随心笔：教书

十五年了。
一直都很拼，
希望学生会考得好。
每次考试时，自己都会很疲倦。
好像跑到终点的那种感觉。

这一年，又快结束了。
教毕业班，总是有心快缺了一块的感觉。
知道他们快离开了。

觉得很奇怪，好多都像成了朋友，
或者孩子。
在学习上，也许对他们比对我孩子用心多了。

我也有点内疚，
明明不是亲家人，
为什么不把更多精力放在自己孩子上。
反正一年后，大部分的学生也不会再见到了。

我觉得有点累，
有时，进课室，觉得很无趣。
最近常常骂学生，瞪他们。

教学法一直在跟新，我觉得我快跟不上了
我也不屑跟上。

这就是十五年的问题。
我傲了，老顽固了。
吃不到葡萄说葡萄酸了。

我心里对教学的疑惑，
没人问吗？

为什么这么重视一堂课怎么教，
我跟着理论走，为什么总是行不通。
我觉得好的办法，为什么总是让人觉得太简单？

这一年，我觉得很幸苦。
我觉得我是个好老师，
因为学生会来找我打篮球。
学生哭了，也会来找我 。
老师做到这样，不够吗？

但是好像这场仗越打越无胜算。
不知几时会满盘皆输。

我是否应该早点离开？
把还有仅剩的一些美好回忆带走。

Company Prospecting: Modeling future earnings of companies

I have finished reading the book "Common Stocks, Common Sense", and have re-read a few chapters twice. I can really relate to the statement about modeling future earnings through qualitative analysis and "guessing" than just simply extrapolating pass data into future. This is especially true for companies that are cyclical in nature. It is not really meaningful to DCF its value, because the earning might be quite volatile. Reits might be a better target to DCF.

To cut the story short, I will like to share how I have applied my own future modeling using Singapore Companies as case studies. Readers who are interested, please read the book, as I am just trying to scratch the surface with my explanation.

First Step: Look for Market leader.
The reason is simple. I want a company that can captured the industry upturn. A company that will gain when industry turn around and not continue to be a laggard.

The example, I am using is PAN United. Looking at Revenue.



Pan United Rev from Cement and Construction materials
2018: 545,710,000
2017: 527,674,000
2016: 577,639,000
2015: 668,421,000

You can see from here there is some sort of correlation and according to https://brandongaille.com/18-singapore-cement-industry-statistics-and-trends/
PAn united is the biggest Cement supplier. Engro, another Cement Supplier listed Singapore managed
2018: 153 mio
2017: 141 mio
2016: 144 mio

So I think there is no doubt Pan United is a Key Market Player that will stand to gain when industry upturn happen.

Second Step: Check for correlation

Profits from the segment of construction material
2018: 8,496,000 with rev 545,710,000
2017: 8,958,000 with rev 527,674,000
2016:  10,657,000  with rev 577,639,000
2015:  12,859,000  with rev 668,421,000
2014:  24,219,000  with rev 612,097,000
2013:  39,406,000  with rev 599,049,000

You can see margin destroyed due to lower demand as well as competition. But Pan United has hold market share reasonable well.

One more chart.

You can see the "good times" correlate to good price of cement RMC.

I am aware of different grade of RMC, the one included in BCA statistic is Grade 40, and there are different type of Concrete, some quick solidifying, some green and carbon neutral, but I still think is a reasonable calculated guess.

So is 2016 - 2018 horrible years in construction demand? From BCA data, the demand for construction in those three years are:
(Data from BCA)
2018 - 27 bio
2017 - 24.5 bio
2016 - 26.1 bio
2015 - 27.2 bio
2014 - 37 bio

Again, it seem 2014 is the golden year for a good reason.

BCA projection of demand is always announced in January. In January the projection is

Third: Guess Industry upturn

It seem it is going to be a slow year yet again, but the 9 bio expansion by MBS and Genting are announced in April, and I am quite sure assuming 3 Bio A year over the next 2 years when construction start, this demand is not captured in the projection, at least not accounted for in the lower end of projection

Worst case scenario, up to April, it is on track to hit the lowest 27 Bio Demand, so it should not get any worse. Reading on Pan United Quarter reports and BCA announcement of big tenders, various En-Bloc redevelopment again seem un-captured in 2018.  

RMC price is better in Q2 than in Q1, and Pan United Q1 results is already better in 2019, than 2018. I assume that the worst is over for Pan United.

In the book, the author model precise earnings.

I will pass giving a giving an exact figure, I will instead guess  a range of possible earnings. Assuming if price of RMC return to the good old days of 110 and above, will margin be closer to the bountiful of years of above 5% ( >6% in 2014)?

