Final Score for 2011

The local stock market has closed for 2011 and it is time to update some scores.

Same basket of stocks on end-2010 vs STI year-on-year 

Sgx Stockpicker -26.8 % vs STI -17.5%

This has been a terrible year! For most long-only investors such as myself. As I have written before, almost everyone on the street and the CBD were over optimistic and what hit us hard was the resurfacing of the Eurozone crisis which does not seem to seek resolution. Most market watchers expect a flattish 2012 and for myself, I expect an exact opposite as I expect Obama to work his magic. I could be wrong.

In 2011, I have been buying stock at a higher total transaction value due to better cash flows. This has resulted in difficulties in tracking the portfolio. It does not help that I am not very adept with Google documents.

As usual, I will try to find some way to keep score, but on the simplest level, however:

A. Current cumulative investment: SGD 30,000

B. End-2011 Portfolio value (to measure for against 2012 and includes all new stock): SGD 37,018 and SGD 265 free cash
C. B divided by A divided by 3 years gives me approximately 8%
Frozen till further notice: C&O Pharmaceutical of about SGD 4,400

I have been in the stock market for close to three years and using all the convenient points, my returns on the cash invested out of my pockets amounts to just 8% and maybe 6% if we take a haircut. Most of the large gains were from the earlier rounds of investing during the recovery phase and my recent purchases have fallen flat.

I am not sure how much more money will I dump in the stock market as I feel like accumulating my wealth in cash, for contingencies as well as expected big ticket items. Given that I expect C&O to buyback what is now my shares in the form of physical certificate, SGD 4,400 is a decent amount for me to start hunting for value in 2012. Let the researching begin.

Have a bountiful 2012! Cheers!

Portfolio annual review

I am on leave for the whole week so let me start by reviewing the portfolio. Considering that there have been several additions to the portfolio, it would be convenient to measure the performance of the basket of stocks that were held at the end of last year, and those very same stocks now.

On this basis, I did very badly. I ended 2010 with SGD 45,350 and of of just now, those very same stocks are now worth SGD 33,313, or a 27% decline in value. Since running this blog for about 3 years, this is the first non-market beating performance recorded. No wonder they say that it is bear markets separate the boys from the men.

The stocks that lost the most dollar value were Etika International and GMG Global, with both stocks losing at least 40% of their price year-on-year. Etika International made a steady decline after announcing its one-for-one bonus and adjusting it. The same story for GMG Global, which announced a one-for-one rights issues not so long ago.

I still have about SGD 4,500 locked up in C&O Pharma. I received the physical certificate about two weeks ago and had to read their announcement again because I was unsure if there will be money credited. So far, my understanding is that the money will only be credited much later in January or February. Once I have access to this money, I may plough them back into Etika International or research into more small caps.

Overall, 2011 was a very humbling experience in the stock market and it really thought me the importance of not over extending yourself. The problems that we face right now is the very long tail of the global financial crisis which the Europeans are unable to get a grip on due to the structure of the EU.

Some housekeeping

Went to buy some long overdue furniture over the weekend - bed frames and a bookshelf. The old one that I had bought from Ikea gave way and I have been sleeping with the spring mattress on the floor for quite some time.

Bought the furniture from a corner shop in the neighbourhood. I realise that I was very bad at bargaining. No doubt there were no list price on the photo file that I was given, and he quoted me a price verbally, I could have used better bargaining techniques such as by telling him my budget first.

This was a lesson learnt. Eventually, should I move out, I will have to get more furniture and hopefully nicer looking and matching ones. That will be where my enhanced skills should be used.

That is not the point however. My point is that, I have been buying some interior design magazines and I realise that the cost of a having a photogenic apartment costs about 5 kidneys. There were some HDBs I saw, that costs SGD 100,000 for their interior design and that is without the furniture. Can you imagine how much more it would cost for that nice looking sofa and bed as well as the fanciful top-to-bottom storage unit?

A case of over optimism

It is time to revisit this post. I had accidentally removed the poll results from the sidebar but in narrative, most of the readers polled expects the STI to be up 5% from the start of the year. Unless there is a remarkable rally all the way to the end of the year, we are no where near that level required (3,350). This has been a case of over optimism and readers were joined by the stock analysts.

Now, at least in the newspapers, analysts are expecting next year to be flat and are suggesting alternatives such as corporate debt and convertibles.

I will still hold on to my stocks. They are most likely to perform better next year. But in the interim, I will be offloading all the weak performers. These are mainly the small caps that have lost their way and are now having cash flow problems.

SGD 30,000 invested level

Using some creative accounting, after subscribing to GMG Global's rights issues (20,000) and some excess (2,000), I have invested  SGD 30,000 of my own money in the market. "My own money" excludes those money from sales and dividends. My current portfolio is estimated to worth just under SGD 40,000. That means if I were to cash in everything, that would mean that my profit would be about SGD 9,500 after deducting the commissions.

This does not look like a good return, considering the effort put in. Oh well, I think it is time i started watching the portfolio carefully and trim the weeds. Comments please!

Portfolio sinks on rights issues, penny plays

I realised how difficult it was to show what was the current score of the portfolio and decided to lump all the stocks that were held since the start of the year with those that were recently acquired. It does not look good.

YTD unrealized loss: SGD 12,936
YTD unused dividends/gains : SGD 167
YTD portfolio value: SGD 39,361

In another words, I am down 25% for 2011!

Most of the losses were from Etika and GMG Global, the latter has gone XR and so the price is really low. I have to cough up about SGD 1,840 cash for GMG Global's rights.

