Saturday, January 16, 2021

随心笔:我也很想他

 看着那桌子,

你不在那拼命地改书了。

空空的桌子,彷佛看到你教导学生。

回过神,就是空空的一张桌子。

课室外的走廊,也没有你和学生的身影。

----------------------------------------------------

你的朋友问我,

你可以来我的补习班吗,

笑着说很想念我的课。

其实,我也很想念你们。

---------------------------------------------------

踏进课室,没有玩捉迷藏的学生,

没有你们嘻嘻哈哈,

装神弄鬼地想吓我。

你们毕业了,有些音讯全无,

有的,还和我聊天。

听着我们一起用来教课的歌,

我也常回忆起你们。

或许,过去了,就不要想了。

新的形象吧。

疯疯癫癫的我,和你们有缘。

今年,可能需要的是斯文类的?

-------------------------------------------------

梦里偶尔还会看到父亲。

那个世界再重逢时,

是看到年轻的你,

还是老弱的你?

来接我的时候,我是老了,还是一个小孩?

我也很想他。

Friday, January 1, 2021

Dealing with losers, First Reit and Silverlake

First REIT

I used to owned FR and during October when it plunge to 50 cents, I actually bought more of it. I calculate the worst scenario of 4 maturing 2021 hospitals' fees being halved and felt 50 Cents will be a steal. My Average price is about 72 cents. 

When Lippo announce unilaterally that they are doing restructing of all the hospitals, and price plunging, I do not have the luxury of time to re-calculate everything although I do remember DPU could well be Halved if all hospitals are reviewed and using a 10% yield as an estimate of fair value, I thought it can go to 40 cents, so I simply sold off all my holdings then for a small profit. 

After the Restructing exercise is announced, I bought back at 44 cents, believing it offer good "value". Given I intent to do it in 3 tranches and 44 cents is my first shot, I am not overly concerned with the daily price movements, there and then.

The bomb dropped when they announced the rights issue. Rights issue is not a surprise, anyone investing in reits should be ready for it. What is "bad" about this Rights issue is that it is done with a hefty discount and will be used to paydown loans and not for expansion. 

Yet, for all the negative surprises, what will I do?

Keep calm and subscribe for rights, including excesses. 

Why? 

I ask myself 3 questions. 

First, is First reit at risk of permanent loss? Well, they may if they default, so I am not buying more from the market, but will subscribe to the rights. Also, since the major shareholders will take up excessess not taken up by minority, I know the probability I will be hanging dry will be low. 

Second, will the operating matrix keep going down. To answer this question, I believe the healthcare (private) sector in Indonesia is still primed for growth. They have the right demography, and public healthcare is hardly a competitor, reasons being very obvious. 



Revenue and GP are improving. The one-off loss is due to a non-cash item

"Through the assets review, it made a one-off non-cash adjustment totaling Rp 426 billion that eroded its profit. The reviews resulted in an adjustment in the firm’s accounts receivable balance, cancellation of projects and improved policies for the firm's registration of fixed assets.

This article was published in thejakartapost.com with the title "Siloam Hospitals books loss in 2019". Click to read: https://www.thejakartapost.com/news/2020/06/02/siloam-hospitals-books-loss-in-2019.html."


In fact, not too long ago, FR is one of the most loved counter. 

Third, at 20 cents, is it value for money? If Rupiah do not depreciated by more than 5% against SGD annually, and you believe Soliam hospitals operating moat. At 20 cents, Yield is 13%. I Do not trust proforma numbers totally. If you missed it by 30%, 9% yield is not too shabby. 

So, I keep calm and carry on. I might not be able to do this, if I have already expended my 2 Average down attempts rule. But since, I have only fire one shot, and a small one, I think it is still tolerant in my whole portfolio scheme of things to continue.

Silverlake Axis

I have already reduced my stake of SAL sometimes back, booking a loss. It is the only company that is close to 10% of my portfolio, so I reduced it to less than 5% now. 

The loss is not crippling if taken together with the dividends I received, and also a short term trading gain when it went from 40 cents to 55 cents. (I sold partially then)

While the loss is insignificant in the overall scheme of things. What is frustrating is the Thesis did not hold.

