Azeus Systems, a hidden pot of gold

This company just reported strong profits in its FY2013. The jump from FY2012 was 199%, which reflected strong performance of the company.

It is going to issue out about 12.5% dividend yield to shareholders this financial year, which is very attractive for shareholders.

However, the problem with this company is that it lacked analyst reports on the stock, and many people are not aware of this stock yet.

Its main currency is in HK and they are an IT solutions provider, mostly for the Hong Kong government departments. They deal mainly with maintanance and support contracts and several large scale software development projects.

I'm buying this stock tomorrow. My advice to you is to recognize this stock before the market do. :)

Dilemma in choosing a stock to sell

Last week i bought XMH holdings, and realised that i ran out of cash because for the past few days i was constantly purchasing stocks.

There was a dilemma in choosing what stocks to sell since most of my purchases are for long time holding. Then i started reading financial statements on some of my stocks which i recently purchase to fund my XMH holdings.

I read MTQ corp financial statements and realized that they are on average debt levels with $73M debts and $40M cash holding, about 1.8 times.

Swissco Holdings, although have some good future growth prospects but their debts was bad at about 6 times their cash holding. They are in a riskier position as they do not hold enough cash to pay back the debts when the need arises. And furthermore, they reported weaker earnings in their latest results.

Ezion was bad with debts with about $706M in debs and $148.5M in cash, which is 4.75 times their cash holding.

Companies with higher debts reflect that they need much more money to generate better revenues or better profit margins which may put the company in a riskier environment in an event of unforeseen circumstances. And furthermore, debts reduces shareholder value as the shares contain more debt than assets.

I arrived at a conclusion and sold both Ezion and Swissco Holdings.

Comfort Delgro, a comfortable one indeed

A global transport company with major operations in Singapore, as well and UK and Ireland, Australia, China and minor operations in Vietnam and Malaysia.

ComfortDelGro has expanded significantly and now operates in seven countries and has a global fleet of about 45,800 vehicles.

ComfortDelGro’s businesses include bus, taxi, rail, car rental & leasing, automotive engineering services, testing services, driving centre, insurance broking services, outdoor advertising and car dealership.

Source: http://www.comfortdelgro.com.sg/ourcompany.aspx?id=4

Below in their FY2012 financial highlights and they are growing decently throughout the years. 

  The graph above highlights their successful growth track record since 2008. This stock is a good stock to own despite the recent drop of $0.255 due to the sell down of major share holder, Singapore Labour Foundation.

This could mark a decent opportunity to buy into the stock and hold it forever.

Stocks will go up in the next 10 years

“As price of risk assets improve, there are more pressures and temptations to reach out,” said Lim, 42, who previously oversaw GIC’s investments and relationships in Europe, Africa and the Middle East.

“Though valuations are not low currently, longer-term prospects are not to be missed,” he said.

Source: http://www.bloomberg.com/news/2013-05-21/gic-says-returns-on-stocks-and-bonds-to-lower-in-next-10-years.html

Although stock prices are not low at the moment, but quantitive easing in Japan and US as well as low interest rates around the world are spurring companies to grow and may cause a slight recovery in the global economy.

Some companies may still lack behind, but there are still opportunities present with the current high valuations.

Let me share with you one of the factors of growth in the oil and gas industry.

the Obama administration apparently supports the expansion of the natural gas industry and the controversial technology of hydraulic fracturing.

Source: http://communities.washingtontimes.com/neighborhood/climatism-watching-climate-science/2013/may/22/obama-administration-supports-fracking-and-natural/

From Hiap Seng's 3rd Quarter FY2013:

The outlook for the oil-and-gas and petrochemical industries which the Group serves still remains
positive.

Source: http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_17CFF9306C301F2248257B0B0027D0D2/$file/HS_Q3FY2013_results_announcement.pdf?openelement



From MTQ's FY2013 ended 31 Mar 13:
Conditions are expected to remain buoyant in the oil and gas industry.

