An interesting 2Q2010 earnings season. Enjoy it while it lasts!

Interestingly, I am sitting at home doing some work rather than out drinking and having a merry time. Suddenly feeling sorry for myself, I decided to put on an old movie while I did some serious reading on funds to recommend investors. Not surprisingly, I ended up paying more attention to the movie than reading. Laughing as my two favorite comedians, Owen Wilson and Vince Vaughn went through wedding after wedding during wedding season. They sure were having a really good time, preying on gullible women at weddings. That definitely does not happen at Singapore weddings because I have been to many a wedding and nothing this interesting ever happens. The only feeling I get is the feeling of loss when a hole is burnt through your pocket for the red packet money.

I tell you which season gets me excited. Earnings season. Over the past 2 quarters, earnings have been a joy to go through as the economy picked up and companies started turning profitable. This sure was not the case during 2007-09, where flat earnings growth was a god sent for investors. The purpose of writing this post during midweek is to remind myself to review the companies that impressed me. Thus I am aware that this post could take some time to write. So I am just going to write short pieces on them.

First company that impressed me was City Neon. I have to confess that I own some of the stock at a very high price, but till today, I am still convinced that it will one day repay the faith I have in this company. Basically, CITYNEON is a leading provider for event and exhibition services in Asia & Middle East, with expertise in the design and construction of interior architectures, galleries and theme parks. I believe this is going to be an upcoming company because of the sheer number of major events that are going to be held in Asia. The company has already done work at the World Expo and Resorts World Singapore etc, they are currently working on the Youth Olympics in Singapore. The open float of this company is extremely small because its largest and controlling shareholder is "The Star Publications" of Malaysia and it is very tightly held by them. Earnings came in 20% higher yoy and revenue grew by 70%. The company is only trading at 11 times 2010 p/e but the potential is huge for it. Watch for it as Singapore's 2 integrated resorts start hosting more events.

Moving on, the next company that really shone through was Bright World Precision. This company deals mainly in metal stamping machinery and has turned around very impressively. Earnings and valuations for this company is just nuts. The market cap of the company is only SGD94 mil, while its earnings for 2Q2010 came in close to SGD12 mil. What does that mean? It means it is trading at less than 3 times p/e if earnings continue to be robust. The dividend yield for 2009 was close to 10%. Operating cash flow is at more than RMB100 mil in the quarter alone. Trading a little more than its NAV ($0.19), this is one company that I would love to have more on my portfolio.

Next up, my personal favorite, Sarin Tech. Amazing company. What can I say, it was just out of this world. Profits were up by an astronomical level and balance sheet just grew from strength to strength. Cash levels are more than enough to pay off all their debt. Cash from operations grew strongly. The latest news was the company just delivered Galaxy 1000 to Blue Star group. This is the next 100% upside stock. Company also declared 1.25 US cents interim dividend. This translates to almost 3 percent~ that is only interim only!!!!

GP Batt I do not need to write too much. Profits continue to be positive, falling yoy mainly because of foreign exchange losses. Still delivering more than 7 cents per share this quarter, translating to only 5.78 times price to earnings. Still trading at 0.61 times price to book, this means its still very cheap. There is still a very nice article on the future of the company in this week's "The Edge" magazine. So I am not going to write on this.

Moving on to my favourite meat for Shabu Shabu, Pork. People's Food seems to have recovered well with their earnings rebounding by more than 100% to around 1.22 cents for the quarter and for 1H2010 earnings has grown more than 150%. Recovery is firmly on track as pork prices continue its march upwards. I have been stocking up on frozen pork recently, especially after my dearest prime minister said the best way for us to curb increasing food prices is by buying frozen meat. I really appreciate such words of wisdom and take them very seriously. I wonder whether if my dear prime minister is also eating frozen meat? Back to the stock, this is one company that has tons of value oozing out of its ears. Stay tuned for more.

One blue chip stock that really caught my eye was Fraser and Neave (FNN). Besides being in a superb cash position, I do think that the company is looking good and with Kirin brewery's acquisition into FNN, makes them an even more formidable company. Looking at their 9 month operating cash flow over the past 2 years, it has averaged SGD500 million in operating cash inflows. That is a whopping amount of money! When I was going through their finances, I was intrigued by the underlying value of the company and almost ran out to invest all my CPF monies into this growing giant. Do pay closer attention to this company. It is one blue chip for the future. Rather than wasting your time with other blue chip pretenders.

Luye Pharma once again took my breath away. 64% profit growth! What the hell is the private equity management doing for the company? This shows, private equity companies really can add value to a company and deliver stronger returns. Cash flow was strong and it does seem like the product base for the company has reached mass adoption and its going help the company move on to greater things. A good platform for it to go further in the future. For pharma companies, the starting up is always the toughest stage, once they get a blockbuster drug up, earnings start growing exponentially and adoption for their other drugs become easier as the public starts to see the company as a dependable one. This is where I see Luye going. So we shall see if I am correct or not.

On the flip side, I need to have an honorary mention for an amazingly bad company called Celestial Nutrifoods. In my years of looking at financial statements, I have never thought I would ever see a company register negative revenue, not to mention negative revenue of RMB161 million. Astonishing! I believe the shareholders should bring the company's board of directors and management team out for a good meal because this is really an achievement. They should be flogged for doing so badly! Idiots. To think that this company was destined for greatness back in 2006. What Warren Buffett once said, " make sure you invest in a company that even an idiot can manage, because one day it will be run by one". Celestial is the prototype company, Buffett was referring to.

There is no way I can write on all the companies that have done well but I am trying my best to give you an impression of which companies are on the right track. It is not going to be so smooth sailing for the rest of the year as the Chinese slowdown is going to be a drag on earnings.

I wish I had more time but honestly, my new boss is killing me with the number of projects he is throwing to me. I do hope that I will still have the time to write every week. Cross your fingers for me.

Best,

SVI