China Port Industry

Stock Code: 00144.HK
Company Name: China Merchants Port Holdings Co. Ltd

Business
CMPort is the largest and a globally competitive public port developer, investor and operator in China with investments in China, Hong Kong and overseas. Its nationwide port network includes coastal hub ports in Hong Kong, Taiwan, Shenzhen, Ningbo, Shanghai, Qingdao, Tianjin, Dalian, Zhangzhou, Zhanjiang and Shantou. It is growing its presence in South Asia, Africa, Mediterranean and South America. In 2017, the total throughput handled reached 100 million TEU.

CMPort's Ports in China

Hong Kong modern container terminal co., Ltd (MTL) was established in 1969 was the first container terminal in Hong Kong, and is one of the Hong Kong's largest container terminal operator. China merchants international owns a 27% stake in the company, the container terminal in Hong Kong tsing container terminal has seven container ship berths and two feeder berths, along a total length of about 2432 meters.

China Merchants Container Services Limited (CMCS) is one of CMHI's wholly owned subsidiaries. It is a mid-stream service provider, owns quay resources, equipped with rail mounted gantry cranes. Located in Tsing Yi island, the company can access to an array of transportation infrastructure.

In port related business, there are Tianjin Haitian Bonded Logistics, QingDao Bonded Logistics, China Merchants Bonded Logistics (Shenzhen), Shenzhen Haiqin Project Management Company and Asia Airfreight Terminal.  Asia Airfreight Terminal is an air cargo terminal based at Hong Kong International Airport for premier passenger and cargo hub. 

Financials 

In the latest interim 2017 report, the ports operation increases by 1% from HKD 12,161 million and HKD 12,043 million. Bonded logistics operation dropped by 16% to HKD 281 million from HKD 335 million. Port-related manufacturing operation increased by 40.4% to HKD 9,265 million from HKD 6,599 million. Total revenue increased from HKD 3,847 million to HKD 4,055 million whereas cost of sales increased from HKD 2,206 million to HKD 2,291 million in 2017. The operating profit doubled in 2017 to HKD 2260 million. This is due to other income and gains. Dividends increased due to special dividend.

Current Assets is HKD 19,590 million and Total Liabilities are 34,743. 

Cash and cash equivalent increased to HKD 15,424 million from HKD 5,263 million. There is a disposal of subsidiary which amounts to HKD 8,543 million. CMPort raised capital as well. 

Overall, CMPort is operating profitably and has the scale of operations. 

Counter: 01199.HK

Company Name: Cosco Shipping Ports

Business

Cosco Ship Port's network of terminals extends to 31 ports worldwide, covering the main five port clusters along the Chinese coast, Southeast Asia, Europe, the Mediterranean and the Black Sea. In 2016, throughput reached 95 million TEUs.

Financials

In the interim 2017 results, the cash dropped from HKD 834 million in 2016 to HKD 332 million in 2017. Long term borrowings increased by HKD 130 million in 2017 compared to 2016. 

From the Income Statement, the revenue is relatively flat while cost of sales has increased slightly from HKD 167 million in 2016 to HKD 177 million in 2017. The company made a gain on disposal of a joint venture which amounts to HKD 283 million. Subtracting this from the Profit is HKD 200 million which is still a good improvement from 2016. 

On 24 March 2016, the company disposed all issued shares in Florens Container Holdings to China Shipping Container Lines (now known as COSCO SHIPPING Development) for a total consideration of USD 1,241,032,000. Upon completion of disposal, Floreans Container Holdings ceased to be a subsidiary of the Company.

The Group's net cash generated from operating activities amounted to US$70,129,000 (1H2016: US$167,844,000) in the first half of 2017, of which included capital gain tax of US$39,365,000 in respect of the disposal of Qingdao Qianwan Terminal. 

The net debt to total equity ratio was 20.1% (31 December 2016: 14%) which is still healthy.

There's a lot of re-organisation within the group through sale and disposal of entities, this will shift money across individual entities.

Operations Review

According to International Monetary Fund, global trade volume in 2017 is estimated to grow at 4%, an increase of 1.7 percentage points compared with 2016. Buoyed by increasing international trade, China's foreign trade continue to improve. According to China Customs, the country's total import and exports (in RMB) in first half of 2017 recorded a growth of 19.6% compared with last year. The throughput of container terminals in China increased 8.8% to approximately 115,000,000 TEU which was 6.3% higher than same period in 2016.

The rise in international trade, as well as launch of mega-vessels, all increased calls at hub ports will enable the Group to achieve encouraging results in container terminals business.