1) Growth only happens in 2019, given 2020 is a Covid year, I could understand that all companies will be affected. However,

2) They further reduced their dividends payout ration by much more than the loss of profits. This is self-inflicted wound

3) The accuisitions of Goh companies are either bad timings, or really a bad deal. Since it makes no difference to both top and bottom lines. Well, at least there is no worry of top up of payments. FAT HOPES!

4) FInTech are all the rage now. Yet as a Saas company, it is not winning any major contacts. I wonder if the new digital banks will approach SAL?

Given that I have already reduced it weigtage to a rather comfortable level, I will continue to monitor it. Given its proftability, I hardly believe I have a permanent loss risk, unless it is a outright fraud. Yet, i believe the risk is low, given the high profile customers. 

 

Thursday, December 31, 2020

From Recovery to Growth, Pan United and Koufu

It is rather difficult to project earnings beyond 1 year, which is what I learned from Lee metals and silverlake axis, Yet, because of the "unqiue" or "unfortunate" circumstances of Covid-19, it is quite possible that we can project 2 consecutive years of growth. 

2020, is a recovery year from a low base, with 2021 being a "growth" year, just by the virtue of execution of shelved plans. 

Lets start:

Koufu:

1) In their updates, H2 is already better than H1 due to Phase 2. Yet, we know the F&B retailing segment will still be mostly constrained by the WFH affecting stalls' business at those near office and tourist attraction and also by the maximum of 5 people capacity

2) 2021 is a recovery year, due to a low base effect, it is a no brainer that earnings will be better. 

3) Assume vacination rollout is successful and most countries have significant of their population vacinnated in 2021, 2022 could see more "normalisation" of business conditions. 

4) Growth in2021, should come from the successful cost reduction when Asia Deli, and their existing factories are sold when the integrated facility becomes fully operational and their reduncies in P&E get disposed. Depreciation is the largest expense for Koufu. 2021, numbers will be drag down by their higher numbers in depreciation before their dispose of their existing factories.

5) The 2 growth areas of "R&B" tea is the area where the strategy is getting clearer. Instead of owning the brand and going it alone, they are going for partnership and reduce on cost by selling the products on existing stalls of partners. 

6) Product diversification and snergy with deliAsia group companies. In 2018, they made 2 mio profits. I believed they maybe loss making in 2020, but I do notice the presence of dough culture and heritage shops. They intend to increase the shops 4 folds over 5 years.  

RISK: Sudden dearth of successful bidding of food courts.

Pan United


You can see that demand has spiked after August, when dormitory workers are allowed to return to work slowly. 

The site Market Price of RMC is also higher than Begining of 2019. Why 2019? Is the Recovery of Pan United Earnings from the slump of constructions. 


2020 is obviously gone, demand is almost halved. I hardly believe 2021 will be able to fulfilled all pent up demand, especially with labour an issue. Genting and MBS expansion plans could possibly only materialised in 2021 (Not in BCA forecast)

Pan United is a market leader in RMC, and poster boy in terms of innovation of products and etc.

Noted: Vested with both companies (Why would you think I would want to write so much? MUHAHAHAHAHAHAH)


Wednesday, December 30, 2020

Random thought: Excited about creating an escape room

I learnt how to create an online escape room using Harry Potter Theme. 

Took hours, but glad I manage to follow the instructions and create a prototype to help me son. 

Try it here, and keep me feedback 

Hahahaha excited 🤣


https://docs.google.com/presentation/d/1aXxettMSuZsO-qWYyWAlM44Y5UKGHoeEAz29fWnyh-I/preview?usp=drivesdk

Saturday, December 26, 2020

Random thoughts: Investment Plan 2021

 This part of investment journey ahead is likely to be my weakest link, monitoring and documentation. In my work, I am quite weak in documentation and monitoring of the effectiveness of various programs or ideas I had, the only exception perhaps is my pupils' exam competence, although I do not do detailed documentations, there is enough "tests" and assessments that gave me insights about their capability. 

