8th Year of Blogging (Why K-Pop Is A Turning Point In My Life)

Just checked my records. Started in 2018 April. Now we are in 2024 May. Time really flew by. 

I feel ok to share about a story on Why K-Pop Is A Turning Point In My Life

I happen to come across an old blog post that i wrote in 2018. 

2018 2H will always be a very dark period for myself. 

In 1H 2022 , Fresh out of University after making 2nd Upper on the last semester, i thought life will be smooth sailing as i can find a job that pays around the average based off graduate surveys and slowly climb from there while building up my portfolio that i have done well. 84.27% Returns as of 2018 June

Then in 2H 2022, the dark period came. Many Interviews but landed none of the jobs. I thought to myself my portfolio is doing well, i still can afford to wait and meanwhile grow my wealth. Then came a lot of bad decisions in investing. I ended up at starting 2019 Jan with 17.5% returns. The demotivation was so much that you could see me writing about investing much lesser.

In Early 2019, i was really lost and just trying to refine my investing or look at trying various styles but motivation to buy was largely sapped up.

Fortunately returns bounced up a little in 2019. But still far from the peak of 2018. Then came what i believe to be one of my turning points in my life. 

(The concert that is probably the biggest turning point)

At this point i was not very into K-POP but just generally listening time to time. A friend told be about Lovelyz concert in Singapore and asked me if i was keen to attend. Despite not hearing the group or their songs before, i said ok.

It turns out to be one of the best K-POP concerts i went in Singapore. Even though it was small crowd and small performing venue, the performance was good. I was blown away. 

Leaving the venue with newfound motivation, i told myself i need to get my act together so i can attend future Lovelyz Concerts. 

I was still close to 40% from my previous peak in 2018. 

(End 2019: 68.2%)

Eventually, with motivation, luck and to a smaller extent hardwork (luck is always important), i manage to recover well. It was within a week after the concert that i bought into shares of a SGX Company that has given me the highest returns in terms of % so far. 

Shinvest.

Purchase Date : 20 March 2019. 

Purchase Price: 0.75

Dividends Collected: 0.47

Delisting Price: 3.50

Delisting Date: 5 April 2022

Total Gains: 429.3%

I also rewarded myself with a trip to Korea in August 2019. My first time going Korea on my own and it was to watch a K-Pop Concert by Lovelyz.

As such, I have manage to continue investing till now. Which is why i would always be very grateful to Lovelyz and K-Pop. I would also try within my means to support as much as possible.

I believe for everyone , there are different motivations that will keep you going in life. Mistakes will bound to happen in life.  You can be down and out and feeling like giving up, but if you can find the motivations that keep you going, keep your head down and work hard to find out the mistakes you have made and continue to rectify them, things should turn out better. 

Thanks for reading to this post. 

(April 2023)

(April 2023)

(May 2023)

(August 2023)

(November 2023)

(March 2024)

(April 2024)

 

Huationg Global AGM Post Thoughts. The best is yet to come?

I will probably write down the conclusion first. I think the best half will be / has to be 1H 2024. Which is why i think the best is yet to come.

However, the possibility of the drop-off in revenue and earnings after 1H 2024 is there. I think there is a 80% chance 2H 2024 will be worst off than 2H 2023.

I have actually not made any decision yet with regards to this position because of its severe below book value and the strong cashflows seen in 2023. 

Why I think the best is yet to come

(a)Expansion of Dormitory Size. Previously it was 10400, now it is 12480 and although there are a few hundred of Huationg's own staff living there, the overall base is still larger and along with the increase in refundable deposits as seen in the annual report, this will lead to an increase in revenue in the dormitory operations

(b)Increased Construction Works. Previously mentioned in the annual report, the next 2 years will be good. With the revenue coming in from civil engineering contracts being at around 30% higher should no delays occur . This is because estimated 132 million will be recognized in 1 year compared to the 104 million in 2023 and tender price index has been on a rise, which means that margins should go up as cost is current but contracts are past prices.

