Tuesday, 30 November 2021

(November Results) How i would invest in the singapore stock market if i had 100k of spare money

 





November 2021 Returns: -1.57%
Year to Date Returns: 56.29%
Since Inception (9 Sept 2020) Returns: 72.51%


Time for changes?

The end of the month has presented an unique opportunity as the new variant seems to have split stocks apart.

We are back to the general market downturn along with the Covid beneficiaries coming back again.

However, i have decided to not make any changes as i believe that the mid-long term investing still holds for the portfolio. That is after reviewing the results of companies in portfolio.

TC Auto is a company i have considered to switch some shares into this newly listed company. However i have given myself another month to think about it and to think on a broader scale for 2022.

Results of companies.

KSH (1H FY 2022) - Results Acceptable, projects still unprofitable but mitigated by rental income, developmental profit recognition. Gaobeidian project remains the long term value to be unlocked.

Powermatic Data - Interim Dividend a pleasant surprise. Results remain stable.

Propnex - Q3 result seems to have slowed a little vs Q1 and Q2 but this year remains a strong year and with covid backdrop, properties remain something that 1 can look to upgrade on and demand in theory is still there.

UMS - i think results are ok, semi-conductor story still plays out.


Monday, 29 November 2021

Why you should avoid Digital Core REIT IPO

To start off, this is just an alternative view amidst the recent hype and optimism seen from some financial bloggers.


As such, it will be mainly talking about why you should not apply for the IPO

1) Poor Rental Revision Rates

(Most expiry coming from FY 2025 onwards)

From this image, we can tell that the rental revisions are at an average of 2% each year. Which assumes that revenue would increase at around 2% each year assuming occupancy rates are the same.

With less than 1% of rental expiring in FY 2022 and FY 2023 combined, a new revenue increase by rental revision if any will have to come in 2024 and that would be 14.1% in FY 2024.

While this figure is an increase, it is just not attractive enough given that things will be stale again next year. 

In fact, they forecasted a roughly 2.5% increase in revenue in 2022 and less than 1% increase in 2023.

(Assuming 100 million in 2021. Growth is low at 2.5% in 2022 and <1% in 2023)

In terms of revenue, Digital Core has recorded an increase of revenue of 1% from 1H 2020 to 1H 2021.

(Increase of 1% from 49 million to 50 million)

In contrast, when looking at Keppel DC Reit, it has recorded a 9% growth in revenue from 1H 2020 to 1H 2021. 

2) Poor Return of Assets of Data Centre

The appraised value of the data centres are at $1.4 billion. 

Whereas, net property income came in at $32.1 million in 1H 2021. This equates to $64.2 million on a full year basis and translates to a return of asset of 4.58%

Drawing out a table of comparisons against other companies, lets see how well they did

Company

Return on Asset

Keppel DC Reit

8%

Sunevision

6.2%

MIT US Data Centre Purchase

2.4%

While it has a better return of asset against the MIT purchase, it has to be said that it loses out to other peers in the industry. 

Although 1 might argue that we are comparing US with DC Reits with other countries, i would like to point out that a higher ROA would be better in giving a better blended yield when mixed with leverage.

3) Expensive Fees

For 1H 2021, Digital Core Reit incurred Manager Fees of $4.729 million. 

This is roughly 14.6% of net property income and 9.36% of revenue.

In contrast, Keppel DC Reit incurred Manager Fees of $11.827 million in 1H 2021.

This is roughly 9.55% of net property income and 8.75% of revenue.

As such, we are paying higher fees for lesser growth and flat revenue. Totally perfectly bad.

4) Poor record of US Properties related listing on SGX

In my mind, these names come to mind when it comes to US related properties listing in SGX. 

(a) Eagle Hospitality Trust - IPO Price 0.78 , now its bust

(b) Manulife US Reit - IPO Price 0.83 , now its 0.71

(c) Prime US Reit - IPO Price 0.88 , now its 0.82

(d) Keppel Pacific Oak US Reit - IPO Price 0.88, now its 0.75

(e) United Hampshire US Reit - IPO Price 0.80 , now its 0.67

As such, i do not have high hopes for such US Reits/Trusts listing in sgx.

Conclusion

The listing of a US Reit has taken the Singapore by storm being the talk of a town as it is a data centre listing.

However, some simple analysis shows that the reit comes up very poor in numbers. In fact i think that the seller is getting a good deal.

Keppel DC Reit trades at a PE of 22.36 while Digital Core Reit trades at an implied PE of 28 upon IPO.

In light of certain positives that has been pointed out by others, this to me looks like a really bad deal. 

