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Dear Readers and Authors,

When I first started this site two and a half years ago, there weren’t many local Financial blogs but I’m glad to say now that this is not the case now. It’s really heartening to see more people willing to share their thoughts and experiences online. Unfortunately my current site is no longer capable of handling the large influx of new blogs. As some of you have known, I have been talking about revamping my site for some time and I have finally found a designer at a reasonable price. Although I hope to earn some pocket money from my site, my main focus is still on you – the readers and authors. I will not clutter my site with ads.  Content and readability is still my top priority.

The design of my new site will be pretty similar to http://tipd.com However, I will still like to hear your views and comments on what you will like to see in the new site so that I can discuss with the designer. Although I can’t promise that I will deliver all of them due to budget constraint, I can promise to look into every single one of them seriously and try my best to accommodate them.

I’m also looking for ideas on a new tag line. The current one “A Collection of Personal Finance and Investing Blogs” is more of a statement rather than a tagline. No prizes for coming out with a tagline but I will credit you for it in my about page.

Let’s hear your views ya.

PS: I have thought of a tagline: “New at your doorstep” but was told it is too general.

No related posts.

TimeWatch 24012010

Time Watch revenue has been increasing steadily since 2007. Kind of surprised because it’s competitors experienced negative growth in FY2009. Time Watch latest results has already seen an increased in earnings.  However there are some queries from SGX on its Financial reports and I will be scrutinizing it. In addition, what contributed to the strong earnings in FY2009?

He thought that this could also be why Time Watch currently trades at a price to earnings (PE) ratio of about six times, compared to peer stocks which trade for as much as 13 times PE.

Michael Tung Chief executive Time Watch Bussiness Times Jan 19 , 2010

It seems like Mr Tung is correct in saying that its share price does not correctly reflect its growth. For FY 2009, the growth rate was almost 20% yet it’s P/E ratio even at my buy price of $0.20 is only 6.9.  However, it’s peers in Singapore are also trading at that range. Cortina Holdings seems to be the most similar to Time Watch in terms of revenue.  If Mr Tung claims that its peers in Shanghai and HK is trading at a P/E of 13 is true, then a dual list is the best bet for its price to be reflected correctly.

Next is to analyze Time Watch competitors in Shanghai and HK.

21 January 2010

Was contemplating on using all my excess cash to buy Time Watch but decided against it. As this is highly speculative, at the end of the day I want to be able to have a good rest.

Dow is bleeding badly and I am very certain that Time Watch will fall tomorrow. Should I hold, sell or average down? Time Watch represents 8% of my portfolio. A further drop in price may offer an opportunity to pick up more. I expect at least a 20% drop (price before news of dual list) before I evaluate my next step. Hopefully, it will not occur this week so that I have enough time to do more research this weekend.

20 January 2010

I have to admit that I was greedy. I bought this company after reading in the Business Times about the possibility of a dual list.  Knowing how all the share prices surge after the news. I decided to join the crowd.

PE before news of dual list was 5 times and Time Watch claim that its peers are trading at 13 times. The share price has surged 20% after the news.  At my buying price of $0.20, PE based on last FY earnings is still a reasonable 7.6. The latest quarter results seems alright too.

Risk:

• I did a quick check on a local competitor – The Hour Glass and it’s trading at a PE of about 7 which is about right.
• The company claim that its own brand name “Tian Wang” is one of the best selling watch in China. However a quick check in the internet comes out with little information.

• Retailing a variety of products including jewellery, cosmetics, electronic products and dried food products…

  This sounds like diworsification to me. Shouldn’t it be concentrating on its core business – watches?

If what Time Watch claim to be true – it should be trading at a PE of 13, there is still a 80% upside to the price. However, the main driving force will be the successful dual list in either HK or Shanghai.

Related posts:

1. The Hype over Dual Listings
2. China Animal Healthcare – joins the band wagon and announces its intention for a dual listing in Hong Kong…..
3. Yield Watch:Big Down day for Mobile One

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The reason that I bought it is because someone told me that that this stock is going to rise soon. That was over a year ago and I believe ’soon’ will never arrive, at least not this year.

As some may know, I’m a avid fan of Peter Lynch and I am going to do a quick take on Lian Beng.