(c)Improved Inland Logistics Support Segment Sentiments

(d) Improved Fixed Deposits. 59.9m at End 2023 with 70.6m cash compared to 7m at End 2022 with 23m cash.

Gathering the above 4 factors, I believe 1H 2024 should outperform.

AGM Notes

1) EGM Resolution Defeated

In what is easily one of the longest AGM i have went, the Q&A went on for at least 1.5-2 hrs.

There were many things that were being highlighted. Most people would have seen the results that the EGM failed.

Personally, I don't think this is a big deal. Because there was a married trade of 12.5m shares on 2 April from a 3rd party to the management. Had the management really want this to be through and 'played the game' , they could have done this married trade after the EGM.

I was just surprised with the amount of votes that were present as these were unrelated parties or retail investors. There was easily 4.4m shares there when i counted less than 8 retail shareholders present.

2) Unallocated Cost

There has been a way the Unallocated Cost has been distributed in FY 2023 compared to previous FY, as such, the margins have been affected by this allocation of cost (which is said to be the administrative cost of the company). As such, the dormitory margins look very different when 1 has seen the 1H 2022/1H 2023 and FY 2022 / 2023 results.

3) Dormitory Operations Enquiry

There were many queries about this from the floor. Unfortunately due to the non-disclosure agreement signed, there is nothing much they can reveal apart from the contract ending sometime in 2024. 

4) The Shift of Asset Held For Sale back to Property Plant Equipment. Due to high interest rate environment, the property at Benoi is unable to be sold. The initial plan was to sell the property at Benoi to get a larger place as currently coping with space constraints but more space is anticipated to be needed.

5) Rather Low Dividend Payout Remark by Shareholders. Management noted on it. Nothing much mentioned. However, after that management did note that they are doing decently now only, past years during covid times it was really bad and they nearly even had to do rights issue to tide through therefore now taking a conservative stance.

Conclusion

In line with point 3 above, this leads me to believe that if they do not get renewed, we could see profitability being affected.

Having said that, 1H 2024 should still be all guns firing. Have to research / look out on the websites or news or announcements to see if the renewal occurs as it goes.

If the rewewal does not happen, we could be looking at 1.5 to 3 cents Earnings per Half Year depending on how well the other segments do (we could get a feel of it at 1H 2024).

U can trust me when i say i left the AGM being more informed but more puzzled yet more head spinning as i still think about whether to make a decision to add / hold / reduce.

These 2 photos probably sums up my reaction and thoughts.

(San Miguel HK Related) San Miguel Brewery 1Q 2024 Results Breakdown

There are actually 3 things on my mind these days with regards to writing of a post and investing related.

1) Huationg AGM and afterthoughts 

2) Dream Int Related updates and views 

3) San Miguel HK Related from San Miguel Brewery 1Q

For (1) i might probably write again when i have more time as the writing could be long and likely boring

For (2) i will await more results in the upcoming weeks from related companies before thinking about writing after i gathered my thoughts

For (3) i will write about it in this post as it is the easiest among the 3 things

(My reaction after seeing the 1Q 2024 Results Breakdown)

San Miguel Brewery released its 1Q 2024 Results.

Operating Income came in at USD 19.9 million in 2024 vs 20.6 million in 2023

Net Income came in at USD 20.3 million in 2024 vs 19.7 million in 2023.

Looking at this portion and the write-up above, we can infer that Saint Miguel HK probably did well in Exports, South China Related while doing badly in its HK Operations.

Looking at 1H 2023 Results, China Operations have lower revenue but have higher EBIT and as such, a growth in exports and south china operations would benefit as it is the more profitable segment. 

Net income coming in at Operating Income would likely due to its Tax coming into play. Which is good because as mentioned before, they have quite a lot of tax credits in its south china operations to utilize due to previous tax losses.

Looking at another major contributor to the International Operations, Indonesia Operations under PTD, they recorded around 26.8% fall in profits.

This is about  USD 1.2m of net income and therefore if we consider that net income is up for 1Q 2024, then international operations such as Saint Miguel HK as well as international operations under the main company itself would have helped.

The main problem is that when i consider the NCI side of things, this is where we don't get tallying numbers.

