Thursday, April 28, 2016

BATTLE : Aims Amp Capital Reit vs SoilBuild Reit

At the moment, the most talked about movie is Captain America - Civil War (by the way, if you are watching the movie, which you should, do take note that there are 2 after credit scenes!). The theme of this sequel is on the war between two superhero teams (Ironman vs Captain America). 

So what is this blockbuster movie got to do with this post?

Recently, there are two industry/business REITS constantly  pop-up in the group chat with a couple of my financial blogger friends (actually, these are the "KT" [Kang Tao], aka lobang in Hokkien, shared by them) : Aims Amp Capital Industrial REIT vs Soilbuild REIT. On first glance, it seems that both of them are equally promising (from dividend yield perspective), however, if you can only choose one to invest, which one would you choose? With this question in mind, it inspired me to come out with a Civil War style comparison. 

I've hand-picked 10 parameters that I personally interested to evaluate and put them side by side to FACE OFF. 

The result is as per following :

So, who is the winner? Team AA (Iron Man) or Team SoilBuild (Captain America)? 

Going by the above comparison, it seems that Team SoilBuild (Captain America) has an upper hand!

Cheers!

DYODD (Do Your Own Due Diligent)

Thursday, April 21, 2016

ISOTeam - My CNAV Analysis

Recently, one small cap company keep popping up in my private group chat with a few of the like-minded financial bloggers. Hence, decided to do a quick CNAV (Conservative Net Asset Value) Analysis.

The company in question is ISOTeam Ltd (5WF.SI). In fact, it happens to be one of the RHB's top 25 small cap picks for 2016 (whatever it means to you).  

ISOTeam Ltd. operates as a building maintenance and estate upgrading company in Singapore. It operates through Repair and Redecoration (R&R), Addition and Alteration (A&A), and Others segments. It primarily serves town councils, government bodies, and building owners. ISOTeam Ltd. was founded in 1998 and listed in SGX on 12 Jul 2013 (IPO Price : $0.11).

The Key Quantitative Indicators of CNAV Strategy (Basing on the 2015 Annual Report):

Net Asset Value (NAV) = $0.163
Conservative Net Asset Value (CNAV2) = $0.044
Current Price = $0.32
Discount For CNAV2 = -209%

Conclusion : From the price's perspective, it is traded above the CNAV2 as well as NAV. 

The P.O.F Scores of CNAV Strategy:

Profitability Score = 1 (With the PE ratio of 11.2)
Operational Efficiency = 1 (with three consecutive years of positive operating cashflow)
Financial Efficiency = 1 (Debt To Equity Ratio of 63%)

Conclusion : A perfect POF indicators.

Other information:
1. The company has a record year in 2015 with a strong Balance Sheet.
2. In Year 2015, the company declared 1.15 cents of dividend (Dividend Yield of 3.6% basing on the current price)
3. In Feb 2016, the company declared 1-For-1 Bonus.
4. Top 5 shareholders of the company are:

Click here for the pdf copy of ISOTeam's 2015 Annual Report!

ISOTeam is not a CNAV stock but still worth a second look for potential GROWTH play. 

Are you vested on this counter? What is your take?

Cheers!

Note : Do You Own Due Diligence!

P/S:
I've learnt this not-difficult-to-do calculation from the Value Investing Mastery Course (Big Fat Purse) last year. Immediately after the one day course, I am on my own to calculate the CNAV myself. With the help of the idiot-proof spreadsheet (provided free after the course), it makes calculating the CNAV a breeze.

Oh, by the way, they are still conducting the one-full-day Value Investing Master Course at $98, which is unbelievable. From what I know, most of their classes, which usually happen on the weekend, are fully booked. So, if you are interested to learn more about Value Investing and how to calculate the CNAV, you should find out more from the horse's mouth!

Sunday, April 17, 2016

Tai Sin Electric - My CNAV Analysis

Just recently, a friend of mine text me and share with me a "Kang Tao" (Hokkien for opportunity) counter, a small cap company called Tai Sin Electric Ltd (500.SI). Of course, the first thing I do is to do my due diligent and dig in further. 

Hence this post on Tai Sin Electronics' CNAV analysis.

Tai Sin Electric is an investment holding company, manufactures, trades in, and distributes cable and wire products. The company operates in Cable & Wire, Switchboard, Electrical Material Distribution, Test & Inspection, and Others segments. It primarily operates in Singapore, Malaysia, Brunei, Vietnam, and Indonesia. The company was founded in 1980, listed in SESDAQ in 1998 and subsequently transferred to the SGX Main Board in 2015.

The Key Quantitative Indicators of CNAV Strategy (Basing on the 2015 Annual Report):

Net Asset Value (NAV) = $0.35
Conservative Net Asset Value (CNAV2) = $0.137
Current Price = $0.32
Discount For CNAV2 = -132%

Conclusion : From the price's perspective, it is traded above the CNAV2 but is marginally below the NAV. 

The P.O.F Scores of CNAV Strategy:
Profitability Score = 1 (With the PE ratio of 8)

Operational Efficiency = 1 (with three consecutive years of positive operating cashflow)

Financial Efficiency = 1 (Debt To Equity Ratio of 36%)

Conclusion : A perfect POF indicators.