2018 margin is at 1.5%, it does not need a party for margin to double. Assume Status Rev 550 mio in 2019 and 600 mio in 2020 (Where the demand for the IR should start flowing), and Margin of 1.8% in 2019 and 2% in 2020, we should see profits of 9.9 mio and 12 mio.

Even if margin double, the best case and most optimistic scenario, it is still only half of what it is like in the good old years. So for a conservative projection, we see EPS of  about 1.4 cents, 1.66 cents in 2020.

Assuming pay out ration of 80%, dividend will 1.12 cents and 1.32 cents.

So at current price, PE for 2019 can be 24 times or at good as 12 times (If margin improve to 3%)
Yield can be 3% or 6%

So at current price, it makes no sense for me to add, no matter how much I like it. I bought my first tranche of Pan United at 28.5 cents, so valuation use, it makes slighly more sense at future PE of 20 times or 10 times, and dividend of near 4% to 8%

As I mention earlier, I did a range of valuation than giving a fix figure, but if  second quarter earnings makes 1H earning out of my expected range of earning, I know it is time to say good bye.

.................................................................................................................................................

This is the first time, I spent so much time writing an article on investment, I will leave QAF modeling to next time. (Not vested in QAF)

Random thoughts: Book recommendation

Check out this book. I have really enjoyed it. An investment theme book.

Company prospecting: Pan United

A very short write up. More for discussion and putting it on investment bloggers radar, than throwing in numbers.

Pan United is a leading supplier of cement in Singapore. Hence their business depends on the demand of the construction sector. Information from BCA show that demand is picking up. The lowest projection of demand is expected to go up over the next few years. The projection came before the announcement of IR expansion. I am not sure if the 9 billion investment is accounted for, I assume that even if it is accounted for, all these would mean the projection Should come to the mid range of projection of close to 30 bio. 

When the construction sector  is declining in Singapore, pan United still manage to increase revenue and hence improve market shares except for the last 2 years.

If u do some tracking, at its Peak of it profitability, Revenue is half of what it is now but net profits is double of what it is now. Margin keep getting squeeze and became.lower and lower. RMC prices has shown some recovery ij the recent quarter but nowhere near its peak. If u look at Q1 reaults, it has double its profits simply by improved margins and RMC price ccontinue to improve due to expected higher demand in construction.

Beside the IR, the Deluxe of En bloc demand seem not BEING captured in 2018 as the BCA projection was higher than the actual Billings. So I am rather confident that construction demand will be nearer to 30 bio this year (clearing of backlog of developnent of En bloc site) and beyond in 2020.

Pan united has maintain profitability when demand hover around 26 to 29 bio.

Construction is turning, and I expect earnings to double.

Hence there is a chance for a yield play plus capital apprecitation to happen if pan united does double its NP for 2019.

Vested and maiden investment made at 28.5 cents. DYOD.

IF anyone has this in your radar, please leave a comment and I would really like a discussion. 

随心笔：祭父文

首先，谢谢各位到这里，陪我和家人送父亲走这最后一程。我代表大姐大哥，表示感激。

我父亲是一个对生活充满热忱又独立的人。记得他常常对我说，担心自己不能走动，那样就遭了。

记得有一回，他跌倒到了。肋骨有点微裂，医生说要吃止痛药，但他却说不是很疼。他在我眼里，他很坚强。

后来，即使需要使用拐杖助走，他也事事亲历亲为。我知道在医院的那几个月，他很辛苦，因为不怎么能下床。他时不时会问我，几时能回家。

最后在家的几个月，当他痒得呻吟，痛得叫出来时，我知道，他很辛苦。当姐姐对我说，他笑着离开，很安详，我虽然有点难过，但是还是很感恩，他的苦难结束了。爸爸，接下来你放心，一路好走。

在我眼里，我爸爸不善表达爱。他从来没说过我爱你，记忆中好像至我懂事也没抱过我。但是，我知道，也感受到你的爱。

以前我服役周末回家，你会帮我盖被。其实我容易醒，也怕热，但是很喜欢你帮我盖被的感觉。

后来，我念大学时，周末会去餐厅打工。值夜班回来，他对会叫我喝鸡精，说睡这么少应该会很累。

我每次给你家用，你对会问我自己够不够用，还会常常叫我给少一点。爸，你放心，我虽然非大富大贵，但还是遗传了你的那么一点点傲骨。我不怕吃苦，在新加坡只要肯努力，生活不会过不去。你靠着两只手，和妈妈煮了二十几年虾面，养大我们，你没受教育，却让我从你身上学到了不少道理。

爸爸，我们姐弟三人也爱你。虽然我也从没说过，但是我相信你也会感受到。以后不能再带你去吃晚餐了。我会想念你。

Coporate updates of Silly InC

Dear readers, Silly Inc has sold all it netlink shares and make its maiden investment into capitaland.

