QAF FY2016 Results

QAF Revenue for FY15 $998,278 decreases by 11% to FY16 $889,520. Cost of material decreases by 13% from FY15 $521,069 to FY16 $453,121. Staff cost is reduced by 11% from FY15 $226,958 to FY16 $200,975. Overall, the management of the company is very prudent and good. Disregarding exceptional item of $59,375, the Profit before Taxation will be 130,615 - 59,375 = $71,240 which is still slightly higher than FY15. This is due to the cost control. Group revenue decreased by 11% to $889.5 million for financial year ended 31 December 2016 (‘FY 2016’) from $998.3 million for financial year ended 31 December 2015 (‘FY 2015’). The decrease in Group revenue is mainly attributable to deconsolidation of financial results of GBKL from that of the Group’s, as the Group sold 20% of its shareholdings in GBKL in April 2016 in compliance with regulatory requirements. This reduced the Group’s stake to 50% of GBKL’s total shareholdings. Accordingly, GBKL ceased to be a subsidiary of the Group and has become a Joint Venture of the Group. Increases in sales were achieved by all business segments of the Group – Bakery, Primary Production and Trading & Logistics. The Group’s Bakery segment achieved overall increase in sales through the launch of new products, increased market penetration as well as from newly installed additional production facilities.

Group Finance Costs (interest expense) increased by 13% to $2.9 million in FY 2016 as compared to $2.6 million in FY 2015 due to higher borrowings.

Current liabilities decreases from 220,356 in FY15 to 165,392 in FY16. Non-current liabilities increases from 51,494 in FY15 to 78,863 in FY16. Overall the total liabilities for FY16 decreases compared to FY15.

On cash flow statements, Net Cash from Operating Activites increases from $86m in FY15 to $101m in FY16. The Free Cash Flow increases for FY16.

The Group is exposed to certain markets in the region which are expected to experience continuing slow growth in 2017. Furthermore, the regional currencies may face volatility and pressure. These factors may result in reduced consumer spending and higher costs. The Group also faces risks of escalating costs especially higher energy and fuel costs in line with higher oil prices as well as higher flour prices in certain markets. In the bakery business, the Group is facing heightened competition; in Singapore with an existing
bread company and in the Philippines with a new entrant to the market. In Malaysia, any further weakening in Malaysian Ringgit (“MYR”) will result in higher import prices, in particular, raw materials and distribution costs. While the Group is taking steps to mitigate the above, these factors are expected to continue to be challenging.

Although the company is facing competition and rise in cost, with its strong balance sheet, it is able to strategize to increase its global footprint, especially in China market. 

28/2/2017
Yesterday, for QAF, Mr Market overreacted and drop up to 11% before recovering back to $1.42. It could be profit taking or people felt that the price they sold the stake of GBKL at an undervalued price. I am waiting for further correction. 

Sembcorp Marine FY 2016

Sembcorp Marine Group returned to profitability in FY2016 and generated operating cashflow of S$669million, compared with negative S$867million for FY2015. Net Profit for FY16 was S$79 million.

Significant deliveries made in FY 2016 include:- 

• Noble Lloyd Noble, the world’s largest ultra high-specification harsh environment jack-up rig, to Noble Corporation; 

• Safe Zephyrus harsh environment accommodation semi-submersible to Prosafe; • FPSO Professor John Evans Atta Mills to MODEC; 

• Maersk Highlander harsh environment jack-up rig for the Culzean Field; 

• Ivar Aasen Process, Drilling and Quarters (PDQ) Platform Topsides to Det Norske; 

• Six LNG Modules for the Wheatstone LNG project for Chevron. 

• Siemens Dudgeon project/ Yamal LNG processing module 

Key ongoing projects include: 

•Engineering & construction of world’s largest semi-submersible crane vessel for Heerema; 

• Design and construction of new Floating Storage and Offloading (FSO) vessel for MODEC; •Engineering, Procurement and Construction (EPC) of harsh environment topside modules for Maersk Oil, including a central processing facility, wellhead platform and living quarters platform; 

• FPSO Pioneiro de Libra conversion for Libra field, offshore Brazil; 

• FPSO topsides modules construction/integration at EJA Yard in Brazil; 

• Construction of power generation module at SLP yard, UK; 

• LNG modules work at Indonesian yards; 

The management also addressed restructuring measures to reduce manpower, salary freeze and adjustment to variable remuneration for management staff to reduce operating cost. This is good but they should do more to reduce pay from the management staff. The new yard CAPEX will only proceed if required for new contracts else it will be deferred.

The divestment of COSCO shipyard group will realise a gain of S$48.32m.

Borrowings increased by 23% from 3,380 in FY15 to 4,155 in FY16.