There will be some money coming in for me in 2012 February, once the acquisition of the remaining C&O shares get completed. The surprising thing was that the offer price will be adjusted for the dividend paid out. In any case, this will be factored into my profit and loss.

It has been a very humbling 2011 so far. I hope that there will be a strong finish.

Bear markets makes clear purpose of stock exchange

In a bear market, the reason why a company sells stock to the public becomes clear: to raise capital by all means necessary. One way has been to sell stocks in a company that does not have the money there and then runaway after you have been found out. The S-Chips are most guilty of doing that, as the down turn called their bluff. Fortunately for them, Singaporean investors go in with their eyes open and hence not very well protected.

Another way is to issue a rights issue. This has happened to myself a few times this year. Companies that already have billions of shares floating and trading in the pennies, have asked for more cash by issuing more stock. Some like GMG Global have a better story. Others like Stratech are tapping shareholders for more liquidity. The end results is likely the same: once too much shares have been issued, they are consolidated.

The final way is to take the company out of the stock exchange. Consider for a moment, when a company lists itself on the exchange, what is it really selling? A shareholder who owns 10% of all outstanding shares does not get all the earnings of the company, but dividends which are a smaller fraction of that amount. Thus, an IPO makes the existing shareholders very rich on paper, and they can realize it by selling in the open market bit by bit. Then in a bear market when valuations are depressed, they can take them private by claiming that they are unloved. Usually, a company that is making very good gets taken public this way. And if things do not work out possibly in the future, take them public again!

Bought Noble Group 3 lots @ $1.21

Tapped SGD 3,000 in cash and some of my unused dividends to buy 3 lots of Noble Group at SGD 1.21. I think the stock still has some legs despite its precipitous decline in stock price after announcing its third quarter results.

My investment thesis is simple: Noble is a good stock with a good business model but has management succession issues. I strong believe that the stock is oversold and that the market has over reacted on its first quarterly loss in a decade.

That said, the guy on the right will have to find the right guy to take over the commodities giant. After hiding in the background for two year, Richard Elman appeared to the press saying he was "unhappy". At the moment, they are looking at getting an ex-Goldman Sachs guy to takeover the position. I would think such a move be extremely short sighted.

I will wait at least three quarters if its results do not improve before selling off. This is probably my first opportunistic buy with almost minimal research. That said, the total capital invested rises SGD 28,000.

Portfolio Major Corporate Updates - Part 1

Asiatic Group
1H12 revenue increased 3.9% but earnings fell 27.7% to SGD 0.8 million. For both the biomass project in Malaysia and hydro project in Vietnam, construction has commenced and project financing of both projects are undergoing negotiation and an update of the progress will be made known in due course.

Action Asia
9M11 revenue fell 37% while earnings fell by more than half to SGD 9.0 million. The company said that problems in Europe and US will cause electronic consumption to remain tepid.

Auric Pacific
9M11 revenue inched slightly higher by 0.7% while earnings rebounded to SGD 9.7 million, from SGD 3.1 million a year ago. The sharp gains resulted from the divestment of a project in Shenzhen China.


Biosensors International
Plenty of news coming out from drug trials, which were unsurprisingly positive. 1H12 revenue increased 72% while earnings grew to USD 45.5 million from USD 11.7 million a year ago.  Due to its acquisition of the remaining shares in JWMS and other reasons, the company has guided FY12 revenue to be 70-80% higher year-on-year.

C&O Pharmaceutical
Suspended. Will be taken private and details of the compulsory acquisition of the remaining shares will be announced by November 30, 2011. 


China Animal Healthcare
The company has said that it might restructure its shares such that they are all listed in Hong Kong, contrast to the current dual-listing. 9M11 revenue increased 33.8% while earning increased 84.2% to RMB 174 million. The strong increase in earnings was due to the surge in biological drug sales. The company warned that the subsequent fair value adjustments on the derivative financial instruments relating to the conversion option component of the convertible bonds may adversely affect its results.

Elite KSB
FY11 revenue increased 5.5% while earnings dipped 2.6%. The company said the cost of live chickens increased significantly in the second half of the last financial year. Also, the Australian dollar also strengthened against the Singapore dollar in the same period, resulting in higher cost of chilled pork. If the trend continues and we continue to be unable to pass on these cost increases to its customers, its performance for the next 12 months may be adversely affected.

Etika
9M11 revenue increased 30.1% while earnings fell 32.7%. The decline has been attributed to the higher cost of goods sold, which increased 39.4% for the first nine months of its financial year.

Investing though insurance policies

My friend G met her friend R. G has been working for three years as a civil servant while R currently works as a financial planner. G told me that after her meeting with R, G felt is seriously considering buying a policy which covers 15 years and costs about 300 dollars a month, including some riders.

I told G that 300 dollars a month is a significant commitment and that if she bought a pure protection plan, such as term insurance, it need not cost that much. After a few iteration of the discussions, it appears that G was interested in using the policy to invest her money.

As a person who invests in stocks directly, first I told her that her friend R would benefit most from a protection plan that had a return component. Second, I told her that investing directly in the market would get about the same returns, if done correctly.

Did I exaggerate here, that if we were to invest in the correct manner, we can get better returns than through the returns of an insurance policy?

I do not think so. G herself admitted that she knows that investing though the insurance plan would involve multiple layers of transaction cost. A John Bogle pointed out, it is these costs that eats into the returns from a portfolio. However, G is not confident of investing on her own and possibly such a scheme might enforce discipline. 

