does this meant that the management believes company will grow bigger in future? Is there something they know that we don't?

8. Recognition of Income

One of the main positive point is that, from all the recent quarterly reports, recognition of the Singapore revenue seems to be from past projects like "Pasir Ris One" and "Citylife @ Tampines".

The revenue from "The Vales" does not seem to be included. Therefore, this stream of revenue will most probably be recognised in 2017. This will push up the revenue and net profit significantly.

Although I have stated many positive points, but not all investment comes without its risks: 

1. In the event, the company is unable to offload "City Suites", it will require to pay a significant sum of charges at the end of 2017.

2. Furthermore, with Trump as President of USA, will the management be able to continue enjoy the network they have in USA?

3. Significant capital expenditure will be required with so many AEI going-on. Rental income will also be reduced.

4. Is the company able to continue to reduce its borrowings with so many developments in place?

In Short

Despite the issues the company could have faced, I believe it has enough catalyst to increase its the share price from the low of 9.6 cents. Therefore, I made purchases of the shares on 20 January 2017.

You can say I was lucky I caught hold of this counter prior to the rise in share price. However, I believe the share price can rise even higher in 2017. Thus, despite the slight drop in the share price today, I am still vested.

Current Price: $0.119 as of 25 Jan 2017.

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

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.

Monday, January 23, 2017

Bukit Sembawang Estates Ltd - Sitting On Unrealised Gold

Readers of my blog will know that I am a huge supporter of this counter, Bukit Sembawang Estates Ltd.

Fundamentally it still stand as one of the best property counter in my view - loaded with cash that can at least cover the dividend for another 3 years and having development properties without any debt.

Recently, I had a discussion with a reader on this company. He is an accountant and were asking me some questions on its financials. I was able to answer some, while others requires a lot of digging.

Nevertheless, he came to a conclusion that the "Development Properties" stated on the Current Asset were at "cost". I double checked on the 2016 annual report and found this to be true. This meant that I am "sitting on unrealised gold" by having this counter as part of my portfolio.

A screenshot of the Current Asset in its latest Quarterly Financials
A screenshot of the Development Properties in its 2016 Annual Report.

Then, one day, while googling I came across this map and I was like, "Isn't this Luxus Hill's development area?"
A map from Streetdirectory.com

I checked Google Earth and the same picture came up:

The open spaces sure look big and imagine the number of landed properties that can be fitted into these spaces!

These spaces are currently owned by Bukit Sembawang Estates Ltd and it will be eventually developed into 99 years leasehold landed properties.

Do note that these open spaces should not be subjected to QC charges.

Anyway before you engage into fast gear and start buying this counter, the risk in buying this counter are still significant. I believe their other developments are still slow moving and they had paid additional charges before. There could be other charges that they need to pay in future, which could potentially reduce the dividend amount.

Therefore, remember to do your own due diligence before buying!

Current Price: $4.550 as of 23 Jan 2016.

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

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

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

Tuesday, January 17, 2017

An Interview with "SG TTI"

As stated in the last post of 2016, I am restarting the interview series. I will try to have an interview with an interesting investor every month in 2017.

For Jan, I will start with interviewing SG Thumbtack Investor aka SG TTI. If you have yet to read his blog, I urged you to do so soon.

I only knew about his blog after he sent me an email to exchange on a guest post. Right now, I constantly read his blog posts. They always amazed me. I will always have new enlightenment of the particular company and industry due to the details he goes into.

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

1. Tell us more about yourself

SG TTI: I am a Singaporean male in my mid-30s, married with 2 young kids. I have a day job in the healthcare sector as a doctor. Concurrently, I am also the CIO for a privately held investment holding company that manages the assets of family and associates. When I'm not at my day job, I like to read about various industries and try to understand the world a bit more. I also love to travel, and make it a point to travel (for leisure) at least 3 times a year.

2. How did you get into investing?

SG TTI: I didn't get into investing, I think it got me. Initially I looked at investing as a way to get a nice passive income. Over time, my objectives have evolved and I'm no longer merely interested in passive income.

I'm interested in the feeling of going against the grain, finding something that the whole world seems to disagree with me on, and eventually and hopefully, being proven right. When a highly contrarian investment turns out to be successful, the feeling and positive energy I get from it is incredible.