The recovery of international trade and the increase in calls by shipping alliances enabled Yantian Terminal to achieve a satisfactory performance for the six months. The co-management of COSCO-HIT Terminal and Asia Container Terminal effective from 1st January 2017 served as an additional growth momentum to the terminals leading to a surge in the throughput of the two terminals by 42.8% to 1,694,130 TEU for the period.

There are other ports such as CIG Yangtze Ports 01719.HK, Xinghua Port 01990.HK, Dalian Port 02880.HK, QHD Port 03369.HK, Xiamen Port 03378.HK and Qingdao Port 06198.HK.

Warren Buffett's advice to survive a market downturn

For the last 53 years, the company has built value by reinvesting its earnings and letting compound interest work its magic,"Buffett wrote. "Year by year, we have moved forward. Yet Berkshire shares have suffered four truly major dips. Here are the gory details."

March 1973 to January 1975 - 59.1% decrease
10/2/87 to 10/27/87 - 37.1% decrease
6/19/98 to 3/10/2000 - 48.9% decrease
9/19/08 to 3/5/09 - 50.7% decrease

All four of those big drops coincided with major market moving events.

59.1% plunge from March 1973 - January 1975 occurred when the US economy was mired in an ugly recession resulting from the oil crisis and fallout from the Bretton Woods agreement. The benchmark S&P 500 lost as much as 44% during that time.

The 37.1% drop during October 1987 happened after Black Market stock market crash. The S&P 500 bottomed out at a loss of 34%.

The 48.9% slide from June 1998 to March 2000 occurred just ahead of the dotcom bubble's burst. The S&P 500 actually gained 27% during this period.

The 50.7% plunge from September 2008 - March 2009 occurred during the darkest days of the Great Financial Crisis. The benchmark S&P fell 44% over this time.

"This table offers the strongest argument I can muster against ever using borrowed money to own stocks,"Buffett wrote.

There is simply no telling how far stocks can fall in a short period. Even if your borrowings are small and your positions aren't immediately threatened by the plunging market, your mind may well become rattled by scary headlines and breathless commentary. And an unsettled mind will not make good decisions."

Buffett concluded that big drops are great opportunities for those who are not in debt.

To reflect on his words on the February minor correction, I was straddled with a huge debt in AAPL options position which cause me to lose focus on the bigger picture. It was a good opportunity to buy into undervalue companies then. Never be in an over leveraged position.

If you can keep your head when all about you  

    Are losing theirs and blaming it on you,  

If you can trust yourself when all men doubt you,

    But make allowance for their doubting too;  

If you can wait and not be tired by waiting,

    Or being lied about, don’t deal in lies,

Or being hated, don’t give way to hating,

    And yet don’t look too good, nor talk too wise:

If you can dream—and not make dreams your master;  

    If you can think—and not make thoughts your aim;  

If you can meet with Triumph and Disaster

    And treat those two impostors just the same;  

If you can bear to hear the truth you’ve spoken

    Twisted by knaves to make a trap for fools,

Or watch the things you gave your life to, broken,

    And stoop and build ’em up with worn-out tools:

If you can make one heap of all your winnings

    And risk it on one turn of pitch-and-toss,

And lose, and start again at your beginnings

    And never breathe a word about your loss;

If you can force your heart and nerve and sinew

    To serve your turn long after they are gone,  

And so hold on when there is nothing in you

    Except the Will which says to them: ‘Hold on!’

If you can talk with crowds and keep your virtue,  

    Or walk with Kings—nor lose the common touch,

If neither foes nor loving friends can hurt you,

    If all men count with you, but none too much;

If you can fill the unforgiving minute

    With sixty seconds’ worth of distance run,  

Yours is the Earth and everything that’s in it,  

    And—which is more—you’ll be a Man, my son!

Source: A Choice of Kipling's Verse (1943)

Hutchison Port Holdings Trust FY 2017

Overview
Global trade outlook remains positive due to continued growth in economic activities in the US, Europe, China and India. Shipping lines are moving into mega vessels to attain capacity and fleet optimization to achieve cost efficiency. In addition, focus has shifted from port performance to supply chain performance to drive competitiveness and operational efficiency. Hong Kong remains a strategic transshipment hub and a preferred gateway to the Pearl River.

Financial Performance
Revenue in 2017 dropped 3%, HKD 11, 551 million compared to HKD 11,912 million in 2016. In 2017, 64% of the revenue is derived from China.

The total CAPEX sheds by 52% to HKD 841 million in 2017 compared to HKD 1,765 million in 2016.  The CAPEX in 2015 was HKD 2,042 million. In 2014, the CAPEX was HKD 1,106 million. I think the CAPEX should be considered a normal level at HKD 1,000 million level.

The Distribution Per Unit (DPU) has dropped to HKD 20.6 for the overall year.

