Wednesday, 17 October 2007

Company Review: Metro (CPF)

More well known for its departmental store, Metro in fact does better with its property business.  The group owns and operates several prime retail and office properties in Beijing, Shanghai, Guangzhou and Penang.  With the increase in properties prices and rents in major China cities, Metro is set to benefit from it.

Since the group is more geared towards property development, I use their NAV as a yardstick instead of PE and ROE.  I purchased 10 lots of Metro at an average price of $0.933, which translates to a discount of about 35% to its RNAV of $1.40.  Also, based on 2006 dividend, my current dividend yield stands at about 4.3%.  With Captial China Retail Reit having a yield of only two plus percent, Metro deserves a better price.

Company Review: ComfortDelgro (CPF)

ComfortDelgro is formed with the merger of Comfort and Delgro in 2003.  The company has stated upon merging, that the group aims to achieve 50% of its revenue from overseas operation within 5 to 7 years after merging and based on 2006 Annual Report, the company is well on its way.  The company has become the second largest land transport operator in 2006 with footprints in China, Australia, UK, Ireland, Vietnam and Malaysia.  Locally, the company owns SBSTransit, VICOM and Comfort Taxi fleets.  In 2006, the company has finally made a gain in NEL which will continue to do well with the North East getting more populated.  One major concern for the company is the volatile high oil price which has a negative financial impact on the company.  The group has coped with this problem quite well, continue to achieve reasonable growth in earning.
The group has a net profit margin of about 8% to 10% and ROE of about 13%.  The company has a generous dividend policy which pays out approximately 50% of its net earning.  Based on what I have read, Chairman Lim Jit Poh appears to be a detailed person with strong belief in his vision.
I have 5 lots of the group shares purchased at an average price of $1.538 which translates to a forward PE of about 13, cheap considering it has a market cap of about four billions.  At my purchased price, my dividend yield stands at approximately 5.8%.   I will continue to hold on to my shares as I am happy with its dividend and am pretty confident that the group can even be better for their 2nd 5 years.
20071H Results
The company has posted a credible first half result with 8% and 10% growth in revenue and net profit respectively.  Oil price remains a major concern but I am sure the group has the capability to cope with it.

Monday, 15 October 2007

Financial Info Analysis Pte Ltd - Shareowl
A new investment website which I discovered this year that gives a new perspective in investing.

Investing in Singapore small-cap stocks and fine French wines
The site where I learned a lot on investing. Currently, only the forum is up to date.

Singapore Exchange website, you can obtain lots of information here.

Company Review: Kingsmen Creatives

As a one-stop design, production and logistics center, Kingsmen tops as a leading communications design and production entity in the Asia Pacific region. Providing clients with integrated solutions in Exhibitions & Museums, Retail & Office Interiors, Research & Design and Integrated Marketing Communications, Kingsmen is the epitome of a reliable global marketing communications firm.
Listed on SESDAQ in 2003, the company was affected by SARS in 2004.  However, since then, the company has posted a CAGR of 30% in earning over the past 3 years.  Net profit margin has improved from a low of 2% in 2004 to 5.9% in 20071H with its average ROE around 20%.  The company has a net cash position and insiders hold about 25% of the total shares.
I was attracted to the company due to the big name clients that it served such as Adidas, Chanel, Hour Glass, Esprit, Nokia, DFS, DBS/POSB, FJ Benjamin and others.  This is an impressive list of clients and having seen some of the interior designs, I am impressed by their works.  One concern that I have is its low net profit margin, hopefully it can be better with new production facilities in Malaysia.  With its expansion plan on track, it is expected the company would grow further this year.
I was lucky to come across this company in Dec. 2006 and purchased 15 lots at a price of $0.22 (at an amazing low historical PE of 4.5).  The market has recognized the potential of this micro cap over the year and its price has more than double over the past 9 months.  I will continue to hold on to my 15 lots as long as the company continues to perform well.
20071H Results
The company has posted a good first half results in August with its bottom line improves by 65%.  It is expected that company to continue to do well in the second half of 2007 which traditionally contributes a higher percentage to company’s revenue and profit.