Other information:
1. The company has a strong Balance Sheet with positive Free Cash Flow of about $22 mil.
2. For the past 3 years, the company has a consistent dividend yield of about 6.9%.
3. For FY2015, the Group’s turnover for the year declined by 5.66% to $289.96 million from $307.35 million for the previous financial year.
4. For FY2015, the Group’s gross profit was $54.43 million, a drop of 13.52%, compared to the previous financial year. Profit before tax declined 22.08% to $20.43 million. Earnings per share was 3.92 cents as compared to 4.96 cents in the previous financial year.

Click here for the pdf copy of Tai Sin Electronics' 2015 Annual Report!

Tai Sin Electric is not a CNAV stock but worth a second look for potential income play. 

Are you vested on this counter? What is your take?

Cheers!

Note : Do You Own Due Diligence!

P/S:
I've learnt this not-difficult-to-do calculation from the Value Investing Mastery Course (Big Fat Purse) last year. Immediately after the one day course, I am on my own to calculate the CNAV myself. With the help of the idiot-proof spreadsheet (provided free after the course), it makes calculating the CNAV a breeze.

Oh, by the way, they are still conducting the one-full-day Value Investing Master Course at $98, which is unbelievable. From what I know, most of their classes, which usually happen on the weekend, are fully booked. So, if you are interested to learn more about Value Investing and how to calculate the CNAV, you should find out more from the horse's mouth! 

Tuesday, April 12, 2016

3 Smart Investments to Spend Your First Salary On (Guest Post)

If you’ve just gotten your first pay cheque, it’s tempting to spend it all. But if you want to have that dream vacation to Europe, or be the sort who buys a house at 25, you’d best think about savings and investments instead.

You don’t need $50,000 for a big trading portfolio either. Here’s how you can start simple but still see results:


  1. Join a Bank’s Blue Chip Investment Programme

Both DBS and OCBC now have a blue chip investment programme. This allows you to purchase shares in blue chip companies, without having to buy in lots.

A blue chip company refers to one of the 30 biggest companies (in terms of market capitalisation) on the Straits Times Index. These are companies such as DBS, Singtel, and Comfort DelGro - they are large and well established, and are make for low risk investments. Usually, buying shares in these companies can be costly, as you need to purchase in lots of 100 or 1,000 shares (e.g. DBS shares are around $15 at the time of writing, so buying a single lot of 1000 shares would cost around $15,000.)

Under the banks’ blue chip investment programmes however, you do not need to buy in lots. Instead, you set aside an amount you can afford each month (minimum of just $100), and the bank will acquire as many shares for you as possible.

So if you set aside $200 and pick DBS for example, the bank would acquire around 13 shares of DBS for you at $15 per share. If the price were to fall to $10 per share next month, you would get 20 shares, and so on.

This is a good way to start investing in reliable companies, even on a small pay cheque.

Regarding your returns, speak with the banker about the dividend pay-outs for the various blue chip companies. This typically happens every six months. You get your returns from both the dividend pay-outs of the companies, as well as money from when you sell the acquired shares.

2. Buy the Straits Times Index Fund

It can be a headache to pick which company to invest in. Even if you are financially savvy enough to read annual reports, and understand P/E and D/E ratios, you may not have the time to do it. A simple way around this is to pick a passive index fund, such as the Straits Times Index.

You can purchase ST Index funds through blue chip investment programmes as well (see point 1). When your purchase units in this fund, you are spreading your money across all 30 blue chip companies, instead of picking specific companies. This provides a degree of diversification - your assets will not be impacted by the underperformance of one specific company or industry*.

(*This being said, do note that the bulk of the ST Index Fund is tied to banks, so movements in the financial sector may carry slightly more weight than movements in sectors like healthcare, transport, etc.)

As of 2014, the ST Index fund generated annualised returns of over eight per cent per annum. This is high in comparison to many financial products, which will deliver returns of about five per cent per annum. However, note that there are no guarantees with regard to your returns, so speak to a wealth manager before making decisions.

3. Buy an Insurance Policy

It’s best to buy your insurance policy while you are still young. Premiums go up with age, and as you develop medical conditions. There are two ways you can do this. The first is to buy insurance for protection only, such as term insurance. This has a low cost and no payout, but will cover most of your medical needs.

The second is to use an insurance policy as a form of investment. Endowment policies, as well as Investment Linked Policies (ILPs), will invest your money in a fund for you. Returns are typically three to five per cent for endowment policies, and seven to nine per cent for ILPs (but these are not guaranteed.) Note, however, that the returns may be diminished by the fees charged - this can be found as the distribution cost, or Effect of Deduction, on an insurance policy.

It is generally more expensive to get an insurer to invest for you, as opposed to doing it yourself. However, if you have no interest or inclination toward finance, using a Financial Advisor is still better than leaving your money in the bank.

Seek Expert Advice Before You Buy

Seek advice from wealth managers or financial advisors before you buy. However, note that this does not mean you must buy from the person you consult. Get opinions from different qualified experts before choosing where to put your money.

