How to value companies

Hi everyone, in this article, i will talk about 1 method i use to value a company. The company i will be using is Falcon Energy.

Let's look at its net income for the past 4 years.

Source: SGX

The breakdown in net income in million is as shown below:

• FY2011 - 3.274 (price $0.67)
• FY2012 - 10.429 (price $0.27)
• FY2013 - (2.387) (price $0.42)
• FY2014 - 60.768 (price $0.335)

In FY2011, the net income is about 20 times less than FY2014 results and yet the the price is about 2 times lesser.

If their earnings can sustain at 60 million, their share price be valued more than $0.67. At the current market price of $0.31 is very undervalued.

This is one method you can use to value a company.

Thanks for reading everyone. :)

Discount on Azeus

Bloomberg

Azeus hit a 1 year low in price, while its growth is ascending. This stock price is undervalued.

A falling star, Make a buy

Oil prices have been declining for 3 months and dropped $4 in 14 Oct. The largest single-day fall in more than a year. Brent oil at its peak in June costs about $115 while now it dropped to $85 a barrel.

Source: http://www.economist.com/news/finance-and-economics/21625819-oil-price-tumbling-good-or-bad-news-world-economy-both

The sudden drop in oil prices does not indicate an oversupply, however telegraph had mentioned that according to Citigroup, Saudi Arabia will cease to be an oil exporter in 2030.

Source: http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100019812/saudi-oil-well-dries-up/

Jim Rogers mentioned that the huge drop in oil prices was due to OPEC driving down prices because of shale competition in the US.

Source: http://economictimes.indiatimes.com/news/economy/indicators/recent-decline-in-crude-oil-price-artificial-jim-rogers/articleshow/44833118.cms

Great discounted stocks to watch in SGX

• Keppel
• Sembcorp Marine
• Ezion (high growth fuelled by debts)
• Falcon Energy
• MTQ Corp

Go for Growth, Dividends or Capital Gains

After a series of bad investment choices this year, i got myself thinking about my own portfolio restructuring

As there are many opportunities in certain periods, it is always good to have certain stocks that are able to ride through the storm to provide us with growth and dividends in cash or shares. 

Growth stocks

As a beginner in stocks, i am always keen to learn from different people about their investing perspectives. One of it was to invest in Singapore banks like UOB, OCBC and DBS. These 3 stocks have good growth and will constantly distribute dividends yearly. 

I begin looking at higher value stocks like Jardine Cycle and Carriage because someone told me that a person who buys the stock knows about investing. Initially, i did not know why people choose this stock. Out of curiosity, I went to check out their business and ask around. I managed get answers that are able to justify the good value of this stock. Jardine C&C distributes Mercedes Benz, one of the premier luxury brands of car in Singapore, Malaysia and Myanmar. Apart from Mercedes, the group also distributes other brands. Their business consists of car distribution and maintenance. The maintenance portion of their businesses are recurring in nature, and thus able to provide a constant flow of income. 

Dividend stocks

Dividend plays are good as well because they provide you with good cash flow to reinvest and expand your portfolio. A person who played dividend stocks well is Dividend Warrior. He adhered to a patient strategy for good dividend yield stocks which seemed to be going well comfortably.

Capital Gains

Since SGX cap the lot size to a 1000 shares, penny stocks are one of the apple for investors looking for short term capital gains. In order for this to work, you have to correctly predict the the ups and downs of the stock.

Conclusion

My personal opinion would be to go for both growth and dividend stocks to ensure constant earnings over a longer period. The capital gains method would require constant monitoring and technical analysis to improve your prediction. 

Alibaba's a growth stock

Alibaba is a growth stock that grew tremendously over the past 3 years. It made $0.44 per share in 2011, $1.68 in 2012, $3.57 in 2013 and $10 in 2014.

Since its IPO on 19 Sep 14, its share price had soared from $68 a share to $93, an increase of 36% in a single day.

Growth is one of the main factor that drew many investors. From 2011 to 2014, its earnings have grown about 30% per year. E-commerce, like search engine companies are growing as more people gain confidence in online shopping.

Alibaba is definitely one of the stock to have.

Straits Trading

Recently, a friend told me he bought Straits Trading in August 13 at the price of $4.4. However, the price now have dropped to $3.

In this blog post, i will explain why it dropped dramatically due to the earning results. In HY2013, the company made a profit of $80.4m, which most of it is due to a gain on disposal of WBL shares. However, HY2014 did not see much income coming in besides their tin mining, smelting and hotel business.

While they earned $343m including a gain from the disposal of investment properties, its expenses offset most of its the earnings. Its tin mining and smelting business incurred $301.4m and their other, financial expenses and exchange losses amount to $26.5m.

After deducting all expenses, they reported $4.9m in net profits, which was 1636% less than last year. The stock price see itself moving up since Jun 13 and started dropping in September 13. The half year reports were released in Aug for both years.

The most important thing to highlight here is the fact that the major gain on disposal in 2013 does not determine the company's ability to grow given its huge expenses on their tin mining and smelting business. Although, its current price have factored in the negatives, i don't expect the company to grow much given its high operating expenses.

Value penny stocks have gained momentum

KS Energy
Centurion Corp
Pacific Radiance
Swissco Holdings
Nam Cheong

These stocks reported good results, mostly came from the ship chartering, ship building servicing the oil and gas sectors. These sectors have been doing well and did not see demands dropping.

Centurion Corp's business lies in its consistent revenue from worker dormitory rental yields but its media business have been dragging down its profits. More value can be seen when it divest more of its media business and focus on its dormitory accommodation.

KS energy recently sold some of its assets and gained about $55m. It is now able to distribute this income as dividends to shareholders or make other acquisition to gain better market position. According to the recent release of its financial result, the demand for oil and gas sector remains positive. This translates into positive future growth potential for the company.

Planning for Retirement

It is possible to invest in stocks for retirement. The power of compounding investment gives you the power to increase your assets over time. In this section, i will talk about how you can hit your retirement goal in steps.