I was really hyped for this IPO but i guess i will be avoiding it after all.

Thursday, 25 November 2021

Earning Kopi Money via Temasek Bonds

 






The Temasek 1.8% Retail Bonds made its debut on markets today (25 November 2021). 

For the public tranche, everyone who applied is allocated some of the bond with those who applied $13,000 and less getting full allocation.

The allocation this time is good.

It closed at 1.01 according to SGX and this translated to a 0.8% - 1.1% gain depending on which price one has sold at.

I have applied and sold the bonds to earn some kopi money which will come handy as my friend is seemingly not leaving his job by this year and i have bet a cup of kopi that he would....so this bond sale would have allowed me to standby the kopi money first.

How did I derive at the decision to apply for the bond?

I followed the comment found on a local forum.



As the comment is relatively fair and the ssb rates are truly well below 1.8%, i think that the chances of it opening underwater is relatively low, which is why it would be worth the risk.



Tuesday, 16 November 2021

Single Largest Equity Purchase this year (so far)

 

After taking a break to consolidate my thoughts and my stance towards investing, made a couple of changes to my portfolio. 

Surprisingly, i have made my single largest equity purchase this year it was a stock that was not even on my watchlist before the hiatus. 

However, i guess i have decided to go bonkers to take some risk that is unwarranted for.

(Praying that things will work out)

Details about the Counter

SGX Stock (Lol i know, its the boring sgx again)

Market Cap : Less than 100 million SGD (Lol i know up to trying to play small and micro caps again)

Industry: According to SGX, it states automobiles & auto parts as well as tires & rubber products but actually to me its more of property development as the main business and there are other side business such as selling industrial goods.

Profitability: Unprofitable since 2019.

So why did i purchase the counter?

1) Company has net cash that is around 60% of its current share price. Alongside a price to book value of 0.58, i would say there is value. However i know what jokers will say, its a value trap. 

Obviously i did not buy the share thinking of 2x or 10x or 5x., if you are then you should stop reading and start searching on youtube for multi bagger videos.

2) Company is giving out 2 subsidiary shares for every 3 shares held. Hence 1 share is entitled to 2/3 of the subsidiary shares. Probably by now if you know about it you will know what company it is. Though i will also say it at the end of the post. What makes it interesting is that the net cash calculation in point 1 does not include these shares. 

Hence based on the trading price on 16 November 2021, the 2/3 of the share that is to be awarded + the cash in the coy equates to 119% of its current share price.

As such i am getting the other businesses of the company for free.(Though they are unprofitable as mentioned earlier)

3) Company's new business scope offers some sort of prospect. The company is expanding into affordable housing projects in Malaysia. Considering that these houses are for the B40 (Bottom 40%) of salary of Malaysians, these houses are selling for very cheap prices of around 100,000 rm to 200,000 rm. I have looked at Lagenda Properties Berhad, a major player in the affordable housing projects in the industry and concluded that this business scope is do-able as there is demand for it and the main difficulty will be in individual companies attempting to keep the construction price low. 

The CEO of Lagenda Properties Berhad is also bullish of the affordable housing projects in Malaysia (Not sure which CEO would not be bullish in something they are investing more in) and said that net profit after tax margins of 20-25% is possible. However it takes time to build the houses. The good thing would be that the land is very cheap for these projects and as such it is not as capital intensive as 1 might imagine about in conventional property development.

4) Turnaround in the subsidiary company (the company whose shares to be given out). The subsidiary has been in my watchlist since 2019. However i was not confident on pulling the trigger because of company events that has happened to the company such as funds being frozen and i could not see their diversification strategy working out. However, its latest result offered some glimpse of hope that a turnaround could be possible. 

Firthermore, their secondary catalyst(everyone's favourite word except when talking about transfer to catalyst listing) has finally shown some traction having been talked about since 2019. I was surprised that on the following trading day after the announcement came out, the price showed only a small upwards movement on small volume.

The second catalyst is actually a land surrender back to the China authorities. 

(Book Value is 8.4million RMB, cost at 329 rmb/sqm 
Management's obtained valuation is at 2707 rmb/sqm
Which is around 8 times of book value)

Of course based on the image above, the estimation is that the fair value of surrender should be around 8 times of the book value of the land. Which equates to around 67 million RMB. This equates to a cash amount of 14.22 million SGD, or 61.4% of its current market cap. 

Unfortunately, the government has decided to offer only 42.9 million RMB. Which is around 38% of the market cap. As such, it is undecided if the company will renegotiate but a decision will be out in less than 30 days.


