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.