Saturday, 31 December 2016

2016 Performance and Review

Today marks the end of market for the year. It brings me great pleasure to announce that my portfolio has returned 41% (including dividend) for the year. My best performance since 2007, largely attributed to the excellent performance by Best World International Limited (BWL). Even if I excluded the gain from BWL, portfolio would have returned approximately 9% which still beats STI ETF that has remained flat for the year with about a 3% return from dividend.

What has gone well?
I have largely adhere to my portfolio allocation that set out in March 2015. Tracking the allocation has reduces the risk of skewing my portfolio to a category just because I am suddenly excited by an avail opportunity.

Along the year, I have tweaked my strategy and have decided to keep my exposure to REIT to around 30%. Also, I have decided to create a sub-category "Turnaround" which falls under the "Growth" category.

The second thing that has gone well was slightly more time was spent reading up about the businesses that I am interested in. This leads to relative smaller movement in my top 5 holdings as compared to the rest of my portfolio. Best World, PLife Reit, Straco and SG Reit have remained in this list. The exception is ST Engineering which is replaced by Raffles Medical and Fraser Centrepoint Trust.

This marked the 25th post for the year. The highest since I started this blog!

What could be better?
I am still trading quite a bit over the second half of the year. Also, am still looking at the price of the stocks way too often. I hope that will change in 2017 and I would instead spend more time learning about the business in my portfolio.

What to look for in 2017?
These are the things about the Growth/Turnaround/Punt counters that I am excited for the year ahead.
1. Completion of Raffles Hospital Extension.
2. Best World execution of its conversion of China's export model to direct selling model.
3. Completion of 800 Super WTE plant.
4. Continue growth of Vietnam business for Food Empire.

For my Dividend/REIT counters, I believe they are able to sustain their payouts for 2017.

Portfolio December 2016

The purchases made this month are mainly due to their reduced price.

1. CMT - Purchased at an average price of $1.88 for a yield of 5.8%.
2. AReit - Purchased at an average price of $2.28 for a yield of 6.7%

Other trades in December.
3. Added to Best World
4. Added to Fraser Centrepoint Trust
5. Added to 800 Super
6. Added to Thai Beverage 
7. Added to SingTel
8. Divested Dairy Farm to raise cash
9. Divested QAF to raise cash
10. Divested ST Engineering to raise cash
11. Divested LHN due to lack of understanding of business.

Current dividend yield (based on purchase price) is 4.0%.

For Income (52.8%)

REIT (31.7%)
Parkway Life REIT
Fraser Centrepoint Trust
Starhill Global REIT
Capital Mall Trust
Ascendas REIT
CDL Hospitality REIT

Dividend Stocks (21.1%)
Straco
SingTel
Valuetronics
Micromechanics

For Growth, Turnaround and Punting (40.3%)

Growth Stocks (28.6%)
Best World
Raffles Medical
ISO Team

Turnaround (4.5%)
Food Empire

Punt (7.1%)
800 Super
Thai Beverage
ISEC

Sunday, 4 December 2016

Portfolio November 2016

November is a month of punting. Lots of trading with small purchases based on others' reviews and a short read-up on latest results and last year AR.

The purchases are:

1. Dairy Farm - One of the recommendations by MF Singapore. I don't always buy their recommendations. The other 2 stocks that I have bought due to their recommendation are SGX and RMG. Still holding on to RMG but have divested SGX. Dairy Farm was recommended somewhere in August but I only bought this month as I realized that all 3 analysts have a stake in it and hence I am more convinced of their recommendation. Classifying under punt due to the nature I bought it but probably would go under growth category if their investment in Yonghui and IKEA franchise in HK, Taiwan and Indonesia continue to perform.

2. ISEC - International Specialist Eye Centre. Read about its 3Q results in MF Singapore free site and its jump in earning caught my attention. Further reading tells me that it just IPO in 2014 and earning has not been consistent after listing. Decided to take a small stake as I think it has a potential to grow; it is increasing its dividend; and a high number of employees are holding its shares.

3. Thai Beverage - This was a miss then. I was looking at it when it was going at 20 plus cents and the rest is history when it acquired F&N. I finally took a small stake in it after its price has drifted down from a high of $1.06 to $0.90. Its latest results is good but due to the acquisition and change of financial year, it is confusing to me. In any case, this is another company which has potential for further growth. Will start to follow it more closely in the coming year.

