Thursday, April 21, 2011

Roxy April 2011 and other updates

A short note to update the numbers for Roxy pacific, a real estate developer and hotel operator listed on SGX.
Back of the envelop calculations (In S$ mm)
- Hotel                 $320
- Total debt        ($376)                      
- Cash                  $157
- Devt propty      $235
- Devt profit pv   $84 - 90
- Kovan surplus  $20 - 25                    
                                             $496 - 507
Rough est value     =        $440 - 451 ($0.69 - 70)
Current mkt value  =         $290 (636.56m shares)
Upside                  =            51.7 - 55.5 %
Downside             =            10.0 - 15.0 % from recent low

** I will look to continue to hold the counter as favorable upside remain. The only risk is devaluation of the hotel which takes a bulk of the asset value. Barring any economic fallout or epidemic, I remain positive on the hotel operations and hence the property value, the asset floor is the locality of the building.

Currently I have a couple of items on my watch list and looking to pull the trigger. However, it does seem that many of them are at their trending highs and I will buy on pullbacks. Other indicators remains positive, market recovered today despite the US S&P downgrade news and China reserve tightening policies. Expect more from China and look out for QE news in June. Will post the updates accordingly.


Friday, April 15, 2011

Mid April 2011 updates + Bright World (SGX)

Past 2 weeks I have been learning on how to better an entry for a purchase with the help of friends. Observing the volume as well as buying/selling pressure is an important side of investing, especially with the reliance on certain indicators, I find that this may well be a self fulfilling prophecy. The effectiveness I am still trying to gauge.

Indicators have a part to play in intelligent investing and many successful investors have employed various means to navigate the markets which in my opinion are indicators. Examples such as put-call ratio, money flow, index valuation versus a benchmark or macro indicators etc. There is also a part to play for micro indicators as well, such as price in relation to volume, relative strength to index etc. Having said that, it is hard to invest looking at the rear view mirror and even harder to try to time the markets. I still remain overwhelmingly a fundamental, bottom up individual who is exploring options to improve returns.

Next, there has also been updates on Bright world. 
The firm started 2011 with RMB 280 million in order book. Added 48 million from China CNR ( China northern railways) in Jan 2011. Just yesterday they announced a 10.9mm order from Jiangyin Zhongnan (listed on SSE) and a 13.4mm order from Changchun First Auto. Total order book will be RMB 352.3mm.

I wonder what is the rationale for the announcement when its only 3-4% of total order book. Perhaps they should update on the orderbook conversion progress instead. Somehow, I get the impression management is trying to promote the firm, in view of something positive happening.

Bright world is indeed an S chip, however imho, unlikely to be another case of fraud. Reasons being:
  1. Insiders own over 77% of the company, only 23% is floated on SGX
  2. Firm gives out regular dividends and have been rather substantial (Especially 2009)
  3. Margins and market share is in line with the financials and industry
  4. My only concern is build up of receivables/ inventories (but the firm manages to convert to cash) 
Thats all folks for now. 

Disclaimer: Author owns a small amount of the mentioned security for experimental purposes.

Thursday, April 7, 2011

Koon update and other ramblings

2 topics: Koon updates and Eratat
A couple of blog readers and close friends have asked me on Koon updates and here it is. This stock is undoubtedly small cap and illiquid, however provides good upside for enterprising investors with minimal downside. The key is to be patient, if you are a income investor (I.e safety investor, I suggest then to only allocate a small part of portfolio to this counter.

For Koon, noted that the firm bought over the entire JV for the Vietnam project so that hints at the management's confidence at pushing it through and executing the project. Do also note that I mentioned, even if the firm does not have the Vietnam port order book, while order book is reduced substantially, the current valuations are so low that it has priced in the failure of the Vietnam port order book. 

Koon also clinched a S$15.25mm project from JTC for Tampines logistic park, being roads, drains and sewers works. This is also positive not only it disproves the firm's ability to clinch projects but also this field is actually outside the usual marine engineering scope of the company (previously management talked about expansion)

2H2011 will also see completion of one of the 9.9MW diesel plant in Australia. To let you know more, attached is the link for the most recent presentation. KOON Presentation LINK

Eratat (F08 SGX) just did a private placement of 45mm shares at a 9.78% discount to market price, or at S$ 0.202 per share. This will also provide additional infusion of capital of net S$ 8.78mm. This is after the firm failed to list 81.9mm shares to private investors in just Jan 2011. 

On the financials, the firm reported a net cash position of RMB 159mm or about S$30mm with no debt. I also noted a considerable run up of 36% in receivables from RMB 269 to 366mm (Mar to Dec 2010) while topline rose 9.7% and bottom line 44%. Note that 44% profit rise was from a 26% reduction of Selling and distribution expenses, and receivables should not have grew by more than 10% imho. Last but not least, if you claim your stock is cheap, then why dilute it further? It was in my list of S chips that I mentioned required additional care and groundwork to invest in. 

Their actions really just bewilders me and is out of this world. It fusses me to find out which institutional guys actually subscribes for this. Theres no "save the world" breaking edge technology, neither is there a revolutionary tap on human behavior and habits.  

The author holds positions in Koon and not in Eratat.


Tuesday, April 5, 2011

April 2011

Once again, my fears of the overall global economy is unfounded.
As I type, market has recovered its losses from the Japan incident within 2 weeks while there are still Middle East and Europe concerns. 

I ought to be paying little attention to the noise. Somehow, I am getting a little uneasy from all these.