Thursday, May 14, 2015

Parkson Retail Asia

Parkson Retail Asia report its earnings.

I expect some SSSG for Malaysia due to the buying to beat the GST of April. And it did show up.

I was hoping for another special intern dividends, but nope.

I did a tracking of the new stores and same stores comparison.

Since December 2013, Parkson has been aggressively adding Indonesia mall space of about 24K sqm, and the loss from new stores in Indonesia spike corresponding in the following 2 quarters. By 31 June, PRA added another 26 K sqm of retail space, but losses from Indonesia operation is not increasing but continued to be reduced. This quarter loss of Indonesia operation is only 1.7 mio. Thus the 1 year gestation period for new malls stand for Indonesia and going forward, since no more new malls from Indonesia, Indonesia contribution will continue to improve.

Malaysia retail space is increasing too, starting from last quarter. So, while we can expect some harvest, we will most probably not see much improvement in overall results since they are kicking starting about 45 k of retail space since last 2 quarters, the losses from Malaysia operation should increase.

However, overall profits while still falling from last year, should stabilized while PRA continued its expansion in SEA.

PRA is expanding at a time when Indonesia and Malaysian Currency are weak. It is expanding at a time when consumer sentiments are weak in Malaysia.

Yet the business is still profitable, and FCF generating.

I think It is easy to fall into yearly analysis of PRA and condemned it to be a loser given it has been experiencing lowering topline and bottomline since 2012. This year will be the fourth year of decline.

But if we look at it in totality, PRA does show some moat in its business.

SSSG is negative at a single digit rate during a hostile external environment of weak currency and poor consumer sentiments.

I believe I will still continue to hold on to my small position and might accumulate if prices go lower.

Do note that PRA need not keep expanding, they have the option to slow down their expansion in 2 years time.


Monday, May 11, 2015

A good short break at Nanjing

Went on a Recee trip to Nanjing. A great trip, because it is paid for. LOL.

More importantly, it provided time off and pockets of reflection time. 

I read 3 books, of course I did not completely read them, but I did get some ideas of what the author is trying to say. 

The book on value investing by Brandes is really boring and repetitive of past concepts. 

The book on mindfulness serve as a great reminder to practice mindfulness but the content is uninspiring 

It was the third book, given free by the principal of the school that really touches my heart.

It was written by a pupil who has become a well known author, talking about the school 30 years ago.

How the principal came from
The city to teach in the village. How also by interacting with the principal, I felt how he is really passionate about education. It is not just about academic or character building, but really Eco awareness, etc. 

Lastly, I get to take it slower and no longer suffered from chest tightness and shaking hands. I even finsihed my exam scripts marking on the plane. 

A fruitful trip. Touching base with the corners of the heart. Feel
More "love" in heart than before I left.

Some photos taken:


The pottery clay was made by me. The swan artistic right? LOL




Friday, May 8, 2015

What could be Mr Market's concern about LMIR?

LMIR announced a great set of results, if you ask me.

In my last post, I projected distribution to be 19.2 mio assuming no fall or raise in operating numbers or currency strength/ weaknesses.

The quarter distribution turned out to be 21 mio. While it is not eye popping as compared to a year ago, it did exceed expectations. Comparing it with a year ago is quite meaningless as the Kemang village effect will be unknown,

Looking at the currency exchange of SG/IDR


I am not crazy to do a point to point calculation, but "agar agar' looking at Oct-Dec quarter and Jan- March quarter, I do not see a significant strengthening or weakening. Going forward, however, there is obvious trend of IDR weaking throughout the Month of April. I guess this is one of the things Mr Market is unhappy about. Uncertainty. 

But it would have mean, either Kemang as the biggest mall is contributing better or the rest of the malls are holding up well, operations wise, LMIR report card for this quarter is a pass.

There is one ironical and funny statement in the presentation, slide 3:

"Weighted Average Maturity of debt facilities was 1.86 years , with no refinancing required until July 2015 "

Hello, it is 2 months away, so how would you finance this? With new debt or fund raising? Uncertainty again. Mr Market don't like.


200 mio is not a small sum to refinance, it is 125% of annualized NPI of this "good" quarter. and its debt profile is rather concentrated with refinancing every year till 2018. 

LMIR execution under Alvin is a good break from the past.

Let's hope he is able to buy another good buy and do some good management of its malls. Maybe sell some weaker malls and borrow to buy yield acretive ones.  

Mr Market will like that if he can pull that off. 


Tuesday, May 5, 2015

New addition: Parkson Retail Asia

I initiated a small position on Parkson Retail Asia yesterday.

I will wait for the latest quarter report before I explained in details my buy decision, and to shed more light with more updated figures.

I was waiting for the price to fall another 10% since I last blog about it. I got what I wanted. 

I wanted to buy the counter in February when the Vietnam closure of  Keangnam tower Parkson made me think twice. Since then it has fallen even more. 

If you look at the way Parkson is falling, it is almost like it is a S-chip. It is only less than 30% from its peak. 

Although there are plenty of headwinds, weak ringgits, competition from e-commerce and other conventional retailers, consumer confidence going down, as well as the hanging compensation issue from Vietnam, but 

1) It is a company in net cash.
2) Making profits even during 2009 Crisis
3) Generating FCF quarters to quarters.

 Assume profits take a 30% hit from last year (Already a bad year), we are still looking at less than 15 PE.

The only reason I think could swing Parkson into a loss will be the write off costs for Vietnam Store. 

Anyway, It is a very small position. More like a push force for me to do even more research.

Saturday, May 2, 2015

In conversation with my sister, an insurance agent

My sister is in the insurance line, today, we had a good talk after visiting my mum at the hospital.

She is my sister, so my view is biased, and be kind in your comments even if you disagree.

I: There seems to be many black sheep in the industry, with mis-selling rampant.

S: What do you mean by rampant? Maybe years ago when the industry in not regulated. There is a new exam for all ongoing agents to clear, and if you can't do it, you are out.

I: Is the new DIY insurance scheme eating your market share?

S: No, at least not that I can feel it. People who can really understand and D.I.Y are few. I am totally comfortable with them not buying anything from me. But there are elderly, and people who are not even covered under H&S, and even if they understand the product, they might not understand the details.

I: What do you think of term insurance over life insurance?

S: Those that advocate this, did they do a comparison of premiums? I have client who bought term insurance till 75 years old. Had they bought a life insurance that becomes premium free in 25 years, in the long run, at 75 years old, he will have problem renewing the term insurance, and there is no cash value, and the total premium pay will roughly equals that of life insurance.

I: How about mine? When I convert my life insurance into payout, will I still get those riders that increase death benefits?

S: Your A** plan is lau sia one. Depending on the clause, some might have riders dropped once the life plan is converted into paid out.

I: My family will get both the death benefits and cash value even it is a paid out?

S: I already said your plan LS, so you will get only your cash value.

I: So, basicially I am surrendering my plan for cash lor,

S; You can say that.

**I forget to ask for those paying 25 years premium for life long coverage, will the cash value keep decreasing after a certain age. I will check and add in comment section

I: Many bloggers I know are quite against ILP and endowement as the returns is pathetic, which I agreed.

S: Not many can invest DIY, if you can, please go ahead. Do you know someone actually ask me why he should pay me. I didn't follow up on him as I do not want him as my client. I told him very nicely that I provide a service where I advise on the various products on the market, I am making a honest living.

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OK. Think the blogger-sphere need  some balance from anti-insurance sentiments.