Saturday, 8 June 2019

Uni-Asia 1Q results post-briefing review- Look forward to the dividend after 2Q 2019

Uni- Asia posted its 1Q results on 15 May 2019 and held its briefing on 30 May.

Will jot down the key takeaways as well as my thoughts about the results.

Shipping Sector

-As per weakening sentiments in the dry bulk rates, the revenue came in lower and 2 of the spot rate ships were originally part of a pool of ships that were under the management of others for charters. That arrangement did not yielded results that were expected by the management and were changed to a model index linked charter to the BHSI. As most of the ships were under long term charter, the results remained decent.

-Looking at the dry bulk rates up till end of May,  i think the charter income should come in at worst case of -10% to 1Q 2019 results. That should still mean that the segment is profitable. Though the key factor affecting revenue would be how much improvement the change in ship arrangements would bring.

Maritime Asset Management Sector

-Following repeated fair valuation adjustment downwards in 2018, there were no adjustments in 1Q 2019 which is a plesant sight. Furthermore, the total investment on the books has been reduced to 5 million USD from 5.8 million USD at end of 2018. This is due to a return of investment of 1 million and recording roughly 200 000 as seen in investment returns. All in all, the risk exposure has reduced which is good to hear.

-Though a key concern would be still how expenses are above the charter income even though it has come down a lot.

-This part of the business is hard to estimate but i do hope that they continue similar results throughout the year.

Property Investments (Ex Japan)

-The 2nd project (CSW 650 also know as China Shipbuilding Tower), an office building in Hong Kong still has 2 floors of 'profit' not recorded yet. They have been sold and would likely be recorded in the 2H 2019. The estimates of the amount to be obtained is probably 5-6 million before fees involved in the partnership.

The estimates of proceed do not fall short of my own layman estimates as well.
Given a ballpark conservative estimate of 4 million in the 2H, this would equate to roughly 6.8 cents sgd.

-The 3rd project (K83), another office building in Hong Kong is slated to complete by 2019. According to management, it seems likely that some gains would be recorded this year. Having made a convenient trip down to proof read my eyes that the building does exist and match to the photos seen in the presentation slides, i would say that it is more than likely this building would be completed this year.

Both projects would likely be a key driver in the dividend for 2H 2019 should there be no recognition in the 2nd quarter.

Property Investment in Japan

-Results mainly boosted by a one-off sale in Feb 2019 of Hotel Vista Nagoya Nishiki, which is not a surprise as it has been mentioned in the annual report of Uni- Asia as well in previous posts following takeaways of the AGM. Following which there are no hotels that are owned by the group, which means that such one-offs will not happen.

-Notwithstanding that, 3 Alero projects were sold in 1Q 2019 and had contributed to the bottom-line. Though 2Q would likely see only 1 project being sold and should have a lower contribution from this segment.

Vista Hotel Management

-Having gone thru the new lease accounting, it is estimated that roughly 2.4 million USD would be added to the expense this year due to the new accounting rules.

-The figure would likely come down only from 2021 onwards, which means 2019 and 2020 would likely stay high due to more new opening of hotels in 2020 as well.

-Profitability of the hotels business would be a loss of 100k-300k if the accounting rules been not counted.

- A pleasant sight would be an improve in occupancy rates despite a higher hotels operated and it has been guided previously that 1Q is usually the worst quarter for its hotel business.

-With the golden week in Japan, 2Q would usually be stronger and it remains to be seen how the results come in.

Personally i would still estimate the hotel management side to record a loss this year as a result of the leases expense.


-2H 2019 should be better than 1H 2019, on the pure basis that the recognition of profits from 2nd and 3rd project in Hong Kong

-Cyclical nature of shipping sector affecting bulk rates is a factor not in the control of the company.

-Hotel Management occupancy rates improving.

-I would look forward to the mid year dividend. If asked to estimate i guess it would be 2 cents sgd hopefully. As they target to pay a dividend equivalent to the minimum of 35% of profit for FY 2019.

As usual, at the end of my post there would be K-Pop pictures.

TMI: My K-Pop addiction has risen multiple fold this year, but its probably the most crucial thing that is driving me in continuing investing to fund my hobby(which is spending on concerts and K-Pop related).