NCI fell by around 60 PHP Million. The fall is around 30.8%. Considering the impact of PTD's NCI at 41.7% stake it would be only 24 PHP Million. The other 36 PHP million is not accounted for or might fall under SMB HK or other NCI like BPI /SMBTL.

As such, due to presence of like 5 NCI, using this to gauge becomes difficult. Especially when there is no mention of anything related in the NCI Line in this financial results.

Conclusion

I would stick to the previous indicator that i have used that have worked. Looking at solely the indicator below, i might consider adding actually.

(As seen in my previous initiation post on 14 December 2023)

Considering that the Int Ops Weightage has fell to an all time low for PTD, we can infer that there is probably an increase in SMHK as Int Ops Net Income has increased as mentioned earlier.

The NCI Fall and HK Operations recording decline has got me to think abit negatively. But the words of south china operations sales volume 11% increase, exports growing has got me to think positively. The international operations net income has increased vs operating income and has stayed strong has also reinforced positive thoughts.

I will think abit more before deciding if i should add as i don't think any addition at this point without any other divestment would affect the portfolio on a sizable scale.

But definitely, i am not selling after seeing this result.

(Saint Mig Light, a popular drink in HK......but i don't see it in Korea)

(April 2024 Results) How i would invest in the singapore stock market if i had 100k of spare money

 

April 2024 Returns: 5.38%

Year to Date Returns: 5.31%

Since Inception (9 Sept 2020) Returns: 83.59%

In April, there were many AGMS. Among the counters above, i have only attended Centurion and Huationg Global. 

Ironically both stocks have also seen a positive return in April. I will probably have to think more much about Huationg before coming up with a more detailed write-up when i have thought long about it and have some time to write more in detail.

For Centurion, the agm is pretty easy and there were not a lot of tough questions.

2 question that qualified for financial analysis level questions was 

1) The prevailing rates in the market and Centurion's current rental rates.

2) Centurion's response to the Newspaper Report of Student Dormitory Bed worth 200k as per Mapletree Investments

Prevailing is 500-600 and Centurion is 500-550 if i did not hear wrongly.

If we look at the Q4 rates, they are around 370-400? Based on my calculations.

Therefore maybe we can see maybe at least 10% in revenue growth for the Singapore Workers Dormitory Side. Of course any higher is possible but we will not know because we do not know the amount of beds that were expired in each quarter.

In response to the 200k bed, they just laughed it off and said that the price depends on the area in the US. Which probably indicates they don't really believe in this valuation. Though if this is true, they are much better well of selling it than managing it actually.

Overall, i remain very positive for Centurion. Lets wait and see how the revenue improves for Q1 2024 when Centurion reports its 1Q 2024 Business Update. Anything from 50 to 55 million for its SG Workers Dorm Revenue will be in line.

Also, Powermatic Data will likely report its results. 

(Long Post) Attempted Deep Dive at Bukit Sembawang Estates Limited (SGX: B61)

1 of my old-time acquaintance (Polar Bear 8888 ) asked me about this counter back in March. But I did not have much time to take a look at this counter until recently. 

It is a Property Developer listed on SGX that has more interest income than interest expense. 

On the first glance of this chart, I might have thought that the Singapore Property Price have dropped a lot or this Property Developer is undergoing the China Syndrome.

Alternatively, I might also have thought that maybe something else has gone wrong such as interest payments have gone skyrocket through the roofs.

 

However, none of these are true.

1)     Private Property Price in Singapore has been on a rise.

Compared to the levels seen in 2019, there has been around 30+ % increase from 1Q 2019 to 4Q 2023. Therefore, to associate Singapore Property Price has dropped is not the reason

2) Interest rates increase affecting the company.

Looking at the financial statements, FY 2022/23 and 1H FY 2023/24 have been positive in terms of financial income.

In fact, there is no borrowings but over 350 million of cash in the company as of its latest financial results.

What could be the real reason for the fall over the years?