Lian Beng is a cyclical stock – pretty obvious given that it moves in sync with construction demand. I bought the stock in May 2008 at $0.380 which is at the downward cycle. For cyclical stocks, it is important to identify and buy it when the cycle is just about to begin or at the very least when the cycle is still at its infant stage. The latest financial report is pretty decent – profits are better than the previous quarter. However the business times reported that construction projects are easing and there’s a high chance that the number of projects will dip even further in 2011 – 2012. I believe it is true – with the completion of IR and related projects, I can’t think of any that can spur the construction industry. At it’s last close of $0.330, is it a good time to offload this stock and invest in others?

The PE ratio is very erratic. We know that the price peak at the end of 2007 and the EPS for FY2008 was 1.36 cents. FY2009 posted even better results – a EPS of 3.21 cents and a growth rate of over 50% but the price of the stock started to tumble after Jan 2008. Why? Two possible reasons. The first is the financial crisis and the second is that the stock is priced way too high. I looked at the half year financial statement published in 2008 and although the EPS has increased to 1.72 cents, at its peak price of $0.795, it represent a whopping PE ratio of 45. Well in that case, if I were to buy at $0.380, the PE ratio will only be 22. Surely a good buy since FY2007 PE was 24.

The latest half year statement shows that EPS has increased again by another 28% but the growth rate only increased by 4.4%. This is pretty strange. On closer inspection, it is mainly due to lower finance cost and taxation. If revenue don’t pick up in the later half of the year, even with lower expenses, Lian Beng will experience a negative growth rate for FY2010.

Using the latest half year statement, I compared Lian Beng’s PE ratio against two of its competitors Chip Eng Seng and Hiap Hoe. Their current PE ratio for 9months is 6.13 and 6.42 respectively. Since Lian Beng’s  statement is only for half year, I’ll assume that EPS stays constant and the PE ratio now works out to 11.89.

Is Lian Beng full priced, over-priced or under-priced? I would think it is fully priced but if a PE ratio of 11.89 is fully priced, what about Chip Eng Seng and Hip Hoe with a low PE of only 6?

Related posts:

1. Hock Lian Seng – had a good meeting with the management yesterday…
2. Golf course analysis of Hock Lian Seng IPO…..appears good…..look out for our more detailed review by our analyst later this week for confirmation
3. Changes to my stock pick / portfolio stocks….following a company visit yesterday

No related posts.

The Invest Fair is here again. I’m sure for some this is an event not to be missed.

Maybe I’m a little biased but I don’t see how attending a fair can make me invest better. I’m pretty sure it is more of a motivational talk telling you that investing is better than saving, start investing now etc. I will probably go home inspired but with more questions than answers in my mind. For those wanting to know what to invest in, those ‘gurus’ will probably paint a vague outlook of the economy and recommend some classes of stock. If you wanna learn in depth about TA and FA, you will probably be ask to sign up for some paid courses. After all, you can only expect so much for something that is free ya?

Of course the Invest Fair ain’t all that bad – it is a good place to socialize and network, and if you see Uncles and Aunties flocking to a particular stock, it is time to take notice too. With so much information available on the media, internet and papers, I will give the Invest Fair a miss rather than succumb to information overload. Besides, I don’t have to be there to know what’s going on. I’m pretty sure bloggers will start blogging about it provided that they do not have the same thoughts as me.

Anyone keen to share their thoughts on Invest Fair 2009?

Related posts:

1. What should I Invest In?
2. Why invest in China?
3. December 2009 and FY 2009 Portfolio Summary and Review

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This is the first time that I received a query on personal finance issues from a reader. I’m pretty ’shocked’ actually because I am not a qualified financial adviser but the average Joe facing the same day to day financial problems like man on the street.

The reader has given me permission to post it my site and what’s better than to open this question to people here whom I believe have more knowledge and real life experience than me. I will of course shed my 2 cents worth when  I get back home later.

Hi,

Just want to check your opinion on my outstanding HDB loan. I have a 30 year HDB loan, now in the 10th year, and thus have serviced most of the interest. Was doing some calculations to determine if it is better to pay the principal to reduce interest on the HDB load, or to leave the money with CPF and earn interest.