4. 800 Super  - Another stock which I missed the run up. Came into my radar when it is at 40 plus cents but its huge debt put me off. Thanks to a value buddy who posted on the company's development of its Waste to Energy plant and with its completion next year, the debt does not seem as scary as before if the new plant can generate a new stream of revenue and profit for them. Just took a small stake as an impetus to monitor how this development will plan out.

5. LHN - Get to know this business from another fellow investor. Just IPO in 2014 and latest results has improved quite a bit from 2015. Took a small bite and will sell in growth is not sustainable.

Other trades in Novemeber.
6. Added to RMG after reading through the past decade's annual reports and am convinced of its potential growth after the completion of its Hospital extension next year.

7. Added to Food Empire after an improvement of its latest results and purchase by its CEO.

8. Divested Old Chang Kee after making a gain of about 3 years dividend. Will continue to monitor its performance and might re-entered at a good price.

9. Divested FJ Benjamin after continued poor performance for 1Q and its price gained by about 30%.

10. Took a small stake in SingTel for a dividend yield of 4.6%.

Current dividend yield (based on purchase price) is 3.9% after putting in the cash withdrawn earlier this year.

For Income (52.2%)

REIT (27.8%)
Parkway Life REIT
Starhill Global REIT
Fraser Centrepoint Trust
CDL Hospitality REIT

Dividend Stocks (24.3%)
Straco
ST Engineering
Valuetronics
QAF
Micromechanics
SingTel

For Growth, Turnaround and Punting (39.9%)

Growth Stocks (26.8%)
Best World
Raffles Medical
ISO Team

Turnaround (4.6%)
Food Empire

Punt (8.5%)
ISEC
Dairy Farm
Thai Beverage
800 Super
LHN

Thursday, 3 November 2016

Portfolio October 2016

The following adjustments are made to my portfolio in October. 

1. Added a small stake of Old Chang Kee for its dividend and possible growth in 2 to 3 years with the completion of its new factories.

2. Added a small stake of FJ Benjamin for a turnaround story. The group is placed on SGX watchlist for 3 consecutive years of pre-tax loss. It has completed its re-structuring that started in 2013/2014. Recently clinches distributor right of CASIO watch in Indonesia and Marc Jacobs. 

3. Re-entered CDLHT which I sold at $1.495 in July. Feels that the current price of $1.335 provides a good yield during the current downturn and believes it will do well when the increase in hotel rooms stabilize after 2018.

4. Increased my stake in ISOTeam after reading throught its latest AR. Confident of its contiued growth in the next few years. Also, reclassifed it from punt to growth.

5. Divested my holdings Capital Retail China Trust to reduce my exposure to REIT which I would capped now at around 30% instead of the original plan of 40%.

6. Divested SIA Engineering due to poor Q2 results and no special dividend declared from its divestment of HAESL.

Current dividend yield (based on purchase price) is 4.4%.

For Income (60.9%)

REIT (31.2%)
Parkway Life REIT
Starhill Global REIT
Fraser Centrepoint Trust
CDL Hospitality REIT

Dividend Stocks (29.8%)
Straco
ST Engineering
Valuetronics
QAF
Micromechanics
Old Chang Kee

For Growth and Punting (34.2%)

Growth Stocks (30.6%)
Best World
Raffles Medical
ISO Team

Punt (3.6%)
Food Empire
FJ Benjamin

Friday, 21 October 2016

Why I buy Best World?

I have written a longer write ups on Best World last July in the following two posts:
Best World International Limited

MLM and Best World...my experience with them


This post will summarise my reason for buying it and my expectation. I will also share its latest results.

Why buy?
The following are the key reasons why I purchased Best World.

  • The group gains traction in both Taiwan and China markets and has grown tremendously from 2014.
  • The group obtained its Direct Selling license in China which opens up a giant market for them in the next few years.
  • The group is a cash business. If they can grow their top-line, they would generate cash. And with a dividend policy of 30%, it means more cash-back.

What I expect?
I expect the company to execute their strategies to grow their China market. Execute well, and it should have double digits growth for the next few years. I also think that the company might issue bonus and rights in the next few years to generate further interest in the company. Best World would become a billion company if they can sustain their growth. Longer term, I hope that they can translate their performance in Taiwan to other markets.