From the Income Statement, the key item for me is the Interest and other Finance Costs, it has increased by 22% from HKD 701.2 million to HKD 856.9 million. The overall operation is seen to be undergoing cost cutting measures but the profit is still lower than previous year. The Profit after Tax drops by 30% to HKD 944.2 million from HKD 1,356.6 million. Rising interest rates environment coupled with increased new borrowings (FY 2017 was HKD 11,736.8 million and FY 2016 was HKD 9,426.6 million).

1. Payout Ratio is 200%.
2. Dividend will continue to drop as revenue drops and interest expenses increase. Double whammy situation.

7% price correction on 2nd February is too steep

Based on 1st February 2018, the National Development and Reform Commission has reduced the tariff rate for origin and destination foreign trade containers at Shenzhen - Yantian ports from RMB 1400/TEU to RMB 980/TEU. Through Yantian International Container Terminals which contributes 64% of HPH Trust's revenue, it contributes less to the bottom line as a 50+% owned subsidiary of HPH Trust. YICT's Average Selling Price is already lower than the new tariff rates, this will allow the port operator to negotiate for better terms. I don't think this will affect HPH Trust.

I will conduct a study on the China ports to understand the competition HPH Trust is up against. I will dispose HPH Trust when the price has reverted back to the mean (when my losses are less significant).

CPB:NYSE Campbell Soup Company

Introduction
Campbell is in the business of providing high quality soups, simple meals, beverages, snacks and packaged fresh meals. Led by Campbell's brand, the portfolio includes Pepperidge Farm, Bolthouse Farms, Arnott's, V8, Swanson, Pace, Prego, Plum, Royal Dansk, Kjeldsens and Garden Fresh Gourmet.

2nd Quarter Results for period ending 16/02/2018

• Net sales compared to prior year, organic sales decreased by 2 percent.
• Earnings before Interest and Taxes (EBIT) increased 19 percent and adjusted EBIT decreased 4 percent.
• Earnings per share (EPS) of $0.95; adjusted EPS increased 10 percent to $1.00

Campbell Fresh did not meet expectations. Sales did not recover and Campbell expects beverage performance to pick up in second half, turning back to profitability. Sales performance of Global Biscuits and Snacks, particularly Pepperidge Farm and Kelsen are doing well.

The acquisition of Pacific Foods were completed to increase the brand presence in the organic soup and broth market. The planned acquisition of Snyder's-Lance will expand the snacking business.

Gross Margin decreased from 37.4 percent to 35.1 percent. Marketing and selling expenses decreased 5 percent to $228 million due to lower advertising and consumer promotion expenses.

Net interest expense increased 14 percent to $32 million reflecting higher average interest rates on the debt portfolio and higher levels of debts.

The company gave a fiscal 2018 outlook on EPS to be increased by +2 to +4 percent or $3.10 to $3.17 per share.

Moat

• Branding
• Cost of finance is low because of the size of company

Operating Performance
Return on Assets 2017 is 11.4%
Return on Equity 2017 is 56.1%
Return on Invested Capital is 18.77%

Valuation
Price/Sales is 1.79
Price/Earnings of 16.14
Price/ Forward Earnings of 15.55
Earnings Yield 6.19%
EV/EBITA is 10.21
Fair Value is about USD 48 - USD 50

Latest updates
Campbell's update at CAGNY on 21st February triggered a steep 7% price decline. My guess is CEO Denise mentioned about the ongoing discussion with a key customer will cause the sales to be sluggish. This is due to the dispute with Walmart. Walmart wants to continue to fight with Amazon and will exert its purchasing power to pull down all prices. Campbell will need to pull down the prices or go home. Rising cost of production eat into Campbell's margin. The company needs to work on its cost saving campaign.

The market has already priced in a decline in margin on Campbell's products.

JD:NASDAQ JD.com

I was shown an article by APS' Mr Wong on JD.com as a bubble in making. This contradicts to my previous findings on my investment thesis. I went back to research on JD.com. I was combing the internet for all the developments of JD.com when I chance upon this website. The author provides a very in-depth research on JD.com and Amazon.

• China's 2nd largest eCommerce company reported profit in third quarter. JD.com posted net earnings of 1 billion yuan, its highest profit in the three months to Sept. 30.
• JD.com expects revenue for the quarter ending in December to be 107-110 billion yuan which equates to a rise of 35-39 percent. The marketing campaign in November will affect the bottom line.
• JD.com is investing in logistics infrastructure in South East Asia, expanding in Indonesia.
• In China, JD.com is focusing on "white glove" platform focusing on imported food, fashion and electronics.
• Thesis for the company is eCommerce retailing is a logistics business, the lowest cost will win the race.
• JD.com differentiates from Alibaba in terms of its faster delivery times, authenticity quality products, and great customer service.
• JD.com has invested from the start on its logistics network in China whereas Alibaba is relying on partnership with 3rd party carriers (eg. China EMS).
• EV to Revenue ratio points towards undervaluation when compared to its competitors. EV to Revenue of JD is 1.29x, Amazon is 3.68x and Alibaba is 16.69x. This company serves the world's largest population, loyal customer base, logistics advantage and industry tailwind.

