What a week it has been. Markets have rallied (told you so) back to levels close to their year highs. Japan is back to its post quake highs (told you so too) with Japanese mutual funds leadings all gainers in the mutual fund space. Fortune always favors the brave. Expect much more to come, this is just the beginning. If you looked at the markets 3 months ago and compare it to today's levels, you would never have guessed that the world has been dealing with a global slowdown, US debt ceiling and Euro sovereign crisis issues. Magic? Thats what excess liquidity does to markets. When has the world seen such money supply growth in developed countries? Never. Liquidity is here to stay for some time.
What that means is inflation is going to be a lot stickier. How much has rice risen this year? 70%? Pork? 49%? Diamonds outperforming gold? Now that is what I call inflation. Yogurt for more than $3 bucks per small pint...at cold storage...so much for cheap healthy living. What should we buy in such a time? Gold, silver and platinum? Nope... The fallacy of gold being a great inflation hedge is something which investors have to learn. Gold has underperformed inflation for the longest time in the 90s and it is still trying hard to play catch up. Go check, you will know I am telling the truth.
I do not have all the answers on this, but personally, I am going to buy into some of my golden stock picks because of their underlying value which will eventually outperform inflation when their time comes.
QAF has just started moving, Heng Long has resumed its uptick, QSR Brands have broken out of its consolidation phase, STX OSV hitting new highs on a daily basis, Sarin delivering solid gains as raw diamond prices rise, Keppel T&T delivering solid growth in their profits etc. These are companies which I feel are still undervalued and should continue to perform well over time.
Was asked by a friend of mine to review my call on Tat Hong some time ago. So here it is. Tat hong as been the subject of downgrades over the past year and its stock price has fallen close to 35% over the past 12 months. Earnings have been dropping due to lower margins caused by more intense competition, weather issues in Australia and delays in shipments no thanks to the Japan earthquake. Why is Tat Hong facing so many headwinds? Bad luck or bad timing? A little bit of both, I would say. Tat Hong is in the middle of restructuring its business, acquiring new businesses and adding to their stakes in JVs. In normal situations, this would mean a lengthy gestation period and teething problems. However, I have personally met Tat Hong's management in the past and I was impressed by their professionalism and enthusiasm in managing their business. However, what should you do if you are down by 35%? Buy more or sell out? For me, I would buy more, but not everyone is the same. If there is a better opportunity this is staring you in the face, take it. If not, hold on. I think the turnaround should be soon. Remember KS Energy? They had a long gestation period and what happened now? 2 large contracts in a span of a month.
Sarin too has a blip before moving up. How long did it take for Sarin to move since my call? 1 year? To me, that is already fast. Bear in mind, when I make a call, I always have the long term in mind. We should always look at returns from a percentage point of view. My target is 10% per year, so if my stock stagnates for 5 years and suddenly within a year it doubles, it would still mean that it has hit my objective. Picking stocks is what I try to do all the time, one thing I never like to do is to time the market. Do not own a crystal ball and never will. Good things come to those who wait.
This coming week will see the market get jittery over the US debt ceiling situation as the deadline draws close. Do not worry, buy on weakness. There is no chance they will allow a default. If they do, we are all dead anyway. So no downside. Hahaha. Gotta go cos its getting a little late.
Have a great week ahead!
Best,
SVI
Sunday, July 24, 2011
Sunday, July 17, 2011
Commemorating my 100th Post - Keppel T&T - Buy $1.365
The world is definitely evolving. It is moving so fast, it is so hard to catch up. Considering the fact that there have been so many events happening this week, it is fast becoming extremely difficult times for investors. This week, we had the scare on Italy, Moody's ridiculous report on Chinese companies, US debt ceiling disagreement, Moody's placing US debt on ratings review and European stress tests.
Madness. Social media, internet, tv, newspapers etc are making information so easily accessible that markets are starting to react to everything as they come online. Isn't the internet an amazing tool? Who would have thought that the internet would be such a great tool? Or has it gotten to stage where it has become detrimental? I really wonder if too much information is detrimental to investors and their decision making process.
Not to worry, all the problems that are cited are not that big a deal. Trust me. The media is having a field day with this but I still think that they are blowing things up. All I can say is, there are that many people who are not that bright in this world. They trust everything they read, which is the dumbest thing to do. Trust your own judgement and also think through how much bullshit there is in the news.