One of the new story which I think is a good idea is Gravifloat. Sembcorp Marine increased stake in Gravifloat to 56% after buying an additional 44% for US$38 million. Gravifloat was formed to design, deliver and operate redeployable, gravity-based, modularised LNG and LPG Terminals for installation in shallow waters. Incorporated in Norway in 2006 as a spin-off of LMG Marin (a marine & engineering and naval architecture company), Gravifloat is headquartered in Bergen. Gravifloat technology allows the LNG terminal to be fully built and completed at a shipyard and installed in shallow waters to facilitate direct ship loading of LNG. It offers a more cost effective solution compared with FSRU (floating, storage and regasification units) and land terminals, and can be designed for both liquefaction and receiving terminal services.

Overall, I believe Sembcorp Marine has performed very well for Q4 FY16. Give it another quarter and it should reinforce the fact that the worst is over and company will slowly recover through this big oil and gas correction. Do note that it does not mean Sembcorp Marine will suddenly outperform as oil majors have not increased their CAPEX much and there are excessive tonnage in the market. The repair and innovation to reduce cost for contractors and vessel owners will be critical for the next few years.

Sembcorp FY 2016

Sembcorp revenue decreases by 17.2% from FY15 9,544,621 to FY16 7,907,048. Cost of Sales decreases by 22.8% from FY15 8,812,960 to FY16 6,801,916. I see restructuring in terms of reduction in terms General & Administrative expenses to $360,827. General & administrative expenses for 4Q16 were lower due to lower allowance for doubtful debts. 4Q16 also included refinancing costs for Thermal Powertech Corporation India Limited (TPCIL). Allowance for doubtful debts and bad debts in 4Q16 mainly pertained to Utilities’ India operations and Marine is at $4,671. 4Q15 included Marine’s allowance made for rig building contracts and from Utilities’ exiting of chemical feedstock business in Singapore is at $201,470. Allowance made for impairment losses for interests in associate pertained to Marine is $2,120. Write-back of impairment of Utilities UK’s fixed assets consequent to the extension of customers’ contracts is $6,707. This indicates to me the worst may be over for Sembmarine. 

Do note on the increases in finance costs for FY16 402,009 from FY15 237,984, which is an uplift of 68.9%. Higher finance costs in 4Q16 was mainly due to Utilities’ India thermal power plants which achieved commercial operation in phases and finance costs were no longer capitalized but expensed to profit or loss, and included other charges relating to TPCIL’s refinancing. Higher finance costs in 4Q16 was also due to Marine’s higher bank borrowings. 

On the Balance Sheet, it is seen that both current liabilities and non current liabilities are inching upwards. The total liabilities increase by about $2b. The net assets and equity shares of subsidiaries, property, plant and equipment which are collaterised for secured loans should already been heavily discounted by the banks. 

On the Cashflow Statements, Sembcorp Group shows overall improvement in the cash status. Cash flows from operating activities before changes in working capital were $1,324.9 million in FY16. Net cash from operating activities for FY16 was mainly due to Marine’s receipts from completed rig building projects; partially offset by Utilities’ India working capital for operations. Net cash outflow from investing activities for FY16 was $800.6 million, mainly from step-up acquisition of subsidiaries and purchase of property, plant and equipment primarily for the expansion and operation of Marine’s yards, partially offset by proceeds from divestment of SembAP and dividends received. 

Utilities' Prospect
Utilities’ China operations delivered record profits in 2016. Its performance in 2017 is expected to remain steady although lower than 2016 due to the expiry of the Yangcheng cooperative joint venture agreement in 2016. In India, Sembcorp has two thermal power plants and renewable energy assets totaling over 3,600 MW. The second thermal power plant, SGPL, commenced full commercial operations in February 2017 but has yet to secure long-term power purchase agreements. As the spot and short-term power tariffs remain weak, its performance is expected to be adversely affected. In Singapore, the centralised utilities, gas and solid waste management businesses are expected to remain steady. However, the power business continues to face intense competition. Operating performance in the other regions is expected to be stable. The Utilities' business remains focused on operational excellence as well as the execution of its pipeline of projects to deliver long-term growth.  

Marine's Prospect
While prospects for the oil & gas industry have taken a more positive turn following the November 2016 agreement by OPEC and major non-OPEC countries to cut production, Sembcorp Marine believes a more robust recovery may take longer. Despite the challenging outlook and intense competition, Sembcorp Marine believes that growth prospects for the offshore and marine industry remain positive in the medium to long term. However, with increasing enquiries for non-drilling solutions, Sembcorp Marine foresees an earlier recovery in demand for fixed platforms, FPSO and FSO conversions and new-builds in the next few years. Rising global demand for gas also augers well for its broad-based LNG solutions and capabilities. Sembcorp Marine believes these are the key segments that will offer opportunities in 2017. Sembcorp Marine’s strategy and focus remain anchored on strengthening and optimising its talent pool; pursuing operational excellence in executing its projects; investing in new capabilities, products and technological innovation to help grow its order book; and prudently managing its financial resources to preserve financial flexibility and ensure overall sustainability of its business.

Dividend
FY2016 Dividend is at 8.0 cents per share which is less than FY2015 11 cents per share.

Conclusion
I used to hold large position (in my context) in Sembcorp. I am interested in this company again as I think the worst is over and turnaround is here. 