00700.HK Tencent

Business Overview
Tencent is a leading internet services provider in China, established since 1998 and has achieved steady growth in its user-oriented approach. Tencent Holdings Limited is listed as 00700.HK in Hong Kong Stock Exchange.

Business - Social Networks
1) QQ
QQ is an instant messaging platform with diversified functions and services. QQ has also introduced CM show which delivers tailor made interactive experience for youngsters. Users can access QQ Wallet and use mobile payment to top up for online shopping and bank transfer.

2) Weixin/ Wechat
Wechat is now the dominant messaging platform in china with social media entertainment, real time communications and payment ecosystem - WeChat Pay. It has reached more than 938 million monthly active user accounts as of the first quarter of 2017.

3) Entertainment
Tencent has a wide range of entertainment services such as Tencent Games, Tencent Literature, Tencent Comic, Tencent Pictures, Tencent Video, etc.

4) Platform
Tencent Open Platform is built for its partners to enable them to connect via QQ, Weixin, Qzone and YingYongBao to gain traffic and revenue through open APIs across PC, mobile and multiple devices.
Tencent has its own cloud services for corporate  and individual users. It provides developers with cloud servers, cloud databases, cloud storage and cloud computing services.

5) Artificial Learning
Tencent AI Lab is moving into machine learning and big data, it has 50 world class scientists and 200 experienced engineers in China and US. The key focus areas are machine learning, computer vision, speech recognition and natural language processing.

Tencent is focus on growing its revenue from both online advertisement and online gaming.
Strengths of Tencent

• Strong brand portfolio
• Multiple and resilient revenue streams
• Product innovation
• Growing ecosystem - network effect
• Strong and reliable suppliers/supply chain - 20% stake in JD.com
• Automation

Weakness of Tencent

• Require investment into new technologies which will continue to require high CAPEX into R&D, currently Tencent is expanding into other countries will require more capital injection.
• Attrition of employees
• Resources are drawn too thin with rapid expansion plan

Opportunities for Tencent

• Economic growth can lead to increase in customer spending
• Move online to offline channel

Threats

• Rising pay in China
• Require breakthrough in innovative products
• Intense competition from other industry players
• Change in consumer behaviour
• Rise of new technology to disrupt existing strength

Valuations
I do not need to go into this as Tencent is not cheap at the moment. Tencent will be on my watchlist.

JC Fund and JC Options Fund - personal review

The Singapore and Hong Kong markets closed today at 12pm and I was looking at the results of Thaibev. I knew the acquisitions will make the results look nasty but did not expect to be this bad. I sat there thinking about the next 1-2 years outlook for Thaibev. I am worried of its over leveraged position and rising interest rate environment. In the short run, the stock will not perform well but the business is consolidating to grow from strength to strength.

I was wondering why I chase after bad investment such as HPH Trust USD, double down on my losses and did not cut this counter last year. In fact, there was a window of opportunity when it was even profitable.

I was thinking of this recent market correction when there were opportunities for me to switch out laggard IBM shares to acquire AAPL shares. I done my homework and I was convinced that AAPL was mispriced. Why I did not do it? There are a few other companies which provide that window of opportunity to switch and move my money into a faster lane. I seem to prefer status quo (maybe I have a fear of losing money) or I have no confidence of my own valuation?

My portfolio consists of mainly dividend stocks and only 1 growth stock. I am playing a defensive role here. Maybe I believe that now I am jobless and there's no income coming in from my side, I need income from dividend. I just want to be prudent and to be paid while waiting. I think everyone has different investing approach and as long as the same objective is been achieved, it does not matter which route you take. I am just thinking whether I should move away from net-net stocks which sometimes can be value traps.

As of 14th February post market share price of AAPL was USD 168.93, maybe on the 16th February, my AAPL sell put options will expire with share price above USD 170 (20th February when I review this, the option expires worthless and share price closed at USD 172 on 16th February 2018). On hindsight, I could be profitable instead of pocketing the huge losses. However I should remember the important lesson learnt. What if a huge bear wakes up and share price drops by 50%? Will I have money to top up margin maintenance call? Nope. It will be a worse scenario resulting into a very unhappy Chinese New Year.  Thou never gamble with leverage and trade within your cash and cash equivalent. Always follow the checklist. If it is a huge gain, there is bound to be another larger loss later on (this applies to me, I suffered twice on this - a total loss of USD 32k on two trades). If I follow a small gain of 1% per month, this will be a safer approach in the long run.

