Showing posts from 2017

Hyflux - Improving Fundamentals?

Improvements 1) Revision of electricity fees from January 2018, the government justify price increase due to increase in energy prices, may result in better profit margins / reduced losses from Tuaspring 2) Revision of water price upwards, the government justify price increase due to lack of revision of prices and need to readjust it to reflect market fundamentals. May result in better profit margin of Hyflux Operation and Maintenance business 3) Liquidation of fixed / non current assets to current assets to improve cash flow. Cash flow used partially to pay down preference shares / debt. 4) Eventual p artial divesting of Tuaspring to unlock cash flow and reduce its exposure to the energy market, which is not within its circle of competence 5) Hyflux group will refocus on its own core business (Municipal and O&M) Free scrip dividend (at no cost)of Hyfluxshop Shares as it is going to be listed eventually. Proposed Distribution being approved by Shareholders at the Ex

Buy and hold (December effect)

Value investing is a frustrating yet rewarding hobby. It is easy to understand but immensely difficult to implement. Persistance in working hard to filter out the most promising companies which might be undervalued at certain price levels. Patience to wait out the hype and resist joining the crowd and do nothing until price fall below target level. Courage to buy when prices are falling and believing in your thesis of the company. Confidence that your company will do well irregardless of market noise. The December effect touted by academics and fund managers is prevalent in us markets. Fund managers will window dress their portfolio by dumping under performing and buy the outperformers, to make themselves look like the winner when investors look at their portfolio constituents. Mere mortals cash in and sell their stocks to raise money for Christmas gift shopping and portfolio rebalancing. Regardless, there will theoretically be a mini crash of temporary under performing stocks and

Peter lynch one up on wall street

Peter lynch one up on wall street Lynch stock picking methodology 1) lynch contrarian, market cyclical, bottom up (individual performance of company not economy) fundamental analysis investing i) Buy based on fundamentals like earnings rather than stock price or broker recommendations in buy/ sell decision. Don't overestimate skill and wisdom of professionals. Strong preference for undiscovered and un-monitored stocks. Usage of earnings line whereby stock price will trend towards earnings line and the importance of projecting how earnings will go. ii) Buy companies that can successfully enter new markets, generate improving earnings, and leading to improvement in share price. iii) Strong preference for buying shares within your circle of competence (everyday goods and services, work related vendors, hobbies and passion). Good to try out the products and services and visit stores, or buy companies within your circle of competence. understand the busine

What I learnt after 1.5 years of investing

It is that time of the year whereby people start reflecting what they have done for the past year, and their investing journey. Due to my usage of dual brokers (poems and maybank) and the inability to automatically track dividends and transaction costs via excel, I scoured the blogs of investment bloggers and came across sgxcafe, a nifty tool to track transaction costs and dividend yield all in one convenient package. My capital gain in the short run is not stellar for this year as expected for a long term buy and hold strategy.This is to be expected. There is always a sinking feeling when your portfolio is in the red rather in in the black, but the dividend gain and the winners managed to cover for the short term losers and I still made a consolation prize profit. At least I kept myself from actively buying and selling and incur more transaction costs, which will effectively had eroded the meagre earnings I made. Thank god I am not a fund manager! I would have lost my job for failin

Development of Fintech and Bitcoin

Fin-tech and disruptive technology is currently one of the hottest discussed topic. While other countries are moving towards regulating or outright banning cryptocurrency, Singapore is aggressively positioning itself to be the industry leader in this disruptive technology. Now, project Ubin is announced and significant support is given by the government and major financial institutions to support this cause. It is indeed an exciting yet troubling development that will affect how banking operations will function in the future. My understanding of bitcoin is of 2 discreet components. I will be focusing on the technological part followed by the valuation part. The technology portion of bitcoin's distributed ledger is top notch. Operating from my circle of competence, it is a way to move information from one organisation to another in a transparent way whereby everyone can see the evidence of the movement, but the information is encrypted so that no one can know the exact contents, m

Law of One Price

I discovered a market mispricing of a company named Tianjin Zhongxin while scouring through the internet and blogger posts. One seemingly promising pharmaceutical company dual listed in China and Singapore, apparently has arbitrage opportunity between 2 markets. I am not sophisticated enough to buy a share in Singapore, do a cross border to Hong Kong and trade it via Hong Kong stock connect to earn arbitrage profit from TJZX Shares. (Not sure if is it even allowed) Nor am I brave enough to do a proper arbitrage position by longing in Singapore and SHORTING in China Stock connect. (I believe china does not allow shorting of most shares).  Shorting is a no go for me as you incur limited profits and potential unlimited liability!!! I will not be able to execute a convergence trade strategy explained by Benjamin Graham, but there is definitely upside potential for longing TJZX SG. I am going to do some research regarding

Convergence trading

In economics, there was a widely accepted theory named the Law of one price, whereby the same good should be sold at the same prices, if you remove the transportation, for-ex and other administrative and misc costs. The popular Big Mac index is a popular illustration of this concept although its credibility is also disputed is a so called popular Surprisingly, there is little documentation about convergence trades in academia finance, despite sharing common roots. Economics explaining why money functions and how it flows, and finance tracking its actual movements and on the practical applications. My curiosity is piqued when I was made aware of HSBC HK/ HSBC UK, TJZX China A and TJZX SG, and this recent discovery, HKL USD and HKL GBP. Theoretically, in efficient financial markets, the law of one price should hold, and triangular arbitrage should eliminate pricing anomaly. In ac

Accounting Fraud Textile companies in China (cyclical company) This story has been circulating around since April 2009 but we thought it was such a good read and contained so many valuable lessons that we decided to share it once more here. The story below is from an email purportedly written by a former S-chip CEO. If you’re not already familiar, S-chips are Chinese companies listed on the Singapore Stock Exchange and notorious for corporate scandals including embezzlement, forgery and accounting fraud. While it’s wrong to assume that all S-chips have accounting issues, this story (along with some juicy bits about KTV bars and nightclubs) reveals how innocent investors are sold the investment potential of an S-chip, invest their hard-earned money, only to later discover that the stock is worth nothing. The authenticity of this story can’t be proven but it still highlights the importance of always being on your guard against characters wh