Well, I guess everyone's approach to investing is different. But I strongly believe that we should not mix protection with investment because it confuses you to the benefit of the sales person. If you want to insure yourself, get a term insurance and the related riders. If you want to invest, use an online brokerage and stick to ordinary stocks. An insurance is a long time commitment and my own experience tells me that even when you realise that the returns are poor, you are averse to quit, because you do not want to realise that loss.

Can I be a risk taker?

I have a copy of the Straits Times but I have yet to finish reading the article (on pages 2 and 3), because I did not bring down that front section for my breakfast routine.

A possible summary of the report would be how some young people dabble in stocks and derivatives and made it big or burnt their fingers. The catalyst for this story would have been the collapse of MF Global.

There is nothing wrong with investing in anything. But the article seems to glorify these group of not so old adults (smell jealousy?). There is nothing wrong with glorifying them for taking market risk, but I understand from the profile, that they tend to be from well-to-do families. Also, a repeated theme has been that some of them started trading in shares on their parents account. What is that suppose to imply?

I will go read the article slightly later once I finish watching my online programmes. Share you thoughts if you have read it.

Is SIA's Scoot a good idea?

scoot is Singapore Airlines (SIA) budget carrier. This is a response to the competition posed by other low cost carriers such as Tiger Airways and Jetstar. In my opinion, SIA's move into the budget segment is not a good idea because it will confuse customers and is a sign of a confused strategy. SIA should continue creating value for existing customers and new customers who want the SQuality and premium. This has been SIA's competitive edge.

Of course by having scoot, SIA would have an additional stream of revenue. Budget air travel is a growing market. I myself only travel on SQ for business purposes and find it much better than either SilkAir or other budget carriers.

However, it is likely that this venture will not work out well because it does not gel with SIA's current competitive edge. For instance, how are you going to convince your own staff that working for scoot is better than SQ, which is a carrier by the same company? The lack of motivation may result in a reduced customer experience, even for a budget carrier.

Therefore, I would think that it is likely that the low cost carrier be unprofitable going 2-3 years in the future.

screwed my blog up

Wanted to try the new templates but ended up deleting the poll results. Given the circumstances, will have to migrate my blog to another address, leaving this one intact for archival purposes. My apologies!

Updated

From January 1, 2012, please visit http://investorsingaporean.blogspot.com/ . The old blog will remain intact but all the updates will be done on the new one. I will only migrate the pages to the new blog, but not the existing posts.

100 connections on LinkedIn

I recently reached 100 connections on LinkedIn, when a very senior guy in the oversea office invited me to join his network. For those of you who do not use it, it is like FaceBook but for professional networking purposes. 

Instead of telling people your emotional issues, what you do for LinkedIn is that you post your career and education experience on a profile and you go around adding people. The idea behind it is that you may find someone who needs you expertise and vice-versa, which may lead to business deals or jobs.

For me, I just like to read people's profile online. Some of them are really great in that they are highly credentialed. You should join LinkedIn too if you like to network professionally,

Go go Biosensors

 Things have been going well for Biosensors International. It recently announced another good set of results for the second quarter ended September 30, 2011. Revenue for the quarter increased 71% due to higher product, licensing and royalties revenue. This helped drive earnings to USD 23 million.

The company announced that it had completed the proposed acquisition of the remaining 50% in JW Medical Systems. This has been an extremely protracted process due to the regulatory approvals needed and with its completion, will allow Biosensors an effective channel into the Chinese market.

Its share price has responded positively to both consistent earnings growth and corporate developments, gaining more than 20% on a year-to-date basis.

End October Portfolio

The portfolio recovered by about 2 percent month-on-month, excluding the value of new Etika stock. Will find some better way to do this by the year end.

Portfolio Pending Activity

We are reaching the end of 2011 and I have only made two purchases for the whole year, namely additional lots of Etika International as well as initiating a position on Auric Pacific. They have not been doing well due to the weak overall sentiment.

To keep the readers posted, I intend to set aside some money to subscribe for the rights share of GMG Global. Based on my current holdings, I am entitled to subscribe to twenty lots of rights share at 9.1 cents each. Also, I intend to take up ten more lots in Etika International bringing to a grand total of forty lots.

That said, I will have to figure what to do once shares in C&O are acquired mandatorily by Shinogi Group. I will have to email the company to know when the proceeds of the acquisition, estimated to be SGD 4,500, will be credited to my bank accounted. I will be sussing for deals in the mean time. If you have any good ideas, do let me know.

China Animal Healthcare Updates

China Animal Healthcare made an interesting announcement. In response to a Straits Times article that suggested the company was an attractive candidate for privatisation, China Animal Healthcare said that it was possible that a restructuring (not privatisation) exercise take place. This would involve only delisting those shares listed on SGX, while those on the Hong Kong Stock Exchange (SEHK) remain trading.

Just yesterday, the company announced its third quarter results for 2011 which were quite impressive. Revenue for the nine months increased 33.8 per cent while net profit rose 84.2 per cent. The strong results were attributed to strong sales of its powdered form drugs and biological drugs.

Putting the two pieces of news together, I would think that such a move is very likely to happen. This is because in general, S-Chips such as China Animal Healthcare have always felt that they are underpriced on the SGX compared to on the SEHK. This is something that the new SGX CEO Magnus Brocker has tried to refute.