Status

Outstanding HDB Loan: S$ 205,000.00

Interest: 2.6% per annum monthly rest

Monthly: S$ 1,138.00 till end 2028.

CPF Ordinary Balance: S$ 54,000.00

Interest: 2.5% per annum monthly rest

Scenario 1

If I don’t touch the CPF:

- Total interest paid for HDB Loan from now till 2028: approx. S$ 55,000.00

- Total interest gained from CPF based on principal of S$ 54,000.00 till 2028: approx. S$ 32,800.00

- That means net interest paid is approx. S$ 22,200.00

Scenario 2

If I use the CPF to pay the outstanding HDB loan:

- Total interest paid for HDB Remaining Loan (S$ 150,000.00): approx. S$ 27,100.00

- This factors in shortening the loan period to 2022 using the same monthly payment value

Net result: It is better to keep the money in CPF, as the net is a gain of approx. S$ 4,900.00 over the next 20 years vs paying the principal loan now.

Would appreciate if you can provide some advice or correct my calculations. I’m using Excel CUMIPMT and FV formulas for calculations.

You can publish this on your blog.

Thanks,
Yong Hwee

Related posts:

1. Make full use of interest free study loan
2. Will You Try To Pay Off Your Housing Loan ASAP If You Have One?
3. Know Your Interest?

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Welcome to the third Macquarie Warrant Hotshot competition! The real-time simulated trading contest designed to improve your knowledge of warrant investing without risking any capital. In fact, you could stand to win the $20,000 Grand Prize if you are crowned Singapore’s Warrant Hotshot.

The Hotshot contest is suitable for investors of all skill levels from newcomers to experienced warrant traders. Participants will begin the contest with $100K Hotshot dollars and prizes will be awarded to those who are able to generate the largest profits by trading Macquarie warrants in the simulated trading environment. Warrant prices in the contest will mirror the real warrant prices on the SGX. Read more…

Related posts:

1. Analysis of Macquarie International Infrastructure Fund (MIIF)
2. Should I Be A Trader?
3. Breakthrough Discovery In Forex Trading

Photo by >NeoGaboX<

As the number of blogs that I aggregate grow, it is becoming more and more time consuming to update them into my site. It will soon come to a point where I can no longer accommodate all of them. Hence, in my quest to become a more efficient finance and investing blog aggregator, where both readers and bloggers can benefit, I have created a new site – www.TheFinanceRSS.com.

TheFinanceRSS is similar to most aggregators out there like AllTop and Popurls but the major difference is that I will focus  on Finance and Investing Blogs only. Hence, you won’t see feeds from the major newspapers or financial magazines.

This site is still in the pilot phase or Phase 1 as I call it – plain layout, some blogs have not been added in yet and a little messy (just simple feeds with no categorizing whatsoever).  I will like to measure the response first before I proceed to the next phase.

Feedback and suggestions are warmly welcome.
Feel free to drop me a comment or email me at admin@thefinance.sg

Related posts:

1. Kevin’s blog US markets tumble on Goldman fears last Friday….but Greece debt woes one step closer to being solved = more volatile markets ahead…..BUT
2. Website Revamp
3. Sucker’s Choice in Financial Freedom

However, during the recent recovery, LMA shares increased by 60% (from 12 to 18 cents) and it is still buying back its shares.This was the catalyst that made me decide to do a more detailed analysis.

LMA - 14 June 09

First the positive signs. It comes of no surprised, that the number of treasury shares increased by almost 6% from 2007 to 2008. As of the last share buy back on 14 June ‘09, the percentage of treasury shares has increased to 7.16%. However, it seems that the pace of the share back buy has slowed down. By comparing the percentage of shares bought in the first half against the second half of 2008,  the pace of the share buy back about doubled in the second half. Hence based on the trend, I can expect the percentage of treasury shares to increase to at least 10% by the end of 2009.

The other positive news is debt and cash. Except for allowance for doubtful debts, there is no long or short term debt obligations. Cash and cash equivalents has also increase steadily. The cash value per share based on the number of issued and outstanding in 1QFY2009 is US$0.063 or about SG$0.082  (US$1 = SG$1.4). Based on the current share price of $0.175, the cash portion is about 50%.