Company Review: Koda

Koda is a leading ODM furniture exporter in South East Asia.  The company focuses on up market furniture and established customers over 50 countries.  The company is a micro-cap with only a market capitalization of just slightly over $100 mil. 
The company has posted 4 years of double digit growth in both revenue and profit.  CAGR net profit is 25% over the past 4 years.  With its production base shifted to Vietnam (lower cost), this growth is expected to continue for 2008. Net profit margin is approximately 10% with ROE of around 25%. The company has a net cash position with insiders holding approximately 68% of total shares.
I’ve purchased 12 lots at an average price of $0.751 (PE of 7.5 based on 2007 results).  Again, this is not such a cheap price considering the company has a small market capitalization.   However, I am intrigued by the company’s performance over the past few years and I like the way they report their results.  Company chairman has come forward to say that the company will not be affected by US sub-prime problem as company’s product is targeted at the higher end market.  With the volatility of market over the past few months, I have decided to pare down my holdings on Koda.  I will continue to hold the 5 lots of the company and wait for opportunity to purchase more if the price is right.

Company Review: Celestial Nutrifood

Established in 1997, Celestial NutriFoods Limited is a leading manufacturer of soy protein-based food & beverage products.  The company is invited to co-develop the first phase of the Hi-Tech Soybean Zone project initiated by the Daqing Government in 2004.  Phase 1 of the development has since been complete and operations commenced in June 2006.  It has boosted Celestial capacity and enables the Group to introduce three new products, namely soy functional protein, biochemical feedstuff and lecithin.  The group is also exploring the production of bio-diesel fuel using soybean oil, a by-product of the manufacturing process.
The company net profit margin is approximately 25% with ROE of around 25%.  For the past 5 years, company has achieved a blistering CAGR of 50% on both revenue and net profit.  This is largely attributed to the completion of Soybean Zone project last year.   The growth is expected to continue for 2007 but the earning will be dragged down by non-cash convertible bond interest expense.  The company has a gearing of 87.5%.  The chairman and CEO Ming Dequan holds approximately 28% of the total shares.
I made a mistake on this company in Dec 2004 by selling it off when the market did not react positively to its expansion plan.  Purchasing it at $1.41 in May is not exactly cheap but with its track record over the last 3 years, I am more confident of the management in delivering further growth of the company with careful handling of the company’s debt.
20071H Results
The company has reported a good set of results in Aug with sales growing at 72.1% and net core earning at 38.5%.  Net earning decreases by 3.3% due to non-cash component of interest expenses on convertible bonds.  The company expansion plan is on track and is expected to reach its target of 70% utilization rate of facility.

Company Review: Pacific Andes

Pacific Andes is primarily engaged in industrial fishing and the supply chain management of frozen seafood products to customers mostly located in the People’s Republic of China, Japan, South Korea, Europe, North America and Africa.  For the past 2 years, the company has grow its bottom line at a blistering pace of 50%. 
In June 2007, the company restructures with an increase stake of 63.9% in China Fishery Group.  The company is upbeat about global seafood industry especially for industrial fishing for FY2008.
The company net profit margin is approximately 7 – 8% with ROE of 14 – 18%.  To expand its capital base CFG issued US$225 million of 7 years senior notes in Dec 2006 and PAH issued US$93 millions 4% convertible bond due 2012 in Jun 2007.  This results in a net debt to equity ratio of 117%.  Approximately 63% of the shares are held by insiders.
I purchased 10 lots of the counter at a price of $0.765 due to its impressive growth rate.  At this price, it is only trading at a forward PE of 6.6x and it’s trading at a discount to its NAV of $0.91.  What I don’t quite like about the company is its debt structure.  I do not know its ability to handle this huge debt that they carry and also the dilution effect of the convertible bonds comes 2012.  Also, the fishing industry can be quite unpredictable especially due to weather factor.  Having said that, personally feel that it’s a cheap price to buy the counter.
20081Q Results
The company posts a strong first quarter results in August where both revenue and net profit increased by 43%.  It is expected that the company will continue to do well for the rest of the year.

