Sectors to invest for the future

Statistics shows that the number of elderly people are set to rise.

Below are key sectors to invest in:

• Healthcare - more elderly people need to see doctor
• IT - tackle manpower shortages

Falcon Energy Group, an undiscovered gem

Falcon Energy reported a full year profit of US$102.084 million as compared to losses of US$2.15 million a year ago. Its cash flow increased from US$12 million to US$40 million from good operating income and loans from banks.

The US economy interest rates remains close to zero % and Falcon energy leveraged on its low interest rates to grow the company. However, risks of hiking interest rates remains as US has yet to raise the interest rates. 

Its jack-up rigs are expected to be ready by mid-2015 to mid-2016, which are expected to be in high demand. The company now still have recurring income businesses in the Oilfield Services Division. 

Price now remains cheap given its improved profitability. Furthermore, it leveraged on cheap loans to fund future expansion, which makes good sense for the company. 

SATS solid operating cashflow ensures stable dividend payment

SATS strong operating cash flow had enabled its company to consistently ensure stable payout of dividends to shareholders. In the unaudited results for 4th quarter and full year ended 31 mar 14 statements, it displayed strong operating cashflow of $246.9 million and used 68% of it to payout dividends. It also saw its foreign translation losses reduced by 42% to $14.8 million from $25.6 million.

The aircraft passenger numbers in Indonesia is expected to see an increase in 15-20% per annum, according to its minister.

Source: http://www.antaranews.com/en/news/93840/indonesia-can-become-an-aircraft-maintenance-center-minister

With the acquisition of the largest gateway services of aircraft in Indonesia, SATS had positioned itself strategically for growth in SEA's largest economy.

Pan United's acquisition dragging down on profits

Pan United 1st quarter 2014 results saw a reduced earnings of 14% as compared to 2013. The acquisition of 90% interest in Changshu Changjiang International Port Co., Ltd (CCIP) saw the increase amount of debt the company incurred. CCIP recorded a loss of about $5.1 million being a new port.

However, the increased in finance costs and the dragging down in net profits by CCIP makes this counter less attractive for me. Although it had risen in share price from my purchase price of $0.6 to about $1.

The CCIP business does not sound too attractive of an acquisition for the company.

2 possible gems

Financial statements released by Hiap Hoe and Silverlake Axis had certainly sparked my interest in the 2 stocks.

After Hiap Hoe acquired Superbowl, it had stated that there will be additional streams of revenue coming from rental, hotel operations and leisure business. Earnings for the three month period was $354.2 million, a significant increase on the $10.2 million recorded a year ago.

Silverlake Axis also did very well in its 3rd quarter with a decent 28% rise in net profit. It has been performing consistently well given its high PE ratio, but however have been giving a dividend of about 4%. 

Its sale software and hardware products gained more than a 100% while runner up maintenance and enhancement contracts rise steadily at 22%. Lastly, its software licensing business grew 16%. 

Similarity between Swissco Holdings and Centurion Corp

Swissco Holdings's ship chartering business and Centurion's dormitory assets are both businesses with risks that are far lower than other businesses like ship building or construction because Singapore faced a tight labour supply.

And businesses that are passive income yielding are more attractive due to their defensiveness in nature. 

Both Swissco and Centurion share the same rental model that do not require much labour supply and therefore proved to be attractive. This translates to the increase of their share prices.