Netlink has play out mostly as the board wanted. Dividends increase, growth in profits, etc. However, the growth is too slow to offset the 45 mio in loans that are used in distributions.

The board would be more hopeful had the growth be more impressive. Going forward, Capex will.most likely increase and if the rate of growth is to continue, netlink could, at best, offset the 45 mio in distribution but they could hardly increase dividends anymore without either CONTINUING WITH THE LOANS DISBURSEMENT OR INCREASE LOANS TO DISBURSE as dividends.

APPT is a good lesson and reference. While the 2 companies are different with different growth sectors and Netlink seem more likely and also competent to capture the growth, it is never a great idea to use loans for distributions.

What happen if Netlink do not use loans anymore? The fall in shares price could be drastic. But Netlink won't do it, they are not stupid. They have enough debt room and cash flow to be on morphim for a long time and hope for growth to come to the rescue.

However, enjoying a 6 pecent yield while facing with such risk seem illogicial. Silly inc had APPT for 11percent  yield and manage to offload it for capital gains yeARS ago. The riSK reward profile do not seem attractive.

With the increase in cash, there are several potential companies that silly inc would like to accumulate at the right price.

The company bought Capitaland not based on ratios but the fact that many did not realise the Capitaland will be a very different animal after the merger.

First, there will be a significant ARA type of fund management business. There are many ways to cash in the cow. Put all the reits under one managemENT and IPO it.

Offload different assets to different reits to recyle capital.

Last but not least, it will be able to truly build a whole township without the need to subcontract. Vietnam is industrial towns hot bed, capitaland can build hotels, malls, factories and homes, and also manage it, and sell it for any governmemt overseas.

Capitaland is not a value or turnaround play, but is a good concept play, and the possibities to cash in after the merger is quite aplenty, and those coporate actions make good story headlines.

As for the recent headlines grabbers on tradewar etc. The company is in the view that all investments should take into considerations the downturn of market. We hold a considerable amount of cash, close to 50 percent, as risk management. There also other funds like CPF OA and SRS that are hardly utilize as of now.

So silly Inc will just continue to do the silly thing of prospecting companies with growth prospects and wait for the right price instead of worrying of trade war or otherwise as a market correction and a gentle bear is already planned for in company cause of action. The company do fear a prolong Winter Bear as company has no experince with it. 

There are already a few counters close to purchase price and silly Inc has made a few bids with no avail. Silly Inc will.update as and when there are deals made.

Silly Inc would.like to assure interested readers that it will continue to be prudent and would like to share The portfolio excluding cash is still doing well, with only 2 counters trading below cost 

SillyInc corporate update : First Reit Accumulation

Silly Inc recently double the holdings of FR in portfolio. The Average price is 97 cents including costs.

The board is in the view that default risk by Lippo K (Biggest rental income customer 87%) is non-existence, since the rights exercise by Lippo K (yet to materialize)

However, since then, First Reit has been falling from above $1 to the low of 93 cents recently. All the known risks have been reduced, yet FR fall instead of rise.

Lets visit the risks:

1) Execution of Meikarta Project by Lippo K (Top management did not get indicted, and there is no adverse updates since then)

2) Default Risk (Almost non existence now, if they raise the fund like they say they would. 1 billion would have wiped off all the loans the parents company had, but of course, 200 mio will be earmarked to develop Meikarta

3) 2021 lease renegotiation to be in Indonesia Currency instead of Singaporean dollars. Well, it will expose one to currency risk indeed.

4) Asset dumping by OUELH or Lippo K. The troublesome and lawsuit laden China projects from OUELH cannot be dumped due to the litigation going on. Japanese home is likely dumping candidate. Hence this post is to provide some numbers for this high probable dumping.


Now the Maths:

Japan homes asset = 290 mio
Yield = 5.5 %
Rental revenue = 16.7 mio

Assumption: (All scenario based on market price of $1, the cheaper u get in, the better the deal)

1) 90 mio by debt, 200 mio rights/ placement (discount at 90 cents)

Future yield becomes 7.6%

2) All Debt. Yield accretive. 9%

3) All rights. Yield 6.9%

4) 140 mio debt (Almost Half), Yield 8%

Board in the view that all rights or all debts way to acquire Japanese Homes is unlikely.

So we are looking at yield at 7% upwards, asssuming they dun price too large a discount, and issue shares at below 90 cents.

Company did not calculate till 2 decimal place and readers are to do due dilligence. Company will most probably trade this counter and will monitor it closely with profit taking and loss cutting markers.