When will I sell?
I would be holding on to my stakes for at least the next few years as there is clarity in their growth. I will sell if there is a sudden reversal of their fortune in both Taiwan and China due to regulatory changes. Another reason that I might sell is if the valuation goes crazy like PE 50x. I probably won't sell all but will definitely takes profit. 

Recent results
Amazing 1H results. Revenue up by 154.3% and net profit increased by 466.1%. Dividend of 2 cents and propose bonus shares of 1 for 4. Taiwan continues to be the star performance with revenue up by 275.8% and China is catching up with revenue growth of 164.7% for its export market. Currently, Taiwan and China accounted for near to 90% of group's revenue. Indonesia also saw growth of 122.9% but it is very much smaller in absolute revenue. 

I am happy to see the results even though it was already expected. There is a slight concern that Taiwan accounted for 63.7% of its revenue. However, things should change by next year with conversion of China export model to direct selling.  

I will continue to hold on to my current stakes and might buy slightly more after the bonus issues.

Monday, 10 October 2016

Why I buy Valuetronics?

I got to know Valuetronics after I read articles on NextInsight. I was attracted to its dividend and purchased a small stake. I increased my stake further after reading its past few years of annual reports. I like its story of how it exited LED business in Consumer Electronics (CE) segment and growing in the Industrial, Consumer Electronics (ICE) segment which provides a higher margin. Just before writing this post, I browsed through the posts on Valuebuddies and now know a bit more of its historical business of licensing, to CE and now ICE. 

Why buy?
My main reason to purchase Valuetronics is its high dividend yield. My average yield is about 6.6% if it can maintain is 20 HK cents DPS going forward. How likely is that? I think that in the near term, it is quite possible if they can continue to grow their ICE business which commands a higher margin. 

Reading the posts from valuebuddies confirm my dislike of manufacturing sector which typically has low margin and depends a lot on its customers. Valuetronics has survived near to 25 years since it was established in 1992 and it seems nimble enough to continue to grow its business.

What I expect?
Do not really know what I can expect but I am hopeful that their growth in ICE will make them a bigger player in the Electronic Manufacturing Services provider.

When will I sell?
Of course if what I hope for doesn't turn true or when Mr Market value it 3-5x the annual dividend I am receiving and there is no change in its fundamentals.

Recent results
20171Q revenue and net profit continued to decrease from its exit of LED segment since 20163Q, partially offset by the growth in ICE segment. Management has guided that revenue of CE segment is more or less stable at about HK 140 mil to HK 160 mil. Entry to automotive industry will be its next driver.

So all is well, within expectation and I will continue to hold on to my small stake.

Thursday, 6 October 2016

Why I buy Capital Retail China Trust?

My first exposure to China retail sector was my purchase in Metro in 2008. Bought with CPF, I have held on to it until now, with near to 200% return (including dividend) and yield based on purchase price is near to 15%. Just two days ago, Quarz Capital Management have written an open letter to urge Metro to return cash. Hopefully that will get Metro to take some action to further unlock shareholder's value.

I decided to purchase Metro rather than CRCT was due to my familiarity to the brand then and hence CRCT seldom came to my mind as a purchase idea.

Why buy?
My main reason to purchase CRCT is its high dividend yield. I was attracted by the more than 7% yield and the trust have increased its dividend payout over the years, though the increase is not linear and dropped in two years.  With these information, I believe that the group can continue to give consistent dividend in the coming years.

What I expect?
I expect that in near term, the dividend payout will be pretty stable. While the recent purchase of Galleria, Chengdu is DPU accretive for the trust, I feel that the impact will be pretty small.

When will I sell?
I will sell when Mr Market decides to value it higher and provides me a return of at least 3 years of dividend, without any change in its fundamental.

Recent results
20161H revenue and net profit income is pretty stable and there is a slight dip in the interim DPU. I will continue to hold on to my lots to collect dividend.

Monday, 3 October 2016

Why I buy Singapore Technologies Engineering?

I bought and sold ST Engineering shares numerous time over the past 12 years. I decided to dig into my record and check the details and these are the details.