Overall, as of 15th February, JC Fund and Option Fund portfolios have recovered to a neutral position with no paper gain or losses. Let's think of a strategy on how to shift the stocks around and what sort of mistakes to avoid in the future.

• Rebuild watch list - understand beta of each stocks, moat, intrinsic value and margin of safety
• Re-balance portfolio towards end of Q1 and review again in Q3.
•  Withdraw some profit every quarter to spend on the family

FB:NASDAQ Facebook

Introduction to Business
Facebook does not require further introduction as it is one of the most powerful social media platform in our times. Actually, I was using another social media platform - Friendster during my university days. That was the Tinder back then.

Facebook is a social media platform, it monetize through digital advertisement through its huge database of Facebook users. Gaming revenue is decreasing. Facebook takes 30% of purchases, with balance going to likes of Zynga. Facebook also acquired Whatsapp and Instagram.

Strengths:
Leading social platform
2 billion of active facebook users - network effect

Weakness:
Dependent on cyclical ad market - 98% of quarterly revenue came from advertising
Lack of alternative source of diversified income

Threat:
Facebook members growth decline or stagnate
The new/younger generation may not wish to use Facebook, they prefer SNAP or other platforms.
Reputation damage (loss of trust) which may lead to downfall of Facebook
Users will grow numb to ads
New Social Platforms may enter the social media industry but the eroding effect will be very slow

Opportunities:
With big data, can harness them into other business ventures other than ads
New products such as Oculus virtual reality headset and workplace office software
With big amount of cash can make new acquisition or build stronger moats to retain users

Financials

The revenue has been growing since 2013. I just heard from my friend who is running an eCommerce store using Facebook advertisement during last year November and December, the ads cost more for a campaign. I believe this is due to the holiday season. In January, the ads cost is back to normal. There is a lot of algorithm Facebook is using based on seasons, demand and supply, target audience group, etc. You get to sell to an audience group with specific interest, hobbies, family background, profession and income level. This is targeted marketing. This makes Facebook's advertisement a very powerful tool for internet marketer. I have run Facebook ads, mobile advertisement and Google campaigns. My personal experience for eCommerce and apps download, Facebook is by far the most superior marketing behemoth.

EPS is increasing since 2013. You can calculate CAGR. However, I do not think this type of growth rate is sustainable.

The interest expense is decreasing over the years. Free Cash Flow is increasing over the years, building up a strong hoard of cash.

Valuations
My calculation on EV/EBITA is at 20.33 and I took a very conservative approach to discount the growth rate, placing an estimation on the targeted price between USD 190 - 200 in 2021.

Conclusion
When I am writing this, FB share price is USD 176. There is not enough margin of safety for me to buy this company. I will need a good 30% margin of safety before I will buy FB. Personal take. DYODD. This is not a buy or sell call.

00517.HK Cosco Shipping International

Introduction to the business
Business is divided into two main business segments.

Shipping Services
Cosco shipping International

• Provision of shipping services
• key customers include ship owners and operators, shipyards and container manufacturers
• Tangible products such as marine equipment and spare parts, marine coatings, intangible services such as consultancy services for buying ships, marine insurance, ship financing and related information support, as well as provision of value-added supporting services for vessels operations such as supply of marine equipment, marine fuel and ship supplies, and ship management.
• One stop shop which enhance the core competencies of fleets

Business Scope
1. Ship trading agency services
Providing agency services relating to shipbuilding , ship trading and charting for all types of vessels.

2. Marine Insurance Brokerage Services
Offer insurance intermediate risk assessment, designing insurance program, placing insurance cover, loss prevention and claims handling to
vessels insured worldwide.

3. Supply of Marine equipment and spare parts
Sale and installation of marine equipment and spare parts, as well as equipment and of radio communication systems, satellite communication navigation systems for ships, offshore facilities, coastal station and land users, and marine material supply and voyage repair

4. Production and sale of coatings
Production and sale of container coatings, industrial heavy duty anti-corrosion coatings and marine coatings

5. Trading and supply of marine fuel and related products
Provide marine fuel supply services, as well a trading of marine fuel and related products.

Shipping Services are beneficiaries of shipping capacity
Demand for shipping services are driven by shipping capacity growth and ship owner's fleet restructuring activity. As distinct from shipping companies the revenues of shipping services are either direct or indirect costs of shipowners or ship operators, and are not affected by short term fluctuations of freight rate.

COSCO shipping international has a diversified business mix of shipping services which are complementary to each other without obvious cycle.