The safest way to build up your assets in SGX is to look into Real Estate Investment Trusts (REITS). REITS are made up of a collection of properties and their income depends on the rental yields. After which, they will pay out majority of their net profits as dividends to shareholders. REITS are stable play when interest rates are low because they are normally high in debts.

A typical REIT company may give you about 4-6% depending on their performance. Lets assume it gives about 5% out as dividends every year.


First 100k in Stocks

• Earnings of 5k per year
• $416 per month

in progress...

Improving your portfolio

Improvements to portfolio is no one time effort in a long term perspective. Market conditions are ever changing, similar to the political situation that is happening around the world.

Conflicts
Israel-Gaza war have became worst after the kidnapping of 3 teenagers. The conflict between Ukraine and Russia have not resolved itself. Furthermore, MH17 was brought down by Ukraine rebels which caused the intervention of other countries. China was getting more aggressive in the claiming of islands that caused unhappiness in the South East Asia region.

So much happenings around the world and stock markets react differently at different periods. Stocks may move because certain funds pump in lots of money to buy it. The big players are powerful enough to control the direction of the markets.

Therefore, retail investors like us have to be vigilant in the type of stock we choose.

Enhancing your portfolio
Most people sell stocks when they are high and buy stocks when they are low. That is not what i think should be the right approach to long term investment, because long term investment depends a lot on stock performance consistency. For example, i bought Vicom 4 years ago at $2.60, today's price closed at $6.68. Earnings per share is valued at $4000.

From this lesson, i inferred that stocks that do well consistently are more likely to continue doing well due to their business model. Therefore, instead of selling stocks that do well, you should sell stocks that are not doing well and buy stocks that have been doing well so that it will continue to perform well.

Do not take deliberate advice from brokers because brokers do not have any responsibility with regards to the money you earn or lose, they only earn the commission when a trade is executed. Therefore, it is important to do your own portfolio management and decide what is good for your portfolio in the long run.

Cutting losses
Do not be afraid to cut losses because when a stock is not doing well, it is harder for it to recover. Take a poor person for example, how long do you think he needs to be rich if he does not have enough money to make money.

This theory applies similar to companies that are not doing well. Therefore, it is essential to cut losses when necessary.

Approaches to Portfolio Management
There are a lot of stocks out there that performed really well over the last few years, and achieved a certain level of consistent performance. Although i agree that high dividend stocks are sometimes risky and therefore company is able to pay out high dividends to allow investors to take up some of the risks. However, there are still companies which are backed up by fundamentals and yet rewarding for shareholders.

In this section, i will talk about how i continue to invest in the type of companies that are both rewarding and less risky.

Portfolio management means that it is a continual process of managing your basket of stocks, stocks that will do well and what stocks that have under performed.

Stocks selection
I will list down some of the more important details in stocks selection

1. Good Branding
• Possess advantages that people will choose over other competitors
2. Demographic advantage
• Favorable to the increasing population (Healthcare, Telecoms, Transport, Food, Services)
3. Political
• Government owned companies that are favorable to win key contracts (Temasek Holdings related)
4. Excellent financial position
• Less debt (Debt to Equity Ratio less than 1) or no debt
• Consistent annual profit growth to prove good business

Basis to sell/switch
Stocks that are burdened by debts and high operating expenses are facing a lot of challenge . Therefore, it is important to constantly follow up on their quarterly financial reports. Their reduction in net profit growth and high operating expenses are indicators to consider a sell in the stock.

1. Loss of competitive advantage / slower in foresight
• Switched OCBC with DBS after Wing Hang Acquisition because DBS made the move 12-13 years earlier with the acquisition of Dao Heng Bank.
2. Increase in debts, operating expenses leading to reduction in profits
• Sold Hyflux due to high debts and operating expenses.

Basis to buy

Stocks that will perform in the long run will likely start from the current position. It is because companies with good business model will follow them through for a long time.

1. Less or no debts in their balance sheet - Allow them to earn pure profits and will slowly grow to a cash cow company
• Azeus Holding, SGX are 2 stocks that have minimal or no debts in their company
2. Good rewards in dividends in cash or shares
• Banks (DBS, OCBC, UOB), MTQ Corp, Silverlake Axis 
3. Consistent profit growth
• Vicom, Silverlake Axis

ES Group

ES group have been one of the most ignored penny stocks in SGX. The volume of this stock is low and also has very limited amount of analyst commentary on this stock.

ES group is a prominent sub-contractor of marine and offshore structures and vessels of all types and sizes. It is well known for its safety track records and have been in business with big players like Sembawang Shipyard Pte LTD and Keppel FELS and ST Marine Ltd.

The Company also owns a 70,000-square-metre shipyard with fabrication grounds in Thailand. Its FY2014 outlook states that more orders were secured for its Thailand yard and therefore its outlook remains positive for 2014 despite a slowing shipbuilding sector.

Buying STATSChipPAC is not value investing

This company has been going up a lot because of news that Temasek Holdings is looking for buyers to take over this company.

In mid 2013, STATSChipPac closed a KL factory due to profitability concerns, and to consolidate its operations in China over several phases.

In a highly competitive semiconductor industry, STATSchipPac have to constantly invest in new technology to meet its customer needs. And if their foresight in technology goes wrong, it may end up like Blackberry or Nokia.

Source: http://www.straitstimes.com/breaking-news/money/story/stats-chippac-close-kl-plant-laying-1100-workers-20130628

The risks to invest in such company is not going to generate good returns over the long run because the risk over rewards might not be worth it. It has to constantly pump in cash flow to purchase new technology to keep up, and as competitive become stiff, prices of semi conductor products may decrease.

My advice is to stay away from this stock if you are a long term investor. Why would its parent want to sell this company away? The risk just isn't worth it.

Singpost recent rally

Singapore post's recent rally had gone up fast after Alibaba announced a acquisition of 10.35% stake in singpost. The news announcement came strategically 2 weeks after singpost release its positive FY2013/2014 results.

