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Wednesday, March 27, 2013

Olam in danger?


I've a friend who bought this stock and i was a little speechless because since he bought it, wouldn't be a good idea to pour hot water on him. But i try to put it in a polite manner, "Well, have you read its financial reports? Do you have good understanding of its business operations?" And he said, "Not really but since it dropped quite a lot since last week, looks like a good buy so i bought it". And the fortunate thing is Temesek Holdings was willing to support their rights issue during that period and he managed to sell it for a decent profit. I was glad for him.

Not that i knew a lot about Olam but looking at the financial report, it kind of make me uneasy. Below is the financial statement for the first half ended 31 December 2012.

Both figures which are highlighted in red indicates the revenue and net profit respectively. In short, Olam has revenue close to about $9.6bn. However, after deducting the expenses, the company earns close to $200m which translates to about only 2% of revenue. This looks crazy to me because the company incur some pretty dangerous operation costs.

Below shows the their borrowings which have grown 15-30% from last year to this year(bad indicator).
Moving on to the financing activities for the company, the only thing i want to highlight here is that there is no indication of them paying off debts, which is one of the most dangerous parts that normal investor will not be able to see. Their debts are increasing, and yet they are having trouble paying them off.


In summary, this company is in trouble but some people are still betting their money on it. Let time decide if this company will survive and make it. I highly doubt this company will ever be profitable in this current state.

Source: http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_022449932FC2A5F648257B0B002FE6CA/$file/7Feb2013-H1FY2013_Results.pdf?openelement

complicated business, Capital Land


For 3 years of my investment experience, i have never read about capital land's financials or even think of investing in this company, not because it doesn't look attractive but rather i do not know the valuation of the company. Their assets are very broadly scattered and thus, is difficult to know or understand the nature of their businesses.

Lets take a look at Capital Land:

Capital Land had tried to reduce their debts but even after its bank borrowings and issurance of debt securities, they are still negative of about $680m on cash flow.

There are no clear indications of how the investments will generate high returns but their debt level doesn't look good.

Although their Net Asset Value(NAV) is close to its buy price, the PE ratio of 16 indicated that the earning potential of the company is still not fantastic, or rather they have not reap what they sow yet.

An image of Capital Land's cash flow statement:


Saturday, March 23, 2013

These are some factors to consider when buying a stock


For this post, i will quote the example from Swissco Holdings FY2012 financial statement.


Source: http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_7E3838BAE920403448257B1E0033133B/$file/FY2012SHLYearEndAnnouncement_26Feb13.pdf?openelement






  • Repayment of borrowings > Proceeds from borrowing (both in 2011 and 2012)
  • Net increase in cash and cash equivalents (both in 2011 and 2012)
When the repayment of borrowings amount is more than the proceeds from borrowing means that the company is able to generate more cash from previous borrowings to reduce its debts. It is good for the shareholders because it allows shareholders to own more assets than the company's debts.

Below is the image showing the Net Asset Value(NAV) per share. When debts are reduced, NAV will increase.


The net increase in cash and cash equivalents also reflected positively on the company's performance as it is able to generate more cash than expenses.



Friday, March 22, 2013

Opportunites in 4th runway in Changi

SINGAPORE - Changi Airport is studying the need for a fourth runway to cater to more flights in the coming decades, even as plans are finalised for a third landing and take-off strip.

The Civil Aviation Authority of Singapore (CAAS) is seeking consultants to look into the feasibility and benefits of a fourth runway, The Straits Times found out.

Source: http://news.asiaone.com/News/Latest%2BNews/Relax/Story/A1Story20130321-410381.html

The rapid expansion of the aviation industry leads to many investment opportunities which lie ahead. The first and upcoming is the seletar aviation hub which will be completed somewhere in 2014.
Below is the location map from JTC.



The Seletar Aviation Bub seeks to reinforce Singapore as a major hub for aerospace and will attract more companies to expand their aviation capabilities. Their strategy to is also supported by the projected strong growth in Asia’s demand for business jets (expected to grow 6-9% per annum over the next five to ten years). A slow but constant growth.


JTC Corporation said these companies stand to benefit from many synergies resulting from an integrated environment and the close proximity to suppliers and partners.Aerospace companies to benefit from synergies at Seletar Aerospace Park.



Stocks to benefit

As Singapore position itself for the aviation growth, the demand for in-flight catering services as well as gateway services will increase. 

SATS, SIA Engineering, ST-Engineering


At Singapore Changi Airport, SATS handles 80% of scheduled flights and serves about 50 of the scheduled 68 airlines out of Singapore. With constant innovation and a growing network of partners, SATS offers a suite of value added services integrating knowledge, specialised skills and ample resources to meet the needs of this industry.
Source: http://www.sats.com.sg/SolutionsandServices/ByIndustry/Airline/Pages/Airline.aspx

ST-engineering revolves much around Singapore's military capabilities. One of such benefits will be the allowing up to 4 of the new Littoral Combat Ships to dock in Changi Naval Base by Singapore. Although this only will contribute a portion to the ST-marine arm, but ST-engineering as a whole, is able to grab military contracts from around the world, thus proving to be able to constantly generate revenue for the company. 