Source: http://www.mtq.com.sg/financials.html

Both these companies have great opportunities for future growth. Hiap Seng recently announced a joint venture with KUB Builders to bid for the Petronas Rapid Tank Farm Project in Malaysia.

MTQ Corp, which reports doubling of pre-tax earnings in Q4 FY2013, complained of overwhelming demands from Bahrain.

Fearing a correction? Go for small caps

Stock markets are soaring and are mostly driven by countries printing money or cutting interest rates in an effort to spur growth in the economy. However, some rises are not justified by fundamentals, therefore are vulnerable to correction. Although there are many overpriced stocks being overbought but some of the low volume small caps stocks are still undervalued and not overbought yet.

This is a period when companies are releasing their results and some of the companies are reporting significant earnings but have not risen in value.

My advice is to take a look at the results and seize the opportunity before the markets realized them.
Stocks like Singtel and Starhub are likely to correct, especially Starhub which had been constantly rising in value.

MTQ Corp and Ezion, the rapid growth of the oil and gas industry

MTQ Corp FY2012 net profit surged 148% as compared to FY2011 while Ezion's net profit surged 227%

Ezion's report in the next 12 months:

The Group expects more Service Rigs to be deployed in 2013. The Group is also expected to enjoy higher
revenue from Australia with the commencement of the APLNG and GLNG projects in 2013. Leveraging on its track record, experience and existing business infrastructure, the Group will continue to pursue business
opportunities to support LNG related projects in Australia and its vicinities. The Group will also continue to focus on investment in Service Rigs to meet the strong demand from its customers in the oil and gas industry.
Barring any unforeseen circumstances that may arise to destabilise the current financial market and global
economy, the Group expects to perform better in the financial year ending 2013.

 

MTQ Corp's report in the next 12 months:

Conditions are expected to remain buoyant in the oil and gas industry. With a wider geographical presence and a much broader suite of subsea and engineering services to offer, the Group will continue its strategy to strive for organic growth and benefit from the buoyant oil and gas industry.

MTQ also acquired Neptune Marine Services at a discount of A$6.4M.

Their total Equity for Half Year Results Dec 2012 is about A$64M after deducting accumulated losses and their takeover bid is A$57.6M.

Evolving Stock Market

Since the 2008-2009 stock market crash, the market have been moving with a lot of uncertainty. Sentiments of a stock market crash have been underway since 2012 and there are fears in investing into equities.

After a report by Jim O'Neill saying that it makes sense for central banks to own equities, the stock market has already been on a bullish path. He also added that many sovereign wealth funds which are tied to central banks have already invested in stocks.

Source: http://www.cnbc.com/id/100674247

The increased in liquidity could probably explains why stocks are rising. And the reason why equities are preferred rather than commodities is that they give dividends to shareholders while holding on to commodities like silver and gold doesn't provide any returns on investment.

Stock prices also indicate an improving economy in the U.S. and the rest of the world as companies report better earnings.

Source: http://www.bloomberg.com/news/2013-05-01/stocks-beat-bonds-dollar-for-second-month-as-commodities-slump.html

A visible pattern can be seen in the current stock market that seems to be different from how it was in the 2008 stock market crash.

The increased liquidity injected into equities are more fluent and steady in a way that is more evenly distributed. Stock markets are less prone to over-heating as previously stocks are blindly bought with "free cash flow".

Rising equities can be seen as inflation and banks and economies developed better counter-measures for overheating. Singapore currency went up against the USD to counter overheating. The Japanese Yen weakened together with the USD and drives exports in both Japan and the U.S. Asian countries like Singapore, welcomes "cheap money" in the stock market, which explains the rise in equities. 

Back in 2008, the crash seems to be engineered in a sense that the media and the rating companies were reassuring the public to stay invested when the fundamentals are not in place. However, now the rising bubble seems to be more cushioned thanks to mistakes in the past and also indicative of a slow global economic recovery. But that said, rating companies like S&P and Moody's rating cannot always be used as indicators as they might be able to engineer a certain outcome. 

From 

to