What should you do when the price drops?

I saw a post on a facebook page and somebody mentioned that he had been quite successful all these while and did not experience a major correction before and asked for an opinion on what should he do if the price suddenly dropped by 40%?

I can vaguely remember it was either 2007 or 2008 when I was in my 2nd job with about 30k in shares. Then suddenly, the market just crashed. I saw the share price dropped like a falling dagger. It was S$2 and suddenly it became S$1.4...$1.3...$1.2. Something inside you tanked as well. Imagine it is 300k or 3m, how will you feel?

If you are a value investor, you will definitely experience several crashes during your investment journey. Do you have the grit to hang on to your shares and will not be affected by others who are frantically selling their shares? 

Markets are highly unpredictable and can be extremely volatile from time to time. Ben Graham has a brilliant metaphor to describe this and will teach you how to handle sudden drop in market price. 

He introduces Mr Market, every day Mr Market will offer you a price for the stock. You have the option to buy, sell or do nothing. It doesn't matter what you do to Mr Market, he will be back the next day. 

Mr Market is a manic depressive guy. When he is in a good mood, he gets greedy and quotes ridiculously high prices. When he is depressed and fearful, he will quote you dirt cheap price. 

The daily price does not reflect how well the company is actually performing. When Mr Market is depressed, it is the best time to scope up shares of good companies and sell when Mr Market is overly optimistic. Sometimes, it pays to be still and do nothing. 

Raffles Medical FY 2016

Revenue increases from 410,535 in FY 2015 to 473,608 in FY 2016 which is an increase of 15.4%. It was noted that staff costs inevitably increases by 18.8% from 203,537 in FY 2015 to 241,736 in FY 2016. In the financial statement itself, it explains that the staff cost increases due to acquisitions and increases in hiring of doctors, nurses and administrative personnel. However, the increase in staff cost does not directly translate to an increase in revenue. I feel investors should not penalise Raffles Medical heavily on this. The results can only be justified after another 1-2 quarters. Profit attributable to owners is slightly higher than the previous year at 70,210 in FY 2016 compared to 69,291 in FY 2015.

It was further explained that investment properties increased by S$27.6 million due to investment property development expenditure for Raffles Hospital Extension and Raffles Medical Shanghai Hospital Project. The Group's net cash position increased from S$53.8 million as at 31 December 2015 to S$81.5 million as at 31 December 2016. This was mainly contributed by the strong operating cash flows from its business operations. Unsecured loans repayable after one year as 31/12/2016 of S$16.947 million is easily covered by its cash position. 

Net cash from operating activities increases from S$72.816 million in FY 2015 to S$78.854 million in FY 2016. Purchase of PPE decreases by almost half. In addition, Raffles Medical made a big sum of repayment of bank loans at approximately S$98 million.

Raffles Holland V has almost 95% of the space committed. I went to the site and took a look at it. 

The picture is taken from courtesy of Yahoo. As you can see one of the key tenants is DBS with a range of restaurants on the 2nd floor. I believe this business unit will contribute and boost the Group's results in the coming year.

Overall, I feel this is a resilient business, easy to comprehend and highly lucrative. I am a customer of Raffles Medical Group, I will do a full body check up and it will easily cost S$500+ per session (during the good times and covered under company's medical insurance to a certain limit). The hospital at Bugis is usually packed with wealthy students from overseas and expats. 

ST Engineering FY2016

Profit before tax (PBT) dropped 6% to $590.6m from $630.3m, and net profit attributable to shareholders (Net profit) was 8% lower at $484.5m from $529.0m in the prior year.

Aerospace sector revenue increases by 19% from 2096 in 2015 FY to 2493 in 2016 FY. Profit before tax (PBT) increases by 3%. Main geographical improvement is in Europe which sees a rise of revenue by 226%.

Electronics sector revenue increases by 10% from 1743 in 2015 FY to 1910 in 2016 FY. Profit before tax (PBT) increases by 9%. 

Land Systems revenue decreases by 6% from 1401 in 2015 FY to 1312 in 2016 FY. Profit before tax decreases by 66% from 65 in 2015 to 22.2 in 2016 FY. 

Marine sees a decrease by 12% from 958 in FY 2015 to 841 in FY 2016. PBT decreases by 15% from 88.3 in FY 2015 to 75.1 in FY 2016. Free Cash Flow is still positive.

Overall, the business is stable and a consistent strong yield stock. On 17th Feb, it shot up by 6.8%.

Preparation for Interview as a Securities Dealer

The stock market is, without doubt, one of the greatest tools ever invented for building wealth. 

What was once the domain of the rich or the investment professional has now turned into the vehicle of choice for everyone to grow their personal wealth. 

So that nearly anybody can own stocks.

What kind of investor are you? 

Investment Style

Active or Passive Investment.

Time Frame

How much time do you want to spend on investing?

How active do you want to be/how involved can you be?

When do you need your invested monies?

Risk Tolerance

Are you comfortable with short term decreases in investment value?

