Caveat Emptor

For Sakae, it's once bitten, still not shy as firm falls victim to second scam PHOTO: The Straits Times file DENNIS CHAN THE BUSINESS TIMES Oct 25, 2018 Sushi maker Sakae Holdings has found itself in a pickle yet again. The company, which runs a chain of Japanese-themed restaurants including the flagship Sakae Sushi, has had to postpone its annual general meeting (AGM) over what one may describe as The Case of the Missing Sugar. Now that the belated AGM has been scheduled to be held on Oct 29, shareholders who plan to turn up may want to acquaint themselves with the plot from the case file. On Aug 28, Sakae Holdings released its profit and loss statement for the year ended June 30, 2018 (which was actually an 18-month period as the company was switching its fiscal year-end from December to June). In the statement, Sakae Holdings recorded an impairment loss on trade receivables amounting to S$6.73 million but gave no explanation. Ten days later on Sept 7, it p...

White knights and damsel in distress. In the depths of the doom and gloom originated by the US and China stock correction, there is a silver lining largely unnoticed by the market.  A CONSORTIUM comprising two major Indonesian groups - conglomerate Salim Group and energy giant Medco Group - has agreed to give Hyflux a S$400 million equity injection, in exchange for a 60 per cent stake in the water treatment firm once it has settled all its debts. The consortium, SM Investments, will also grant Hyflux a shareholder's loan of S$130 million and a debtor-in-possession loan of S$30 million to help finance it through the restructuring. With this offer on the table, it falls to Hyflux to negotiate terms of a debt restructuring with each of its creditor groups, which could include debt-for-equity swaps. The best case scenario turned out to be the outcome of this case although the White knight I envisioned turned out to be completely different entities! The turnabout ...

 One industry. Two strategies. The technology industry is a different monster compared to traditional boring companies in my existing portfolio. The more I read about Tencent and the technology industry in general, the more it seems to digress from traditional value principles. Instead of hoping to succeed in a monopoly position in a state of no change, technology industries seek to expand and capture market share aggressively and create fundamental changes to stay ahead of the pack. Even the strategies it adopt are vastly different from the traditional companies I am holding. Here is a break down of the competitive strategies in the china scene (BAT) between Alibaba and Tencent  1) Underlying monetization strategy Alibaba - online mall REIT. Able to raise the rental of internet storefronts. High dependent on MAU and continual visitor inflow to be viable. Or else, vendors can uproot and shift to competitors.' Tencent - focus on platform as revenue generator. Su...

Reblogged from https://theirrelevantinvestor.com/2017/07/14/ten-rules-for-catching-a-bottom/ Ten Rules For Catching A Bottom Posted July 14, 2017 by  Michael Batnick I’ve never met a new investor who was a trend follower. That’s because we were taught to buy low and sell high before we were old enough to open a brokerage account. So when we come of age, we go hunting for bargains. But we quickly discover this is harder than it sounds. Nobody can actually buy low and sell high. Not consistently anyway. Successful traders typically buy high and sell higher, and successful investors buy low and sell rarely. But if you  are  tempted to catch bottoms, to be the investor who can recognize treasure where others find trash, there are some broad rules that I suggest you follow. The obvious area of the market that falls in the pile of “other’s trash” these days are retailers. A group of 54 of these names that  Bespoke  ca...

Company : Tencent Holdings, 700.HK 1) Thesis / Decision to buy :Hong Kong market and the technology / gaming sector has been heavily battered, and presents a margin of safety.  Ten-cent has suffered 20% decline in its stock price due to the tightened scrutiny on the addiction of video gaming on the residents (Moat of the product line is too strong to the point of requiring government intervention)  . I believe these headwinds are temporary as the government is not totally shutting down the industry, and is merely putting a hold on the monetization pipeline of the soon to be released games. Its short time revenue is affected but should not damage its fundamentals. Ten-cent is not in a dire debt position and has considerable free cash flow. A delay in the next 2 quarters while the government undergoes restructuring, should not affect the superior economics of its  premium gaming  franchise. In addition, it has a powerful super-app in the form of We-chat, which ...