Don't be surprised if the pictures are reused, for pictures are limited just like how one's capital/war chest is.

Friday, 31 May 2019

Portfolio Actions/Review April and May 2019

As May comes to an end, things look to be a carbon copy of what is happening last year, where STI
peaked in May and fell in the subsequent months.

I think the next few months will once again be tough.

Nevertheless, i will have to continue investing as i still have to continue to work towards the new unrealistic aims set.

Year to Date STI returns: 3.59%
Year to Date HSI returns: 4.08%
Year to Date Portfolio returns: 25.75%
Cash : Portfolio ratio is Roughly 50-50

Actions Done in April and May

1) Added AAG Energy(Hkex: 2686) to the portfolio
-Coal-bed methane extractor in China with a relatively small portfolio of 2 concessions.
-IPO price of $3, however quickly went southwards in the following 3 years
-Partial takeover of 50.5% of shares in 2018 by Xinjiang Xintai Natural Gas Co Ltd (SHA: 603393) at the price of $1.70 Hkd, current price is at least 10% below that takeover price
-Industry seems to be suffering in margins but AAG Energy is one of the companies who has decent margins and is profitable even if the subsidies and vat refunds are not included
-China a net importer of Natural Gas, the demand for natural gas would be present. Furthermore a depreciation of currency would likely result in a more expensive import rate
-Results in 2018 plenty of one-offs in ceasing of credit loan facilities as well as relocation of staff
-Currently debtless as of 31 December 2018, net cash 15% of market cap
-Estimates roughly 10% increase in productions, should bring in higher income via subsidies and vat refunds.
-Key risk: 2020 5 year plans might not be accommodating, company risk involved with extraction

2) Increased holdings in Uni-Asia Group (Sgx: CHJ)
-Will come out with a post hopefully in the next week about the counter after attending the Q1 results briefing.

3) Sold Dongyue Group (Hkex: 189)

-One of my 2 biggest losers in 2018, the other being PC Partners, can be found in an earlier post
-Spectacular rally from start of year to April prompted a relook at the counter's valuations
-Turns out that there has been an analyst report with a buy rating of 14 dollars
-However the assumptions used such as earnings per share predictions are unlikely to happen as majority of peers operating in Dongyue's industries had 50% fall in earnings in the 1st quarter. On the other hand, Dongyue does not report quarterly earnings.
-At $4, its below book value and the PE ratio if earnings are to be halved would be roughly 8, which is reasonable. But at $7 the PE would be 14.
- My earnings predictions has been fairly accurate previously in this counter, trusting my own instincts and research that results would likely flunk, the decision to sell came about.
-As a result cash: portfolio ratio becomes equal.

3 Stocks on my watch-list that i might add but are not in my portfolio as of 31 May 2019 (will come out on a post if i have time)

*Disclaimer, some ideas might have been inspired by others and are definitely not 100% my ideas.

1) LHT Holdings (Sgx: BEI)
2) Starland Holdings (Sgx: 5UA)
3) China Motor Bus (Hkex: 0026)

As usual, at the end of the post there will be a k-pop picture.

Sunday, 26 May 2019

Hk agm vs sg agm similarities and differences

Was in hk for agm on 20 and 21 may. The main purpose of the trip was to decide whether i should continue allocating funds into it and i have gotten an answer from the agms but thats not the purpose of this post.
Please do note that i only have went for 2 so it could be different for other agms.

-Age group attending mostly elderly

-Showing of identification and signing an acknowledgement of number of shares you have

-Management answering questions

-Voucher for refreshments/ door gifts etc

-Proxy nomination by CIMB is $32.10 for each agm. Unlike in sg which is free as u just show ur NRIC as the shares are held in your cdp account.

-Can be held in chinese or english. Which means all resolutions etc are read in chinese or english

-Question asking and answering in cantonese.

-Elderly look to be snapping up drinks and tibits in a frenzy more worst than i have ever seen in sg.

-Results are to be posted on the hkex website and not shown at end of the voting

-Pen and paper used in voting of resolution.

Would like to commend the staff at one of the agms i went. I was given a gift slip when i registered but after voting i lost the slip and was unable to present the slip for a gift. So i told the staff in english i might have accidentally submitted it when i submitted the voting slip and the staff gave me the gift as well. Felt quite thankful for it as its my own mistake...