As a rule of thumb, you should aim to get returns of at least five per cent, if you are aiming to build a retirement fund. This outpaces Singapore’s rate of inflation, which is historically around three per cent.


By Ryan Ong 
Ryan has been writing about finance for the last 10 years. He currently helps people save time and money at SingSaver.com.sg.

Saturday, April 9, 2016

What Is Your Reaction Towards Investment Setback?

As the saying goes "Life is 10% what happens to you AND 90% how you react to it". Same thing applies to your investment journey too. 

If you can still remember your investment journey, especially during the initial phase, I am sure you have made some "silly" or bad trade that turned into a loss or two (if you are an exceptional one i.e. never made any losses at all, probably you will never come to my site anyway). I guess we all been through that and might still making such losses in the future, the key is not whether it will happens or not, but how we react to it? 

Fundamentally, there are three broad reaction that we can make after such investment "setback" :

1. Treat it as a blip and move on. Of course, if there is/are lessons to be learnt, we should learn from our mistakes. 

2. Shift approach. There are many road lead to Rome and we might be attuned to certain style of investment, find your "holly grail" and stick to it after that. One of my friend learnt that Value Investing is not for him and hence switch it to trading, he has since doing pretty well till now. 

3. Give up! Since you are no longer in the game, you will naturally shift focus to other aspect of your life. Might be a good thing as investment might not be your cup of tea in the first place. 

There is no right or wrong answer in whatever reaction you are making. The key is not to let such temporary "set back" affect your daily life, emotionally! Keep going and keep smiling ;-) 

Personally, I am more towards type 1 of people, what about you?

Cheers!

Wednesday, April 6, 2016

CEI Contract Manufacturing - My CNAV Analysis

I first came across CEI Contract Manufacturing (AVV.SI) when am doing a random stock filtering. It appears in the top few position of my filtered list. After learning about its lucrative previous year dividend yield of more than 7%, I decided to dig in further and did a quick CNAV (Conservative Net Asset Value) Analysis.

CEI Contract Manufacturing  provides contract manufacturing services (including printed circuit board and box-build assembly services, as well as equipment design, cable harness assembly, and manufacturing services) to industrial equipment market in the United States, Europe, and Asia Pacific. 

The Key Quantitative Indicators of CNAV Strategy (Basing on the 2015 Annual Report):

Net Asset Value (NAV) = $0.462
Conservative Net Asset Value (CNAV2) = $0.165
Current Price = $0.72
Discount For CNAV2 = NA

Conclusion : From the price's perspective, it is traded above the CNAV2 and NAV and hence trading at premium. 

The P.O.F Scores of CNAV Strategy:
Profitability Score = 1 (With the PE ratio of 5.8)

Operational Efficiency = 1 (with three consecutive years of positive operating cashflow)

Financial Efficiency = 1 (Debt To Equity Ratio of 82%)

Conclusion : A perfect POF indicators.

Other information:
1. From the beginning of the year 2016, CEI has increased 41% from $0.51 to $0.72 (last closed today). So, at the current level, it is kind of pricey (1.55 Price/Book).
2. The company has a strong Balance Sheet
3. As at 31 December 2015, the Group has orders on hand worth $49.0 million (31 December 2014: $59.8 million) most of which are expected to be fulfilled within the current financial year.
4. The company has declared a $0.052 dividend (7.2% Dividend Yield), to be paid on 27th Apr 2016 (XD on 12th Apr 2016).

Click here for the pdf copy of CEI Contract Manufacturing's 2015 Annual Report!

CEI Contract Manufacturing is definitely not a CNAV stock but I will still keep it in my watchlist for potential income play. 

Are you vested on this counter? What is your take?

Cheers!

Note : Do You Own Due Diligence!

Friday, April 1, 2016

The Season Of Flooding Annual Reports And Exercising War Chest?

For Value Investors, these two months (April and Month) will be interesting one! First, there will be tons and tons of Annual Reports to read and digest, second there is this famous trading adage of "Sell in May and go away" we need to "content" with (means time to dish out the war chest!?).

I've just received the Cache Logistic Trust Annual Report in a small packet. I like the slogan "Spreading Our Wings". It is environmental friendly as it report is in the form of CD-ROM. Yes, I am aware that at the current phase of technology, PC or Laptop with CD-ROM drive might not be that common anymore (for one, my laptop do not come with CD-ROM). 

In any case, I like the idea as it is one of the way to protect our nature (yes, I am talking about trees here) and it is more convenient to read it online (or in electronic version) anyway.

What about you? Do you like to read Annual Reports in hardcopy or in e version? 
Cache Logistics Trust - Annual Report
In terms of exercising the war chest, potentially in the next two months. Following are my potential counters (DYODD) :

1. Croesus Retail Trust (Target entry price : $0.75 to $0.77). Click here to check out my take on this counter. 

2. Hock Lian Seng (Target entry price : $0.35 to $0.37). Click here to check out my take on this counter. 

What about you? 

Cheers!
  
Note : DYODD (Do Your Own Due Diligent)

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