2003 - Purchased a lot at $1.81 and sold at $1.96 within the year.
2009 - Purchased 5 lots at $2.38 and sold at $3.10 in 2010. 
2011 - Purchased 10 lots at $2.81 and sold at $3.35 in 2012.
2015 - Purchased 5 lots at $2.985 and sold ???

My purchase in 2003 was of course during a time when I was still clueless about investing. Yes, I made a gain of $100 but that was without any homework done. If I know the financial of the company better, I would have definitely held on to my lot and even buy more at a price below $2.

The subsequent purchases weren't really much better. By 2009, I roughly know what the company does but its business is very much more complex for my simple mind. As you can see from the purchase price each time, it has been creeping up, though the last 2 purchases were below the previous price that I sold. 

So unlike my purchase of Best World, Parkwaylife Reit, Raffles Medical, Straco and Starhill Global Reit, I don't seem to be buying ST Engineering for long term.

Why buy?
Based on its track record, ST Engineering delivered a pretty stable performance. From 2011 to 2015, revenue and net profit is around $6 bil and $5.3 mil respectively. EPS is around 17 to 18 cents and DPS is around 15 cents. 

My assumption is that the company will continue to pay out dividend annually and there won't be much change in the amount of dividend in the coming few years. Hence, I have a sense of comfort buying it whenever the price dropped below $3, as at 15 cents, that give me a good yield of 5%.

What I expect?
I expect that in near term, the revenue and net profit should continue to be stable. There might be a dip as economy seems to be drifting at this moment. The dividend payout should remain pretty stable at 15 cents too.

When will I sell?
I will sell when Mr Market decides to value it higher and provides me a return of at least 3 years of dividend, without any change in its fundamental.

Recent results
20161H revenue grew by 5% and net profit grew by 2%. Management guides that revenue would continue to grow in 20162H but profit before tax will be lower. 5 cents of interim dividend declared which is the same as last year.

Will hold on to my 5 lots and continue to monitor.

Wednesday, 21 September 2016

Portfolio August and September 2016



For the past two months, I have made the following adjustments:

1. Added my holdings to Capital Retail China Trust, Fraser Centrepoint Trust and SIA Engineering. All these are to increase the dividend payout received from them. 

2. I divested Vicom due to uncertainty in its short term business outlook.

3. I divested SGX due to lack of affinity to it.

4. I have initiated a position Micro-Mechanics as I see a constant stream of dividend from them.

Also, base on better understanding of how I view the individual stock, I have re-classified Straco under Dividend category and Food Empire under Punt category.

With all these adjustments, the "For Income" category has ballooned to 67.3%, beyond my initial plan on 60%. It does make me think and I am still thinking on my initial figure.

My current dividend yield (based on purchase price) is 4.9%.

For Income (67.3%)

REIT (34.3%)
Parkway Life REIT
Starhill Global REIT
Capital Retail China Trust
Fraser Centrepoint Trust

Dividend Stocks (33.0%)
Straco
ST Engineering
Valuetronics
QAF
SIA Engineering
Micromechanics

For Growth and Punting (30.5%)

Growth Stocks (25.3%)
Best World
Raffles Medical

Punt (5.2%)
Food Empire
ISOTeam

Why I buy Raffles Medical?

It was 8 years ago when I decided to purchase Thomson Medical over Raffles Medical (RMG). The decision made was not base on its financials or a study of its fundamentals but more of an emotional one. I simply bought Thomson because my first daughter was due in a year and my wife's gynaecology was based at Thomson.

Do I regret the decision? Yes, but not because I bought Thomson as I did a good exit price when Peter Lim made it private. I regretted that I decided to choose one instead of buying both. 

RMG has more than double its net profit and free cash flow since 2008. Stretched it to 2004, RMG has quadrupled its revenue, net profit and free cash flow. So RMG has a solid track record over the past decade.

Why buy?
RMG is expensive in terms of valuation and that has always stops me from buying it for the longest time. So why did I purchase it last year and buy even more this year? It boils down to the report I read from Motley Fool on the group's near and mid-term plans and I am optimistic of its growth.

The group recently completed its development and started its operation of its Holland Village medical/retail complex. RMG is also building its extension in the adjacent land next to the current hospital. This is expected to be completed in the first half next year and will increase its capacity by 80%. The last development is a joint venture with Chinese state-owned enterprise Shanghai Lujiazui Group to develop a new 400-bed internal hospital in Shanghai. This is expected to be operational in 2018.