Thanks to the staff, i was able to obtain 2 new era caps as a gift from 1 of the agm. The other agm just gave light refreshments.

Overall any trip will unlikely be 100% perfect but i am fairly satisfied with this trip.

Following the trip and over the weekend, i have decided to set 2 fairly unlikely targets that i would like to hit and the rewards i would award myself should i hit them.

As usual, time for a k-pop related picture.

Wednesday, 15 May 2019

Tat Seng Packaging(Sgx: T12 ) 1Q results thoughts- On track for worst 1H since 2016

Tat Seng Packaging released its 1st Quarter results on 10 May 2019.

It was somewhat a surprise as Tat Seng has never released its 1Q and 3Q results, meaning that investors have to infer from Hanwell previously.

Results came in with net profit coming in at 59% lower. Though I have to admit that i was not really surprised with the poor results. Will explain later in depth why so.

Results Overview

-Net Profit slipped. Doesn't need much elaboration on this

-Non-Controlling Interest recorded a loss, this meant that one of its plants would have likely incurred a loss, which signifies a much more competitive environment and companies might have to shut down operations.

-Gross Margins slipped below 20%, 20% is actually a very interesting quote from a chinese website that writes 'If not for the sake of the staff, one would be better off working instead of running packaging business that is below 20%)

-Volatile Yuan, especially with trade war possibly bringing yuan back to 1 usd = 7 yuan levels, what this means is that the comprehensive income might record loss and instead be book value destructive

-Sales volume increased 2.9% in 1Q 2019, a remarkable feat considering that the shroud in the industry currently

-Operation remains lean, distribution and selling expenses increased less than the increase in % of sales volume. General and administrative expenses also fell more than % fall in revenue.

-Cash flow from operation came in at 4.3 cents per share, largely due to good trade receivable collection.

-According to Chinapaper, the new Nantong plant to bring in 100 million sgd of revenue each year? Nevertheless, from the article, the new plant seems to be well received and aided by the local authorities. It also reiterates the state of the art facilities present with equipments of international standards. 

So why would Tat Seng be on track for the worst 1H since 2016?

-Do note that 1H results do include 1Q results as well. Previous 1Q results would not be accurate as they would be based on estimations from Hanwell which is something i did not choose to include in the data.

From the chart its easy to understand 3 key points

1) 2H will usually be better than 1H due to the traditional peak season effect. That trend however is not applicable in 2018.

2) An increase in corrugated prices brings higher profits. Similarly as corrugated prices start falling, the profit will follow suit.

3) Despite higher corrugated prices in 2018 2H, profits are lower than 2016 2H. Why is this so?
In 2016, 2H corrugated prices were much higher than 1H corrugated prices. In 2018 1H corrugated prices are higher than 2H. Which is why profit fell (also explained in point 1 and 2)

At time of writing its only May, but April corrugated prices are about 9% lower than 1Q 2019 average. The bad market conditions can also be seen in the shutting down of packaging firm in China.

(Translated to English: Thank you for the long term support to the company. Due to bad economy conditions and  a downturn in the markets. The company is in a loss making position and has decided to end operations on 30 April 2019. Orders that are already received will be delivered as soon as possible. This decision is made out of a lack of alternatives and we apologize for any inconvenience caused.)

Based on that and the above materials, i would estimate that the profits would be lower than 5.7 million which is the lowest 1H result from 2016 to 2018. I would say if the company earns a minimum of 3 cent EPS, it would be remarkable performance.


I would say Tat Seng is generally a decent company going under tough industry conditions at the current moment.
The price to book currently is attractive but estimating earnings going forward is going to be tough as as the highest factor would be demand in corrugated products. This in turn drives prices and profit of corrugated packaging companies like Tat Seng.
I will probably need more time to think through if i should even be adding any equity(not just Tat Seng) at the current stage.
Meanwhile i would listen to some k-pop and think through.

Attaching k-pop pictures as usual.

Wednesday, 8 May 2019

Design Studio Group Ltd (SGX: D11) 1Q 19 Result thoughts- The pain worsens

Design Studios released its 1Q 2019 results on 8 May 2019. 
It turns out that the results were pretty dire.