GMG Global 1-for-1 Rights Issue

GMG Global announced today a 1-for-1 rights issue, at 9.1 cents per rights share. This is the second time in two years that the company has proposed such a fund raising exercise. The company said that the proceeds may be used for acquisitions or financing purposes. The full document can be read here. I should be subscribing to the rights issue via the ATM.

Update December 31, 2011: I applied for 20,000 rights and 2,000 excess. In the end, I have got only 1,000 excess on top of my entitlement. This brings the total number of GMG shares I currently hold to 41,000 at an average price of SGD 0.094.

Book buying spree in October

I went on a major book buying spree during October and I think I spent close to SGD 700 dollars!

I bought one career-resource book for my friend's birthday; something on philosophy for my library (I do read philosophy!); and three very expensive books related to the industry I am covering at work.

One was a reference book which cost me SGD 256, which I saved SGD 60  on as I had the Kinokuniya membership card during their promotion period. The other was ordered online and inclusive of shipping, cost me about SGD 240.  The last was a textbook that was SGD 100.

The books you do not read

Although I am tempted to expense the cost of the book, I would like to keep the books for myself as well. This is because, at least I know I can bring the books along with me even if I change my company, unless of course some one knicks it from me from the office.

I was also reminded by sister, who read The Black Swan, that it is not about the books you have read, but those you did not read. The underlying idea is that what you do not know is more important than what you already do know.

But that is besides the point. The reason for buying the books is that I feel slightly inadequate at work and I need some form of structured literature to get me through one more year. Continual learning. It has been three years since I have left the University and I think my career path is more or less fixed. And to be good at what I am doing, I will need to use the free time at work and at home to read up on the industry. And so, even if I feel the temporary pain, I know that it may pay off further down the road. If not, I can always try to sell the books on ebay. Off to the bookstore to get a book jacket!

Debt crisis at home

I have been doing something silly recently - applying for credit cards. Previously, I only had one plastic, which is a supplementary card given by my father, the POSB Everyday card.

My "crisis" occurred recently when I started traveling overseas for holidays and for work. The expenses that were charged on the card was within limits, but it affected my savings because say in June when I had booked a hotel, I only paid up in July or even later because the bills were overlooked (but were paid due to GIRO deduction) as they were not addressed to me. Now that I have got myself a personal card, I hope I can bring my spending and saving into a balance (more savings definitely!).

The lessons learnt here are simple. Always set aside money to pay off credit card bills. And while it may be convenient to have and use a credit card, you tend to overspend because you do not feel the pain immediately and it screws up your mental accounting. Therefore, unless you are going overseas or trying to impress your date, you should leave your credit card at home. That way, you will not overspend your month's budget.

Sixty-six dollar and fifty cents profit on C&O Pharma

As some of you may know, Shinogi has managed to acquire at least 90% of all ordinary shares in C&O. It will now acquire the remaining shares that have not been tender at the offer price.

I did a quick calculation and my cost of purchasing 9,000 C&O shares was $4,501, $67.50 dividends in between, while the offer will give me $4,500.

This means that during the same period I have been holding on to the shares, the STI lost about 15%, I made a 1.5% gain!

A 1.5% gain is nothing much, considering that there are opportunity costs that I did not factor in. Also, I am a bit sad to have to lose a drug-maker in my portfolio. Nonetheless, C&O's share price had been languishing for a very long time, and Shinogi looks like a white knight on hindsight.

I will have to email the company to find out when my shares will be acquired and when the money will be in the bank. Hunting season begins when I sort that out.

Is the bottom near or far?

I have not been following the market very closely because most of the news coming out is the same - America, China and Europe (ACE) is crashing or landing softly.

I would like to buy some stock soon, as my position in C&O will most likely be liquidated due to the 95%-threshold being crossed eventually. Also, I have not invested much this year. This is not helped by the fact that the market does look attractive.

In terms of valuations, most of the Singapore blue chips are trading close to the GFC levels.

Personally, I will shore up my stake in an FMCG company or those stocks that have high sustainable dividend yield. This is because my view is that all will come to pass eventually, and picking these stocks does not cause much grief. Furthermore, I do not see how the existing problems will lower the revenue of companies selling basic food stuff.

For the readers, if you have the money, I will suggest global oil services companies listed anywhere, but the holding period will only be 1-2 years from today. Oil is a necessity still and as I have often said, if it were not for the takeover offer, I would be holding on to the shares of SPC.

I have taken a look at the STI charts and identified the start of August as the turning point of the market. My own investment rules tells me to wait at least 18 months before increasing positions. This is usually how long a bear market last. I do not mind buying stocks in the next one month as I will still have at least 10 more months to shore up my money for one big purchase. So to summarise, I am aiming short and long, but not in the middle.

That is of course not taking into consideration, the cost of doing my Masters or preparing for Marriage. Things that start with M.

I cannot wait for the year to end. The past twelve months has been very fruitful.

Portfolio in pain as Transatlantic fears return

It has been a horrible 3 months or so. The problems in America and Europe show no signs of abating since returning to haunt the markets in 2011.

Shares of C&O look likely to be suspended as the acquirer looks to shore up to the 95% level. I am not sure if I can still sell them at the open market or just wait for them to re-tender. In anycase, I will make a slight loss on this investment.

This is nothing compared to Stratech. The shares of this Singapore technology company has slid continually even before the recent meltdown, because it has been hardly turning a profit. It has recently announced an acquisition to be satisfied partly through the issuance of new shares.

There is not much to say for the rest of the portfolio as they have not been able to escape the flight from assets with any sort of risk.

