Author: Evergreen Investing

Kingsmen: NERF matters

Kingsmen’s plan to develop NERF attractions is one of the key reasons why I invested in this company so I wanted to share what I learned during the 2018 annual general meeting. The total investment in NERF Marina Square is expected to be around SGD5 million so Kingmen can survive the hit even  if this attraction is a complete failure. This 18,000 square feet attraction will be sited near the Marina Square taxi stand (the one near Mindchamps pre-school) and tourist bus centre so it should benefit from decent footfall. Marina Square NERF will have several large activity zones...

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Portfolio review: Q1 2019 results

All five Evergreen stocks (iFAST, Kingsmen, SOG, China Aviation and HRNet) reported poor results for the first quarter of 2019 but I’m sticking with them. These companies have a history of producing great results and I’m giving them 2-3 years more before I consider selling. iFAST Revenue and net profit declined because of” a decrease in front-end commission income resulting from a significant drop in customers’ investment subscription in unit trusts”. This was one of the key risks mentioned in my thesis so it wasn’t a surprise to me. iFAST is one of the lowest cost investment platforms in Singapore...

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Singapore O&G’s 2018 AGM

SOG is one of the largest positions within my portfolio so I attended the Singapore O&G (SOG) annual shareholder meeting yesterday. Here are the key highlights: SOG market share for baby deliveries increased from 8.0% to 8.9% in 2018. While Dr Heng delivered the most babies within the group, it was the younger O&G doctors who have been driving growth in 2018. This is good news because it reduces dependence on the founding doctors. Management is aiming to achieve 15% market share in baby deliveries over the next five years. SOG aims to hire 2-3 like-minded doctors per year...

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SOG: Winning market share for 5th consecutive year

SOG’s cancer and O&G doctors gained recognition and won market share in 2018. SOG is one of my favourite medical stocks on the SGX. Their share of the private birth market grew for the fifth consecutive year. Based on their 2018 annual report, SOG specialists delivered 1,824 babies in 2018 which works out to a 8.9% market share of the private birth market. 1,824 babies in 2018. Let that sink in for a while. . . . 1,824 babies in 2018 . . That  works out to almost 5 babies a day! It’s pretty impressive because the company’s obstetrician...

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Kingsmen: Growing with the IRs

Kingsmen’s share price was up 7% this week on news involving a SGD9 billion expansion of the two integrated resorts (IRs) in Singapore. Universal Studios Singapore will be adding more attractions and Kingsmen should be well positioned to win some work as they have done SGD100 million of work on the existing theme park which includes the Waterworld and Shrek attractions. Meanwhile, the expansion of MICE facilities in Marina Bay Sands should also lead to more opportunities for Kingsmen given the company’s strong track record in trade shows and exhibitions. The expansion of both IRs could lead to some...

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iFAST update: Moat growing wider

iFAST has published their 2018 annual report with the company reporting the highest growth in client accounts since it was listed. These statistics were previously released in their February 2019 results presentation but they jumped out at me when I was reading their annual report. As of end 2018, the number of client accounts grew 27% year on year to 330,000 which marks the highest growth for the company since it was listed in 2014. The company’s B2B platform also showed healthy growth with the number of advisers using the platform growing 15% year on year. As I mentioned...

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Five Evergreen shares and one test

HRNet and Singapore O&G are the most profitable companies in my portfolio based on the gross profitability ratio. After reading Michael Mauboussin’s excellent Base Rate Book, I applied the gross profitability screen to my existing portfolio. Gross profitability or Gross Profits divided by Total Assets measures a company’s ability to make money and is used as a measure of quality.  Professor Robert Novy-Marx found that the share price of the most profitable non-financial companies tended to outperform the least profitable companies. According to Novy-Marx, a 33% gross profitability ratio is generally regarded as attractive. Lastly, companies with high gross...

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Kingsmen: Keep calm and wait for Jewel

Azure Capital has noticed Kingsmen. Check out Terence Wong’s post on IN. 2019 will be a big year for Kingsmen. Kingsmen’s Retail and Interiors segment could get a boost from the opening of Jewel Changi Airport (280 shops and restaurants) in April 2019. This segment’s 2018 pretax earnings is already up 90% year on year and Kingsmen’s clients including COACH, Hugo Boss and Kate Spade have stores in Jewel. Funan Mall, another major development is also opening in June 2019. Any boost in retail earnings can be reinvested in the company’s promising NERF business. Net cash makes up around...