This is my 100th post and I would like to commemorate it with a stock pick. A long time has passed since I picked a stock for this blog. It is not because there have not been any ideas, but the truth is, I have become more choosy on the stocks I pick. STX OSV has been a good pick, hitting a new high and now that Och Ziff capital has bought 20% of the company, it makes me even more positive on the stock. Patience in this stock has really paid off for the guys who listened to me earlier. KS energy on the other hand has been really a sad story. After the mandatory takeover offer, the company has announced two huge contracts. I will once again beseech shareholders to not sell their holdings. The integration is over and the company is finally going to deliver. Sell it and you will really be giving up a very good company.
I need to say, this is probably the last stock pick I will have for the next two month because I will be very busy and the postings will become more irregular. SO lets make it a good one.
Keppel Telecommunications & Transportation Ltd (Keppel T&T) is a subsidiary of Keppel Corporation Ltd. Headquartered in Singapore, Keppel T&T offers integrated services and solutions in two core businesses: logistics and data centers. It traces its origin to Straits Steamship Company Ltd, which was established in 1890 as a partnership between British and Chinese interests at Malacca to provide regional and coastal shipping services. Today, Keppel T&T has operations spanning 12 countries in Asia Pacific and Europe.
Through its subsidiaries Keppel Logistics Pte Ltd, Keppel Logistics (Foshan) Limited, Keppel Logistics (Hong Kong) Limited, Keppel International Freight Forwarding (Shenzhen) Limited and Keppel Logistics Sdn Bhd, Keppel T&T offers one-stop, integrated logistics solutions to help clients manage their entire supply chain--from the inbound movement of raw materials to the delivery of finished goods.
Operating world-class facilities with state-of-the-art IT infrastructure in Singapore, China, Hong Kong, Malaysia and Vietnam, they deliver logistics solutions that are tailored to meet clients’ specific needs.
As a strong testament to their operational and service excellence, Keppel Logistics clinched for the third consecutive year in 2009 the FMCG & Retail Logistics Service Provider of the Year (Singapore) Award , as well as the Domestic Logistics Service Provider of the Year (Singapore) given out by Frost and Sullivan.
Through its subsidiaries Keppel Data Centre Holdings Pte Ltd and Citadel 100 Datacenters Limited, Keppel T&T owns, acquires, develops and manages high-availability data centre facilities for an international clientele. They help companies ensure smooth business and IT operations by providing highly resilient and energy efficient data centres that are reliable and cost-efficient for their customers.
Keppel T&T hold stakes in a portfolio of companies that helps contribute to the profitability of the Group.
M1 limited is a leading integrated communications service provider and it provides a full range of voice and data communications services over its 2G/3G/3.5G network, as well as fixed and mobile broadband. M1 also provides international call services to both mobile and fixed line customers. It has partnered operators globally to provide its customers coverage and roaming services in over 230 countries and territories.
Business Online Public Co. Ltd (BOL) provides full-service business verification support: company's information search, creditability check, business analysis and debts collection. Established in 1995, BOL has been cooperating with Department of Business Development, Ministry of Commerce to provide basic information on more than 720,000 companies registered in Thailand.
Computer Generated Solutions, Inc. is a leading global provider of end-to-end, technology-enabled business solutions, including ERP, SCM, PLM, WMS, CRM, portal, e-commerce, application development, project services, e-learning, training, staffing, call center, and global sourcing solutions.
Founded in New York City in 1984, CGS currently serves North America, Europe, and Asia with 20 global locations and 2,500 employees worldwide. CGS enables mid-market enterprises, Fortune 1000 companies, and government agencies to drive business transformation and improve operating performance by adapting and implementing advanced technologies.
Advanced Research Group Co., Ltd. is a leading information and knowledge provider in Thailand offering fully integrated information resources associated with state-of-the-art information technology to enhance the potential of individuals, businesses and organisations in making informed decisions.
Anew Corporation Ltd is an associated company of Advanced Research Group. It is a holding company of:
* A-Net Co., Ltd
o Thailand's third largest ISP. Anew holds a 53.32% stake.
o Customers include the general public and corporate clients. General businesses and educational institutions are the major corporate clients.