Reasons for becoming a trader

Results oriented traded vs ego driven trader

My style -> work one-on-one as a personal stock broker, offer investment ideas, analyse your portfolio, let my customers execute orders online for buy and sell to save on commission.

Risk and return have a direct relationship. Generally, the greater the level of risk, the greater the expected return. However, greater risk may also lead to greater losses, so the investor needs to determine the level of risk tolerance.

1. Why are you the best candidate for us? Ans: I have strong interest in this field, I have been investing for the last 10 years and construct a portfolio of close to a million. I am determined to make this business a successful one which will be a win-win situation for both the brokerage house and myself.
2. What are your short term career goals? Ans: I intend to grow the business till 4k per month for take home salary within 6 months.
3. Have you worked in sales before? Ans: Yes, since graduation all my roles involve sales element. We need to prospect and close sales.
4. How do you conduct research on companies and markets? Ans: I research on the company management, business, valuation and financial. Management is on who the top guys are, their remuneration, whether their interest with the shareholders are aligned. Business - what industry is the business in and what sort of competitive advantage does the company has over others. Valuation will be determined by DCF model. Financial is derived from financial statements.
5. What qualities do you feel are essential to being a successful stock broker? Ans: Driven, Build rapport easily and trustworthy
6. What do you know about our firm? Ans: 
   Lim & Tan Securities was established in 1973. Its main activity is stock broking and the main focus of the company is the retail market. Believing in providing cutting-edge technology to its clients, Lim & Tan Securities was amongst the first to introduce Internet Share Trading in Singapore in October 1998.
   In line with its belief in providing a fast and convenient way for clients to trade shares Online, multiple channels are provided for clients to access its easy-to-navigate Online trading platform to check prices and trade. This includes the Mobile trading channel using mobile phones, where clients can view streaming live prices, which was added in June 2008. Subsequently in 2011 and early 2012, it introduced iPhone, Android and iPad Apps for more convenient on-the-go trading under its Online trading brand name, limtan.com.sg.
   Currently Lim & Tan offers a trade charting application, LTS Station, where clients can trade using technical charting tools, insert trade diary comments on the charts and also view up to 10 years of their trade history with Lim & Tan Securities.
7. Take me through a recent portfolio you have won over. Ans: I manage my mother's portfolio.
8. Tell me something about yourself that I wouldn't know from reading your resume. Ans: I like to spend my personal reading books.
9. Give me an example of a time you successfully handled a high pressure situation. Ans: I am in Vietnam and I was working to close the contract and started preparation of project procedures at the same time.
10. Where do you predict interest rates going in the next 6 months? Ans: I believe it will be go up slowly.
11. How do you manage working in a constantly stressful environment? Ans: I enjoy momentum and stressful environment, it helps to keep me upbeat. I will unwind after work by exercising and spending with the family.
12. Why do you want to work for our Broker Firm? Ans: I have all my networth in this company. 
13. Are you comfortable cold calling? Tell me about any cold calling experience that you have. Ans: Throughout my career, I need to cold call potential customer and tell them about the company. 
14. Bring your resume to life. Ans: I started my career in the shipyard building and repairing vessels, after which I was handpicked by the CEO to change to marketing role. I got onto a sales manager role and was stationed in Perth for two years, doing project management and sales work in Perth. I came back to Singapore once the project was completed and changed to subsea diving sector, followed by my present role. Elaborate from there.
15. What is your proudest career accomplishment to date? Ans: I manage to secure a USD 42m project and this project was very complex, involves a lot of stakeholders including Pertamina and main contractor in Jakarta. 
16. Would you buy stock in the market right now? Ans: I am always buying stock regardless to how the market is.
17. Tell me where the STI closed at yesterday? Ans: 3107
18. Our industry has a very high turn over rate. Why do you feel you will be one to make it long term in this industry? Ans: Alot of them left the industry are because they cannot make sufficient money and need to draw down from their savings. This business takes time to build like other business. I do not need to rely mainly on this source of income and I can last longer in this business than most.
19. What is the most recent business article you have read? What were your thoughts on the story? Ans: I read on the scorecard of Singapore Q4 2016. It outperforms due to the manufacturing uptick. Personally I think Singapore is in a difficult situation and we are very vulnerable in this open economy. My take is Singapore will continue to deteriorate for the next decade. 
20. Would you consider yourself a calculated risk taker? Ans: Yes, like most entrepreneurs, I take calculated risk.
21. What is your favorite financial market information resource? Ans: Bloomberg
22. If given this opportunity, how would you build trust with our clients? Ans: I will go through a know your client system, understand their requirement and what is their financial goals to be achieved. Then I can start to plan accordingly with them. This is the best way to build trust. Nobody wants to be sold a product but if they know that I have their best interest, they will grow to trust me.
23. What is the largest portfolio you have managed? Ans: I have managed close to 1m, presently standing at 950k.
24. How would you market yourself? Why is that an important part of being a stock broker? Ans: I will engage social media and online resources such as investingnote.com to market myself. Marketing is important for client acquisition. 
25. What do you enjoy about sales? Ans: I enjoy meeting people
26. Are you comfortable generating leads? Tell me about your experience doing so. Ans: I used to cold call client and talk to them to get potential business. I am comfortable in talking to people on the street as well which I intend to do so through road shows.
27. Does money drive you to succeed? What other factors motivate you? Ans: Money does drive me to succeed. Other factors such as freedom and family.