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SOG 4Q18 results: Look beyond the surface

Singapore O&G (SOG), one of my highest conviction holdings reported bad headline results on Friday night. But after digging in, the good news seem to outweigh the bad. 4Q18 revenue grew 10% year on year, recurring net profit was up 39% year on year, operating cash flow was up and the final dividend grew 1%. However, reported net profit fell 98% because of a goodwill charge on the company’s dermatology segment. The dermatology segment has been performing poorly since its 2016 acquisition with revenue and net profit falling every year due to fierce foreign competition. SOG still has SGD24...

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HRNet: Perfect fit

HRNet is the largest staffing company in Singapore and has a company culture which is laser-focused on maximising profits.With the company present in 13 Asian growth cities and a 24 year track record of profitable operations, this growth company should be a perfect fit for my income portfolio. The company’s annual report is well written, focused on shareholder-friendly growth and reminds me of great companies like Berkshire Hathaway, Amazon and Netflix. HRNet’s story began in 1992 with the company growing from a 4 man team in a 300 square feet office to over 1,000 employees in 2018 across 10...

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SOG continues organic growth in Q3 2018

Singapore O&G (SOG) reported a strong set of Q3 results with the company reporting year on year and quarter on quarter revenue growth. Q3 revenue was up 18% year on year while net profit grew 23% year on year to SGD2.8 million. The improved results is especially impressive since it was driven by organic growth and not acquisitions. Existing clinics benefited from a higher patient load  and the ramp-up of two pediatricians who joined in 2017. Q3 revenue grew 18% year on year and 5% quarter on quarter with growth across its O&G segment (SGD0.8 million), cancer (SGD0.5 million)...

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SOG continues organic growth in Q3 2018

Singapore O&G (SOG) reported a strong set of Q3 results with the company reporting year on year and quarter on quarter revenue growth. Q3 revenue was up 18% year on year while net profit grew 23% year on year to SGD2.8 million. The improved results is especially impressive since it was driven by organic growth and not acquisitions. Existing clinics benefited from a higher patient load  and the ramp-up of two pediatricians who joined in 2017. Q3 revenue grew 18% year on year and 5% quarter on quarter with growth across its O&G segment (SGD0.8 million), cancer (SGD0.5 million)...

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CAO Q3 2018 update: Short term headwinds

CAO reported a weak set of results for the third quarter of 2018 with net profit falling 8% year on year. Weaker earnings from its largest associate, Shanghai Pudong (SPIA) and OKYC was the main cause. SPIA was hit with lower earnings despite higher refuelling volumes. SPIA is expanding its facilities (5th runway operational in 1H 2018 and new satellite terminal in 2019) so the company has been expanding headcount and investing in re-fuelling equipment. As the exclusive international jet fuel supplier in Pudong airport, SPIA will benefit from the growth of Pudong airport. The company’s gross profit performance was...

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China Aviation Oil (Part 2)

I previously wrote about how China Aviation Oil (CAO) offers value and growth at a price of SGD1.45 per share. A recent history of SATS is a useful analogy for understanding CAO’s potential to become a successful and independent aviation fuel supplier. SATS is a gateway services and food solutions provider that mainly serves the aviation industry and was once 80% owned by Singapore Airlines. Although both companies operate in different parts of the aviation industry, I see a few similarities between SATS and CAO. Both companies derive 40-50% of their annual revenue from a single client and are...

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China Aviation Oil: Flying high

China Aviation Oil is one of the few SGX-listed companies which offers both growth and value. China is the fastest aviation growth market in the world with Boeing predicting Chinese outbound passenger traffic to grow 3x from 2017-37. But how can one invest in this trend? Buying airline shares can be risky because of fierce competition while Chinese internet travel companies such as Ctrip are trading at lofty valuations. With a trailing 10x P/E, China Aviation Oil offers a safer and cheaper way for me to benefit from China’s high growth aviation industry. China Aviation Oil has the sole...

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