So if RMG is successful in its execution of its plan, then while valuation appears rich now, it is reasonable when one considers its growth. 

What I expect?
I expect that in near term, the net profit might not grow as much due to expenses for expansion. Things will look brighter after the initial expenses.

When will I sell?
I would love to hold it for as long as I can since it is a great company and should continue to grow for a long time.

Recent results
20161H revenue grew by 21% but net profit grew by 4%. All is in line and will continue to hold on to my current holdings.

Why I buy Starhill Global REIT?

I first wrote about Starhill Global REIT here and my reasons to purchase its shares remain the same.

Why buy?
I bought Starhill Global then mainly for its yield and my perceived good properties in Orchard Road. No regret so far as its dividend has gone up over the years though it is getting flattish

What I expect?
I think the REIT would provide stable distribution for next 2 to 3 years. The possible up side might come from asset enhancement of its Australia properties.

When will I sell?
I would like to hold on to this REIT for as long as possible as I am getting about 7.7% yield based on my purchase price. Sell will only comes in if there is major negative changes in its fundamentals.

Recent results
2016 distributions increased be 1.4% with a flat 4Q. Full contribution from Myer Centre but drop in contributions in Japan and China. Fortunately, China only takes up about 2% of its portfolio.

No impetus to buy or sell. Hold and continue to receive the dividends



Friday, 5 August 2016

Why I buy Straco Corporation?

I first came across Straco from Motley Fool Singapore subscription service. As mentioned in my detailed analysis of the company, I wish I have gotten to know this company earlier.

Why buy?
The following are the key reasons why I purchased Straco.

  • The group has been able generate cash consistently. This leads to its ability to pare down its debt and to increase its dividend over the years.
  • The acquisition of Singapore Flyer marked its foray beyond China. I believe this would lead to other acquisitions when opportunities arise.
  • The ability of the group turning over the fortune of Singapore Flyer within one year of acquisition gives me confident that the management team knows what they are doing.

What I expect?
Base on the past actions, I expect the management to use its cash to repay its debt in the next few years and hence dividend should remain the same. After which, it would increase its dividend unless there are new attractions to acquire. I also think that the management will improve Singapore Flyer's business further within the next 2 to 3 years.

When will I sell?
I am confident that the company will continue to grow and hence look to hold on to the shares for a long time. I will sell if the competition in Shanghai significantly affects SOA's top and bottom lines. 

Recent results
20161H saw Straco's revenue decreased marginally by 0.5% from 20151H. Its net profit dropped by 8.2%. Management attributed the drop to poorer number at SOA and UWX but offset by increase in revenue at SF. Net cash flow from operation also decreases by about the same amount. 

I have a slight concern of company's performance at SOA and UWS. I am not sure if the numbers will continue to deteriorate and will continue to monitor the coming quarters results. I have decided to reduce to my holdings in the company even though I think it's still a good company to collect dividend due to its ability to generate cash. I will also re-classified the company in the dividend category rather than growth category in my portfolio.

Wednesday, 3 August 2016

Why I buy Parkway Life Reit?

I first came across Parkway Life Reit from Motley Fool Singapore subscription service. It is interesting that this healthcare Reit was not in my radar for the past decade. It could be that I was holding on to First Reit through CPF in the past decade and hence it did not occur to me to look for other healthcare Reit. And because of that, I missed its growth over the past decade! Ouch!

Why buy?
I believe it is still not too late to take a stake in this stable and probably growing Reit. A few reasons behind my optimism.

  • Population in affluent Singapore and Japan will continue to age and hence there will continue be demand for quality healthcare and nursing homes.
  • The built-in rental escalation for the three Singapore hospitals (Mount Elizabeth, Gleneagles, and Parkway East) which is based on the formula of consumer price index (CPI) + 1 allows annual growth rent.
  • Past performance indicated a strong management team which has ensure no more than 30% of its debt matures every year.
What I expect?

What do I expect for the next decade? I expect to receive consistent dividend from the Reit and based on my purchase price, it's about 5.2% yield. Growth should be moderated since it does not have much headroom for debt (though management felt that there is ample headroom) with its gearing around 38%. I think these are two possible events in the next decade, 1) Rights issue to raise money for new acquisition; 2) occasional divestment which will result in special dividend.


