Author Archive

Posted on March 8, 2010 - by musicwhiz

Kingsmen Creatives – Analysis of Purchase Part 1

I purchased shares in Kingsmen Creative on January 25 and 26, 2010, and the following few postings will elucidate the thought process and analysis which went into the rationale for the purchase decision. Note that some of the factors which led to this decision are qualitative by nature, and are also known as “intangibles”, but are nevertheless important in assessing if a company is suitable for investment. Though an objective assessment would be difficult to predict if a Company will continue to do well, a somewhat rational look at the business model and Management quality does give some hints as to what may come. That said, an investor should always prepare for some risk of partial permanent loss of capital, no matter how thorough or detailed the research is. My job is to minimize the risk of loss, and maximize the probability of gains over a decent period of time; and as the business grows.

This analysis will be split into several sections, of which I will cover the industry in which Kingsmen operates, its competitive climate, its financials, fundamentals and business units (divisions); and also its prospects, plans and investment merits (and demerits). Part 1 will touch on their business, industry characteristics and Profit and Loss + Balance Sheet.
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Posted on March 2, 2010 - by musicwhiz

Tat Hong – 1H FY 2010 Analysis and Review Part 3

In this final Part 3, we will look at Tat Hong’s Inventory levels and I will comment on their slow but steady transformation into a “rental” company and also their building of their tower crane business in China. I will also give a quick summary and low down on the progress of their planned China expansion so far, based on announcements filed with the SGXNet.

Crane Fleet Profile

Total Fleet Profile Review
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Posted on March 1, 2010 - by musicwhiz

February 2010 Portfolio Summary and Review

February 2010 was a somewhat interesting month, as troubles continued with PIGS (Portugal, Italy, Greece and Spain) amid talks of a potential bailout by Germany and France. Stock markets globally were on jitters due to fears of the potential fallout from these 4 countries, and the Euro currency was also threatened as people dumped it in favour of the USD as the Euro zone countries were perceived to be having numerous problems. There were even some calls for these countries to drop the Euro to prevent it from sliding further against the Greenback. Greece did get a little incensed at the Germans because Germany had implied that Greece had been imprudent with their finances, which led them into their current predicament. In retaliation, Greece demanded for more war reparations from Germany, citing the fact that Germany had yet to fully account for the atrocities they committed during World War II! This mud-slinging is likely to carry on for a while but Germany and France are unlikely to stand idly by and watch Greece sink, as a lot of their banks’ debts are also tied to Greek banks, so if Greece fails, the chain reaction would be catastrophic.

China also gave much cause for concern when it raised its reserve ratio twice within one month, reasons being possible overheating of its economy and also its frothy property market. Since China has remained the “bastion of strength” throughout the entire global financial crisis, managing to grow by a breakneck rate of 8-9% even amidst a global slump, many observers saw the tightening measures as a possible derailment to the global economic recovery. If China were to put the brakes on their red-hot growth, what would the impact be on other nations which are still struggling to overcome the effects of the deep recession?
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Posted on February 23, 2010 - by musicwhiz

Sun Tzu – War On Business Reality TV Series

During the Chinese New Year festive holidays, I managed to catch an episode of a new TV series called “Sun Tzu – War On Business”. It is hosted by a very prominent and prolific entrepreneur called Mr. James Sun (“James”), who made a name for himself as the only Asian to have appeared in the finals of the reality TV Series “The Apprentice”. In 1995, at just the tender age of 18, he set up his own investment firm Sun & Associates and invested US$5,000 of his savings into popular auction portal eBay. Six months later, he was staring at a huge profit of US$150,000. This and other instances of savviness has made him a successful entrepreneur and investor, and next on the cards is a hedge fund he plans to set up, targeting an annual return of 35% per annum. The Sunday Times also did an interview with James which was published on February 14, 2010, and it features some of his money habits and also details how he built his wealth.

What was intruiging, though, was his new TV show which was a sort of reality TV show in which James looks at businesses from top down and advises on how to improve the business, by focusing on aspects such as Management capabilities, division of labour, human resource, technical skills, operational details and financial management. (more…)

Posted on February 18, 2010 - by musicwhiz

GRP – 1H FY 2010 Analysis and Review

On February 5, 2010, GRP released their 1H FY 2010 results. Considering the Company has hardly any news and updates in 6 months (it does not report quarterly), suffice to say this was quite a “momentous” event indeed! I immediately sat down to thoroughly run through its financials, commentary and to read about its plans and prospects. I shall now do an analysis and summary here and offer my comments on what to expect from the company in the next 6 months.

