Recent activities

It has been a while since I last wrote something. The financial market is hit by double worry, Euro debt problem plus slowing down US economy. I guess it will be a while for the market to sort out the direction. Therefore, I have took the pain to cash out on some of the holdings on loss. In hope that to avoid the volatility and able to buy it back at lower level. Chance for market to go down further? I think it is bigger than market make a u turn immediately. So, finger crossed, the politician is able to come together to finalise a good plan to revive US economy.

One of my holding C&O has cash offer from Shinogi. I have accepted the offer, in the view that the share won't be able to move higher in near future. The stock's key draw is the wide distribution network in China, but the near term earning was hit by policy change. I checked the last PE, it was about 15, consider higher among s-chip but lower than those listed in HK. Without competing offer, I think exit is the better option.

At the same time, I have received the scheme document from Hsu Fu Chi for the Nestle offer. Judging Nestle already has 58% and the hurdle is only 75% of total share, I guess it is just a matter of time. However, Hsu Fu Chi is really one of the stronger s chip on SGX. Just look at Want Want which went to HK market.

The number of better quality China company on SGX is getting less. I have started the study on HK listed China company. It is a whole new world on HKSE. There are so many stock with good story and business. My previous holding hongguo is preparing the listing on HK right now. Compare to hongguo, I will go with the market leader. The market leader is actually Belle International. The valuation is not cheap but maybe you pay for the quality. Waiting for further market weakness to make my foray.

S&P downgrade US to AA+ rating

Latest news, S&P downgraded US rating to AA+, one level down from AAA. It is going to unsettle the market for next week. Expect more downside for the stock market. The good part is I didn't really buy a lot these few months, waiting for more opportunity.

After the US debt ceiling soap opera, the purpose of S&P to downgrade US rating is puzzling. What is the difference compare now vs previously? Since the debt ceiling has been raised every time? With the current speed, the QE3 will be out sooner than later. Expect the stock market to bounce by then. Meanwhile, if possible, buy some quality name.

Hong Kong stock market also experienced big drop. Hopefully the stock get de-rated, so I can start establish my position there. The current volatility is interesting for investor to buy cheaply. The double dip word is coming back in the news.

Another S chip going

Today, one of the stock in my portfolio - C&O Pharm announced the general offer by Shionogi & Co. This shows that although the market has so far ignored the good china company, there are people recognise the value.

First, it was Hsu Fu Chi, offer by Nestle. Now, it is Shionogi & Co offer for C&O Pharm. Number of good companies reducing.

Hsu Fu Chi has a good brand name, wide distribution network and low valuation compare to HK peers. It naturally attract company that like to grow in China faster. The same applies to C&O Pharm. Although the result was disappointing, the distribution network is something hard to ignore.

Going by this rate, all the good S chip would be taken private, left with those which offer little growth. I think my next forte will be branch out to HK market in order to gain access to China growth story at its core.

Stock melt down

Bad things come one after another. Inflation fear, middle east unrest, tsunami and the now nuclear plant blast. The situation is indeed worrying, I do hope it is under control and everybody will be safe. Market selling accelerated. I think it is panic selling, since nobody can predict the consequence of a nuclear melt down.

From big to small cap, all stock are under pressure. Any buyer? At least not me. I am not interested in panic selling, neither I am dare enough to go into market now. Low could be lower. If the panic selling continue few more days, then I might go in to grab some cheap stock.

Epicentre buck the trend to stay firm at current price. Recent broker report and ethusiasm on iPad 2 make the stock hot among investor. After few round of consideration, I decided to give it a miss. Why? Retailer's margin is thin and cost is catching up, since the rent and wages are increasing. However, it could continue to do well, driven by iPad 2 volume.

Anwell tech right issue. Oh no, cash call again. I am glad that I made the decision to cut it off. Otherwise, it will burn more cash.

My recent sell decision

Market volatility has returned, starting with middle east and africa unrest, follow by last week Japan earth quake. My portfolio is back in red again. I sold away some of the counters in order to make the portfolio more concentrated. I also kind of realised that small cap, although offer potential great return, also comes with great amount of risk.

Longcheer
The buy decision originated with a broker call and the sell decision also come with that. When I bought the stock, it is kind of undervalued where company has been buying back share, giving out dividend and emerging market business is doing well. It briefly go up for a short period and come down recently because of the disappointing result. I managed a small loss. I am glad that I took that loss. Because after the result release, it fell quite substantially and I think the business will remain weak for sometime more. The first sign of danger emerged when major shareholder start to trim holding.

Oceanus
It is a classical case of didn't take my profit at the right time and end up with loss. It went up to 0.40 plus when the TDR issue was hot, I should have sold it to lock in the profit. Because the restaurant business is tough by nature and their abalone need time to mature. Just look at the restaurant listed on SGX, how many of them offer good growth? I realised the inherent short coming with a restaurant. During the off peak hour, the resources are idling, during the peak hour the capacity is maxed out. No matter how long the weekend is, when your restaurant is full, you can't earn any extra. The core business and restaurant business need sometime to bring good profit, I am better off take my money to other stock.

Anwell Tech
It was mentioned in my earlier post. Surprisingly the solar business competition is getting more and more crowded, money is no where to be seen. Safety first, just sell until they can bring in good cashflow.

Genting SP
The next day after they announced the Q4 result, I sold it at 10% loss. My hope for better than expected earning did not materialise. Looking at the currrent climate, there is chance for it to weaken and could be bought back at lower price. However, the market player seems to agree that it was a temporary set back only and the casino is still going to do well in Singapore. Let's look at what happen for the rest of the year.

It was tough call to where market is going. However, I feel safer by selling away those businesses that are going to suffer in the short term. I am looking to deploy the reclaimed capital and fresh capital if market weaken considerably. My target for this year is to buy some cheap stock for long run, take some good profit when chance come and wait patiently.