Below are 2 military contracts won by ST-Engineering this year:
  • Construction of 8 RSN patrol vessels by MINDEF (30 Jan 13)
  • ST ENGINEERING’S AEROSPACE ARM SECURES C130 CONTRACT FROM ROYAL AIR FORCE OF OMAN (15 Jan 13)
Source: 


SIA Engineering, positioned in Changi will be one of singapore's top spot for (MRO) when Changi airport expands. The planning of the 4th runway is an indication that provide vast opportunities for SIA Engineering which is the main (MRO) spot in Changi. 

4 reasons why SIA Engineering is still on industry's top spot

Monday, March 4, 2013

The dragons are sleeping, Dukang Distillers

Investment risk associated with Dukang

  1. Government regulatory controls
  2. Cessation of substantial shareholders over the past three months
  3. Slumping prices for Moutai and Wuliangye products



Source: http://www.sharesinv.com/articles/2013/02/05/dukang-distillers-%E2%80%93-still-growing-despite-industry-headwinds/

Saturday, March 2, 2013

Kori Holdings


Specs

PE Ratio: 4
Net asset value(NAV) per share: $0.35
Closing price on 1 March: $0.35

Their established track record and strong technical expertise for both structural steelworks and tunneling works has allow them to compete effectively with other industrial players. Their outlook will remain positive given the Building and Construction Authority(BCA) has projected S$26 billion to S$32 billion of construction demand for year 2013. They are confident of  winning the contracts from the upcoming Thomson MRT Line.


Potential Projects
  • Singapore
  • Malaysia

GOVERNMENTAL SUPPORT FOR INFRASTRUCTURAL 
DEVELOPMENT IN MALAYSIA
• Under the 10th Malaysia Plan, an economic blueprint that covers 
2011 to 2015, the Malaysian government has allocated 60% of 
RM230 billion for physical development
• Projects underway include the extension of an electrifi ed 
double-track railway project to Johor Bahru, the construction 
of a mass rapid transit system covering a 20km radius from the 
Kuala Lumpur city centre and the building of a new low cost 
carrier terminal at Kuala Lumpur International Airport
As at the Latest Practicable Date, the order book for the structural 
steelworks and tunnelling services business stood at approximately 
S$82.8 million, which would translate into revenues for the Group 
over the next one to three years.

GROWTH IN SINGAPORE’S INFRASTRUCTURE
• As the population and number of tourists and immigrants 
increase, the government will continue to see a need to raise its 
spending on projects for further infrastructure development
• These will include the need for more housing, transportation 
infrastructure and industrial facilities


About Kori Holdings
The Company was incorporated in Singapore on 18 May 2012 under the name of Kori Holdings Pte. Ltd. The Company was converted into a public limited company and changed its name to Kori Holdings Limited.

The Group is a Singapore based multi-discipline engineering and construction services company. The Group's principally engaged in providing civil/structural engineering and infrastructural construction services as a sub-contractor for commercial, industrial and public infrastructural construction projects. Its customers include local and overseas developers in the engineering construction industry.

The Group’s businesses can be categorised into two main segments as follows:
• structural steelworks services; and
• tunnelling services.

Source: SGX

Friday, March 1, 2013

Nice things coming



Thai Beverage reported a 145% jump in net profit in their FY2012 results. The outstanding performance could be attributable to their F&N acquisition which was instrumental in expanding their distribution networks in Asia.

Source: http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_3295A55B8DD2A4AB48257B1F0034019D/$file/YearEnd_2012_SGX_Format.pdf?openelement



Starhill Global REIT announced the completion of acquisition of Plaza Arcade in Perth which was strategically located next to their owned David Jones Building. Their Perth operations has expanded and their strategy followed similarly to Singapore's.

Similarities in acquisition strategies

Australia - Perth

  • Plaza Arcade
  • David jones Building
Their Perth operations are strategically located at the center of the city with a 200m radius from their financial hub, government house, Australian Bureau of Statistics, Hotels and 500m SW of Perth Convention and Exhibition Centre.


Singapore - Orchard

  • Ngee Ann City
  • Wisma Atria

Source: http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_79D8F2FBE72646DA48257B210014737A/$file/PlazaArcade130301.pdf?openelement


Silverlake Axis won new contract with Hong Leong Bank, Malaysia to implement Enterprise Payment Platform which will transform and modernize the banks's existing payment system into a centralized enterprise payment system with advanced intelligence workflow designs.

This deal as stated in the news realise, will contribute positively to the current and following financial year.

Source: http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_B59271BFD80F5D7248257B2100375DAC/$file/SAL_HLB.EPP.Announcement.pdf?openelement