This can only be achieved via a contrarian approach, and the confidence to stand your ground in the face of disagreeing opinions can only be attained by having a superior, in depth knowledge of the situation that most people don't have at that point in time.

3. Any thoughts about short term trading?

SG TTI: It's fun.

Not necessarily profitable on a ROI basis, but it sure is fun. The amount of research data that thus far proves that short term trading is unprofitable for the vast bulk of the participants over the long term, fails to recognize that it is a lot of fun and excitement. And when something's fun, people tend to pay less attention to the costs of doing it.

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

SG TTI: My worst investment is in a HK listed company with Mainland Chinese management, Flyke International . It's the traditional Ben Graham type of company, valuations are dirt cheap. But I didn't count on the management to commit fraud and abscond with the company's money. I guess during Ben Graham's time, there weren't infamous Chinese management committing fraud to contend with. Or rather, he wouldn't be able to invest in any Chinese company in those days. I've written about this worst investment in SG TTI blog.

My best investment is always going to be the next one I'm going to make. I have to think of it this way. That's what will drive me to dig deeper and harder.

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

SG TTI: It depends on how confident you are in each of your ideas isn't it? If there's only 1 idea, but you've close to 100% confidence and the likely ROI will be extremely high, then the number of stocks you should hold is... 1.

That's the case for most successful entrepreneurs. They have the bulk of their net worth in the company or business they're managing.

For most other instances though, I think retail, active investors who spend a considerable amount of time managing their own money, should hold between 8-15 companies. Any more and it's a real challenge to manage your portfolio closely.

I'd also point out that the number of stocks you own is not necessarily a good barometer of diversification. I'd argue that 5 stocks across different industries and with different business cycles would be more diversified than 10 stocks of the same sector.

The other factor is of course, position sizing. You can have 100 stocks but if 50% of your portfolio is in 1 or 2 stocks, than it's hardly considered diversified.

6. What is financial independence to you?

SG TTI: Being able to live your life with a certain level of comfort that you want, without having to worry about how to fund that lifestyle. Unlike most people who focus on being frugal, saving up and investing to retire, I personally believe a balance is more important. Spending on certain luxuries (like travelling in my case) within your means, if you want them, is part of living. To me, accumulating wealth for the sake of it just makes life meaningless. I'd much rather accumulate experiences and memories.

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

SG TTI: It is usually updated here monthly

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

SG TTI: Don't jump straight in. Invest in your knowledge database by buying books, attending courses, learning from the mistakes of others and spend the time and effort to refine your thought processes.

In short, learn more, think even more, but do less.

"SG TTI"'s Blog, SG Thumbtack Investor, is also on the my blog list at the side.

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

Sunday, January 15, 2017

New Explanation for PE and PB Ratios

So the morale of the Untold Story that I want to portray is that:

1) Please don't anyhow follow the trend, follow the people, follow the tips;

2) Do your own analysis and make your own decision.

I believe if you constantly make your own decision, you will slowly find the right criteria and start making gains!

To assist a newbie on making this decision, I suggest using these 2 ratios to see if the particular counter is TOO SIGNIFICANTLY OVERVALUED.

1) PE Ratio 

The first ratio is the regular Price to Earning Ratio. It is basically taking the Share Price divided by Net Profit per share (There maybe other calculations on the net, but I believe this is the most popular calculation of this financials). To understand this ratio further, it is good to get a counter with a low PE Ratio.

For this ratio, I interpret it as Price to Expectation Ratio. The higher the ratio, the higher the expectation of its up-coming earnings/net profit.

Therefore, if the net profit falls below investor's expectation, the share price will drop subsequently.

2) PB Ratio

The second ratio is the regular Price to Book Ratio. It is basically taking the Share Price divided by Equity per share (There maybe other calculations on the net, but I believe this is the most popular calculation of this financials). To understand this ratio further, it is good to get a counter with a low PB Ratio.

For this ratio, I interpret it as Price to Build-Up Ratio.

The higher the ratio, the longer the time is required to build up the company/balance sheet. For example, if the Price to Build-Up Ratio is 10, we can deem it as the company may require 10 years to build up its balance sheet that is similar to its share price. Therefore, the shorter the time is required, the better it is.

With the above new explanation of the old ratios, I hope it can help newbies to understand these ratios and, at least in future, use these simple ratios in their decision making of making future purchases.