As seen from the above image, for ship trading agency, marine insurance brokerage and marine equipment and spare supply, Cosco Shipping International is the "sole agent" to provide a centralised procurement to Cosco Shipping Fleet. This means in simple terms left pocket pass to right pocket. They do not want such a high value and margin business to benefit third party, instead they are passing the meaty part of the business to an internal party.

On the marine insurance brokerage, 40% of revenue comes from external customers and they are growing this segment, moving into non-marine insurances. This could be a growth factor.

Marine insurance, equipment for maintenance, marine bunker, crew changes, logistics and marine coatings are OPEX of a shipping company. They can be reduced in times of downturn but can never be reduced to zero. Moreover, now with the global economy recovery in place, the China Containerized Freight Index is recovering from 2016 low, standing at 836.6 at the time when I was writing this.

In essence, I felt that Cosco Shipping International has certain level of moat. The business is sheltered by the parent company and it has given some autonomy to grow other aspects of the business. However, need to monitor the growth and decrease rate of each individual segments in the next financial report.

Valuation
Based on June 2017 results, Net Cash per Share is HKD 4.19 and NAV is HKD 5.09. As of today, the share price is HKD 3.09 which is approximately 25% safety margin. Recently, I read this book Deep Value Investing by Jeroen Bos. It gives me a good insight on what he looks for in deep value investing.

Conclusion
I am invested in this company. There are certain risk as shipping is cyclical business. Please DYODD. This does not constitute a buy call.

Finding Value in Today's Market

We are officially in a correction which can go up to 19% drop in terms of share prices. If the market price drops >20%, then we are into a bear market. What should value investors do at this moment?

Let me share some of the thought processes:

1) The Sale that you have been waiting for is here, it does not mean that you need to enter the market but with cash seating on the sideline means you can deploy them when the stock price comes to your ideal price range. This means that you have done your homework, created your watch list of stocks and understand what are the intrinsic values. I am going to deploy the last 100k into different tranches to absorb China A50 ETF and Tracker Fund to focus mainly on China and Hong Kong market. The dividend will allow my wife to settle some expenses such as charity and bills. I will not deploy margin money for correction. I will only deploy it when there is a bear market and there is a strategy to peg to margin to make it work.

2) Investor Mindset - Investing is all about managing your emotions. That is the reason why the gurus always say a good temperament is essential for investment. Everyone likes to think they can be a contrarian but when the fire is here, everyone shit in their pants. Especially with the past 1 week, there is so much volatility in the market, the market can drop 1000 points on alternative days, you will not know how to react. I will like to take this as a form of training. You need to be calm and see this as an opportunity to re-enter the market. We need to control our natural human instinct to flee when there is danger and avoid the herd mentality to follow everyone to sell when the market prices hit low.

3) Be like an ostrich - I recalled just 2 years ago when I thought with the rising interest rates environment, OCBC should benefit from it and I took a huge stake in OCBC (about 30% of my portfolio back then). Then OCBC started to drop till $8+ as Singapore STI took a correction. It was very painful to keep looking at your price and your total portfolio value. The pain of losing money is much more severe than the feeling of winning money.  Prices will not miraculously increase in a downturn just because you keep pressing the refresh button. The only thing that holds is Value which is not based on market pricing. For example, Apple has its ecosystem of products and services in tact and a share price of USD 100 or USD 200 does not affect the business. In a market downturn, people are still buying iPhone X (maybe lesser). Focusing on value instead of just price itself, you can sniff out undervalue stocks and rebalance your portfolio. Mr Market is offering you a good price for these coming few weeks as a form of Ang Bao for Chinese New Year. For example, if you are yield player, Singtel is offering a pretty awesome 5% yield. Unfortunately, I have already deployed my cash into the market but the bulk of SGD 200k is been bet on a specific counter. I was lucky to consolidate the money before the correction into this defensive counter. So far it has corrected 7%. I will switch out to AAPL or a few other stocks depending whether there is sufficient margin of safety.  I have learnt in times of downturn, I will be like an ostrich, I will not check the prices and unrealised profit/losses. I continue to build my stocks watch list.

4) Find a Hobby or Things to do other than spend time looking at the screen - Do something that keeps your mind away from the market. It can be in the form of exercise such as cycling, running, swimming, etc. It can also be working hard at work. It can be spending more quality time with the family.

There are companies which counter the down trend and there are bargains out there. Hope you can find value stocks and enjoy life! Stay healthy, stay wealthy. Health comes first. Do not let the market affect your health. Close the screen and go exercise now!

Run a home based business

The decision to start a home-based business - to begin a new business within walking distance of your kitchen! - will be your second decision as a new entrepreneur. Your first decision will already have been made: The decision to become an entrepreneur and enter the fast growing world of the self-employed. It is a decision which thousands of ambitious, confident people make each working day.