Its effort in the e-commerce sector had began to gain traction after it announced its net profit of FY2013/2014 increased of 2.9% as compared to last year and saw its cash flow increased by 14%.

My view to invest in Singpost at the current price of $1.645 may be too rash as the rally lasted for 2 weeks consecutively. The company showed promise with their transformation into the e-commerce logistics solution and i think that is the direction that should benefit investors in the long run as Singaporeans are big shoppers online. In 2011, a survey by Paypal showed that Singapore's online commerce grew 30% from S$1.1 billion in 2010 to S$1.4 billion in 2011.

Source: http://www.asianewsnet.net/Sporeans-are-big-online-shoppers-50429.html

My entry price for this counter should range around $1.10-$1.30 as the rally was a spark of overwhelming media coverage.

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.

Raffles Medical

Despite its property expansion plans, Raffles Medical still have the ability to grow its net profit and at the same time, finance its growth plans.

Its 2014 1st Quarter saw an increase of 8% in net profit after tax with a healthy cash position of $98 million. Its healthcare sector grew by 14.3% and its main revenue stream from hospital services grew by 4.8%.

This results in turn translates to Raffles Medical's ability to perform consistently, giving value investors a very positive signal for this stock.

I am in favour of the management's ability to grow the company in present and future.

Good mid-cap stocks have appreciated in value

Stocks like Centurion, Swissco Holdings, Nam Cheong, Penguin International, Pan United and MTQ Corp have risen in value over the past few months due to their strong balance sheet and strong fundamentals.

Penny stocks in particular have gained much popularity due 1000 shares per lot restriction imposed by SGX, making expensive blue chip stocks much less affordable by the public. Profit margins for penny to mid-cap stocks are higher as compared to expensive blue chips. Their price movements could be upwards but very slow like a turtle.

Although there are still good mid-cap stocks, but they are harder to find nowadays or rather have not appreciate in value until analyst reports about them are released.

Why DBS

Nov 2013
DBS sold its remaining stake in Bank of Philippine Islands for S$850 million to focus on key financial hubs like Singapore, Hong Kong. A realised net gain of S$447 million came from the sale.

Source: http://www.bloomberg.com/news/2013-11-12/dbs-sells-philippine-bank-stake-for-681-million-to-gic-ayala.html

Mar 2014

DBS redeemed preference shares early, returning $895 million. The returning of debt shows that DBS is in a financially stronger position for growth opportunities ahead.

Source: http://business.asiaone.com/news/dbs-redeeming-preference-shares-early-returning-895m 

At the same month of March, DBS had constantly been doing share buybacks of about S$5 million a month

My prediction of future occurance

Business Owners

According to tradingeconomics.com, Singapore's corporate tax rate in 2014 stood at 17% while US corporate tax rate stood high at 40%. 

Investors

Singapore do not have capital gains tax as compared to US. Fool.com states that for short term capital gains, taxes can go up to 39.6% while long term capital gains tax range between 15-20%. High-income tax payers in US, whose income ranges more than $200,000 or $250,000 joint filers, get an extra 3.8% on capital gains tax, which made selling or buying even more costly.

Dow Jones Industrial Average (Yahoo Finance)

Straits Times Index (Bloomberg)

Conclusion

It makes more sense to be a Singapore citizen to be an investor as no capital gains tax is being charged for buying or selling of stocks. Foreign investors are also not liable for capital gains tax in Singapore. Furthermore, the US stock markets are constantly on the upward trend with no sign of correction while the Straits Times Index suffered periodic correction. 

High net worth individuals in US might not like that tax system in the country and could avoid high taxes in US by becoming a Singapore citizen as they need to pay more taxes as a owner of a business and also an investor there.

I predict a correction in US stock markets as a result of higher interest rates and higher tax rates. The funds from selling could be diverted to Asia as stock markets here remain low, namely the STI in Singapore and also the rest of Asia (Hong Kong, Malaysia, Thailand, Vietnam, Indonesia, South Korea)

My take on falling yuan

In a scenario of a falling yuan can translate to profits from the Chinese government or even the investors in China.

Here's an example:

Chinese government and its investors make use of strong yuan to purchase strong currency assets in London or maybe Singapore. When yuan started falling, these assets translate into more yuan and thus become profits for the Chinese government and its investors.

A weaker yuan could also lead to a weaker rupiah as Indonesia needs to export coal to China. Singapore listed firm, XMH holdings could be affected due to reliance on the Indonesia coal exporting industry.

recent share buyback, SATS

SATS recent share buyback could indicate that the price is being under-recognized by investors. Its recent acquisition of Indonesia's key gateway provider could give itself a larger slice of the gateway pie.

Preparing for the next phase of growth

Both of Temasek owned shares are buying up stakes in companies that could set themselves up for the next phase of growth.

OCBC raises stake in bank of Ningbo from 15.34 per cent to 20 per cent, and is currently discussing on a possible acquisition of Wing Hang bank.

SATS, on the other hand bought 41.65% of PT Cardig Aero Services for S$118.3 million, repositioning the group to focus on growth in a country whereby demand for gateway services will increase, especially in a large country of islands separated by waters.

GLP, a rising emperor

2 of the the world's high growth markets namely China and Brazil had committed huge sums of investment as a sign of confidence in the growth prospects of warehouse leasing business.

A group of chinese investors which includes major players like Bank of China Group and private equity firm Hopu Funds will invest $2.35 billion in GLP. E-commerce in China is starting to bloom which saw in increased in demand for lease warehouses.

GLP Brazil Development Partners I fund, had raised an extra 538 million reals ($227 million).

Source: http://www.worldpropertychannel.com/asia-pacific-commercial-news/asian-warehouse-operators-see-influx-of-capital-demand-for-logistics-properties-global-logistics-properties-goodman-group-ming-mei-paul-mcgarry-8029.php

While GLP still had good valuations after a recent drop in share price from $3+ to 2.8+, it will not stay low at the level of demand for warehousing facilities. 

