Saturday, November 27, 2010

Week 47: Portfolio Trends Downwards

For a moment, I thought the portfolio covered! I was wrong of course, if we compared to the previous week. FJ Benjamin moved below the 40 cents mark. I have reasons to believe that this is due mainly to Peter Lim making an offer for Thomson Medical Center. If he has made a bid for the pregnancy-centric medical center and at such a premium, he must definitely find some way to cough up the cash as well. Unless he already had earmarked the money for his latest acquisition, after his failed attempt to take over Liverpool FC.

During the week, I purchased a few more lots of C&O Pharmaceutical. That makes the amount of capital from my salaries injected to the stock market, to the $20,000 mark. However, I took too much a time to consider my purchase as I was deliberating whether to sell Asiatic or Stratech to make my holdings leaner. I was looking at either OSIM or NOL the day that the market correct on Wednesday but I did not have the courage the key the buy order. Fortune favors the brave.

Macro Economic Issues And War
For those who have been catching up with the news, two significant headlines were the Irish government seeking a bailout from the IMF as well as North Korea lobbing a few artillery shells at an isolated South Korean island. In my opinion, both headlines have almost no impact on the stock market. For Ireland, they do have enough money to keep itself running at least next year. That its finance minister announce a requirement for bailout, is more pre-emptive than indicative of the troubles that ails the once booming economy. It should be noted that there are many options available to Ireland but some of the IMF sponsored ones need Ireland to increase its corporate tax rate. This will cause a flight of corporations from the island country and seems to me a evil plot by the IMF.
As for North Korea's histrionics, they distract most of us who are already bothered by how QE2 will affect the stock market or by slasher teen gangs in Singapore. The STI is on course for slight gains from the start of the year as I had hope. We should see more action in the month of December as more investors, especially the larger ones, gear up for 2011.


  1. Hi,
    just saw your posting again.
    Can you share with me the reason you are looking at OSIM and NOL, but later decided not to invest on them?


  2. Hi Commenter,

    it is purely administrative. I reckoned that when the stock market plunged sharply, stocks like OSIM, IndoAgri and NOL (as well as others) will take the greatest hit in terms of share price. But.... if i were to do that, then I would have to sell some of my existing holdings to top up my cash... further, i would increase the number of companies under my watch to 12.. a bit too spread out for me... also, i worry that the sharp plunge is just the beginning of something more sinister.. but i was wrong... nonetheless, i picked C&O for its supposed defensive qualities...


  3. Hi sgxstockpicker,
    thanks for sharing your view. The purpose of me asking you is to find out your thoughts for these 2 counters. Apart from administrative, why don't you take a closer look at their P/L, P/E, P/B ratios and industry growth? :)

    Are they in a better position and having greater potential than your current holdings?
    Are you a advocate of value investment?

    To play devil advocate, do you think you have time to monitor 12 counters? or even to understand their businesses?

    Just to share, I am only invested in a few great companies where I closely monitored their industries and performance. Most of these counters have fetch ROI of >100% and posed for greater uptrend swing for the run.

    Great hunting ahead!

    just some food for thoughts and sharing.

  4. Commenter,

    Here are my thoughts:
    OSIM: A growth stock with very high margins on its products. In Singapore, it has very strong brand equity, the latest product campaign showing andy lau is a very good example. It is also going into China and has spent alot of time doing its homework there. China will be a growth driver for the stock and company. However, that said, China is a tricky place to do business as fake massage chairs carrying OSIM's brand is a probability. In terms of valuations, it is definitely a growth stock and I believe that there are investment funds which are major shareholders of OSIM, that has led to higher valuations.

    NOL: Cyclical company with blue-chip pedigree. No doubt the shipping and ship building sector has been plagued by excess capacity that has driven charter rates down, charter rates will recover eventually because there is a minimum cost of shipping stuff that these shipping companies can accept. However, how long does it take is the question you have to ask yourself. for charter rates to return to pre-crisis levels a few things must happen. All those extra vessels (mostly older ones) will have to be retired to trim supply. Demand-wise, the European economy will have to sort out it financial ails.

  5. sgxstockpicker,
    you might need to look deeper into these counters. Pardon me from being frank, what you said is only touching the surface. Look deeper, you might find gem in counters you are interested in and not just the 2 counters you just shared.

    Taking for example, have you noticed what the shipping industry have been going through before and now? And what action have they taken to ensure that the previous crisis will never happen again?

    Maersk the largest in the industry is posing for a great profit this year and why is this so? How about next year and after. Then the question come back to NOL, can NOL leverage on what is happening in the current economic situation and growth, etc..

    Why OSIM choose China not other region?
    Any recent action taken by their CEO cum chairman to show confidence in his company? ;)

    Few questions for you to ponder and ask yourselves.


  6. Commenter,

    I am not sure what you mean when you say that Maersk is poised for great profits for the coming year. Do you mean to say that the profit is bigger year-on-year, or do you mean absolute terms. At least from what I have read, the shipping companies are trying to form a grouping to ensure there is a floor price for the container rates. Is this what you were saying to be the cause of the bigger profits?

    As for OSIM, it has been in China for a very long time. If I remember correctly, it has been eyeing the growing affluent people in China since early 2000. To be clear, China is not the only overseas market it has targetted. USA through Brookstone was suppose to be its other foreign market. It has since written off its investment in Brookstone and things have looked much better for OSIM balance sheet wise.

    sgx stockpicker

  7. sgx stockpicker,
    Maersk profit is expects to be USD$5bn - ahead of the $4.69bn for 2004, the previous record high.

    Why the profit this year is much higher even though the global economic just recovered? I suggest you try to find out yourself.

    As for what you mentioned about forming a group on the agreed price "will never" materialize as there is antitrust lawsuit in US and Euro.
    Everything will be based on voluntary. ;)

    Same applied for OSIM, you will need to dig further into their business to understand the industry. And why OSIM concentrate their fire power in China?

    I believe I've given you enough information to do your own research and decide on how to find a gem in the market.

    Happy hunting

  8. Commenter,

    thanks for your input... the way i see it, you sure do your homework before getting the stocks...