Author Archive

Posted on March 10, 2010 - by Market Uncle

Do we need to monitor the stock market so closely?

Hectic but fruitful life after a new entrant

Ever since my girl was born and my confinement lady left, life have been very hectic, tiring and sometimes frustrating. Eventually, when she learnt to smile at us, its had been one of the happiest moment of my life and instantly felt all this was worth it :). Looking back, my last post was more than 3 months ago and I haven’t really got the time to meddle with my portfolio or look up company reports ever since.

Missed opportunities?

As my girl grow up, nearing her fourth month on earth (not counting the time she spent evolving in my wife’s womb), she finally seems to be able to adjust to our earthly culture and give me some peace to do my stuff without constantly crying and requiring us to decipher what she want. So finally I an able to find time to stock take on my portfolio, read up a little on my companies and what had gone on in the last 3 months. Surprisingly (at least to me), I neither didn’t miss much of the action nor any really great opportunities. As far as fundamentals go, the reporting seasons only occur once every 3 months and the last one was just concluded. Looking at the results and outlook stated in the financial reports of my companies and those I’m interested in, none really warrant much action and there isn’t really much changes in their stock price for me to bang wall on missed opportunities. Read more…

Posted on December 30, 2009 - by Market Uncle

Investing in REITs – Really for the yield?

Business model of typical REIT

People invest in Real Estate Investment Trust (REIT) primarily for the stable dividend yield. REITs are supposed to provide good source of passive income for those with neither the cash nor the leverage capacity to invest in typical properties for passive rental income. Is this really so?

Before answering that question, let’s look at the business model of a typical REIT. In layman terms, REIT acquire properties and lease them out for rental income. The funds for acquisition comes either from shareholders (share issue), banks (loans) or both. REIT is supposed to pay out ALL profit from rental income less all other business expenses (including bank loan interest) required to keep the REIT alive.
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Posted on December 14, 2009 - by Market Uncle

6/6 Hindsight vs 0/6 Foresight

6/6 Hindsight

Comment and analysis articles started popping up everywhere after Dubai World requested creditors to delay debt repayments for 6 months. Articles explaining how the collapsed of these property castles built on shaky grounds of leverage was just a matter of time and listed so many warning signs that any idiot could predict this crisis with ease. This kind of postdated prediction also occured after the subprime crisis erupted in the United States.

While it is true that genuine warning signs were indeed present and if people took heed, many of such crises could have been avoided. But in this era of information barrage, where one has to sieve real information from fake, good from bad and useful from useless, spotting a few true red flags from countless fake cry wolves are always a challenge.

0/6 Foresight
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Posted on November 22, 2009 - by Market Uncle

I bought MacArthurCook Industrial REIT on 18 Nov — a bet gone wrong?

1. 6 November 2009: MacArthurCook Industrial REIT (MI-REIT) announced a severely value destructive recapitalisation plan on the 6 November 2009.
2. 11 November 2009: Cambridge Industrial Trust (CIT) annouced the usage of $10.5m out of $28m from recent private placement to acquire 9.76% interest in MI-REIT.
3. 16 November 2009: CIT alerted MI-REIT unitholders to the value destructive nature of the recapitalisation plan and urge them to vote against the resolution at the EGM on 23 November. They intend to vote out the managers of MI-REIT and install themselves as the manager of the REIT.
4. 17 – 20 November: Separate rallying announcements, newspaper ads by CIT and MI-REIT to seek support against and for the recapitalisation plan respectively
5. 20 November: MAS announced that it will not approve managers of CIT to manage MI-REIT due to potential conflict of interest.

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Posted on November 2, 2009 - by Market Uncle

Cut loss on United Food and Ocean Sky, invested into Suntec REIT on 28 Oct 2009

United Food Holdings

Mistakes are mistakes, no matter how they are packaged. United Food Holdings is one of the most spectacular value destructing business on my portfolio. Starting with a huge cash horde which translates into a large cash per share, it can easily qualify as one of my best cigar butt. But as time go one, the management demostrated outstanding capability to drain it with seemingly failed but huge investments (land, soya beans).

Ocean Sky International

Unlike United Food Holdings, I did not classify Ocean Sky as a cigar butt in the beginning. However, just like any typical manufacturers hit hard by the falling orders due to the ongoing economic recession, they are driven into quarterly losses. Read more…

Posted on October 10, 2009 - by Market Uncle

Reinvested remaining proceeds from SPC into KS Energy on 29 September 2009

Motivation

Despite the recent oil price correction from above USD $147 last year to current level fluctuating around USD $70, I believe the demand for crude oil for energy needs, and accompanying support services will surge again as the world economy gets back on its footing.