Top 5 undervalued stocks

Top 5 undervalued stocks

- Penguin International
Good balance sheet with zero or close to zero debts. Capable management to reduce cost and maximise profits

- XMH
Good balance sheet with zero or close to zero debts. Solid cash flow to have flexibility to explore greater growth opportunities.

- Falcon Energy
Its offshore drilling business is starting to rip the rewards and showing promise of further profitability. Demands for drilling rigs are expected to increase.

- Heeton
Constantly exploring joint venture opportunities and growing its recurring income portfolio

- Hiap Hoe
Good value with construction of projects and investing in value property portfolio overseas.

Why is it interesting to stay invested in sgx

In 2009 stock markets crashed when Lehman brothers defaulted on their debt and collapse, leaving many people with huge losses on investment products. People who invested in the stock market also saw huge decline in their asset value.

However, buyers from that period benefited a lot from the cheap asset prices and the rich become richer.

In 2012, the eurozone crisis cause a global decline in stock markets as Greece defaulted on its debt. Spain and Italy were also in a bad debt situation and these countries needed help from Germany, who possess one of the strongest economy in the world to revive them.

After the eurozone crisis, the fed brought out its money printing policy in attempt to recover the labour market in us and to bring about a faster global economic recovery. And by repurchasing bonds at 85billion a month, it kept global interest rates low for companies and consumers.

Low interest rates provided channels for cheap money to flow out of us into emerging markets and Asia, where the return of investments are greater. The prices of stocks also rise as a result of increase buying.

These events that happened around the world provided good lessons for me to relate with sgx and kept me looking forward to every market opening day in curiosity. Knowing that happenings around the world will affect the stock market every day will keep myself busy keeping up with the news.

I thank all readers for keeping up with my blog.

Have a great bullish day!

Higher correction, higher bull

What goes up must come down, and what goes down must come up. Based on historic records, markets had been acting on ups and downs.

What is set for a correction now, may be paving way for a bigger bull later. Interest rates are set to rise while the Fed started cutting back its bond purchases by $20 billion.

Property investors may face headwind ahead of rising interest rates, which means they have to pay much more interest if they are taking up huge loans. Same goes to property stocks as well.

However, there are no clear indications why markets are correcting now. And the fact that they are correcting means there are many good opportunities to pick up good stocks.

While interest rates are set to rise, try to stay away from stocks with huge debts, especially property counters.

Penguin International

Penguin International is a good stock to own. Their business includes designing, building, owning and operate crew boats and fast supply invention vessels. One of their strength is that they have zero debt and yet holding on to good cash flow which grants them the edge to invest or expand at a better position.

They delivered a strong 3rd quarter results showing profits 337.8% more than last year's. Their cash flow stood strongly at S$28.242 million, a decrease of 4.2% as of last year's.

The management reports that their core businesses continue to be key drivers for earnings for the rest of the year and expects to sell more crew-boats, secure more new-build orders ad increase offshore charter revenue.

Stick to fundamentals

Stock markets in US dropped due to the further tapering of bond repurchases by Fed from $75 billion to $65 billion.

The initial sum of bond buyback was at $85 billion and was cut to $65 billion, a decrease in $20 billion. The total sum of the repurchase efforts are estimated to be about $4 trillion, according to CBC news.

Source: http://www.cbc.ca/news/business/u-s-fed-to-taper-bond-buying-program-to-65b-a-month-1.2515564

Gold and silver prices saw themselves decline tremendously, even though inflation rates are rising. The safe heaven for hedging inflation did not prove to be useful in current economic trends. No one knows when or how the direction of the precious metal will go but it is like a waiting game to hold on to these sitting ducks.

Stocks like Singtel are still holding on to the strong resistance price of $3.5. M1 and Starhub seen their prices appreciated or maintained in good or bad circumstances.

Margins of safety

Sick to companies with low or no debts and good cash flows.

Growth

Banks or property counters with assets of highly scarce supply. However, it is a challenge to manage risks that comes with these stocks. Good or bad news will likely push the stocks up or down. Market prices are determined by investors like you and me and does not justify the true value of the stock. A good growth potential stock might be dropping in price but may rise higher in the long run.

Dividends play

REITS with good dividend yield and low net gearing ratio.

Top 5 blue chip stocks to buy in 2014

Comfort Delgro

It's expanding taxi fleet size in 2014 and furthermore, divested parts or fully its China, operations which was loss making.

SGX

Consists of 2 business components namely the securities and derivatives. By reducing lot size from 1000 to 100 shares, the volumes of securities traded may increase with more flexibility for investors to manage their funds. While share prices may be cheap now, people are still afraid of this strong blue chip counter with zero debts and payout of dividends via profits. Not understanding what is going on here but it is a safe company to be invested in with the current price of $7.

M1

Its recent results show a significant increase in cash flow which lead to the saying 'Cash is King', and opening more rooms for opportunity and growth for the company.

OCBC

Its recent acquisition of Bank of Ningbo and in a process of acquiring Wing Hang Bank for $5 billion suggests its major shift of focus to the China region where it sees huge potential growth for its business. Although its share price had seen itself dropping recently, it may see its profits rolling in after the acquisitions and synergy with the OCBC business. Not forgetting its highly lucrative Bank of Singapore parked under OCBC. The potential for this bank is huge, which also means higher risks involved.

Hong Kong Land

With its profits soaring while the share prices are dipping does not justify the value of the stock. Hong Kong was named by bloomberg as the best place to do business and while land is scarce in Hong Kong, the land and property prices will not be allowed to nosedive at the expense of the country. Although there is a possibility of it occurring, it is not of the interest of Hong Kong and the leaders to welcome such event.


Wish you all a HAPPY CHINESE NEW YEAR IN 2014 AND MAY YOUR PORTFOLIO HUAT MORE THAN 2013.

Cheer:)

Bearish STI

Although the Straits Times index had gone down quite a bit, i am pretty bullish on the Singapore stock market.