Formerly a dividend darling, the company was barely profitable in 2017 and made losses in 2018.

In 1Q 2019, it made losses of S$ 6.193 million. In whole of 2018, the losses were only S$23.912 million. 1Q 2019 made up 25.9% of 2018 losses.

There were couple of details that stood out in its 1Q 2019 results.

Poor margin control

A quick count tells us that revenue is 15.535 million but the raw materials used, subcontractor cost and employee benefits totaled to 15.355 million. That leaves only $180k of profits after these 3 subtractions.
I would say there is probably 2 ways of looking at this figures.
1) Poor margin control leading to projects that are not even profitable.
2) Staff cost is mostly fixed therefore the cost did not decrease but instead increase due to expansion of business united or the commonly seen wage rise.

Sign of negatives to come?

We are told that there were project delays leading to lower revenue generation. Does this mean that there would be higher cost recognized in future quarters along with the revenue? This would mean more losses ahead should it happen. Personally I do think that this would happen.


Having been in the woods since 2017, it seems like the company is venturing even deeper into the woods and has been constantly eroding its equity.

The only bright spot is that order-book has been at a healthy level consistently. Though if these order book only serve to bring in revenue that result in losses, that would not be a bright spot at all.

It still remains an interesting company for me to take a look at its financial statements and try to understand how its business model works.

Posting a K-pop picture as usual.

Wednesday, 1 May 2019

Investing results in the past 12 months, - 43% swing in time weighted returns and back to square 1

Decided to look back on the past 12 months of investing on a public holiday today.

Before actually loading the chart on stockscafe i probably had a similar sight in mind as well.

At highest point which is in June, time weighted returns hit 21.82%
At lowest point which is in January, time weighted returns hit -22.32%

That's a rough swing of 43% in a short span of just 6-7 months. To give a rough gauge the amount swung is probably around 6 semesters of university school fees.

How did i cope with it?
To be frank i did not really cope very well initially but i just have to continue my daily research to make sure my estimations are at least somewhat close.
Then its leading life as normal, going for more concerts definitely cheered me up as well. I developed the habit of not even bothering to open the app to look at daily prices.
At some point where the portfolio just tanks 4 digit sgd a day i'm already kinda frozen and emotionless, as though knowing its gonna happen but i'm just like nope i'm not gonna sell anymore no way man.
Due to the fact i was pretty heavy in equities to begin with and had a low income, it was pretty difficult for me to add.

Then come the turn of the year where we see broad rally in Hong Kong and China markets. This made the returns head back to where they were just 1 year ago. Literally back to square 1. If anything i felt that i did very bad in the past year. Could have improved my analysis process better. But then again if my 'analysis was really good i won't be in the current position now :( '

What are the implications the past year had on me?

Well at the current moment there are certain stocks i really want to add but i took a look at the chart above and i'm like 'here we go again?' Guess that part of fear does run a little in me still.

I foresee myself adding still in May, probably a change in strategy from what i did last year i guess. After-all, the stocks i held in recent few years all had different strategies involved and resulted in varying results.


-Could have done better really given the amount of time and space i had.
-Was really lucky, could have actually lost much more money.
-Did a couple of nonsense panic sells when in actual there really isn't a need for it. Its just the i want to keep more cash on hand fear at play.
-The sharp rally year to date makes me wonder why i did not really add even more? But i guess that's human emotions at work. Might have to work on that better.

All in all i would say the results were a blessing while the process was a good learning experience and taught me that i really need to be more precise and less complacent. Not just because the returns hit a peak in June and hence i could be more 'slack' in researching. I am pretty angry with myself looking back at that.

Hopefully the next 12 months i would be able to do better. So that i would continue to have funds to go watch concerts haha.