Profit and Loss Analysis

Disappointingly, revenues had dipped 5.4% from S$13.4 million in 1H FY 2009 to S$12.7 million in 1H FY 2010. In one traces back further, revenues had dipped 11.5% from 1H FY 2008 to 1H FY 2009, from S$15.2 million to S$13.4 million, so this is a 2-year continuous decline and does not bode well as it appears to be an effect of the global financial crisis; which has crimped demand for GRP’s products. This is probably also a result of oil prices which have remained low and which has affected its Hoses and Marine segment.
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Posted on February 12, 2010 - by musicwhiz

Property Investing – A Discussion on the Pros and Cons

It is with some trepidation and reluctance that I venture into the topic of property investing, for Singapore is a country whereby its residents fall in love with property, and where most of the rich folk make their money from properties. Personally, I also know a few relatives who are sitting on very good rental yields on property which was purchased a few decades ago. With the steady and relentless rise in property prices, for both HDB flats and private properties, I think now has come the time for me to voice out my views on this matter. Firstly, it is to highlight the salient aspects of property investing; secondly it is also a “diary” of sorts to remind myself of my thoughts at this point in time (when property is hitting new all-time highs).

The Essence of Property Investing

Property investing generally differs from equity investing in one important aspect – it makes use of leverage and collateral to “multiply” gains. (more…)

Posted on February 6, 2010 - by musicwhiz

Tat Hong – 1H FY 2010 Analysis and Review Part 2

In Part 2, I will be examining the Business Unit performance for Tat Hong’s various divisions (they have 5 in total) and commenting on the margins for each division. Please note that the financial crisis may skew the numbers during this period, thus it may not be representative of the actual gross margins in terms of the average performance for each division over the long-term. I will need more time and data to compile in order to see the trend of gross margins and also the core performance of each division as a comparison against Management’s stated growth plans.

Business Unit Revenue Analysis

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Posted on February 1, 2010 - by musicwhiz

January 2010 Portfolio Summary and Review

I guess the most earth-shattering piece of news this month is the announcement by American President Obama about new controls over banks and what they can do. On January 22, 2010, he proposed that commercial banks be prohibited from entering the investment business; and to just stick to what banks do best – provide loans and earning money from loans and interest. Basically, this is the concept of the “old-fashioned bank” and seeks to move backwards in terms of banks’ allowable activities and roles. This has similarities with the Glass Steagall Act enacted in 1933 as a result of the Great Depression, and was a direct legislative measure in response to the failure of 5,000 banks during that harrowing period. In addition, he mentions 2 additional reforms – that of ensuring that banks (which received taxpayer-insured deposits), are not allowed to put such monies at risk by operating hedge funds and private equity funds; and to prevent big banks from further merging and consolidating till America is left with just a “few super large banks”, which will NOT benefit the average American. Of course, the markets did not take to his comments very well and a savage sell-down ensued, with the DJIA falling over 500 points in just 3 days.
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Posted on January 27, 2010 - by musicwhiz

Divestment of China Fishery – Reasons and Rationale

I guess there’s a time for everything, and the time had finally come for me to close the curtain on my investment in China Fishery. On the morning of January 21, 2010, I decided to divest my entire stake in China Fishery at a price of about S$1.92, netting a gain of about 87% on my initial investment (excluding dividends). This decision did not come lightly, and follows on the heels of a somewhat love-hate relationship I have with this company, and also the turmoil and conflicts within my brain which came along in the process of owning it. Taking into account my total holding period of about 2 years 2 months, the annual return is approximately 40% (non-compounded).

On the morning of January 21, 2010, China Fishery (“CFG”) announced their intention to dual-list (secondary offering of shares) on the Stock Exchange of Oslo Bors, located in Norway. The aim of the dual listing was to increase recognition of China Fishery as many fishing and fish processing companies were listed on Oslo Bors (there are currently three – Aker Seafoods, Leroy Seafood Group and Austevoll Seafood). (more…)

Posted on January 22, 2010 - by musicwhiz

Investment Sins Part 7 – Gluttony

With the dawn of the new decade, I felt it was an opportune time to continue this Investment Sins series. I last left off with Anger/Wrath and now the next in line is “Gluttony”. Gluttony is defined as greed personified, and is basically an extreme case of wanting to eat more and more, even when one ceases to be hungry. A glutton will also eat for the sake of eating, which brings me to the description of this investment sin. Note: All these investment sins are described from the book “The 7 Deadly Sins of Investing” by Maury Fertig, which can be found in all good bookstores.

Signs of an Investor Afflicted by Gluttony

The book illustrates four examples of investors who are afflicted by gluttony. Are you afflicted as well? The four signs are described below:-

1) Buying in the worst possible markets

Normally, the correct mindset for an investor to adopt is to buy in plunging markets and sell in markets which are soaring on hope and optimism. (more…)