1)      Dividend Record Unstable

Year	Dividend Amount
2019	0.22
2020	0.11
2021	0.33
2022	0.16
2023	0.10

 

2) Earnings Per Share Unstable

Year	EPS
2019	0.39
2020	0.29
2021	0.73
2022	0.32
2023	0.13

 

3) Higher Discount Rates associated with the story of the company.

Previously, the company is known to have 999-year land plots. 1 of these land plots have to pay a Land Betterment Charge for conversion into future residential development. As such, this might affect profitability moving forward.

 

Also, with each passing year of non-development, investors have to discount the landband further.

 

 

Prospects of the Company

 

Looking at its Projects. There are 4 projects ongoing currently. With 3 of them having started selling.

 

Liv @ MB – EST TOP 2025 1Q. Fully Sold

The Atelier – EST TOP 2024 2Q. Fully Sold

Pollen Collection – EST TOP 1Q 2026. 45% Sold.

Bukit Timah Link Residences – EST TOP 2028. EST Launch in Q2 2024 with Previewing Soon

 

The sales value currently of the projects are as follows.

Liv@MB – 717,957,580

The Atelier – 306,371,137

Pollen Collection – 222,611,000 . Implied Fully Sold Value could be around 489,744,200.

 

The tough portion is to estimate what is the margins / amount that has been recognized already in revenue. The base case should be most of it is not recognized yet since TOP is not done. 

 

In its most recent result, we can infer that the segment profit margin is around 10.48%.

 

How much left of revenue to recognize?

Looking at 37% of Completion for The Atelier, 19% Completion for Liv@MB. I would estimate around 250 million has been recognized. Along with the 256 million in 1H 2023/2024, I would have assumed that there is around 500 million left to be recognized.

However, looking at its AGM presentation details, we might have around 435 million left.

435 million is based on sales value of The Atelier * 0.5 + sales value of Liv *0.75 deducted by most recent revenue of 256 million.

Either way, if the TOP is as stated above, this means we will see only meaningful revenue recognized in 1H of next FY and next next FY as usually TOP and Completion will see a larger chunk of revenue recognized.

 

To add on, The Atelier’s land price was at $1626 psf while average selling price was 2683

 

For Liv@MB, the land price was at $1280 psf while average selling price was 2413 psf.

 

As such, margins wise, Liv should be better than Atelier. With more of the Liv left, this segment margin should trend upwards moving forwards.

 

 

Lastly, we should also not forget the main thesis behind its initial rise in share price, the severely undervalued landbanks. Pollen Collection will represent the company’s usage into its deeply undervalued landbanks yet again.

The segment profit margins should not be ignored because they are close to 30%.

 

The segment profit margins in 1H alone is at close to 31%.

 

Conclusion

The current drop in share price is probably justified given that the development of the undervalued land bank projects is slow and given higher discount rates in the markets, there are better alternatives.

Is the current price an attractive entry? Current Price of 3.31 SGD Implies 857 million of Market Cap.

Given Cash – Liabilities= 287 million

Hospitality Property = 208 million

Investment Property = 21 million

This implies that its development properties and land bank is currently valued at 341 million.

 

Development Properties

Liv + Atelier Implied Profit = 10% * 435 million = 43.5 million

Pollen Collection = 25%* 489 million = 122.25 million

Land Bank = 95,690 SQ m GFA

Looking at past projects where 39 Units took up 10002 SQM. This implies roughly 373 units left to build at current land bank

Considering the current sale price of Luxus Hills Project at 2000 -2663 psf / 4.15 mil per unit.

This implies a potential revenue of 1532 million or 1.53 billion. At 30% margins.  This implies around 459 million profits to be realized. However, considering that there were no new sales since covid, the margins can be higher as prices have gone up and segment margins back in 1Q 2020 where such projects were sold are 40% margin.

But at the same time, we have to consider the opportunity cost of waiting. As well as prices might keep going up as time goes by.

The stock is probably slightly cheap right now because the development properties will be done by 2026. As such against a potential value of 459 million profits, the 175 million left implied valuation is cheap especially considering there is still 100 million of other current assets. (Which means the present valuation is actually like 75 million)

However, if no new development is to occur from the precious landbank that made Luxus Hills, then this undervalued will lose attractiveness to any investors who are investing and hoping to make their money in the near term.