In 2020, I went from the peak of 60% cash to 15% cash, and activated my CPF for investing several times. I have kind of done with building up my portfolio. What I need now, is monitoring, and decide when to hold, sell, and perhaps buy more. 

I have put down the various criterias I used to screen a stock. I now assigned a nummerical score to it, but I will still use it as a guideline instead of saying when the score falls by 3, I will sell. I will defintely look at the total score at least twice a year from now on. The criteria used are

1) FCF yield, above 10% given highest score (-1 to 3)

2) ROE, above 20% given highest score (-1 to 3)

3) ROIC, above 15% given highest score (-1 to 3)

4) Dividend payout rate, and yield, with 30% payout yielding more than 5% guven the highest score (0 to 2)

The above 3 criteria are what I considered as how well a company allocate it capital.

5) Quick ratio, with above 2 given highest score (-1 to 2)

6) Debt to equity ratio, with below 0.3 given highest score. (-1 to 2)

7) Stable/ deterioriating/ growing/ or volatite Gross margin and Net Margin   (-1 to 1)

The above 3 are measure of balance sheet strength and potential red flag of loss of competitiveness

Beyond point 8 are qualatative assessments, it is not rocket science but required judement or opinon

8) Overall track records

9) Adressable market expanding

10) Track record in new product execution or fruitful acquisition

*11) Industry has reached/ near bottome, with consolidation, bankruptcy, utilisation rate and product rate all at muti-years low or historical low 

12) Earning visbility over the next 1 to 2 years.

*13) Signs of turnarounds

For point 11, the question asked before even assigning a score is, is this industry at risk of obsoletion? Oil and Gas come to mind, hence I have sold off all my SembMarine. Keppel has been successful in winning orders in renewal energy, while Sembmarine aims to do the same, there is no order win yet. 

As I am tabulating the scores,  I ask myself what does a high score means? It means the weightage should be managed for those of low score. Selling if the score get lower and lower (HIgh valuation will depressed several criterias for asset allocation criteria) 

But it is really the trend of the score that matters. 

I am not done with it, and will continue to refine it.

But thus far, the companies with the highest score are:

1) ST engineering

2) YZJ and CSPC

3) Silverlake

Lowest score are 

1) Sembcorp Industries

2) Keppel 

3) Capitaland


I will also want to monitor the performance of the companies of the highest and lowest scorers to see if this evaluation makes any sense at the end of 2021


Wednesday, December 23, 2020

Merry Chiristmas! Here are 3 Companies that will likely increase their dividends in 2020/21

Merry Christmas, readers. 

How time flies. The end of the holiday is coming, the hectic pace of work will pick up soon and I will miss thinking, researching and blogging soon.

Here are 3 Counters I believed will increase their dividends is 2020 or/ and 2021

All 3 counters have more or less a payout ratio policy, and pay more when time are good/ bad. Also, all three companies should have better earnings in 2021, due to either better addressable market or simply riding the tide. 

1) UOB kayhian pay out 50% of NP, plus minus, and 1H EPS is 9 cents. Due to the crazy trading during this crisis year, comission interest went up by 90%. How they will do in 2H is anybody guess, but with retailers setting up accounts, low interest rate, and a market in generally swinging from excitment of vaccines, and Brexit and many elections to come in 2021, I believe Volatility will be high and trading will likely improve rather than deteriorate, as no bull or bear can be dominaint

2) CSPC Parma (HK: 1093)

This is an company that kind of blows my mind. They have a payout ration of around 30% and has been increasing their dividends in the last 5 years. 


If you look at margin and ROE, ROIC, it is amazing? right? I couldnt believe my eyes. Payout ration is 30%. Topline and bottom line are also increasing. 

https://secure.fundsupermart.com/fsm/stocks/factsheet/HKEX.1093/CSPC-PHARMA

You can look at other metrics at the above link yourself. It also has a strong balance sheet. I spent quite a bit of time reading up the AR and etc, wanted to know why is such a strong growing company has a shares price that is near 25 years low. 