I think my investment style has gradually evolved, hopefully for the better. Some will be under my long term portfolio and to be bought on cheap. For those fast moving stock, I will take some meaningful profit, as not to suffer the not taking profit emotion. I will mix some small, mid cap with big cap, as to reduce the overall portfolio volatility. I will buy those which offer good dividend yield as to boost the recurring income. While holding the stock for long term gain, the only comfort thing is to receive dividend.

Buying on hope

Every investor has different expectation of the share he/she bought. Ultimately, everyone wants to make money. For big company, to attract investor willing to buy company's share is not difficult. The earning is stable and growing slowly. Some are of course grow faster and has high PE.

For smaller company, attracting investor money is more difficult. The business is still going through transition or picking up. You need to have good story for people to buy into the share. Therefore, there exists the PR agency, to communicate the merit of the company. Investor buy the company on hope that the new venture or business will pick up and will make a windfall out of it. However, many time, you find that, story is one thing, performance is another thing.

Take an example, Anwell Tech, the recent financial result is disappointing. When the share was hot, chasing by punter, it went up quite a fair bit. I didn't take profit, wishing the solar business could take off and earn more money. However, looking at recent result, there is a gap between expectation and reality. I decided to cut loss, selling at some loss to protect my capital.

Perhaps I should keep in mind Buffet's teaching - Don't lose money. Slowly my investment style has changed towards big cap. Those that has more stable business and chance to keep increasing earning. I need to think twice in investing promising company in future.

Happy golden rabbit year

Wish all a Happy Chinese New Year and Golden rabbit year. I hope this year will be good for stock market.

After the initial rally, market is having a correction now. There are possible buy if the price is attractive. I may post again on my find and stock bought.

OUE - Analyst love it

For the past one weeks, two brokers initiate coverage on OUE Ltd. The target price given is quite close, around $4.2. The stock was also covered in the edge year end issue. Why the buzz around the company?

The draw:
- Office rental recovery
- Hotel business doing well as more tourist arrive

- More initiative to unlock value


At this price, the upside is about less than 20%. Not that attractive compare to many undervalued small and mid cap. However, if you buy only blue chip, I think it has chance to continue to move up. As more people believe the stock will do well in coming year, it will move up slowly.

Wilmar diversify into property

Few weeks ago, Wilmar announced the plan to go into China property development with Kerry properties and Shangri-la. Wilmar's job will be sourcing the site for development with their connection, the partners will be managing the development.

The market reacted negatively on the deal. The logic is simple. Why diversify into something that is new and unproven? Furthermore, China property sector is under pressure from the cooling measure. However, I have a neutral view on the move.

While moving away from one's core competency is not a good idea, but we have to judge it on case by case basis. The investment and contribution from this property venture will remain small, and they are getting a good deal from the local government. It looks like an opportunistic move rather than purely losing focus.

Investor has to continue monitoring the situation to see whether there is any deviation to the core agri consumer business.

Selling Longcheer was a good decision

Longcheer is a handset design company which has customer in China, India and other emerging market.

I bought into the company share after being highlighted by Lim & Tan. The company is paying good dividend, having sufficient good return on equity, low valuation and business is doing well. Later on, DBS Vickers also recommended the stock. Although it is a tech stock I will usually avoid, I bought some share hoping for re-rating.

Things didn't pan out that well. After a good quarter, major share holder start selling out which makes me uncomfortable. The earning visibility is poor and Lim & Tan suggest that the earning might disappoint. Therefore, I took the decision to quickly cut it. It is drifting down slowly.

Venturing out to Hong Kong

Recently, I have started to read more about Hong Kong market and stock. Being a bull in China, there are not many choices on SGX. Among the few s-chips that SGX have, not many are market leader in China. In contrary, there are many good China companies listed in Hong Kong. Those that can offer superior growth of 20% per year and having ROE of more than 20% can be more easily found on Hong Kong stock exchange.

I am doing research on the market now, will post more if I have concrete details.

2011 - A new start

2010 was a busy year for me. The project work and constant OT took most of my time. However, I still manage to squeeze out sometime for investing.

2007-2008
Since the sub prime crisis, the global economy has gradually recovered. The pace of US recovery is still pretty slow and China has taken a bigger role in supporting global growth. When I think of my investment performance for 2007 to 2008, it was horrible. I was too late to cut loss and those stocks that bought during last peak were still 50% down. I hope I will do better going forward.

2011 outlook
The market will still go up in year 2011. We are no where near the peak now, since the confidence is still fragile and inflation just started to come back. What stock will do well is hard to say, as I am not a macro guy. My main investment theme is still China. That's where the strong growth going to come. Singapore tourism will continue to do well as more IR attraction will open. All the gambler in South East Asia will want to try their luck in Sentosa or Marina Bay Sands

My portfolio
Since second half of 2009, I have been gradually building up my portfolio again. Base on the experience accumulated for previous few years, I hope I am on the way for better performance in this cycle.

My top 5 holdings are
1) Hsu Fu Chi
2) Etika
3) China Animal
4) C&O Pharm
5) Eratat

For the past few weeks, Eratat lifestyle has started to move. It has gradually attracted market interest due to low valuation. I think there are two theme with the stock - i) stock re-rating ii) earning growth. It could be a multi bagger in making if the management is able to execute the growth plan well.

Beside that, I am confident that F&N and Genting SP will also do well in coming year. F&N rose a lot in year 2010, the upside might not be that great, but the growth plan for F&B sector is exciting and there is value to be unlocked from property segment. Genting will do well if the gambler continue to come in a big way.

I hope I can do more regular posting. To sum up year 2010,

Sometime the best stock is the one you already holding