Net Asset value. I have not  gone into detail on what assets LMA own or how it classify its assets but its encourage that it’s NAV has also been increasing steadily. At US$0.173 or SG$0.242, it’s about 30% above the current share price.

There are also a few risks involved. While net sales is generally positive, the same can’t be said of earnings per share. This is due to the intense price competition with its competitor Ambu. LMA is now focusing on single use product and I hope that will boasts its earnings.

Lawsuit with Ambu on its patent infringement in France, Netherlands and Germany. This lawsuit has been going on for a couple of years now and currently LMA has won it’s lawsuit in Germany and is discussing on damages claim. It will be a plus if there is a substantial claim but I’m not sure how the other two law suits will have a impact on LMA balance sheet.

Treasury shares. There is still a small possibility that the buyback is not done with the shareholders’ best interest in mind – e.g. buying back its stock to improve financial ratios such as EPS or P/E.

I am still anticipating a maket correction soon and I have set myself a price of $0.12 or in October to buy into LMA whichever is first. At t$0.12, assuming that cash position remains constant, it will represent 68% of the share price.

Related posts:

1. Insurance – Human Asset and Liability
2. China Fishery – 1H 2009 Financial Review and Analysis
3. Hongguo FY09 half year result

What makes it even more surprising is the statement below.

TM Asia Life can surely be proud of its unmatched record of never having to cut its bonus ever since its maiden bonus declaration to its participating policyholders in 1951.

Source: From an email article that I received

This is a very bold claim. I have no way of justifying it since I only purchased a policy from them last year but still, there must be some truth in it to be able to publish such a statement. I hope the same could be said of my current insurer.

In my last article on The dawn of a new year… I mentioned that I was contemplating on terminating my 20 year Endowment policy (year 2009 will be the 16th year) and I will like to ask readers here to vote. I will not necessarily make my decision based on the votes here but it will be a good opportunity to share and hear from you.

Policy Details

Plan Name: 20 Year Endowment

Coverage: S$10,000

Policy Date: 01 Apr 1994

Maturity Date: 01 April 2014

Annual Premium: $550.80

Endowment Plan returns

I paid a higher premium initially because of some riders which I duly canceled when constructing my insurance portfolio. Looking at the table above, if  I were to terminate my policy this year, I will incur a lost of nearly $900 or a loss of nearly 10%.  That’s not so bad if I were to divide it with 15 years, I have a negative returns of less than a percent annually.

I dug up my 2008 annual statement and calculated my returns based on their their highest and lowest projected value at maturity date – $14,832 and $13,866 respectively.  The returns doesn’t look fantastic either. 21.89%gain for 20 years based on the highest projected value transmutes to a little more than 1% annual returns!

The crux of it lies in the final few years where the returns increase substantially. I calculated my returns for the next 5 years only based on the highest projected value and my returns is a whopping 128.39% or 25.68% per year for 5yrs! I know that this is not because my investment suddenly become a 10 bagger but rather my bonus for holding my policy till maturity.

Hence my dilemma (I used the highest projected value for calculation):

• Carry on with the policy and hope that the I will attain the highest projected value.

or

• Surrender the policy at a lost of of $873 and a potential returns of 21.89% in 5 years and invest in a instrument that can generate 11% (be it capital or dividend gain) annually for the next 5 years.

My own personal view is that amid current market conditions, I am not optimistic in attaining the highest projected value in my 2008 statement. In fact, achieving even the lowest projected value might be a problem. However, it will also be difficult, given the small sum of money to find a instrument that can generate 11% annually.

As for coverage, I already have a insurance portfolio in place and  I  do not regard this plan as part of my insurance. The excess premium saved here can be put into other use (I’m thinking of bumping up my coverage in other areas). I have also spoken to my agent last year and he is neutral on my decision. I guess so as well since he does not recommend endowment plans nor did he sell me this policy.

I understand that every individual will have their own concerns and I will like to hear from you. Please also place your vote in the poll located in the sidebar.

PS: I have not mention the insurer name earlier because I want readers to read it in a fair and unbiased manner.

Here’s the clue to the insurer which is a little ironic in a way.

Trust us for life

Related posts:

1. Cost of surrendering an insurance policy
2. Should you terminate your lemons?
3. For whom is the whole life insurance meant for?