Things have been busy at work. I just crossed the one year mark with the company and I think there are things to do and more skills to development. I am still lacking in terms of industry knowledge and recent events have made me realised that I may not be the best person for the current job. But then again, seldom is there a perfect fit.

Will take the weekend to recharge and consider my options as well as game plan.

is this the double dip we are looking for

Is this the double-dip that everyone was talking about 2-3 years ago? Based on the past month alone, this scenario seems very likely. There has been a steady flow of negative news and economists are already predicting a recession in the latter half of this year.

In my opinion, there is a double-dip in the stock market but not in the global economy. The reason for the stock market to decline precipitously is that all the money that has been pumped in - QE I and  QE II - were not put to productive use. Rather, they were used to give stock prices a boost. When the underlying does not improve, stock prices that are pumped up using borrowed money, will have to obey the law of gravity. This is what we are seeing the past weeks.

What about the economy? In my opinion, it was hardly out of the woods when the whole thing began. When I say the whole thing, I am referring to the fact that we were entering the down phase of the business cycle. The fact that America has not been able to sort out its credit woes, with the mortgage sector the most important one, economic activity in the the number one economy had to revert to a realistic condition. That is why despite the Obama's administration best efforts, job figures are still as bad.

Will the stock market get better? Based on recent events, I would think that things will get shakier before getting better. Sub-2,800 levels of the STI looks like a decent range to be trading in. Once all the big money is flushed out of stocks and into other asset classes, that is the time to get in.

Portfolio sinks in pain, opportunities missed

This was a miserable month as the portfolio reverted to June levels. What was frustrating were the uncertainties in the market and the wild swings has planted doubts into my head whether to increase my stake in Etika International.

It was not all that bad as GMG Global recovered and is currently at 24.5 cents. I did not take any action on my C&O Pharmaceutical and am now waiting for the stock to be suspended should the 90% threshold be achieved by the acquirers.

Going back to School

Recently, I found out that I failed my CFA Level II examinations. It was unsurprising considering that I did not have sufficient preparation given the change in my working schedule.

For the moment, I do not intend to take the Level II again next year, because I feel that a Master's education would be more suitable for my course of work. My some times client-facing, research function job requires me to write a lot more, and there is little financial analysis (although it would be good to have).

If I were to pass the CFA Level II and then Level III, it will cost me about SGD 4,000, bulk of which is to pay for the exam registration. This is definitely the cheaper alternative compared to the Master's course that I intend to sit for, which I estimate to be worth possible at least SGD 12,000. However, it is important to note that the CFA is a self-study certification programme and is very well-recognised across the world. For the Master's degree, it sometimes suggest to employers that you have a lot of money and time to further your studies.

There are also other consideration as well, namely, how setting aside the money for the studies will impede on my life-cycle. After all, I do intend to get married and have to pay for two big items, a wedding and a house. SGD 12,000 may not mean a lot over the course of one person's life, but it can contribute to a comfortable interior design for the first home, or a very nice holiday away from Southeast Asia.
 
Fortunately, I have until the end of October to decide whether or not I want to do a Master's or not. Preliminarily, the cost will be a big issue that I have to sort out with myself.

C&O Pharma Trading Halt

Did not realise that C&O issued a trading halt announcement. Based on the volume of shares trading up in recent weeks, I can only gather that the following may take place.

1. Privatisation. Sumitomo is trying to acquire as many shares as it can in the open market before taking the drug manufacturer public.

2. Share placement or rights issue. The share price is being ramped up so that C&O can raise enough money in the market without selling too many shares. However, this is a sell signal to me as it means that C&O is not a cash generating machine that I think it is.

We will know when Monday comes. Generally, when a company issues announcements over the weekend, it cannot mean good things. Fingers crossed.

Portfolio recovers slightly

The portfolio recovered slightly. but what is really bothering me is that I find it almost impossible to dump Stratech. I bought it at 5 cents and now it is 2.2 cents! This is compounded by the fact that I bought only SGD 1,000-plus worth of it, meaning the transaction costs will eat up most of the money. On the bright side, while I did thought of dumping C&O, another top loser in the portfolio, it has climbed up in recent weeks to an "acceptable" level.

In my opinion, there will not be the market crash even if Obama and gang fail to trash something out. In fact, the last thing we would want is for the world's largest debtor nation to continue printing more money. GIC will be hit hardest by the falling dollar.

Going forward, it is unlikely that I will pump money into stocks as I am focusing on the other aspects of life. Traveling has been on the top of my list this year, followed closely by housing and education. Things at work have picked up and I do feel a bit more confident as well.

GMG Global Post Strong 2Q11 On Lowbase

GMG turnover for 2Q 2011 was $288.4 mil (47,409 tons sold) compared with $80.7mil for 2Q 2010 (19,069 tons sold).

For the six months ended 30 June 2011, turnover was $571.2mil with 92,856 tons sold compared with $288.4mil with 40,273 tons sold in the corresponding six months of 2010.

Increase in tonnage sold was due to (1) maiden contribution from the Group’s new subsidiary, Teck Bee Hang, (2) net increase in external purchases from its factories and (3) increase in trading tonnage.

However in its Hevecam plantation, the prolong heavy rainfalls had impacted production in the first six months ended 30 June 2011.

Gross profit for 2Q 2011 was $31.9 mil (GP margin 11.1%) compared with $17.4mil for 2Q 2010 (GP margin 21.5%).