UOB FY2016

UOB produces another stable quarter. FY 16 profit is S$3.1 bn, which is slightly lower YoY. The higher net interest income and fee income offset by lower investment income. Net interest income up 1.3% to S$5bn, led by healthy loan growth. Loans are up 8.8% YoY, with selective targeting of quality credits. The NIM is -6 bps to 1.71%, although it has stablised over last 2 quarters. Non-interest income remains flat at S$3.1 bn. Higher fee income rises 2.5% YoY which is offset by lower trading and investment income which is reduced by 8.1% YoY.

Portfolio quality is broadly stable. NPL ratio is up slightly at 1.5% with high general allowances-to-loans ratio of 1.2%.

Bottom line is dampened by higher allowances from offshore and marine sector. We heard about the Ezra's impairment issue.

Wealth management did pretty well, focusing on growth on mass affluent and high net worth segments. It increases by 8% YoY, profit increases 16% YoY, at $93bn AUM as at end 2016.

Motivation

Recently, I have been listening alot to Gary Vaynerchuk's videos and I like this quote.

"My feeling is that no matter how much you like your job, you should aim to leave it and grow your own brand and business or partner with someone to do so, because as long as you are working for someone else you will never be living entirely true to yourself and your passion."

I had a phone call with a headhunter recently, he will like to recommend me to a different industry working as a business development manager. The pay package budget according to him is 10% higher than my existing package which seems very enticing. However, if I take up this job, I will be on the plane every single week to other countries, clocking insane air miles. I dislike entertainment now as it is a waste of my time. To me, the time is better spent with my family - my love ones. Furthermore, if I am always overseas for work, I will miss the formative years of my child.

"Stay within your circle of competence, do not need to worry about anything outside of it." I just need to reverse engineer and understand who I am, what I good at and focus on them. 




I need to determine my moat - competitive advantage.  I know pursue your passion is overrated and it will be better if you are doing something you are competent at. What if we can combine something you are good at and you are passionate about? It is the best of both worlds. 

ThaiBev 1Q17

Highlights

The fiscal year from "1 January to 31 December" is changed to "1 October to 30 September". The new fiscal year for 2016 was 9 months to 30th September 2016. The fiscal year 2017 will be 12 months from 1 October 2016 to 30 September 2017.


There is a decline in domestic consumption during mourning period in Thailand. Total sales revenue dropped 8% by Baht 4,051 million. Thaibev is dominant in spirits market. Maintain growth in net profit, net profit excluding F&N/FCL increased 12.1% to Baht 6,138 million, net profit including F&N/FCL jumped 29.1% to Baht 7,743 million. There is lower net loss in non-alcoholic segment.


Financials

The way business owners approach management is different from scholars running a corporation. Not a lot of scholars know how to run a business as they are not entrepreneurs to start with. If you look at the financial statements of Thaibev, you will realise the cost control aspect is amazing unlike our Singapore companies. The selling expenses, cost of goods sold, administrative expenses are decreased. Total expenses decreased from 44,857,176 in 2015 to 39,655,839 in 2016.


There is a consistent positive free cashflow, a constant paydown of debts for financing and the company is seating on a heap of cash. The cash is used to acquire companies like Vinamilk.


Conclusion

ThaiBev is a brilliant company. Good quarter results. The market has already reflected on this. Today the share price increases by 5%.

OCBC FY16 Financial Results

I will further elaborate the details at a later date. This is a season of reporting, lots of companies to follow up on.

Some key findings after reading the financial statements and watching the AGM, I understand that the following:

• Oil and Gas sector has not hit the bottom yet. Tell me about it, I am from this sector. There are no major projects in the pipeline. Even if there is any, it will take at least six months for FEED study, tendering and clarification stage, then they will proceed to project execution. The earliest recovery will be in 2018, if not 2019. Hence, CEO Samuel mentions that his concern is on the demand side and there are a lot of supply in the shipyards. The capital will not return to this sector in the near future. 
• OCBC has always been very prudent and price in their NPA accordingly whereas other two banks are seen to be converging towards this direction. In short, other two banks have no choice but start to recognize all the NPA. This is the key reason why I fancy this bank because of ownership by family members and they are very prudent in managing the business. 
• Banks are moving towards HNWI, they will reduce their exposure to SME. For every $1 banks pump in, SG government can match dollar for dollar. MAS will step in to encourage banks to lend money to SME. This is how the economy will grow. This will be interesting 

OCBC has increased quite a lot for NPA. OCBC is concerned with other sectors such retail which will deteriorate when the economy slows down. I feel SG is facing strong headwinds and we will experience a long winter. I believe SG government will use its reserve to stimulate the economy.