KS Energy

KS Energy operates in the oil & gas industry. It has 2 main core business segments, trading of capital equipment and provider of capital equipment chartering, drilling and rig management services. It is the latter that I see potential.

Business Performance

Ignoring other operating income that normally arose from divestment of investment or interest income, profitablitiy seems to turn the corner since 3Q 2008. With a lower base in 3Q 2008, 3Q 2009 should see a better improvement in earnings. Read more…

Posted on September 20, 2009 - by Market Uncle

Investing in gold, a worthwhile option?

As gold price rose past USD 1,000, there seems to be a renewed interest in investing in gold. I am pretty curious to find out whether this is a worthwhile adventure.

USD quoted commodities

As with many commodities such as crude oil, gold is quoted in USD. When USD depreciates against major world currencies, gold prices tend to rise in assumption value of gold remains unchanged (neglecting inflation to keep the discussion simple). If this assumption is true, then investing in gold for anybody leaving outside United States becomes more of forex investment than commodity investment.

Is gold expensive now?

The following charts shows the gold prices in USD and USD/SGD exchange rate.
source:

1. gold prices: http://www.goldprice.org/gold-price-history.html#36_year_gold_price
2. currency: http://sg.finance.yahoo.com/currency

Indeed, for Singaporeans, the gold price looks like a mirror image of USD/SGD exchange rate chart. Thus, is gold price expensive or cheap now? Read more…

Posted on September 7, 2009 - by Market Uncle

Reinvested funds from SPC divestment in Thomson Medical Centre on 28th August 2009

Motivation

I see potential in SPC and was prepared to hold on for the long term since I got it when the oil industry was in its doldrums. I was still hopeful that more than 10% of minority shareholders of SPC could hang on to their shares. Unfortunately, PetrolChina easily collected more than 90% of SPC’s shares and ‘forced’ me to divest my holdings. As a consolation, at least I’m fortunate to make slightly over 120% on my investment in SPC.

Anyway, with funds I raised from my sale of SPC, I plough some back into the market and bought Thomson Medical Centre, my 2nd investment into ‘growing or recovering’ but neglected businesses, after Food Junction (all in one day).

Thomson Medical Centre, TMC

One can read about TMC from their website and financial reports. In short, they aim to be a leading healthcare provider for women and children and its developments over the years indeed indicate that they are moving in the right direction. Other than the usual obstetrics and gynaecology (O&G), paediatric services and fertility treatment services, they set up the Thomson Women Cancer Centre, TWCC. TWCC is dedicated to the prevention, diagnosis and treatment of breast, gynaecological and colorectal tumours in women. Recently, they announced the setting up of the Thomson Chinese Medicine Pte. Ltd. Read more…

Posted on August 31, 2009 - by Market Uncle

Traded Tsit Wing for Food Junction on 28th August 2009

With this, I officially threw in the towel on Tsit Wing, making a meagre 8.5% (taking dividend into account) over 3 years. I could either continue to wait for their restructuring efforts to pay off (assuming they aren’t taken private successfully) or look somewhere. I chose the latter given the lack of visibility on how long the wait could be amid deteriorating performance, beginning even before the financial crisis started.

Food Junction

As the world economies embark on the uneven road towards recovery, opportunities to invest in cyclical businesses trapped in cyclical doldrums get harder to come by. After SPC, Courage Marine and CH Offshore, I had to look elsewhere and turned my attention towards stable, recovering businesses that is still thinly traded to signify lack of interest… yet. Re-investment into Super Coffeemix marked the beginning to this change of approach and Food Junction is the second one.

Business performance

If profit after tax (excluding other income) for 4Q exceed $595,000, I will be quite confident they are on the road towards a more convincing performance in 2010 and beyond, riding on the wave of economic recovery in Singapore and the region.

Reasons to be optimistic
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Posted on August 9, 2009 - by Market Uncle

Condominiums – Opportunity or Trap

Upgrade or downgrade?

I came across the following article in the 联合早报: 是享受还是受罪. It described someone nearing retirement who ‘upgraded’ to a condominium of 102 sqm and a new mortgage to pay off, by selling his fully paid up EA flat of 145 sqm. When enquired about his rationale, the simple answer was ” no choice, for the comfort, for a better external outlook, will have to suffer a bit”.

Selling like hot cakes

I read with both amusement and amazement of the recent craze for condominiums, with new units flying off the shelf like hot cakes. Am I missing something? Are residents here are getting really affluent in the midst of recession or is money raining in corners of Singapore I’m not aware of? While foreign investors could possibly scoop up a substantial number of private properties, residents made up a significant half of recent purchases, as I found out when I went ’sight seeing’ in one the recent showflats.

A natural upgrade?
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