When will I sell?

I do hope to keep this forever unless there's a big deterioration in its fundamental such as a big drop in its revenue, net property income etc.

Recent results
In the results released in July, Parkway Life Reit continues to perform well. For 1H 2016, its revenue has grown 7.7% to $54.286 million and net property income grew 7.5% to $50.7 million. Its dividend per unit dropped by 8.6% to 6 cents due to lack of divestment gain. Exclude the divestment gain, current dividend represented 51% of 2015 full year dividend. From the presentation slides, management highlighted two prong approach in its Strategic Investment.

  • To continue to seek out long-term and strategic partnership with good lessee/operator where possible. 
  • To prioritise & seek out investment opportunities in countries where PLife REIT  already has investments. It might establish a country HQ for closer monitoring of its properties and portfolio.
All seems well and I will continue to hold on to my small stake.



Sunday, 31 July 2016

Homework for next 2 months

I was re-reading the article "Avoid The Mistake Most Investors Make" by  by The Motley Fool Singapore and was reminded that the ingredient to success investing is timeline and temperament.  I strongly encourage you to read the full article as it provides good pointers on how to keep level-headed when investing.

One suggestion which I would take up is to write down why I bought the share in my portfolio, my expectations of the share and what would make me sell it. 

I hope to cover all my counters in the next two months.

Thursday, 28 July 2016

Portfolio July 2016

I have made some adjustments to my portfolio in July. I decided to reduce my exposure to REIT, so divested CDLHT and reduced SG REIT. This leads to a drop in my dividend which led to the purchase of QAF and increase stake of Valuetronics.

I also added back some Best World when its price dropped form $1.5+ to $1.3+ recently. Finally, I initiated a position on ISOTeam after reading positive reports about it and quite like its performance over the past few years.

With all the adjustment, the current dividend yield decreases to 4.2%.

For Income (55.6%)

REIT (31.7%)
Parkway Life REIT
Starhill Global REIT
Capital Retail China Trust
Fraser Centrepoint Trust

Dividend Stocks (23.9%)
ST Engineering
Valuetronics
Vicom
SGX
SIA Engineering
QAF
For Growth and Punting (38.6%)

Growth Stocks (36.1%)
Straco
Best World
Raffles Medical
Food Empire

Punt (2.5%)
ISOTeam

Sunday, 17 July 2016

Best World Joint Venture with Prolife Biobank on Dental Stem CellBanking

My initial reactions on the JV were more negative. Personally think that management should focus on expanding their core business, especially ensuring execution of their business in China market. I also think that stem cell banking business seems to be a stretch from their current business.

However, the investment is only 2.5 mil. So it does not warrant any action at the moment. I am keeping faith with the management that they know what they are doing.

Thursday, 14 July 2016

Cleared car loan

Difference of 2.5k. Haiz, should have cleared the loan earlier and saved more on the interest. Nonetheless, I am happy that I am temporary financial free, that is until the next car loan. Wishfully hoping for the COE to drop below 40k by end next year.

Wednesday, 6 July 2016

Recent actions on the market

I decided to sell the two stocks that I punted Cityneon and Sunningdale Tech upon confirmation of Brexit, in anticipation of a drop in share price after that. However, that did not materialise over the past 2 weeks. Will hold on to the cash for future investment.

As mentioned in the last post, I sold a third of my holdings in Best World. While I am confident of their business in the next few years, I took profit as the share price has risen much in a short period of time.

Lastly, I have taken a small stake in SIA Engineering after reading through what it went through over the past 2 years. I reckon that while earning in near term will be flattish, it will benefit from its venture with Boeing and Airbus in times to come.

Monday, 4 July 2016

Best World International Limited

Best World share price has gone from $0.335 at the beginning of the year to $1.5 today (4 July). An investment of 10k then would give you 45k now. To sell or not to sell is the question that would pop up in many of our mind.