Someone in the community pointed out that China has various regulartion regarding medicine, and basically, the few that will affect CSPC are 1) Centralised competitive tenders 2) Risk of having medicine removed from rebursement list (No longer subsidized), and one such drug has sales fallen by 60% because of this. 3) No mark up of medicine by hospitals (Hospitals has no incentive to push the sales of certain medicine)

However, the numbers show that it is still growing, especially is Class 1 medicine (Exclusive rights), also they have a record number of medicine to be luanched and in the pipleline as compared to the last 4-5 years. I feel that the market is undervaluing it. 

https://www.dbs.com.sg/treasures/aics/templatedata/article/equity/data/en/DBSV/012014/1093_HK.xml
https://www.dbs.com.sg/treasures/aics/templatedata/article/equity/data/en/DBSV/012014/1093_HK.xml

3) YZJ

YZJ aim to pay out  at least 30% of earnings, although they woud pump it out in a rough year. 2020, EPS is unlikely to exceed 2019, the growth so come in 2021. There are a few trends going for it. Order book improvement is one direct factor. Over the years, YZJ has proven to be able to build a repetoire of different vessels, it has even managed to deliver a rig. Containers freight is improving, low sulphur emisson requirement will drive scrapping of older vessels. 


Conclusion:
While it is likely that dividends will be increase, it is of no use if you suffer capital loss. YZJ has an HTM business, and has taken an significant impairment in the latest quarter. CSPC has very strong balance sheet, but the dividend yield is low, around 2.5 % (They already started intern dividends).

Kayhian dividend yield is still attractive, but going beyond 2021, it is any guess. Also, it has went from $1.08 to $1.4. I would think the MOS is dwindling. 

One need patience, for CSPC to grow over a few years, and time is always a risk. 

As for recovery of dividends, the banks have potenial, once MAS lift the ceiling for dividends, and the relief scheme expires without spike in bad loans and credit cost. I however, put this as a hope rather than a high probabality. 

Enjoy Christmas. Leave a comment if you have ideas of dividend growers. 

 


Monday, December 21, 2020

Companies with Free Cash Flow Yield of more than 10%

 After reading the book "Market Masters" a  few times, there are at least 2 "Masters" that swear by free cash flow yield. In fact, they both mentioned 8- 10% yield as a very attractive proposition. 

Hence, I did a scan of all the companies in my portfolio, excluding the reits and financial companies, and discovered several such companies. I calculated FCF yield by using 5 years average OCF minus  5 year average PPE minus 5 year Purchase of Business (If regular and significant), then divide by number of shares and then finally the price. Data drawn from FSM Screener. I gave Sembcorp Industries a miss, since it is considered a "new" business after demerger and Keppel, because its number are too volatile, for the numbers to be meaningful.

They are:

1) Lung Kee (HK 0255) (15%)

2)Yangzijiang (13%)

3) Lonking (HK3339) (13%)

4) *Diary Farm International (13%)

Closely followed by Silverlake Axis and Singpost in the 8-9 % range.

Do note that Diary farm has a debt to equity ratio of 3, according to the website.

Surprisingly, favourites like ST engineering and SATS, are having yield of 2.3-2.5%. 


Looking at the small sample of counters I have, it seems obvious that not all sectors yield such high FCF. Manufacturing seem to be a good place to look. 

Also, I believe valuation is due to a lot of factors, including potential for growth in the next 2-3 years. Or rather, the potential to exceed growth expectations. I am currently finalizing the qualitative part of my screen by giving it a score, beyond quantity numbers like FCF yield. Will share more later. 

Also, the FCF yield is taken with current ratio and debt to equity ratio, and the 2 companies that stand out are Lung Kee (Current ratio >4 and debt to equity ratio below 0.1) and YZJ (Current ratio >3 and debt to equity ratio below 0.2)

YZJ has HTM business. I did send an email asking what impact if any on the recent regulation on Fintech and Shadow Banking in china has on their HTM busines. But I receive no reply. Nonetheless, I do owned YZJ Shares. 

Some Companies that are recently listed like Koufu, are not calculated as the Integrated Facility increase Capex but is not reflective on it recurring Capex, and for Singpost, I only used 3 years average, not including the years when they are building SIngpost Center