For the six months ended 30 June 2011, gross profit was $73.9mil (GP margin 12.9%) compared with $39.3mil (GP margin 24.0%) in the corresponding six months of 2010.

The decrease in gross profit percentage was due to the increase in the Group’s tonnage sold from its processing facilities in 1H 2011 compared with 1H 2010. Rubber produced and sold from its plantation operations has a higher gross profit margin compared to rubber purchased from third parties for processing operations. The increase in sales revenue and tonnages sold in 1H 2011 over 1H 2010 was due to the 44,153 tons from its new subsidiariy, Teck Bee Hang, which currently has five processing factories.

Burning Money for the Love of Life

Flying to China on Singapore Airlines in August. I will first head to Shanghai then take a train to Beijing, from where I will fly back. It will cost me SGD 2,000 for this trip, bulk of the cost made up by the air ticket which cost me SGD 950. I am trying to clear my leave and see the world as much as possible this year, since before 2011, I hardly left the country.

For the moment, it seems my plan of accumulating more money will take a back seat, as I try to enjoy the life that I know had missed.

Working overseas: how much will you do it for?

I was playing mahjong with my friends over though the night on Friday and he told us that although we was planning to leave his job, his company had thrown a spanner in the works by offering to post him to Paris, France, on an urgent basis.

I understand that for his latest year of assessment, he paid close to $2,000 for taxes. He said that the company will give him an overseas allowance on top of his existing pay, lodging I assume will be paid for. How much will that work out a month for my friend on a annual basis?

Your views are welcome

Sorry for the slow down in content with regards to equities. There has not been much to write about stocks recently as the market has been rallying, but I did not do my research. If there is any company you wish that I cover, or offer my view on, do drop me a note at sgxstockpicker @ gmail dot com  .

Presentation Monday - Let's Go Get'em

More frightening than Death

You might have heard of this before, maybe on an episode of Seinfeld, that public speaking is the number one fear of most people. I will be confronting that fear on Monday as I fly to KL to give a short presentation (4-5 slides) on my company to senior executives to two different potential clients.

Usually, the person doing the song and dance will be my boss but he has just gone for a scheduled holiday. I have sat in at the presentations that he has been giving, most of the time remaining silent as he has covered most of the ground. Saying other things will just make me sound silly, I think. He is also very experienced given his time with the big boys in the industry and that projects a sense of reliability to the person on the other end. And now the time has come for me to have to do my bit.

My preparation time is this short weekend. I will be having to read the reports done by both the main characters involved, the project approach and some background research as I expect out of scope questions to be asked. To a large extent, it is like going for a job interview, but the company's fortunes are resting on your shoulder. And did I mention that I have not been given the preparation training prior to this? Nonetheless, it is a good time for me to learn a lot more, although I will be for a world of pain when I come back to Singapore. Akan datang.

Busy Again - Portfolio Down

Life has been very wicked. I was for sometime, having relatively quiet moments in the office. Suddenly, after going for an unscheduled half-day on Wednesday, I am now due to fly in to KL on Monday for presentations. The work on my table has since stacked up above my head and it is a Friday.

Yes, the portfolio went down. Despite the short term rallies, the portfolio has not been able to benefit due to the large exposure to small caps. Greece announced its austerity measures Bill was passed yesterday, ensuring that it is on the way to foot its bill to the EU. I am hopeful that there will be short term dips that gives me the chance to buy-in, if I want to.

If by the next week, there are good volumes in the market, I believe that we are in for a strong if not at least firm finish, all the way till the end of the year.

What stock to buy? (2)

Wow! Everyone must have missed yesterday's tremendous rally which saw the STI surge close to 40 points albeit on thin volumes. I have been doing my sums and looking at the charts and assessing the global situation. My sums look a bit precarious, as I intend to go overseas for one more trip as well as get a big item for my hobby. The charts tell me that there is a higher possibility of downside (2,900 - 3,000) but as we have witnessed, sinking below 3,000 seems like a hard task to accomplish. And the global situation tells me that yes, the financial stimulus are ending and debt fears are rising, but overall economies look firm (less China)- any financial apocalypse should be priced in.

So the question is, if I believe what I have said earlier, that there will be short term weaknesses but by the year's end all will be well, which stock should I buy? As MusicWhiz had posted earlier, it has been a time for contemplation and step up research since the markets are offering stocks on sale. Unfortunately for me, I have been a bit tight travelling and busy and work. On one hand, i am spared the gut wrenching market plunges but on the other, I am not attuned to which stocks hold value.

Tentatively, I will look through the stocks that I have covered before before making my move. What about you? What stock will you buy this time?

Money well spent?

I went to Vietnam from 9 - 16 June. I spent 8 days there of which 1 full day was spent at the airport.Inclusive of my taxi to Changi Airport there, my expenditure for the trip was close to SGD 1,150 assuming a USD/SGD exchange rate of 1.3. Bulk of the expenditure went to the flights, as I had to make additional trips to visit the other cities of Vietnam - Ho Chi Min, Danang and Saigon. My friend chose to stay in a budget hotel and that was a bit steep for me considering I was alone in the room and he could share it with his girlfriend. Nonetheless, I found the room rates acceptable considering that I do not intend to stay in a bed and breakfast style inn, yet.

Should I payoff my education loan at one shot?