Adding to a 3rd quarter result that the new business (loans and factoring in Malaysia) has shown some profitability due to increased revenue. It becomes more compelling.

(3Q Turnaround)
(Increase in Scale and turnaround in Financial Solutions)
(3Q a significant pickup in revenue and contribution to bottomline 
as it only made 901000 in 2Q while in 3Q its 2826000)



I have the belief that with the economy in Malaysia starting to pick-up due to reopening, the risk of defaults should start to drop and this would allow the financial business to be less prone to default risk. Although this belief is as flawed as me believing that my salary at least earning 3500 now but I ended up at a much lower level currently.
(Balance Sheet)

On a balance sheet level, the company has 65m cash and 71m receivables (due to its loans and factoring business). 

If we were to be a noob analyst and take the receivables and pay off all the liabilities. We get 65 million rmb of net cash and add the 42.9 million rmb from the surrender of land, this equates to 107.9 million rmb or 22.89 million SGD

This equates to 98.8% of the market cap. Alongside a turnaround business, the above factors convinced me despite the many problems the company has.

What can go wrong? *Thinking out loud*

1) Money frozen again by the subsidary company.

2) Negotiations go wrong and a bad offer is given.

3) Defaults in the loans business

4) Affordable Housing turns out to be unprofitable due to poor project management

5) Sudden change in unpredictable events resulting in the shares of the subsidary not being given out.

Revealing the Company

(GRP Limited SGX: BLU)


Revealing the Subsidary Company

(Luminor Financial Holdings Ltd formerly known as Starland Holdings)

Just to clarify in case the post is as confusing as it intended to be i bought into GRP Limited.

Wednesday, 3 November 2021

Personal Update (Taking a short break)

 

I will be taking a break from updating as my favourite k-pop group has disbanded.

Usually at the start of the month, there would be more post. However for this month its highly unlikely there will be.

I will try to update my thoughts on Uni-Asia 3Q Corporate Update if i am feeling much better when the operational update is released.

Have seen the shares drop around 9% today. To be honest i am not feeling anything as most of my pain is towards the disbandment of my favourite group.

(Thanks for the amazing time and memories i had since 2019 March. It accompanied me to walk out of my 2018 depressed state)

(Going Korea in 2019 July was probably the top few decisions i made since 2019.)

(A clip of a song performed during the concert then)




I was much poorer financially then. But i was much happier then than i was now. Sighs such is life. 


Friday, 29 October 2021

(October Results) How i would invest in the singapore stock market if i had 100k of spare money




October 2021 Returns: 3.39%
Year to Date Returns: 58.77%
Since Inception (9 Sept 2020) Returns: 75.25%

October Returns are decent, Uni-Asia pulling in the returns while main detractor is Ifast.

Thoughts on Ifast Results

-Q3 is not as good as 1H 2021 results, however still beat Q3 2020 results.

-Guidance given for 2024/2025 from Hong Kong MPF is very very outstanding and has beat street expectations. However the share actually went up in trading hours on the morning results was released before closing at a negative gain and this momentum continued on for the next few trading days.

-Personally i feel that this injection of eps is still very far and as the chinese saying goes 远水救不了近火, in english it means that distant water does not put out an impending fire. The concern will be to grow its AUA and ensure that it gets revenue improvements. With the introduction of buying funds on apps such as Moomoo, competition has started to get much tougher. 

-I believe the key straw will be whether Q1 2022 is able to improve a huge amount compared to Q1 2021. 

With that there has not been any other results to review, though in November, there will be a few updates/ results releases upcoming.

-KSH Half Year Results

-Powermatic Data Half Year Results

-Uni-Asia 3Q Business Update

-UMS 3Q Results

Something to mull over as well is if there is need to conduct a shakeup of the imaginary portfolio. 





Thursday, 14 October 2021

[Crap Post] 2 Investing Thoughts i have recently

 

To start off, the post will be offensive to certain people who are reading it. Hence if you cannot afford to be offended then please refrain from reading further.

However, if you feel that you might have been offended after reading then i truly apologize.

1st Investing Thought (Least Provoking)

Pacific Basin 3rd Quarter Trading Update (Hkex 2343)

Pacific Basin released its 3rd Quarter Update on 13 October 2021. Details can be found here

Just in case you have forgotten, Pacific Basin is a company that operates dry bulk, mainly in the Handysize and Supramax segment. It is the largest listed company for Handysize.

The rates for 3rd quarter results came in to be widely in-line with my own expectations. The rates have always been lagging the spot market this year due to lag time. This is not an issue as in the event a down market happens, the rates would have reversed.