Sunday, 28 April 2019

Short AGM review + some personal thoughts on Sutl, Hanwell and Uni-Asia

SUTL Enterprise(BHU.SI)
-Attendance roughly 20 
-A shareholder mentioned about the vitality around the marina being 'low'. For e.g restaurants keep folding. Management says that its up to sentosa development corp to do the leasing and keep the area vibrant 
-Current lease left at Sentosa is about 19 years left , after which its probably a need to do some discussing to see if the leases will be extended, but similar to golf courses at sentosa, it will be 30 years basis. With the sentosa cove properties around the marina, its 'hard' to see the marina being changed into something else according to management. 
-Malaysia's new marina will be 2 times bigger. Interest checking has begun but pre-sale has yet to begin 
-For US and China's operations it will be management contract basis. Whereas in sg, msia and thailand(i think) its an ownership basis. 
-1 shareholder highlighted the need for local partners to avoid getting 'chopped' which the management replies they have been doing that and cited the msia one as a joint venture as an e.g 
-Lastly one asked when the foreign operations will reflect on P&L, the answer is that the proceeds of membership pre-sale should enter the cash flow this year but there is no clear infos. 
-Had a chance to have a 3-4 lines chat with one of the management guys who was seated at front row. He says us operations should start in 2 weeks.
Personal Thoughts: I believe 2019 should see some sales progress on the marina in malaysia as well as some management fees coming from the usa operations and hence we could get a better sense of its future operations. Singapore is likely to come in stable as the membership sales are on a long term basis. The cash on hand and cash flow from the marina is pretty decent at current price considering it has 19 years of lease left. The concern I have would be the business risk in Malaysia and possibly Thailand.

-Attendance roughly 50 
-A shareholder asked about the Capex in the upcoming year. The reply is that most likely its on the side of Tat Seng only 
-Tat Seng will cease operations at Nantong Hengcheng and move operations to new plant at Nantong Tatseng which is more hi-tech. The current land at Hengcheng is on rental basis. 
-Differing views among shareholders, one sees Tat Seng as capital intensive and would rather Tat Seng be divested while another has the complete opposite view. 
-Management said they are pretty satisfied with Tat Seng's results in what was a harsh and competitive environment. 
-Capital Reduction 100% passed, the deputy chairman says out of so many he chairs, its rare or was it the first time its 100% something along those lines and everyone can go celebrate.
Personal Thoughts: Hanwell still remains a very asset based play, this year has been a big breakthrough in terms of distributing cash and having a good dividend. As for Tat Seng, it remains to be seen whether they will continue to grow and contribute more profit to hanwell via the new plants. A key information in the auditor statement is that the fair value of the golf course is actually higher than the carrying value of Million Cube, the holding company. Therefore even if the money is not obtained and the deal falls, the risk is not big. 
Uni-Asia Grp(CHJ.SI) 
-Attendance roughly 50 
-Started with a presentation by CFO on the results 
-Proceeded with reiterating that despite the impact of leases they remain fairly confident of 1Q results which would be out in May. 
-Dividends will be distributed on a semi-annual basis. 
-1 shareholder asked if the asset for sale that has been sold in Feb according to AR will book a full 5+ million usd profit (which is roughly 10 cents eps). The answer was there will be a gain but its not full gains as due to the leases effect some of the gains will be deferred as well. 
-Another shareholder questioned the placing which is met with the answer of growing the pie for all shareholders. 
-Another shareholder suggested for share split as according to him the optimal number of shares should be 200 to 300 million but the current number of shares is about 50+ million only. This was met with the answer of options are being assessed. 
-A shareholder asked why the finance cost are quite low, the reply was that the company had good ties with banks in Japan such that even if they borrowed in USD it was low.
Personal Thoughts: Past few quarters i have many misses with the estimation of the company's different segments. I would really wait till the 1Q results to appear before knowing whats the impact of the new leases on the company's profit and loss statement. Having said that, the divestment of a hotel at above book value in February as well as gains from Hong Kong 3rd Office Property Project should still happen sometime this year. 

Just sharing kpop photos as usual below.

Buying thoughts for those who actually scrolled down :)
I probably would wait till 1Q results of Uni-Asia Group before deciding if I should add my position.
As for SUTL, i believe it would be a long wait and if i decided to go for a longer time frame i might add more of it.
As for Hanwell, i do not think that Tat Seng's results might be good in 1H due to high benchmark set in 2018. Its all eyes on the 2H. As Tat Seng's results generally decide most of Hanwell's profits that would be crucial. If the gap between share and book value continues to widen in Tat Seng, it could be good chance to add more Tat Seng. I bought Hanwell shares as i was unable to attend the Tat Seng Agm in the afternoon.