* Business Online Co., Ltd
o A business information services related firm, in which ANEW holds an 80% stake. Dun & Bradstreet holds the remaining 20%. This company focuses on the provision of company information, most notably in the credit rating field.
SVOA Public Company Ltd and its associated companies are the distributors of leading brands of office automation, computers and peripherals. The company also provides consulting services and full-service computer installation to customers.
Keppel's earnings have been very consistent driven by strong warehouse occupancy, growing strength in Data Center business and earnings contribution from M1. The key growth engine will come from its Data Center business as they add on more capacity. M1's earnings is not expected to grow much in Singapore's saturated mobile market. No doubt, the increased use of smart phones has led to increased revenues from data streaming services but that also cannibalized some of the mobile usage. Therefore it does not deserve any re-rating in my view.
In terms of margins, the teleco and data center business looks very attractive. High margin businesses are something which I like. The expansion in their data business will be very beneficial for the top and bottom lines. It is more a matter of capacity than utilization rates. Over the last two years, I have become a big believer of cloud computing and data center services that is why I have spent some time looking into Keppel T&T.
Having a strong shareholder in Keppel Corp (owns close to 80% of shares) gives extra credibility to Keppel T&T. I do like the company for its business. Current valuations on the company is around 15 times p/e which is not considered excessive considering the potential of its data center businesses. The company's operating cash flow is very consistent and I expect it to grow at a good healthy rate going forward.
The risk to this company is that they have a current and quick ratio of below 1. Short term debt has grown quite substantially over year due to acquisition of a subsidiary. Since the borrowings are listed as short term, I expect Keppel T&T look for refinancing soon. Either that or a cash call of some sort will happen. However, this is really one to keep an eye out for. So for investors who are looking for some exposure to the fast growing data business, this is one to invest in.
Ok have a good week ahead!
Best,
SVI
Madness. Social media, internet, tv, newspapers etc are making information so easily accessible that markets are starting to react to everything as they come online. Isn't the internet an amazing tool? Who would have thought that the internet would be such a great tool? Or has it gotten to stage where it has become detrimental? I really wonder if too much information is detrimental to investors and their decision making process.
Not to worry, all the problems that are cited are not that big a deal. Trust me. The media is having a field day with this but I still think that they are blowing things up. All I can say is, there are that many people who are not that bright in this world. They trust everything they read, which is the dumbest thing to do. Trust your own judgement and also think through how much bullshit there is in the news.
This is my 100th post and I would like to commemorate it with a stock pick. A long time has passed since I picked a stock for this blog. It is not because there have not been any ideas, but the truth is, I have become more choosy on the stocks I pick. STX OSV has been a good pick, hitting a new high and now that Och Ziff capital has bought 20% of the company, it makes me even more positive on the stock. Patience in this stock has really paid off for the guys who listened to me earlier. KS energy on the other hand has been really a sad story. After the mandatory takeover offer, the company has announced two huge contracts. I will once again beseech shareholders to not sell their holdings. The integration is over and the company is finally going to deliver. Sell it and you will really be giving up a very good company.
I need to say, this is probably the last stock pick I will have for the next two month because I will be very busy and the postings will become more irregular. SO lets make it a good one.
Keppel Telecommunications & Transportation Ltd (Keppel T&T) is a subsidiary of Keppel Corporation Ltd. Headquartered in Singapore, Keppel T&T offers integrated services and solutions in two core businesses: logistics and data centers. It traces its origin to Straits Steamship Company Ltd, which was established in 1890 as a partnership between British and Chinese interests at Malacca to provide regional and coastal shipping services. Today, Keppel T&T has operations spanning 12 countries in Asia Pacific and Europe.
Through its subsidiaries Keppel Logistics Pte Ltd, Keppel Logistics (Foshan) Limited, Keppel Logistics (Hong Kong) Limited, Keppel International Freight Forwarding (Shenzhen) Limited and Keppel Logistics Sdn Bhd, Keppel T&T offers one-stop, integrated logistics solutions to help clients manage their entire supply chain--from the inbound movement of raw materials to the delivery of finished goods.
Operating world-class facilities with state-of-the-art IT infrastructure in Singapore, China, Hong Kong, Malaysia and Vietnam, they deliver logistics solutions that are tailored to meet clients’ specific needs.