In theory, the price purchased should not matter in the sell decision. A sell decision should be based on one or more of the following reasons.
a. The fundamentals of the company has deteriorate
b. The company is overvalue at the current price
c. To raise cash for a better buying idea
d. To raise cash for other reasons

For Best World, its fundamentals definitely has gone better with the award of its China DS License. Annualising 2016 1Q results, 2016 PE at $1.5 will be approximately 14. Not dirt cheap but definitely not expensive, given its growth in the coming years. At the moment, I do not have any better idea. Last but not least, other reasons which for me is my recent decision to pay off my remaining car loan.

Again, in theory I should sell off my other holdings since BWL has such huge potential. However, I succumbed to my emotion and sold a third of my BWL holdings to take some profits due to its quick gain. Will hold on to the remaining shares to participate in the company's growth in the coming years.

Business
Back to its business, Best World International Limited (BWL) is a direct selling company that sells health supplement, skin care and lifestyle products. Its key products are Avance range of health supplements and DR's Secret skin care products. 

Listed in 2004, it had shown tremendous growth till 2008. From 2009 onwards, its revenue, net profit and dividend shrank and was flat between 2010 to 2013. The growth and then subsequent challenging years was due to over-reliance on Indonesia market. The regulatory change in Indonesia that revoked some of BWL products' license caused the huge drop in both its top and bottom lines. 

During these trying period, the company worked on other markets and establishing its China market.  The acquisition of China manufacturing plant in 2014 allowed them to fulfil the final criteria in its application for DS licence. In the same period, its Taiwan market grew and on their own estimation, the company felt that they are the number 13th/14th company in Taiwan in 2015. They reckoned that they will be 8th/9th this year. While waiting to get their DS licence, BWL sold their products to China through export model which also see a tremendous growth last year and 2016 1Q. All these recent developments augur well for the company and they should have good growth in the next few years.

Crunching the numbers












As seen from the data, this is a cash business. As long as the company can grow their top line, its FCF will mirror or be higher than its NP. The company has a dividend policy of at least 30%. So again, if NP grow, its dividend will continue to grow.

Management
Having heard the COO spoke during an investment seminar, I would say that the management know what they are doing. Together, they hold more than half the shares, so their interest will be aligned with the rest of the share holders.

My Take
Having gone through and survive a challenging period, I am confident that the management has learned much from the episode and is ready to bring the company to the next growth of phase.

I will hold on to my current holdings to participate in the company's growth. I might look at accumulating the shares when and if the current euphoria is over, resulting a lower share price.

Saturday, 2 July 2016

MLM and Best World...my experience with them

MLM sent  a shudder through me. That was true for me for many years when I felt that it's a scam. I reckoned that I felt this way because of various negative reports about pyramid scheme during a period of time. When did that happen, I could not recall but probably quite a long time ago. 

This negative association continued until I read briefly on an investment by Warren Buffet on MLM company. If the world best investor is into MLM, then there must be something I don't know about MLM. It was then that I first knew about Best World, the only direct selling company listed in SGX. Without much knowledge, I bought the shares in 2009 even as its sales were dropping. Then,  I felt it was a temporary problem and dividend yield was good. Held on to the shares, bought the rights and continued to accumulate but things got worse and when their best market in Indonesia tanked, dividend was cut as the group hardly made any profit. Finally sold out at a loss of about 11k in 2013. 

It was then a friend called me out to introduce me to Amway. After attending to an introduction presentation and finding out more about its business model, I decided to have a go at it. While I am not very used to the use of NLP during the seminars, my perception of MLM has changed. I think the business model is highly scalable and one can achieve success if he put in sufficient effort in it. To cut the long story short, I was a passive member for two years and decided not to renew my membership as I was not putting it as my priority. I might one day re-join Amway when I decided to have a go at having a business.

While I have divested from Best World in 2013, it was still on my radar. Last year, I read about its improved performance and decided to purchase a small stake in it again. I accumulated more with the release of its 2015 results. The share price just rocketed after it released its 2016 1Q results. And of course it is with joy that I read that the company received its direct selling license in China.

I am now clearer of Best World business after reading its past 12 years annual report and the various analysis done by valuebuddy Boon. The presentation by its COO during a recent investment seminar also provided me a better insight of the company. 

This is my experience with MLM companies and Best World. In the next post, I will share more on what I know about Best World business.