OCBC share price dropped from $9.75 to $9.3+... On hindsight, I was right but I can always sell at a later stage and save $6k.

Courage to take Risk

I read Ken Teng's blog and I like this quote "Life is inherently risky. There is only one big risk you should avoid at all costs, and that is the risk of doing nothing."

I remembered two years ago I wrote in one of my notes "I will make myself redundant on when I am 35". I was praying hard and God answers my prayers. God is good all the time and all the time he is good.

I see this year as a breakthrough year. However, I see this year full of challenges, dispairs and troughs. I hope to see some fruits of labour by end of this year as I need to put food on the table for the family.

Things I need to do for my stockbroker business:
1. Setup a system for the business
2. Setup stock filter system, stock analysis system, buy and sell system
3. Setup personal cashflow system
4. Setup business cashflow system

Singpost FY 2016/2017

Q3 FY16/17 Summary

Revenue rose 16.8 per cent to S$369.4 million for the third quarter of FY2016/2017. Underlying net profit was down 28.5 per cent due to operating losses in the US eCommerce business, Regional eCommerce Logistics Hub costs, and a decline in domestic mail volumes. Q3 FY2016/2017 dividend of 0.5 cent per share declared compared to 0.15 cent per share for last year. Operating Profit decreases from Q3 FY15/16 54.6M to Q3 FY16/17 37.3M. 

Revenue movement is pointing towards a stronger business than previous year. I like this part of the story where it is seen as a holistic e-commerce and logistics company with the support of Alibaba Group. This is a move by Alibaba to pit itself against Amazon. In fact those in ecommerce will understand Aliexpress/Alibaba complements Amazon instead of been seen as a competitor.

I dislike this portion of the acquisition. The question here is "Did Singpost overpay for the new headcount?"

I am concerned on the lower mail volumes. As we are moving into the digital age and alot companies are going green by using e-statements/ soft copy, the demand for letter mail will naturally decrease. 

Looking at Cashflow Statement, FY 2016/17 is a better year than FY 2015/2016 as all the CAPEX has been spent already. The total Free Cashflow is improving for this FY 2016/2017. However, I saw a big ticket item on increase in bank loan, increases from 253,113 to 522,031. Nonetheless,  Interest coverage ratio remained healthy at 24.7 times, compared to 42.1 times last year,  its cash position is relatively good but at the expense of cutting dividend. I still think Singpost's dividend policy should not be changed. They should reduce their staff cost, pay them with dividend. You can use your dividend model to derive the intrinsic share price of Singpost. This is on my watchlist for now.

13/2/2017

Mr Market whacked the share price of Singpost and share price tumbled more than 7 percent in the morning. TradeGlobal, the US ecommerce firm Singpost acquired in 2015 is expected to incur losses for full year. TradeGlobal accounted S$169 million in goodwill and S$43 million in customer relationships in the intangible asset. I am waiting patiently for the big cut in price.

14/3/2017
Today the share price hit lowest at 1,32, Let's see whether it will reach close to 1.25.

HPH Trust FY 2016

Overview

2016 full year throughput of HPH Trust’s deep-water ports was 6% below last year. YICT’s throughput was 4% below last year. Combined throughput of HIT, COSCOHIT and ACT dropped 8% yoy. Although outbound cargoes to US and EU showed a positive trajectory in 2016 and grew at a faster rate in the fourth quarter of 2016, YICT’s throughput overall declined compared to 2015 as it was adversely impacted by the decrease in empty and transshipment cargoes. The decline in HIT’s throughput was mainly attributed to weaker intra-Asia and transshipment cargoes. Revenue and other income was HK$11,912.3 million, HK$700.5 million or 6% below last year. 2016 full year NPAT was HK$2,954.0 million, HK$90.6 million or 3% below last year. NPAT attributable to unitholders was HK$1,713.6 million, HK$31.3 million or 2% below last year.

Outlook and Prospects

As a result of the strong rebound in economic activity in the US in the second half of 2016 supported by robust employment data, outbound cargoes to the US escalated in the fourth quarter of 2016. However, there remains a high level of uncertainty on the policy stance of the new US administration and its domestic and global ramifications on the US economy and trade in 2017.

The moderate uplift in outbound cargoes to Europe when compared to 2015 is largely supported by the stable, albeit slower pace of growth of the European economies in 2016. However, continued weak consumer sentiment and high unemployment rate is expected to hinder the speed of economic recovery in Europe and the pickup of the European trade in 2017.

In addition to the economic performances of the US and Europe, HPH Trust's performance is also impacted by the outcomes of the structural consolidation within the container shipping industry. The service rationalization of various global shipping alliances has negatively impacted the transshipment volume of both HIT and YICT in 2016.