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Tuesday, January 10, 2017

The Untold Story Of The Stock Market

Before I start telling you the story, I just like to tell the readers that I am not "forgetting" about the Singapore Stock Market. Although I am starting to look at the U.S. Stock Market, but I will not forget my roots. I will be updating on my Sabana REIT journey soon...

So let get back to this "Untold Story".

Disclaimer: This is a work of fiction and any similar event/name/situation are just coincidental.

Tom owns some shares of Company A, which was listed. Company A has become a penny stock and no one has traded for a long time. So Tom decided to take action.

Tom had a huge network and told his network of rich friends, Peter, Dick and Harry to buy Company A. He started to accumulated more of Company A too. Furthermore, he advised his friends to buy in different tranches. Thus, the shares price did not increase significantly suddenly.

He also told Peter, who works in a stockbroking firm to advise his customers to buy as well. But Peter not only told his customers to buy, he also spread the news in his office.

Soon, Company A share price rises.

At this point, Company B, which is a huge fund management firm, picks up the algorithm of that Company A share price rises. Due to its system indicating a buy signal, Company B buy huge amounts of Company A.

Company A share price rises much more.

Jim, who is an analyst, saw Company A share price rises. He decided to call the CEO of Company A. The CEO tells Jim of the big plans that Company A decided to engage in. Jim decided the plans seems valid and decided to publish a "buy" report on Company A shares.

After reading the report, retail investor and traders pick up the signal and decided to buy too.

At this point, Company A's share price has rise much more significantly. Despite its initial illiquid nature, it has continued to stay in the "Top 20 Volume" and "Top 20 Gain List" for a few weeks.

Company A's share price is currently trading at triple its initial share price (at the start of the story).

Tom decided to sell his accumulated shares slowly over the period of 1 week. So no one will notice.

Then, he started to tell Peter, Dick and Harry to sell slowly over the week.

At this point in time, Company B's system picks up a "Sell" signal on the share price of Company A. Company B decided to dump all the shares of Company A.

The regulator noticed something is wrong and halted the trading of shares of Company A.

Thus, the victims of this event are eventually the people who are still stuck with Company A's shares.

So what's the moral of the story? 

I will be revealing my answer in the next post. Hopefully no one will ever be trapped in this kind of situation in 2017. 

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Sunday, January 8, 2017

My 1st Post of 2017

I will just like to apologize for the lack of post for the last 2 weeks.

Other than taking the holiday breaks, I am busy learning about US Stock Market. As I have emphasized so many times, I intend to invest in the US Stock Market in the very near future.
Many will ask why will I invest in the US Stock Market now, when Dow Jones Index is at all time high?

There are 2 reasons.

Firstly I want to have some distraction off Singapore Stock Market, I want to be less active in buying and selling in the Singapore Stock Market. I believe this will help in my goal of attaining a capital gain of 10% eventually at the end of 2017.

To explain further, there was a period I was so busy that I ignore the Singapore Stock Market for about 6 months. At the end of 6 months, I realised my portfolio rise more than 20%. Therefore, I believe I need some distraction to take my eyes of Singapore Stock Market and the value portfolio will need some time to be "found out".

Secondly, my friends and I believe there will be opportunity in the US Stock Market after Donald Trump take office. Furthermore, if you realise the Economic Advisory Council or Strategic and Policy Forum formed by Donald Trump, it is formed by major corporations' CEO. Thus, we can be assured these CEO will want to do something for their industry and even their own companies.

So when I started reviewing 2 to 3 weeks ago, I felt there is just so much to learn. 

Firstly, the number of stocks in the US Stock Market is like 10 times the amount in Singapore Stock Market.

Secondly, there are so many different stock exchange in US. You have to make sure the stocks are not OTC or for the Grey market. In addition, Nasdaq has a minimum $1 rule - Yet to even know the details of this rule.

As for value stocks in the US Stock Market, their share price will be "realise" faster than a counter in Singapore due to the numerous value investors and funds in the country. Thus, it is quite hard to find value stocks in the US Stock Market. Therefore, there is a need to really learn about the company business to see if they are worth premium amount.

In addition, there is another point about Institutional Investors. Up till now, I still do not know whether it is better for a company to have more or less Insider ownership or Institutional ownership?

Anyway I have tried to create an Enhanced Triple S Scorecard for US Stock Market. But it was done in vain. Till now, I am still unable to find a true value stock in the US Stock Market.

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