As a strong testament to their operational and service excellence, Keppel Logistics clinched for the third consecutive year in 2009 the FMCG & Retail Logistics Service Provider of the Year (Singapore) Award , as well as the Domestic Logistics Service Provider of the Year (Singapore) given out by Frost and Sullivan.
Through its subsidiaries Keppel Data Centre Holdings Pte Ltd and Citadel 100 Datacenters Limited, Keppel T&T owns, acquires, develops and manages high-availability data centre facilities for an international clientele. They help companies ensure smooth business and IT operations by providing highly resilient and energy efficient data centres that are reliable and cost-efficient for their customers.
Keppel T&T hold stakes in a portfolio of companies that helps contribute to the profitability of the Group.
M1 limited is a leading integrated communications service provider and it provides a full range of voice and data communications services over its 2G/3G/3.5G network, as well as fixed and mobile broadband. M1 also provides international call services to both mobile and fixed line customers. It has partnered operators globally to provide its customers coverage and roaming services in over 230 countries and territories.
Business Online Public Co. Ltd (BOL) provides full-service business verification support: company's information search, creditability check, business analysis and debts collection. Established in 1995, BOL has been cooperating with Department of Business Development, Ministry of Commerce to provide basic information on more than 720,000 companies registered in Thailand.
Computer Generated Solutions, Inc. is a leading global provider of end-to-end, technology-enabled business solutions, including ERP, SCM, PLM, WMS, CRM, portal, e-commerce, application development, project services, e-learning, training, staffing, call center, and global sourcing solutions.
Founded in New York City in 1984, CGS currently serves North America, Europe, and Asia with 20 global locations and 2,500 employees worldwide. CGS enables mid-market enterprises, Fortune 1000 companies, and government agencies to drive business transformation and improve operating performance by adapting and implementing advanced technologies.
Advanced Research Group Co., Ltd. is a leading information and knowledge provider in Thailand offering fully integrated information resources associated with state-of-the-art information technology to enhance the potential of individuals, businesses and organisations in making informed decisions.
Anew Corporation Ltd is an associated company of Advanced Research Group. It is a holding company of:
* A-Net Co., Ltd
o Thailand's third largest ISP. Anew holds a 53.32% stake.
o Customers include the general public and corporate clients. General businesses and educational institutions are the major corporate clients.
* Business Online Co., Ltd
o A business information services related firm, in which ANEW holds an 80% stake. Dun & Bradstreet holds the remaining 20%. This company focuses on the provision of company information, most notably in the credit rating field.
SVOA Public Company Ltd and its associated companies are the distributors of leading brands of office automation, computers and peripherals. The company also provides consulting services and full-service computer installation to customers.
Keppel's earnings have been very consistent driven by strong warehouse occupancy, growing strength in Data Center business and earnings contribution from M1. The key growth engine will come from its Data Center business as they add on more capacity. M1's earnings is not expected to grow much in Singapore's saturated mobile market. No doubt, the increased use of smart phones has led to increased revenues from data streaming services but that also cannibalized some of the mobile usage. Therefore it does not deserve any re-rating in my view.
In terms of margins, the teleco and data center business looks very attractive. High margin businesses are something which I like. The expansion in their data business will be very beneficial for the top and bottom lines. It is more a matter of capacity than utilization rates. Over the last two years, I have become a big believer of cloud computing and data center services that is why I have spent some time looking into Keppel T&T.
Having a strong shareholder in Keppel Corp (owns close to 80% of shares) gives extra credibility to Keppel T&T. I do like the company for its business. Current valuations on the company is around 15 times p/e which is not considered excessive considering the potential of its data center businesses. The company's operating cash flow is very consistent and I expect it to grow at a good healthy rate going forward.
The risk to this company is that they have a current and quick ratio of below 1. Short term debt has grown quite substantially over year due to acquisition of a subsidiary. Since the borrowings are listed as short term, I expect Keppel T&T look for refinancing soon. Either that or a cash call of some sort will happen. However, this is really one to keep an eye out for. So for investors who are looking for some exposure to the fast growing data business, this is one to invest in.
Ok have a good week ahead!
Best,
SVI
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