Shipping lines continue to deploy mega-vessels to achieve economies of scale, reform their carrier alliances to improve efficiency, control costs and expand the coverage of vessel-sharing schemes to enhance competitiveness as seen by the recent announcement by Japan’s big three shipping groups, Kline, MOL and NYK to merge their container shipping businesses. HPH Trust is well positioned to be the preferred port of call for mega-vessels given its natural deep-water channels and unparalleled mega-vessel handling capabilities. The recently signed co-management arrangement for the 16 berths across Terminals 4, 6, 7, 8 and 9 in Kwai Tsing, Hong Kong is expected to deliver cost and operational synergies as a result of a more efficient use of the facilities and manpower resources which will enhance the overall competitiveness of the services offered by HPH Trust in 2017. The acquisition of HICT in 2016 is expected to provide additional handling capacity and generate operational synergies with Yantian International Container Terminals through sharing of resources and better utilization of port and related facilities in 2017.

Key Business Update

Revenue 

Total Capex - Need to explore throughout all the years

Distribution

DPU for the year ended 31 December 2016 is 30.60 HK cents which is about 9% yield based on USD 0.435 market price. 

Financial Results

Due to changes in depreciation to a shorter duration, the depreciation amount is increased. Staff costs decreased from 306.6 to 297.4 in 2016 which is 3% improvement. I look at Singapore companies such as SIA engineering, they increase staff cost at the expense of shareholders whereas HK and US companies will run their company more prudently by keeping cost low. Such is the typical lives of employees. 

The Profit after Tax for FY 2016 in my context (prudent) = 2954 - 70.5 - 357 = 2526.5

Profit after Tax for FY 2015 = 3044.6 - 155.5 = 2889.1 

We see a decrease of 12.5%

I see that both current liabilities and non-current liabilities increase by approximately 14%.

Cashflow Statements -> Operating Cashflow increases but it is due to tax savings. Nonetheless, the cash generated from operations is flat compared to the year before. It is good sign to see that CAPEX is been reduced but there can be a limit before the equipment needs to be renewed/repaired/replaced. 

It is interesting to see that the total borrowings for FY 2016 is lesser than FY 2015. Is it a sign that things are turning around? HPH Trust USD has higher free cash flow than last year.

Conclusion

I believe the company has sufficient cash to continue to pay dividend. 

Singtel 9MFY3/17

·9MFY17 core earnings are within expectations

·3QFY17 core earnings were up 4.2% YoY (+3.6% YTD) on lower financing cost and stronger associate contributions 

·3QFY17 core EBITDA was stable YoY (-1% QoQ), supported by cost rationalisation initiatives, notwithstanding the topline pressure (-2% YoY) from stronger competition affecting Optus. On a constant currency basis (AUD gained  3% QoQ against the SGD), group revenue would have dipped 4% YoY. 

· Regional associates remained the bright spot with contributions up 3% YoY in 3QFY17 (+ 9% YTD), led by Telkomsel (+31%) which offset the intense price- focused competition by new 4G entrant, Reliance Jio, affecting Airtel (-27% YoY) 

I believe market is expecting Singtel to spin off NetLink Trust and this will create a special dividend. I like this business, superior cash flow and debt level is not as high as its counterparts in Singapore market. In the near future, I will definitely attend their AGM and question how the CEO deploys the cashflow. It is also not ideal to leave too much cash in the company pocket and spend unwisely to fatten the management's purse is not a good thing. I will like Singtel to issue a higher payout or acquire selective telco/companies.

I just check SGX platform and Singtel has purchased 232,563 shares on 10/2/2017. Good stuff!

I hope Temasek will "Make Singapore Great Again"!

Brink of a New Chapter

Yesterday my 2nd boss got us into the room and talked to us individually. He started the conversation with,"As you are aware how the market is like, just to give you the heads up, I believe it is time to start spending the rest of your time to look for a job. Reach out to your mate and industry friends."

In short, I have about 1-2 more months time to look for a new role as the company is looking at closing the Singapore office. 

First I will like to list down my feelings and how I feel towards this matter. It has been 10 years. I graduated in 2007 and I still remember my first job at Jurong Shipyard with a 2nd upper honours only command S$2,500. After deducting my CPF and contribution to Chinese organisation, I was left with S$1,999. I remember vividly that I wanted higher salary and I was always complaining how much the business school students were making back then with their cushy banking jobs. My income increases over the years and I am drawing a very comfortable pay cheque. However, at the back of my mind, I always know that there is nothing known as job security or iron rice bowl. 

I felt helpless when the reality set in. I was thinking of all the expenses and the liabilities. There are a lot of self-doubt, worry and concern. I have never gone without jobs since the start of my career. I understand these are unnecessary but those thoughts just creep into my mind, making me depressed for the entire evening. The only relief was when I brought my kid for a walk. I realize my family is the key reason why I need to continue to work hard. As long as I work hard in Singapore, I am sure that my family will not go hungry. I should not let my job determine who I am. I may lose my job but I still have my health, my family and friends to be thankful for. 

The uncertainty and helplessness is really scary.

I remember this from the movies.