(Handysize coming in at 29k for October but Spot is around 30k)
(All in all still the best quarter seen in last 13 years)


How about earnings? In one of the slides Pacific Basin has shown how to model their earnings and used an example of September 2021. The underlying earnings came out to around 90 million USD for September 2021. Based on my estimations, the earnings should be around 235 million USD for Q3. To put into retrospective, earnings in June 2021 came in at 53 million USD. Hence it is an improvement of 69%.

This means that assuming such numbers hold and do not improve, full year earnings should come in at 1.04 HKD. With 0.78 HKD of earnings coming in 2H. Do note that this is a very conservative estimate.

As as result the current price will indicate a PE of around 3.4. If the 2nd half earnings PE are used then it would be less than 2.3. Of course this would be a rather bullish estimate because usually the 1st half of the year is a traditionally weaker part of year for dry bulk.

Random Person might ask: So u talk so much cock liao. Can buy or not?

Broken Answer: Yea can buy, but can make money? i think chance of making money is there but risk is high lor where got so simple make money.

A more proper Answer: 2023 will be a new ball game for dry bulk with rules of lower emissions which means that speed of vessels will be slower. This will benefit newer vessels that emit lesser. There will also be a need to customize older ships or to replace them all together. 

The supply of new-built dry bulk remains low when compared to the previous such peak of 2008. The covid problem and supply chain disruption remains strong. Winter is coming there will be increased usage of energy. 

I believe rates of 2022 will be lower than 2021 but not much lower. Then in 2023, rates would likely sustain compared to 2022 due to the rules. If such theory applies then the PE is probably too cheap especially when considering that the average age of its fleets are 12 and 10. Which means that they can run for more years as average fleet duration is 20-25 years. Even if they are not being run, they have a resale value which has been increasing this year.

(Black Line refers to 10 years Handysize.)
(Price increased from around 7.63 at January 2021 to 15.43 in October 2021)

2nd Investing Thought (More Provoking)

Sir, are you a troller, investor or an opportunist?

Recently someone sent me a link to attend a Uni-Asia Presentation held by Maybank on 4 October 2021. 

(Ok sounds interesting, lets register and see what they say)


Unsurprisingly that Maybank had such connection as they were the ones who did the private placement back then in 2019 for Uni-Asia.

(Fun Fact: Investment is spelt as Investmet)


I chanced upon a question asked by one of the participants. I did not manage to capture all questions asked by this person but he probably asked closed to 10 or even more questions.





From the way of the writings, he/her is probably from a group or a company or some clandestine alliance. As anyone know from zoom, you can register any name u would like from Donkey Kong to Mario Kart to Andy Lau hence the name does not really matter.

I took offense to the suggestion of share buy back up to 3% every 6 months. Well it is not a bad suggestion when first looked as it increases the share price due to the increased demand. However, i am unsure if you are a troller/investor or an opportunist.

As a troller you would probably want to troll the management whenever u have the opportunity to interact with them. Hence you would throw such a curve ball suggestion. However, such suggestions should be tabled during board meetings or during agms. I believe an info session is not the best way to show such question. What would other attendees think? Idk. It would be better if you have emailed the investor relations or the company this suggestion even if it is correct.

As an investor, i would want to see the company grow. Of course, share buyback is good, but for a company that has made only profit in 3 of its past 5 full FY, are we jumping the gun too quick with a buyback on the back of a decent 1st half result?

I would be more happy if the returns are in the form of dividends and the profits can be used to generate future growth as an investor. After all, if the company is really worth what it is worth, the value will be reflected in long term whether via capital gains or dividend distributions

(Company actually lost more money than made money in last 5 Full FY)


As an opportunist, you would usually want to seek for a catalyst. Unfortunately there has been no catalyst so far apart from a rosy business outlook for the company which is not a catalyst. 

Therefore we need to create a catalyst so share price rise and a lot of people wanna rush in to buy then we can happily dump to the kumgongs as we have loaded plenty previously at lower prices. 

All in all, i just feel that the suggestion has been tabled at the wrong place.


Lastly to end of on a more serious note, the average age of Uni-Asia Dry Bulks are 8.6 years. 

Albeit a lesser operating scale compared to Pacific Basin, Pacific Basin with 13% Handysize ships in 20+ years and an average age of 12 managed an average of 24,350 charter rate in 3Q 2021. Hence as mentioned in 1 of my previous post, i would be disappointed if Uni-Asia did not hit at least 20k in 3Q 21.