I would say if they decide to develop at least 25-30% of their current landbank by 2028, then it would be truly undervalued at current price.

If not i think it is just really undervalued on paper only. 

With planning for Luxus Hills Phrase 10 underway, i believe some value will start to surface again.

Having said everything, this is not going into my portfolio or the monthly updated imaginary portfolio any time soon.

However, i might be keen for my parents to pick up the stock and sit on it when the 75 million implied PV is 0. Which means a market cap of 782 million or a share price of around 3.01.

If i want a bigger margin of safety for them then i will slap a 25% discount on the hospitality property which means another 52 million discount. Making the entry price at 2.82. 

 

 

Portfolio Updates + Recent Thoughts (As of 9 April)

I just decided to post an update because there is a chance the returns might get lower as the year goes lol.

(Pretty and Cute)

Portfolio Returns as of 9 April 2024: 10.77%

The top 3 holdings of the portfolio remains largely the same trio. Dream, Huationg, San Miguel

San Miguel - Await May 1Q 2023 Results of its Parent Company San Mig Brewery. 

Currently, HK Beer Domestic Exports are up 14% in first 2 months of 2024 compared to 2023. Encouraging but March 2023 is a high export month so will have to continue to monitor as well.

As mentioned in my facebook post, the highlight of the annual report will be the rental amount is estimated to be higher in 2024 compared to 2023 and also a longer term rental lease is locked with the new anchor tenant.

Huationg - I have wrote up my view on the annual report in this facebook post. The highlight would be the refundable deposits being around 30% higher. This is usually a indicator for revenue moving forward as deposits are usually 2 months of rental. I hope i will be able to have time to attend the AGM.

Dream - I have mentioned in my previous post so i will not be talking much more about it. I will be attending the AGM and hopefully i will have more insights to share following the agm.

Recent Thoughts

HK Domestic Consumption 

In my recent trip to HK, it was a long weekend therefore a lot of Hk-ers were overseas. As such it seems pretty quiet and trains were less packed. I would say at least 60% of the people i see at restaurants / cafes / shops are mainland chinese.

The Harbour City was not packed on a Sunday Lunch Time. As such i am actually slightly worried about March Retail Sales and the whole tourism sector as a whole. It seems like the trend of HK-ers going China to buy cheap goods is growing while the reverse trend is not happening.

As such, F&B outlets, retail outlets, HK Reits are things that i was not keen on looking and after this trip i would still not be keen.

I am keen on EGL Holdings (HKEX: 6882)  A tour agency business in HK, but the gearing is too high making it scary and there are some financial loans from a related company as well.

Vietnam Consumption

From what i have seen, it seems like Vietnam consumption patterns have improved largely since Sept 2023.

(Positive Results Seen in Q1 2024)

(Affirmed by Bach Hoa Xanh (BHX), a Vietnam grocery operator, with 47% increase in revenue in first 2 months of 2024 vs 2023)

(Down 11% at December 2023)

(Down 16% YOY at Sept 2023)

1 way i try to assess how the economy is doing is to look at how Mobile World Investment Corp is doing.

It is a company that is Vietnam's No.1 multi-category retail platform by revenue and has different shops which sells mobile phones, electronics, groceries , medicines, kids products.

As such, looking at its revenue, it seems like domestic consumption has recovered.

This seems to echo the thoughts of Masan Group , another large conglomerate in Vietnam.

From its Earnings Release back in Jan 2024.

As such, a company that has re-entered the consideration list will be Golden Resources Development (Hkex: 677)

With convenient stores business in Vietnam, i wonder how much it will benefit from this recovery. 

Another company to consider is Luks Group (VN) (Hkex: 366) with its main business being cement production in Vietnam. Unfortunately, the property sector there is also undergoing downturn and the company's cement production is unprofitable in 2023. Looking at the Index of Industrial Production for Cement, the first 3 months of 2024 is still lower than 2023. This signals that a recovery is still some miles away.