“Let me tell you something you already know. The world ain't all sunshine and rainbows. It's a very mean and nasty place, and I don't care how tough you are, it will beat you to your knees and keep you there permanently if you let it. You, me, or nobody is gonna hit as hard as life. But it ain't about how hard you hit. It's about how hard you can get hit and keep moving forward; how much you can take and keep moving forward. That's how winning is done! Now, if you know what you're worth, then go out and get what you're worth. But you gotta be willing to take the hits, and not pointing fingers saying you ain't where you wanna be because of him, or her, or anybody. Cowards do that and that ain't you. You're better than that! I'm always gonna love you, no matter what. No matter what happens. You're my son and you're my blood. You're the best thing in my life. But until you start believing in yourself, you ain't gonna have a life.” 

― Sylvester Stallone, Rocky Balboa

After gathering my thoughts, I decided to actually pen down my next course of actions. 

Step 1 Understand Your Financial Status

I need to review my financial status. I need to look at my family cash flow statement and balance sheet. I need to understand how long my CPF and cash will last me to pay my home mortgage. Next, I need to pay down all my short term liabilities. Following that, I need to look at the expenses section, I need to cut away all unnecessary expenses and focus on necessities only. The winter is coming and I need to conserve all the cash to tide us through this storm.

Step 2 Uncluttered Your Stuff

I had already sold my watches and helping my wife to sell some of her bags. I got some cash back to finance my side-hustle.

Step 3 Update of Resume

I am sick of applying for a job. I have been bitching all my life on starting my own business. I will not apply another job but I will become a dealer. At least, I will be paid $2k for the start.

The first table is for dealer, assuming a salary of S$2k/month. The second table is for remisier. The risk is the same. I will transit to become a remisier once I achieve a revenue of S$8-10k for three consecutive months.

Step 4 Becoming a Dealer/Remisier

I will submit my CV to the brokerage house and go for my exams. Target to get my license within 3-4 months. Meanwhile, I will do Grab/Uber, tuition, affiliate marketing and e-commerce to supplement my income. 

Starhub FY December 2016

Starhub Key Financial Highlights

The total revenue for Starhub is flat Q-on-Q, net profit after tax decreases from S$81m to S$54m for 4Q16. For the full year, net profit after tax decreased from S$372m to S$341m which is about a reduction of 8%.

Starhub proposed the final dividend of 5 cents per share for FY2016. Starhub intends to reduce quarterly cash dividend of 4 cents per ordinary share for FY 2017.

The staff cost continued to increase by 11.4% from S$66.1m in 2015 to S$73.6 in 2016. This is not good management, an increase in staff cost but it did not lead to increase in revenue. 

Looking at Cashflow Statement is demoralizing, Net Cash from Operating Activities decreases from S$122.6m to S$81m. Free cash flow for 4Q2016 was a deficit of S$45.5m, due to lower cash from operating activities and higher CAPEX payments. For the full year, free cash flow was S$31.7m lower at S$184m as a result of higher CAPEX payments.

Conclusion
We will look at it after further price reduction and with a dividend yield of 9-10% based on reduced dividend forecast.

2/2/2017 Major Position Movement

Assume I am addressing my stakeholders of JC Fund, I will mention the following.

Today, I made a major switching of position by selling 20 lots of OCBC at S$9.44 and buy into 26 lots of Company M which was mentioned in previous post. Hence, my total holdings in Company M will become 33 lots. 

I sold 20 lots incurring a position loss of S$9k+. The reason of selling is twofold. I saw the impairment issue of EMAS Chiyoda which means DBS is going to write down further losses. I am sure DBS has already catered for this under NPL. I am just not confident of the quality of the loans, the O&G positions are just a small portion of banks' portfolio. The larger portion belongs to the property developers and construction companies. To add salt to the wound, SME loans will further deteriorate in the next 2 years. 

My OCBC original position consists approximately 30% of my portfolio which is overexposed in the finance sector. I want to reduce the holdings to a comfort level of 10%. The 26 lots of company M which I switched to will generate approximately S$14k of dividend. This will cover my loss and have a margin of safety for my entry price. My downside is covered.

I think back, maybe I should switch out slowly. 

Only time will tell whether this move is right or wrong. Let's reflect this again.

09/02/2017 Reflections on my actions

From the previous post, I did not think deeper and on a hindsight, it is a rash decision. Emotion is at play. Looking at the above chart, OCBC today is at S$9.71 range. I believe eventually this will close up higher to S$10 and I will not incur any losses at all. There is an additional factor which I have ignored. There will be the final dividend which will amount to 20,000 x ~S$0.2 = S$4k. All in all, my this move is equivalent to a loss of S$14k.
Yes, the future company M's dividend should cover this loss.

What I could have done is to wait a while longer for OCBC to rise, get the dividend and immediately switch to Company M. Well, if I am that accurate, my net worth should be a few folds more than now. 

24/2/2017
The switching out from OCBC is about to breakeven. Hang in there.

28/3/2017
The price went past breakeven point. The switching works. Now Mr Greed is in the hot seat. I sold 5 lots already. By mid of April, I will sell down more.