Firstly, i think that Singapore is a tax heaven for investors in the United States and they might flock here to avoid heavy investing taxes in their country. US citizens are taxed for both capital gains and dividends.

Secondly, interest rates are kept low to maintain a slow and constant rate of inflation in the country. A healthy rate of inflation will boost spending in the country because cheap money can easily be available.  According to Jesse Colombo, majority of the loans in Singapore comprises of housing loans and is in a risk of a a property bubble burst in a situation of an interest rate increase. However, since the recent property cooling measures by the Monetary Authority of Singapore, property prices have said to stabilise.

Source: http://www.forbes.com/sites/jessecolombo/2014/01/13/why-singapores-economy-is-heading-for-an-iceland-style-meltdown/

Lastly, prices are low now in view of the upcoming results announcement for the various companies. Interest rates have been kept low to spur growth. Property companies have ventures out of singapore to Australia and other parts of the world as land prices soar. OCBC seek to acquire Wing Hang Bank at almost twice its book value. Low interest rates might be helping these companies to expand to greater China where more growth might be.

As the STI index hit one of the low now, buying could be evident in many counters. This is a good time to buy because no major crisis had led STI to drop. Singtel, DBS, OCBC, Hong kong Land are a few counters that comprises in the STI ETF.

So much cheap money, why are we still holding on to cash.

Fed's bond buying program had reached $4 trillion worth in assets and they are not ready to stop yet. People who have not invested in the stock market may see their value of the cash or savings getting lower as commodity prices increase along with the cheap money floating around the world.

Source: http://online.wsj.com/article/BT-CO-20131219-710800.html

Next year, SMRT announced that they may increase fares to keep their business sustainable. This is an indicator of inflation.

Source: http://sg.news.yahoo.com/fare-hike-proposals-submitted--ptc-105820955.html

The amount of money printed is close to about 3 times of what they printed previously, erasing debts too much to be repaid. When debts are reduced, the banks keep the borrowing costs low for enterprises or state-owned enterprises to lend cheaply to boost economy. This could led to the increase in share prices across the world, but the only thing that does not change is the value of the currency and the fundamentals of the company.

Companies that take in more loans to try to increase profits may not be able to sustain. It is because when operation costs far outweighs the profit, no matter how much loan the company take to improve profit, in the long run it will still incur losses due to high interest rates and operating costs.

Therefore, it is very important to look at the past performance of the company. Fundamentally strong companies, with this historical excellent performance will continue to do well while weak companies will continue to deteriorate.

It is the same principle why the rich gets richer and the poor gets poorer.

There are still good deals out in SGX for grabs.

Tapering! Should i enter?

Should we as investors care about Fed's tapering even if stock prices has gone down quite a bit? Low interest rates has certainly improve earnings across companies. There are certain companies with low debts or rather no debts and still maintain constant earnings.

Tapering will only affect those companies with high borrowing rates and will affect less for companies with low or close to zero borrowings.

As economic outlook improves, tapering might kick in to maintain or improve the strength of the currency.

When it doubt do not enter the market, there are still uncertainties ahead and nobody knows what will happen next.

2 REITS have entered the Australian Market

AIMS AMP Capital Industrial REIT plans first Australian acquisition

Source: http://www.theasset.com/article/25629.html#axzz2lkKTuyag

Suntec REIT buys Sydney office tower for S$481 million

Source: http://www.todayonline.com/business/suntec-reit-buys-sydney-office-tower-s481-million

Australian's economic prospects

Australia's Treasury Secretary Martin Parkinson said it would be "prudent" to raise the legislated debt cap from 300 billion Australian dollars(US$282 billion) to A$500 billion, given a worsening economic outlook as the country grapples with the end of a decade long resources boom. But the Labor opposition, swept aside in September elections dominated by a slowing economy and rising unemployment, rejected the request, joining forces with the Greens party holding the balance of power in the upper house to block the move. They have offered to approve a A$400 billion cap on borrowing instead.

Source: http://www.nasdaq.com/article/australia-sees-grimmer-economic-outlook-amid-debt-row-20131120-00070#ixzz2lkPtQzXc

The increase in debt limit will means that inflation rates are set to soar in Australia while interest rates remain low which favored foreign investors, especially in the property sector whereby huge loans are required. The acquisition of Australian Property from Suntec and AIMS would also mean that they could be taking advantage of the low australian currency to make acquisitions which could profit or save the company money and these money could be used to pay the loan's interests.

When is a good time to buy?

I have no answer to my own question but i might be able to predict the period of dropping using graphs.

Let's look at 2 stocks that i might want to buy and based on a 5 year average determine the period to purchase the stock.

Color code indications:
Red - Aug-Sep
Black - Feb-Mar


HK Land

Source: Bloomberg

SATS

Source: Bloomberg

However, it does not always happen for all the stocks. It just happened that these 2 stocks show slight similarity in their drop periods.

Both stocks showed that their major drop in share prices happened between August to September.
It would be good now to wait till February to see if the tapering announcement in January really kicks in or will the Fed continue on their monthly bond purchases and keeping interest rates low.

China's hidden debt problem

China's shipping dragon rests where the Yangtze River flow towards the sea north of Shanghai, which was previously the rising nation's biggest private ship builder became quieter on a recent morning whereby China Rongsheng Heavy Industries Group Holdings Ltd's 38,000 employees went jobless as the the company struggled to stay afloat over the past 2 years. With 80% of the employees being sacked, the restaurants and shops serving them have since closed.

After accumulating $4.1 billion in debts, Rongsheng seeked a government bailout is a example of a company overly invested that have gone bust.

Source: http://www.businessweek.com/news/2013-11-18/credit-driven-china-glut-threatens-to-turn-into-bank-debt-crisis

Many of China's companies are facing these issues as the domestic consumption of the population remained low and bank funding to companies not being able to land in the correct place.

People of china sees property investment as the safest form and would save up to buy a property which have already inflated a bubble in the China's property market, therefore affecting domestic spending.