As a home based entrepreneur, you will be setting out on a journey designed to improve the overall quality of your life by taking control of your working life. It will be journey by taking control of your working life. It will be a journey filled with enormous challenges, unexpected obstacles and the possibilities of significant financial and emotional rewards!

You will have to make certain that you are endowed with confidence and with patience; that you are prepared to cope with the inevitable ups and downs which will occur as you build your home-based business and that you have the support of all the people in your life who matter to you.

Every new business entails considerable risk, but you have already skewed the odds in your favor: By electing to start your own new business at home, you will be beginning your self-employment career with the right attitude.

Home-based Benefit No 1: Low Overhead
Accountants designate them as "fixed expenses." By starting your new business at home, you can save on one of a business' most onerous fixed expenses - the rent.

Thus you are starting out with an enormous financial advantage. Maintaining a low efficient overhead is a sound, conservative business practice. Rent is frequently the largest single fixed expense. By eliminating it, you have given your new business a significant advantage.

Home-based Benefit No.2: Your ego is in the right place
If you were to ask a venture capitalist what single element causes him to back away from a prospective deal, he would probably tell you that it was an entrepreneur who ushers him into a large flashy office from which he then proceeds to attempt to convince the venture capitalist that he will prudently manage the money which he is seeking to raise.

The point is obvious: the intelligent entrepreneur has a strong sense of priorities. He knows that his limited funds have to be spent as carefully and productively as possible. His sense of personal satisfaction will come from the success of the business, not from the elegance of his high rent corner office.

Home-based Benefit No.3: Efficiency
If you live an hour from where you work, you spend two two hours a day commuting. That's ten hours, 500 hours a year! To the new entrepreneur, time is money. By working at home, you will be saving time and money. It is an irresistible combination.

All of your working hours will be productive ones, and your sense of purpose will be heightened. There is no more satisfying bottom line and working at home will provide you with that priceless sense of satisfaction every working day.

Home-based Benefit No.4: Your Self Discipline
One of the most critical characteristics of the entrepreneur is self-discipline. He has to be able to motivate himself. He has to be able motivate himself, to provide his own sense of direction and determination. There is no "boss"or time clock to keep him in line.

Working at home requires enormous self-discipline because of the endless potential distractions. When you are working at home, you have to be able to resist the bed and get to work.

By working at home, you are putting that self-discipline to test every working hour of every working day. It is a test which you cannot permit yourself to fail - and there it becomes another of the many subtle benefits of starting a home-based business.

Home-based Benefit No. 5: Quality Time
The home-based entrepreneur quickly develops a useful sense of "quality" time - because he has to make time based judgement all day long in the same environment where he works and lives.

Quality time is admittedly difficult to quantify but like many positive events, most of us recognize it when it occurs. It is a dimension which can improve the quality of our lives - and home based entrepreneur often develops the ability to create it because he has to.

Self Sabotage to JC Options Fund

This is a dire situation. Forecast loss will be at least USD 10k. Many mistakes made in this AAPL trade. I am going to list the following mistakes. In addition, my mistakes were further aggravated by the timely market correction.
"Owning stock is like having children. Don't get involved with more than you can handle."

1. After cutting loss, you need to gain your grounds and be able to think before you jump into another trade.
2. Do not over-leverage.
3. Stick to your cut loss rule. No emotion at play.

I got an email from thinkorswim that I need to top up cash to cater for the maintenance margin call. That was the first wake up call that I have an over-leverage position.

How do you know that you have overextend your position? That is when you cannot sleep in the middle of the night. For the last two days, I woke up at 3 am to look at the market. I have never in my life gone through this when I was investing.

On the other hand, on Friday wee morning, US market has wiped out a lot of my paper profit for JC Fund but I did not fret because they are cash position. I understand this is a market correction before the market can reach a higher position.

I have two incidents when the share price returned to 168 and I did not manage to minimize my loss. I was praying that it will go further up beyond 170 which is my strike price. On Thursday after post market, the stock price did reach 173 temporary. I have discussed with my wife to close the position at below 165 and I fail to execute this as well.

I am going to pause any new trades after 16 Feb 2018 and review my temperament. There is a serious issue with it and I need to rectify this. Don't need to beat myself up for this but I need to learn from it. Many things to unlearn and learn.
I have made a simplified checklist.