Company Review: Midsouth

Midsouth is a manufacturer of fiberglass reinforced plastics (FRP).  Listed in May 2006, the company has produced good results for 2005 and 2006.  Its revenue and net profit has grown by at least 35% in 2006.  Shifting its production to Lingxian plant, the company is expanding its production and since the beginning of the year, its bottom line is boosted by the production of Polypropylene (PP) parts for automotive vehicles.  The company will continue to benefit from China boom in infrastructure and property sectors.  Also, the company is looking into exporting its parts to US and Europe markets which will provide another driver for its growth.
The company net profit margin is approximately 24% and ROE approximately at 25%.  With cash from its IPO listing in 2006, the company is in a net cash position.  Approximately 57% of the total shares are hold by the Executive Chairman (Gao Yanjun), CEO (Gao Yanhua) and GM (Gao Yanguo). 
While I do not really like a family based business, the company’s numbers is impressive enough for me to purchase 10 lots of Midsouth at a price of $0.815 (in June) which translates to a forward PE of 9.2x.  Not that compelling considering the company has just listed.  However, if the company is able to execute its growth plan, there will be good returns in the coming 2 to 3 years.
20071H Results
The company reported a good set of results in August.  Revenue grows by 37% while net profit increases by 33%.  With a historically stronger contribution in the second half, it is expected that the company will continue its double digit growth rate.

2007 3rd Quarter Report

It has been 16 months since I made my last entry.  I do need to make more effort to update this journal. 
I decide to take on a new approach in dealing with my investment portfolio.  Instead of just thinking that this is an ad-hoc interest, I will take that I am having a business that holds interest in Singapore equity.  Hence, I will do at least a quarterly report on my company and will also provide update on my business decision (buy and sell decision).

3rd Quarter Performance
Last quarter sees my cash portfolio drops by 10.2% and CPF portfolio increases by 4.6%.  The drop in my cash portfolio is largely attributed to two wrong moves I made: purchasing MMP Reit, Guthrie and FSL in July and subsequent selling of these counters during the meltdown on 17th August.  This again surfaces my lacking in the control of my emotions in decision making.  As for my CPF Portfolio, the gain is attributed to the gain in Jardine C&C, Aberdeen China, GEM and Lion Capital Korea Funds.
Buy and Sell decision for 3rd Quarter
Cash Portfolio
Besides the three mentioned counters which I have bought and sold, I have sold Cougar after receiving the dividend, making a gain of $341.01.  Again if I have hold on to the counter a little longer and not sold at the meltdown, the gain would be heftier.  With the rise in valuation over September, I have decided to raise my cash position.  I have pared down my stake in KODA and sold Beauty China.  I will continue to keep Beauty China in my radar.
CPF Portfolio
I have taken profits from
Aberdeen China, Schroder Euro Fund, Jardine C&C and SIA Engineering.  While the counters might still have some upsides in the next few months, the sharp rise in the price in such a short period made them a riskier investment for me.  Again, they are still in my radar and I will purchase them if the opportunity appears.

9th Month Performance
The first 9 months of this year saw my cash portfolio increases by 52.7% and CPF portfolio by 13.7%.  Overall, I am satisfied with this performance especially considering the two crashes in February and August.
Buy and Sell decision for 20071H
As I have not reported on my investment in the first half of the year, I will highlight some of the buy and sell decisions in the first half of the year.
Cash Portfolio
I have sold off my positions in China Flexible Packaging and People’s Food in June.  For the former, it was still at a very low valuation.  It is frustrating to hold this counter as it hardly moves even when the whole market has moved.  Eventually, it might move to its value but with so many other possible positions I can take up, I decide to sell it off.  People’s Food is a company which I have wanted to hold long term.  The decision to sell it come after the company announced that they faced short term problem in the shortage in supply of pig which will drag down its profitability for the next 2 quarters.  I still believe the long term prospect of the company but will wait for the correct opportunity to purchase it again.
CPF Portfolio
OSIM was sold off in the beginning of the year after holding the counter for slightly more than 3 years.  I should have sold it off earlier last year when the company faced problem after consolidating the accounts of Brookstone.  However, I took confidence from Ron Sim purchase of the company shares and held on to the shares believing in a fast turnaround.  This did no realize and the company suffers a larger than expected loss for FY2006.  I still made a profit of $2500 over the 3 years but that profit could easily be $8000 if I have sold it out when the fundamental has changed.
I sold Sincere after holding it for a year.  Made a 60.8% gain (including dividend) over a year.  The primary reason to sell Sincere was to raise cash for purchase of Jardine C&C and SIA Engineering.