It will be close to 3 years since I graduated from University. The cost of my degree was 4 times $6,000 = $24,000. Of which, 75 percent was paid from my Dad's CPF monies. After leaving the University for one year, I opted to pay $288 per month, to repay the monies owed to my Dad's account, including interest that would have been accrued.

back from Vietnam

I was away in Vietnam for the past week. I could access my the Internet but then the blogger had some issues. Overall, the trip was good. A good mix of touristy stuff and museums and activities. The latter included exploring the Marble Mountains in Danang as well as the coves in Halong Bay some way off Hanoi.

Keppel on track to deliver P-56 to Petrobras

Singapore, 5 June 2011 – The consortium of Keppel Offshore & Marine Ltd (Keppel O&M) and Technip Engenharia S/A is on track to deliver the P-56 Floating Production Unit (FPU) to Petrobras Netherlands BV (PNBV), safely, on time and within budget. The first FPU completely built in Brazil, P-56 achieved 9 million man-hours without lost time incidents. With a displacement of 50,000 tonnes, this massive FPU, one of the world’s largest, measures 110 metres in length and width, and 125 metres in height. Brazilian President HE Dilma Rouseff witnessed the christening of P-56 by congresswoman Luiza Erundina at Keppel FELS Brasil’s BrasFELS shipyard in Angra dos Reis. Also present were the Governor of Rio de Janeiro, Mr Sergio Cabral, Petrobras’ President Mr Jose Sergio Gabrielli, Keppel’s management and over 8,000 Brazilian shipyard workers. Mr Choo Chiau Beng, Chairman of Keppel O&M and non-resident Ambassador of Singapore to Brazil said, “P-56 is a shining example of the technology expertise and execution capabilities built up by BrasFELS and Brazil’s offshore and marine industry.

Oil and Gas Asia 2011 (OGA 2011)

I was in Kuala Lumpur the past 3 days to attend the Oil and Gas Asia 2011 (OGA 2011) as a visitor. OGA 2011 is held once every two years and the big Malaysian oil and gas players as well as international ones, attend this exhibit to make known their presence in the region. There were also the smaller players as well, which took this opportunity to identify business leads.

portfolio down ytd as small caps slide

I am out of country without a laptop. Just a quick update for the record.

Portfolio value 39,715
New stock 3,850



I'm slowly losing that swagger as my portfolio continues to under perform. I promise a comprehensive review of my stocks once i get my exams and holidays out of the way.

Near term STI

The Straits Times Index (STI) closed on Friday at 3,135 points, which is about a 3.5% decline on a year-to-date basis. My portfolio comprising mainly small caps have done worse, at down 10%. Using the two as a comparison, equity investors have been largely cautious, preferring to hold on to blue-chips for their dividend yields, as the usual macroeconomic issues repeat themselves. These issues include the unwinding of the US Fed stimulus, Eurozone debt issues (Spain this time) as well as a slowdown of China's economic growth.

My own outlook or feeling are as follows.

One-Month : The STI will be range bound between 3,000 to 3,200 with close to no volumes. June has typically been a quiet month for investors too.

Three-Month : Watch out for the 3,200 level as it might signal the bull run.

Through the end of 2011 : The STI should slog its way till the end of the year at about 5-10% higher than it was in 2010, based on the median expectations of readers here.

I know I sound like the horoscope. My personal view is that I will accumulate stocks at 2,900 to 3,000 levels for the long run just to play safe. I am a long term investor because my time frame is very long, at least 20 years. The stock market is not in a supercharged bull run but it will have legs for 5 more years. The economic troubles in the developed nation will mean that everyone is looking at bonds, causing the fixed income instruments to get pricier. Right now, we are in the process where bonds are getting more air time than stocks, for the same reason. These make stocks a contrarian investment.

Biosensors International Announces Continued Sales And Earnings Growth for the Fourth Quarter And Fiscal Year Ended 31 March 2011

Singapore, 26 May 2011 ‐ Biosensors International Group, Ltd. (“Biosensors” or the “Company”, Bloomberg: BIG SP) today announced continued strong sales and earnings growth for its fourth fiscal quarter (“Q4 FY11”) and fiscal year ended 31 March 2011 (“FY11”).

Total product sales in the fourth quarter were US$39.7 million, a 33% increase over the same quarter of fiscal year 2010 (“Q4 FY10”), driven largely by continued growth in sales of the BioMatrix™ family of drug‐eluting stents (“DES”). Total Interventional Cardiology revenues increased to US$36.5 million in Q4 FY11, a 35% increase over the US$27 million reported in Q4 FY10, with higher DES sales offset by lower component sales. Sales of critical care products (“CCP”) for Q4 FY11 increased to US$3.3 million as compared to US$2.9 million for Q4 FY10. Including licensing revenue and royalties, total revenue for Q4 FY11 was US$44.5 million versus US$32.8 million for Q4 FY10, an increase of 36%.

Product revenue for FY11 was US$139.4 million, compared to US$107.1 million for FY10, a 30% increase. Interventional Cardiology revenues in FY11 were US$126.4 million, a 34% increase over the US$94.6 million reported in FY10. Sales of CCP increased slightly to US$13.0 million in FY11 as compared to US$12.5 million in FY10.

Gross margins on total product sales improved to 75% in FY11 from 70% in FY10, driven by a shift in product mix toward the Company’s higher margin DES products, combined with increased economies of scale in manufacturing.

“Our overall product sales achieved another quarter of positive growth, thanks to strong growth in our DES business”, commented Co-CEO Jeffrey B. Jump. “Our results reflect the continuing market penetration and acceptance of our technology, the safety and efficacy of which are backed by a robust and growing body of clinical evidence”.