Sell uncovered PUT

1. Does the company have consistent increasing or positive EPS over the long run say last 5 years. Better still, if last 10 years.  If YES, move to Step 2. If NO, kill this idea.
2. Does the company have MOATS If YES, move to Step 3. If NO, kill this idea.
3. Is there any interim results or annual results announcement? If NO, move to Step 4. If YES, kill this idea.
4. Now, go to the chart www.tradingview.com , whether this stock is at the support line If YES, move to Step 5. If NO kill this idea.
5. Before you execute the trade, check did you click SELL PUT? It should be red colour with -1 or -X amount
6. Did you negotiate for a better price? The market is there to serve you. Have more margin of safety is good for you. 
7. To decide the quantity of Sell PUT, run a quick check, is the NUMBER of CONTRACT x 100 x SHARE PRICE < your CASH BALANCE? If YES, move to Step 8. If NO, reduce your quantity now! Save the headache, you can sleep better instead.
8. Execute the trade and wait for it to be filled.

7th February 2018 - I closed 15 contracts of AAPL and accepted a loss of USD 18k which wiped out all my profit from options. I want this to be a very painful lesson for myself.

00101.HK Hang Lung Properties Annual Report 2017

Brief
30th January 2018, Hang Lung Properties announced annual report results. I estimated based on underlying profit a fair value of about HKD 18.6 - 19.00 disregarding the revaluation of the properties. I did not sell immediately when the share price was at HKD 20.7 when the results were first issued. I have my own justification why I believe this company will do well in the long run.

Introduction
Hang Lung Properties Limited (00101.HK) is the operating arm of the Hang Lung Group (00010.HK) is in the business of real estate development, owns and manage world class commercial complexes in key cities in the Mainland since the 1990s.

Hang Lung Group was founded in 1960 by Mr Chan Tseng-Hsi. The business grew rapidly building residential complexes along the Mass Transit Railway (MTR). On January 1991, Mr Ronnie Chan took over as the Chairman of the company and venture into the Mainland. They took the opportunity, acquiring a lot of land and investment properties to position itself for the future.

Present Properties Portfolio
Hang Lung Properties owns Shanghai Plaza 66, Shanghai Grand Gateway 66, Shenyang Palace 66, Shenyang Forum 66, Jinan Parc 66, Wuxi Center 66, Tianjin Riverside 66 and Dalian Olympia 66 in the Mainland.

Hong Kong's leasing portfolio includes Kingston in Causeway Bay, the Peak Galleria, Kornhill Plaza in Hong Kong East, leasing properties in Mongkok includes Grand Plaza and Gala Place and Amoy Plaza in Kowloon East.

Offices are in Central, Causeway Bay and Mongkok. Residential and serviced apartments such as Kornhill Apartments. Properties for sale include The Long Beach, houses at Blue Pool Road and The HarbourSide.

Property Development and Capital Commitment
The total aggregated value of investment properties under development was HK$21,592 million. They comprised mainland China projects in Kunming, Wuhan and remaining phases in Shenyang and Wuxi. The portfolio consists of malls, office towers, hotel and serviced apartments.

The construction work for Kunming Spring City 66 is progressing, total gross floor area of the entire mixed use development is 432,000 square meters, comprising a world-class mall, a Grade A office tower, serviced apartments and car parking spaces. The mall is expected to open in min 2019.
Wuhan Heartland 66 covers a total gross floor area of 460,000 square meters. This prestigious commercial project will house a 177,000 square meter mall, a Grade A office tower, serviced apartments and car parking spaces. The project is planned for completion in stages from 2019.
The conversion of top 19 floors of the office tower at Shenyang Forum 66 into a Conrad Hotel is in progress. This five star hotel will be expected to open in 2019.

The construction work for the second office tower at Wuxi Center 66 is progressing as planned. In May 2017, Hang Lung Properties took a piece of land of 16,700 square meters for Wuxi Phase 2 development. This will be used to build serviced apartments.

With conversion of existing property into five star hotel, grade A offices and serviced apartment, I believe Hang Lung Properties is well-positioned for the rise of China in the next decade. The recurrent income will help to grow the company and allow it to acquire future lands in the inner China. The revenue from these will only be recognised in 2019 and 2020.

Financial Strength
Hang Lung Properties has a Net Debt ratio to Equity ratio of 1.9% and Debt to Equity Ratio of 17.4% which are both healthier than 2016 results. Net Assets Per Share is HKD 31.60.

Key Risks
This is an age of disruption, the co-working era is coming and grade A offices will face its challenges as well. I cannot predict whether co-working will replace the traditional office setting but I think this erosion factor will be slow.

Malls are challenged by eCommerce making traditional retail more difficult than previous era. Malls have evolved into social places for entertainment, services and food & beverage. The trend is to cater to experiential tenants such as cinemas, online to offline stores, mobile payment and smart parking to entice footfall and retail sales. Hang Lung Properties is said to be in talks with smaller eCommerce players to collaborate on some of the malls.

The progress in China's economy will continue to play an important role.

Conclusion
I will continue to hold on to this company, I have only 12,000 shares and my average price is about HKD 17.98. If share price drops below HKD 18.6, I will acquire more of this company. To review half a year later.