The company funds that were borrowed did not contribute effectively to the economy because of the lack of demand for products and services, but the CEOs and the directors were still being paid. These people became richer and those funds that they earned goes into other parts of the world while the company's financial position is in a bad state. This is one of a similar occurrence that happened during the Lehman Brother's financial crisis whereby bankers were so well paid that even if the company went burst, the employees benefited from it in the expense of the company.

The problem had been hidden by the China's government though, but when it became too big to be hidden, the financial world will take a huge plunge.

Suntec REIT buying an office tower in Australia

News of Suntec REIT acquiring an prime office tower to be developed in Australia for A$413.2 million cause the share price to drop ~2% on last friday.

A further 1-5% may be expected to drop next monday as this stock as the debt ratio nears 40%.

Although this acquisition is expected to generate more returns for unit holders, in the short term, will affect the group's net income as acquisition costs will be funded by borrowings. Coupon payments will be issued to unit holders during the construction phase of the tower to mitigate lower DPU.

Source: http://www.channelnewsasia.com/news/business/singapore/suntec-reit-acquiring/888214.html

Funds movement

Global fund movements might have caused the STI to be slightly weaker than it was suppose to be. Last friday, the Dow Jones  Industrial Average gained 1.08% while the STI dropped 0.78%.

More funds have been moved to the US in favor of the bond purchases by the Fed and  although investors are anxious about a taper in bond buying, they are still very positive about the US market. The continuous bull trend in the US might be causing a bubble that could burst anytime with a 5 year high Dow Jones, S&P 500 and NYSE. What goes up must go down.

If more investors get positive about the US markets, funds may be withdrawn from Asian markets as Asian stocks get more expensive.

Be on the lookout for some good deals in the STI if it continues to drop further.

Semiconductor companies report better earnings

Hi-P

Report quarter profit increase of 5.2%
YTD profit increase of 771.1%

Serial System

Report quarter profit increase of 35%
YTD profit increase of 40%

Source: SGX

These 2 companies may not be a good indicator that the semiconductor market will continue to do well in the next 5-10 years but is able to show some indication of a positive pickup in the industry in a short term perspective.

Likely market correction

China set up 3 yuan hubs in the top financial countries namely Singapore, Hong Kong and London as it reduces its US treasuries holdings. This happened chronologically after Obama administration warned the Congress of a possible US default on its debts in October, China reduced its holdings by $11.2 billion to $1.268 trillion in August.

Source: http://www.straitstimes.com/the-big-story/asia-report/china/story/more-offshore-yuan-hubs-no-fears-singapore-20131024

Source: http://www.globaltimes.cn/content/819847.shtml#.UmzZp5SkzaE

NYSE hit a 5 year high despite risks of a US default on debts and no signs of tapering of US monthly bond purchase. 

Source: Bloomberg

US markets are in their 5 year high and with the debts problem still unsolved. The risks of a correction are present but still not visible in the short term. 

Singapore markets might be affected by the correction if investors panic sell stocks.

Protecting your portfolio

Investments can rip high returns, and may also rip high losses. I started investing with a mindset of buying low and selling high, which sometimes can lead to high losses in the stock market.

The thought of buying low and selling high often traps investors, including myself into a value trap. A value trap means that the stock can be on a downtrend but the investor keeps holding the stock thinking that it will go up eventually after a crisis. But if the stock do not go up, the investor will risk better returns elsewhere because the current stock bought at an overvalued price did not get sold away.

Do not fall into a value trap while preparing for a crisis

While thinking of what to sell in your portfolio to prepare for a crisis, what have gone down in value cannot be ignored. Instead of thinking of the losses due to the sale, think of how much lower the stock will go in the event of a crisis. By changing the way you think, you can avoid more losses than what you have already incurred.

Protecting your portfolio

By having a diversified portfolio of stocks, you mitigate your risk of a single sector downfall and keeps your portfolio balanced. For example, in a diversified portfolio, you may see stocks spreading across a few sectors like 'services, finance, transport'. A financial crisis would likely bring the prices of stocks in the finance sector on a downtrend while the services and transport sectors helps to keep the portfolio buoyant.

Making prudent decisions

It is very important to make prudent decisions in the equities market because as what Warren Buffett said, "If you buy things you don't need, soon you will have to sell things you need."

This is what happen when 3 stocks, namely Blumont, Liongold and Asiaons plunged up to 80% after SGX suspended trading on them. They are highly speculative stocks and anyone who bought it at a high price will soon realised that they are holding on to huge paper losses.

Even when the prices have dropped tremendously, people still think that the stocks are undervalued. and there are no indicators or rather unknown indicators of its future growth prospects.

Although the temptations of a 'buy low sell high' mentality is strong, i would like to remind myself to be prudent in investing and of what Warren Buffett said.

Correction risks and knowing where they are

Nasdaq Composite Index at 5 year Highs

Source: Bloomberg

New York Composite also at 5 year high

Source: Bloomberg

STI not belonging to a 5 year high

Source: Bloomberg

Conclusion

The US market is likely to correct as it has gone up to a 5 year high. Stocks had been rallying at a steady pace even with the government shut down. Investors are still optimistic that the continuation of QE will bring about better profits for businesses and are not worried about the impact of the government shutdown.

 STI still have correction risks, but the government are still running without major problems. The economy is growing, although at a very slow pace.

Taking the story of the race between a fast but complacent rabbit losing to a small but steady turtle can be used to describe how long term investing can win the race by placing assets in a slower growing market and avoid the risks of complacency which might lead to a major stocks correction.

SGX Stocks Starter Kit

The image above shows a starter kit provided by myself for initial investments of up to $25K. The rational for this starter kit is to help people who do not know about investments to get started with some of the good stocks i've picked up over the years.

A diversified portfolio helps an individual to hedge against risks across different sectors. This starter kit will help to kick start a fresh equities investor and journey him to finding the best mix for himself in future, with good returns yet protect against the downfalls of the stock market.