Friday, 1 July 2016

2016 1H Performance

Performance
After 2 years of lacklustre performance, I am happy to announce that my portfolio returned 23.7% (including dividend) for the first half of this year. This is definitely better than STI ETF, which reported an annualised 0.51% return over the past 6 months.

The good return is largely attributed to the amazing performance of Best World International Limited (BWL). If I have excluded the gain from BWL, the gain would be approximately 6%. Not fantastic but I think it is better than STI ETF.

As of 30 June 2016, top 5 holdings of my portfolio in terms of capital outlay are
Parkway Life Reit
Starhill Global Reit
Straco Corportation Limited
Best World International Limited
Singapore Technologies Engineering Limited

I decided to start tracking on average how long I held on to the stock since I first purchased it.
And on average, it's only 0.9 years! Well, this is so as I did a major review last year. The two counters that I held for a longer time are Starhill Global (since Jan 2012) and Food Empire (since Mar 2014). I am confident that with the review last year, the holding period of the companies will be longer.

Outlook
BWL requested a trading halt yesterday, pending an announcement. Cautiously optimistic that it will be a positive announcement and if so, that should further boost its share performance.  I will write more about BWL in my next post. Besides BWL, the rest of the companies should produce stable performance for the rest of the year. Looking forward to dividends from PLReit, SGReit, BWL, STEngr, VICOM, CRCT, CDLHT, Valuetronics, FCT and SGX in the second half of the year.

Friday, 10 June 2016

Straco Corporation

It is ranked #8 of 729 things to do in Singapore and has an average rating of 4.5 stars based on 10500 reviews on TripAdvisor. This popular attraction is none other than Singapore Flyer (SF). Straco acquired SF in Nov 2014 for 140 million from Singapore Flyer Pte Ltd. It has a 90% stake of the attraction which was built at a cost of 240 million and opened in 2008.

A shrewd purchase by the management and within one year from its acquisition, it has managed to generate profit from the attraction that has caused the previous owner to go bankrupt.

Reading about Straco and its past annual reports, I wish I have gotten to know this company much earlier. Since listed in 2004, its revenue has grown by 7 times, while net profit and free cash flow have grown more than 10 times. It has also consistently paid out 30% to 50% of its income as dividend. Hence, dividend has grown by 6 times over the past 10 years. 

Business
Straco is a developer, operator and investor of tourist attractions. Before the acquisition of SF, Shanghai Ocean Aquarium (SOA) was their prized asset. Its Lixing cable car service (LLX) ferries visitors to a mid-mountain where Chao Yuan Ge (CYG) located. Underwater World Xiamen (UWX) was acquired in 2007.

On TripAdvisor, SOA is ranked #31 of 1306 things to do in Shanghai with an average rating of 4 stars based on 644 reviews. There are more mixed reviews of the aquarium as compared to SF. The good includes the beautiful and wide selection of aquatic life. The complaints are its entry price, overcrowding of attraction and the tanks are too small for the aquatic life. As for UWX, it received even less reviews as it probably caters more to domestic travellers.

Crunching the numbers



As seen from the data, the group net profit margin for past 5 years is high at around 40% and ROE is around 20% for the past 3 years. With its FCF mirroring or even higher than its NP, the group should be able to sustsin its dividend. Dividend might not increase  in the next few years as cash generated will be used to pare down its debt.

Management
Based on past history, management has shown that they are capable in running a good attraction and chairman Wu Hsioh Kwang is able to spot good potential attraction to develop. Wu currently holds 56% of the company with another 22% held by China Poly Group.

Recent Results
The group's 2016 1Q revenue increased by 5% but net profit dropped by 4%. The drop is attributed to the opening of Chinese restaurant st SF and sales tax for SOA. The sales tax is pending waiver.

With the exception of UWX, the other attractions saw an increase in visitor numbers.

Related News
Shanghai Disney is opening on 16 June 2016. Management sees this positively as there might be a spillover effect.

Shanghai Hai Chang Polar Ocean World will open in 2017. Management feels that SOA central location would have insulated it from this competition.

My Take
The company's past records have given me confidence of its growth. I am hopeful that they would develop SF into a more vibrant attraction and in turn generates more cash from it. The competition to SOA is something to take note of and I will continue to monitor the company's report on it.

I had increased my stake slightly over the past 2 months. I  will probably hold on to my current holdings to participate in the company's growth.