Sales and marketing expenses were US$12.2 million in Q4 FY11 compared to US$8.7 million in Q4 FY10, and US$44.0 million for FY11 compared to US$31.4 million for FY10. The increase was mainly due to higher expenses for headcount, warehousing, trade shows and brand building as the Group continued to expand its sales force and global marketing activities.

General and administrative expenses were consistent at US$5.1 million in Q4 FY11, compared to US$5.0 million in Q4 FY10, and US$17.7 million for FY11, compared to US$19.1 million for FY10. The decrease was mainly due to lower share-based expenses as well as decreased payroll-related expenses resulting from the Company’s recent US restructuring.

Research and development (“R&D”) expenses, which include costs for new product development and testing, pre-approval clinical trials, and regulatory approval costs, were US$4.7 million in Q4 FY11 compared to US$3.0 million in Q4 FY10. For FY11, R&D expenses were US$16.1 million compared to US$13.1 million for FY10. This increase was mainly due to higher clinical trials expenses and additional investment in research and development.

Included in the Q4 FY11 results is the equity method of accounting for the Company’s 50% ownership interest in JW Medical Systems Ltd (“JWMS”), which resulted in net income of US$5.0 million.

In Q4 FY11, the Group reported net profit of US$18.2 million, or basic earnings per share (“basic EPS”) of 1.65 US cents and diluted earnings per share (“diluted EPS”) of 1.60 US cents, compared to a net profit in Q4FY10 of US$9.1 million, or basic EPS of 0.85 US cents and diluted EPS of 0.82 US cents.

For FY11, the Group reported net profit of US$43.3 million (basic EPS of 3.99 US cents and diluted EPS of 3.88 US cents) compared to net profit in FY10 of US$32.1 million (basic EPS of 3.02 US cents and diluted EPS of 2.96 US cents).

Excluding the fair value adjustments for the warrants and the restructuring charges related to the closure of the US operations, net profit in Q4 FY11 would have been US$16.7 million (basic EPS of 1.51 US cents and diluted EPS of 1.46 US cents). For FY11, excluding the fair value adjustments for the warrants and US restructuring charges, net profit would have been US$52.6 million (basic EPS of 4.85 US cents and diluted EPS of 4.72 US cents).

“We closed the fiscal year on a strong note, having successfully achieved our revenue and profitability targets through the effective execution of our growth strategies. The credit for the positive results goes to our entire team”, concluded Co-CEO Jack Wang. “Our total product revenues met the mid-range of our previous guidance. We were also able to lower our operating expenses through our various cost-reduction measures and restructuring efforts, and we will continue to manage our operating costs carefully as we continue our strong growth. In FY12 we will continue to leverage our global sales network driving increased coverage within existing markets and increased penetration within existing accounts. In addition, we will aggressively pursue expansion opportunities in high-growth markets such as China, India and Latin America”.

Financial Guidance

For the fiscal year ending 31 March 2012 (“FY12”), management anticipates that total revenue will grow by 20% to 30% compared to FY11. The increase in total revenue will continue to be driven by our drug-eluting stent business and increased licensing royalties. The Company expects FY12 profitability to increase over FY11 on an overall basis, with the effect of higher revenues being offset by increased expenses required to support revenue growth and development of future products.

The revenue and profitability estimates provided by Company’s management do not include the potential effects of foreign exchange gains and losses or any additional exceptional events or unforeseen circumstances which may occur.

sgxstockpicker says:  I have got only 3 lots of Biosensors at around 60 cents. I couldn't be happier!

KS Energy commissions the construction of two drilling rigs worth USD 388 million

The two rigs are based on LeTourneau WORKHORSE®Class design. The addition of the two new rigs will increase the fleet-size to 12 rigs. Cost of rigs to be funded through internal sources and borrowings. LeTourneau will be supporting COSCO Shipyard on this project

SINGAPORE, 26 May 2011 – Mainboard listed KS Energy Ltd (“KS Energy” or the “Group”) announced that it has contracted COSCO Nantong Shipyard Co. Limited (“COSCO Shipyard”) to build two new jackup rigs. The total project cost is estimated at US$388 million (approx S$483 million), which includes project management, drilling and handling tools, spares and capitalized interest.

The construction will build two drilling rigs based on the LeTourneau Technologies, Inc. (“LeTourneau”) WORKHORSE® Class design with expected delivery date of 27 months and 32 months respectively, from the contract effective dates.

When completed, both rigs will be capable of operating in water depth of up to 400 feet and a rated drilling depth of 35,000 feet. Each rig can also accommodate 150 personnel on board.

“To be a global player in the drilling business, we have to have a large fleet to cater to different market needs. The addition of these two rigs will increase our fleet to 12 rigs, which includes 4 jack-up rigs,” said Mr. Kris Wiluan, Chairman and CEO of KS Energy.

Presently KS Energy has 6 land rigs, a lift boat, 2 jack-up rigs and an accommodation rig. Two of its jack-up rigs – the KS MedStar and the KS Endeavor are drilling in Egypt and West Africa.

This latest move is part of the Group’ strategy aimed at growing and expanding its drilling operations. Following the consolidation of its distribution business last year, the Group is now moving towards consolidating its drilling business.

sgxstockpicker says: The new orders are of good specifications and are good for KS Energy's drilling business. However, from Keppel Corp's announcement, there are other players who have taken the opportunity to upgrade or expand their jackup rig fleet. Since it takes about 2-4 years to complete the rig, the material impact will also take just as long to be reflected in KS Energy's financial performance.