*note: Invest at your own risk. I will not be responsible for any of your loses or winnings.

Cheap outdated electronics caused by QE

With the continuation of quantitative easing in the US, inflation as a whole will rise and that will force growing countries in Asia to strengthen their currencies against a weaker USD.

Food prices, fuel prices will rise as well as transportation costs. The medium income group which i call the savers group will be badly affected by this.

On the other hand, the IT geeks are able find great bargains from IT products as the electronics sector are facing an overwhelming supply of products in the market. Technology companies compete very fiercely to innovate and push out better products.

Consumers, on the other hand are also sitting on the addiction to upgrade their products. The electronics second hand market is facing a problem of over-supply and people are all-time ready to sell their second hand electronics to upgrade to a better model.

The second-hand markets are filled with bargains or cheap electronic products as people seeks to upgrade their model.

There could be other sector that may be affected by this, by i think the most visible market to me is the electronics market.

SGX breaking into the China Market

SGX yesterday announced that it had signed a memorandum of understanding with the Bank of China to develop RMB products and services and expand the exchange business in China as well as helping the Chinese to expand their products in Singapore.

Singapore is a small country and it is tough for SGX to grow its securities and derivatives business in the region. Given the largest population country like China, SGX is able to leverage on the population numbers to better grow its business. 

Furthermore, companies in China still lack good corporate governance and locals seeked to park their cash elsewhere. SGX, as Geoff Howie, market strategist at SGX, explains that SGX remains one of the most diversified exchange in the world perfectly caters for the people in China, who are in search of companies with better corporate governance and good returns on investments.

Fed Delay Taper, So what's next for the market?

Fed's decision to taper was because unemployment rates were still high. However, cheap money does not seemed to flow to where it is suppose to flow. According to Bloomberg, the QE saves companies such as Verizon, Apple and other companies about $700Billion in interests payments. However, it does not seem to effectively bring the jobless rate down.

What is seen is that stock markets are rallying and companies are able to lend cheaply to expand business. This can lead to a bubble when some companies spend the cheap loans on bad investments, and later not being able to pay back. Another scenario can be as such that companies took advantage of the cheap loans to borrow excessively, without concerns of being able to pay back and when interest rates hike, these companies default on their payments.

These two scenarios are likely to bring about a great correction like the Lehman Brother's bankruptcy back in 2009. And this time it could be bigger because this time the target audience are companies instead of the local public. The companies with good management and strong cash flow will inevitably benefit from the QE in the long run.

Therefore, right now the good investment opportunities lies in the US.

What about Singapore stocks? 

The cheap money continue to flow into Asia by spurring US companies spending and currencies has to be strengthened to control inflation growth.

Stocks will likely to grow at a slower pace, as spending power is dispersed within the Asian region. I expect to see healthy and steady growth in the Singapore stocks. STI could go up to 3,300 this year, but looking ahead, tapering could set in a major correction in the stock market. Now is a good time to offload stocks which are heavily in debt, and then buy back when STI retreats to 3,000.

Companies with solid fundamentals and remains low and or zero debt position will bear sweet and juicy fruit in the long run.

Source: http://www.bloomberg.com/news/2013-09-17/bernanke-saves-companies-700-billion-as-apple-to-verizon-borrow.html

Hafary paying out 29% dividend

They supply flooring tiles to the Singapore market by importing from manufacturers located around the world.

Such companies do not produce good cash flows, but this time they are paying out a dividend yield of 29%. Such a huge payout may not be sustainable for the company to grow healthily, but if they are able to consistently grow, then i think it is an attractive bet.

But for now, markets are cautious about the bond tapering which is expected to happen this month. I will be cautious about it too because when markets fall, fundamentals will not work on those who deal in large volumes.

SATS, stable recurring income

SATS two main stream of incomes lies in its gateway services and food solutions.

Its gateway services operate in Changi Airport and Marina Bay Cruise Centre which are the 2 major tourist stopovers.

Their food solutions served mainly the Airline catering and also SFI, which feed the soldiers in Singapore every day.

These 2 businesses experienced high daily traffic and deemed to supply the company with stable recurring income in the long run.

Sgx on google finance

Sgx had finally listed their counters on google Finance which is excellent for the business as it is able to attract more global participation.

Sgx had quietly been growing it's business for the past few years and is slowly reaping better net margins.

It has also managed to attract China investors by introducing RMB currency in one of the its counter.

Prices had gone up for sgx after hitting its low at 7. Nevertheless, as it increased it dividend payout over the years while maintaining a zero debt position, it will be one of the safest blue chip to acquire.

Growth in China's food consumption

I spent my last long weekend in China town today. The crowd consists of mostly tourists with restaurants charging a premium for tourism eats, and stores selling China souvenirs ranging from Chinese paintings to calligraphy brushes and signature stamps made from jade.

Indeed the place really looks like a mini China, with all sorts of China-related products and also the shop houses were well preserved to bring out a historic look.

Since i came back from my China exchange in Beijing back in 2008, i had never tasted food that I tasted in China until i came across a Chinese food shop house. Looking at the amount of food the people ordered and the tongue curling accent, it appears that the place was operated by a native chinese. 

I ordered some pork belly and beef bbq sticks and they tastes exactly like the ones in China. Very tender and tasty with flavoring powder added to them.

It was a great meal and my stomach was filled to its brim. The price of the food was reasonable and the portions were more than what i expected.

Now going back to the growth in China's food consumption, the people dining over at the restaurants have big appetites because i see them ordering a lot of food. The fact that almost all the customers in the restaurants had filled up the dining tables tells a little bit about the pace of food growth in China.

In fact, back in 2008 when i was in China, people also ordered food generously especially with friends or family. 

The food is spicy and sometimes oily, and beer(Tsing Tao or Harbin Beer) goes along well with their food. 

About 2/3 of their food comprised of vegetables which were used to add into dishes as flavourings or purely vegetables for consumption.

There is a china listed stock which produces vegetables and markets to Asia, Europe and US. Trading at a PE ration of 3.8 and net Book value of 0.7 gives a stock a very good value. However it had yet to pay dividends to shareholders, but the price of vegetables will increase given the rising food consumption, and also the lack of farmers in China as more people in the village seeks to urbanize in developed cities in search for a better life.  

Below is the products produced by China Minzhong: 

Shareholder's member card

"As a token of appreciation for the continued support of our valued shareholders, the Board of
Directors of the Company is pleased to announce that the Company will be giving a Privilege Card
(the “ST Card”) to its shareholders. The ST Card shall entitle the shareholders, their family members and friends to a special room rate and 10% discount on food and beverage at our Nantong and Suzhou hotels.

Hotel Room Type Rate

Nantong Santeh Hotel Deluxe Standard Room with breakfast for one RMB410 per night
Suzhou San Teh Hotel Superior Standard Room with breakfast for one RMB398 per night

Shareholders whose names are registered in the Depository Register and Register of Members of the
Company as at 5.00 p.m. on 31 July 2013, including CPF investors will be entitled to the ST Card."

Source: http://infopub.sgx.com/FileOpen/Privilege_Card_for_Shareholders.ashx?App=Announcement&FileID=249014

This is the first of such initiatives i've seen to provide shareholders with benefits.

Cheaper Suntec REIT, but is it worth buying?

Source: bloomberg

Suntec REIT currently have a NAV of $2.03 and priced at $1.53 on 20 Jul 13, Fri. However, gathered sources reveal that it had one of the most expensive management fees in SGX REIT section, and also had stopped receiving income support for its One Raffles Quay (ORQ) property. Management blamed the 4.7% fall in DPU on the partial closure of Suntec Mall and Suntec Singapore for enhancement works.

Source: http://www.todayonline.com/business/suntec-reit-posts-47-fall-q2-dpu
Source: http://infopub.sgx.com/FileOpen/Suntec-2Q2013-Presentation.ashx?App=Announcement&FileID=248407

Suntec REIT might be affected by the possible hike in interest rates in the future, However, with the basket of good portfolio assets, it may become profitable in future when its Suntec assets reopened fully and is able to extend the lease of the current office tenants which lease is set to expire in 2013.

Apart from that, it is also able to benefit from the increasing office rates, especially in key CBD areas in MBFC and OFQ

Manipulating the stock market

Ben Bernanke had once again manipulated the markets with his speech on continuing the $85M monthly bond purchase which he previously hinted a possible tapering in purchases.

Stocks across the world rallied on the comment, but despite the rally, the euro zone crisis is still not over and interest rates are quietly rising.

Source: http://www.forbes.com/sites/robertlenzner/2013/07/12/how-bernanke-manipulates-the-markets-in-3-easy-steps/

I still think that there are downsides to the market sometime around mid 2014 due to the forecast of bond tapering by Bernanke and markets will still continue to be on the uptrend for the next few years due to inflation caused by bond purchases.

Banks are a good bet against rising interest rates and stocks with low borrowings as higher interest rates affect profit.

Investing in SGX

There had been much volatility in the stock market this week and stocks were moving up and down in anticipation of the Fed's announcement to the tapering of bond purchases in the US.

Portugal's economy was left in a mess when two ministers resigned from coalition government. Stocks around the world plunged in reaction to this incident, causing more uncertainty looming in global equities.

I was prepared for a crisis, seeing SGX plunged from a 6 months high of $7.8 to $7.03 on 28 June 13. And furthermore SGX, reported higher revenue and net profit amid a 10% drop in price. A 10% drop in price does not justify the strong performance of SGX, which is the sole leader of equities and derivatives products in Singapore.

Source: Bloomberg

Genting SP in a difficult position

S$9Billion in debts (bonds) + S$2.5B secured loans

Their total debts make up to about 11.5B. and they managed to pay back S$122M first quater this year and at most S$488M this year.

They are still left with S$10.512B of debts to repay plus bonds interest payout of 5%, which make out to be about S$45M per quarter.

To hold or sell will be your choice to make. Good luck :)

Correction underway

Embrace the bear and enjoy the ride later!

Very unpredictable market

The recent drop of STI suggests that investors are taking a very cautious approach to the reduction of QE by the Fed, ignoring fundamentals of good stocks which are making money as stated in their financial report.

One thing for sure is that the next announcement by Ben Bernanke will affect the market movements on the direction of further QE.

If the Feds decide to stop QE, the market is pretty sure to hit the bear stance and start dropping as most investors will anticipate a huge drop in the market. A Ben Bernanke's exit may direct markets as well.

Fund managers are on standby with cash to seize the great opportunity when the markets start dropping.

Hope i have enough cash to size the opportunity, so can you. In the meantime, be cautious with stocks and hold some cash for the GSS.

Good luck people :)

STI down! Don't panick.

The STI had been performing badly these few days and a lot of red numbers are coming up from the SGX website.

US was upgrade to stable by S&P, and Japan upgrades its economic outlook.

Source: http://www.reuters.com/article/2013/05/20/us-japan-economy-report-idUSBRE94J00S20130520

Source: http://money.cnn.com/2013/06/10/news/economy/sp-u-s-credit-rating/index.html

Both of them are good news but despite that, it still is not able to push up the markets. At current situation when the market is selling, most people out of fear, will start selling as well.

"The market is there to serve you, not instruct you" as stated by Warren Buffet.

Be determined and stick to your decision.

Good luck

Bears are tired while Bulls attack

The Straits Times Index dropped from a 5 year high of 3600 to 3300 in two week period. Blue chip stocks like ST Engineering and GLP see some fluctuation in stock prices. However, the tide is turning around with some good news.

Spain's economic position improved as it sees better export numbers.

Source: http://www.bloomberg.com/news/2013-06-03/spain-s-crisis-fades-as-exports-lead-the-way.html

This correction period could be a good chance for investors to buy stocks. A further bull run in future may occur as interest rates around the world remain low. 

Good luck to all investors.

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.