Could not get back to sleep after watching the Champions League finals. I guess it is all the adrenaline pumping in my veins after watching Barcelona outclass Manchester United. What a great result. Lay in bed for 1 hour and decided that it was really a waste of time trying to get back to sleep. Decided to start writing the post and maybe catch up on the sleep a little later.
This week, we had another weak showing for the markets even though we had a slight rebound towards the end. Is this the turning point for the markets? I do not think so. Volumes are still low and expect more volatility ahead.
We also saw the privatisation offer for Allgreen this week. At a hefty premium indeed. Analysts scurried around after the deal trying to find the next property play that may be taken private. So typical of them, trying to sell the story that more M&A in the property sector is in store. I do not disagree that more privatisation offers are on the way but it will not be constrained to the property sector. I actually find S chips attractive as M&A plays because of their lack of popularity and low valuations. If you used Bloomberg to filter the SGX listed companies, using p/e, p/b, cash to liabilities, ROE and debt to equity parameters, you will see a whole list of S chips companies. Why is that so? You really cannot blame market participants who are skeptical about S chip companies especially after the likes of China Aviation Oil, Ferrochina, China Milk, Fibrechem and the list goes on and on. S chips have really not done well for a long time and credibility has been flushed down the toilet.
What made things worse was the worrying news of Cosco's parent having audit issues and from what I know since meeting Cosco Singapore's management, I would not be surprised if this company has many more audit and credibility issues going forward. China Chaoda, the largest independent vegetable producer in China plunged more than 20% in a day last week because an article in "Next" magazine wrote about how the company has overstated its arable land on its books. There are also some bad press on the US listed chinese ADRs, how do you expect Chinese companies outside of China and Hong Kong to do well?
What I totally intend to do is to start investing some money into those S chips which I like and trust because investing when there is fear is somewhat of a speciality for me. Maybe I should set up a fund investing just in S chips. I believe if you have a medium to longer term view, you will be handsomely rewarded. Remember what Buffett always say, "be fearful when others are greedy, be greedy when others are fearful". Be rationale and look at those companies that have delivered according to whatever they have promised and have steered clear of negative press since their listing. Low profile companies which have high management ownership tends to be safer bets. Will write more if I find any interesting ones.
The property market is still booming. Considering the number of transactions listed on "The Edge Singapore", it really shows that the market is still booming and does not look like abating any time soon. Plenty of market watchers are speculating that there are more policy action to come in the near future. I do not deny this is a possibility but I still maintain my stance that the liquidity flood in the market is not allowing the property markets to cool down. Interest rate is the key to stopping this rampaging property market in its tracks and no matter what draconian measures are made, they will only be temporary in terms of slowing down the market. The government has to also consider the risks of over implementing policies and totally affecting the market and causing the market to crash rather than correct in its own cause. The destruction of wealth and the wealth effect is something which the government understands that will not help the economy in any way, that is why they would be more cautious with regards to policy action going forward.
Another point I would like to make this week is on Goldman's reversal on their call to sell commodities. Last month, they made the call to cut resource exposure and suddenly this week, they raised their target price for oil causing commodities to make a turnaround and move upwards. That is just down right disgusting. Personally, I just feel Goldman's move was their ploy to lower prices to accumulate before pushing for higher prices. Poor investors who placed their faith in them. What a shameless move.
This week, I would also like to pay a special tribute to my favourite CNBC anchor, Mark Haines who passed away suddenly last week. I really liked his frankness and his hard line approach to asking questions to questionable CEOs and analysts on screen. Good reporting is already rare this days, to lose a great anchor man like him means financial journalism has taken a big step back. Well rest in peace, Mark Haines.
Ok I have written what I wanted to write this week. Nothing special to talk about because the market volumes are low and this is definitely not a trading environment because sustained moves in the market is going to be hard to come by. If you are looking to trade the market be wary, if you want to buy and hold, please do so because this is a good time to accumulate.
Thats all for this week.
Have a good week ahead.
Best,
SVI
Saturday, May 28, 2011
Saturday, May 21, 2011
Tradewinds Corporation Berhad, the winds of change are blowing in the right way. Buy $1.10
Sell in May and Go Away......I am still right as the weakness continues. Told you guts so.
What a week of IPOs! We had the mega blockbuster IPO of Glencore, the much anticipated launch of LinkedIn and PRADA finally marketing their issue. After so many years of hiding in the dark, Glencore has finally decided to put themselves up for public scrutiny. The question is why? Some people are saying it could be the end of the commodity cycle and they newly crowned billionaires of Glencore decided to cash out. No matter, this is the commodity giant that is equivalent to the likes of Goldman in the investment banking industry. So keep this baby on your watchlist.
LinkedIn however is a very different proposition. The social network bubble continues with LinkedIn being the served up as the entre of the social network meal while investors eagerly await for the coming of Facebook. My sources tell me that Goldman Sachs have already started marketing the launch of Facebook's IPO to preferred clients. There is no doubt in my head that Facebook's IPO will fly and it will probably rival that of Google in terms of market cap eventually. But a word of caution. There is absolutely no fundamentals in these social network companies because they do not earn a cent. LinkedIn has been in the business for 9 years and the business has only broken even this year. Its IPO opened up with a 95% gain from its IPO price of $45. That is just ludicrous. This is somewhat reminiscent of the 2000 internet bubble. Sigh...stupidity always finds a way back into our hearts. Let me just emphasize...THIS TIME IS NOT DIFFERENT!
As my mum always told me, I have always been such an extreme person, its either my way or the highway. So if you are looking to invest in rubbish, please stop reading this blog. I will not be right all the time but at least you can be assured that the stocks I am picking have the best possible fundamentals I can find. If you want companies that trade at 100 times price to sales....I think its better that you read some research report from investment banks or maybe local brokerages. They are not going to go for boring businesses like Heng Long. Go check how many brokerages or research houses cover Heng Long. The answer is a very nice 0. Research houses will be able to come out with lame explanations on how the a company can be worth 50-100 times price earnings and how it is actually cheap in terms for forward earnings. Unless you have a crystal ball, there is no way anyone can be sure about how the company will grow at more than 30% per year over the next 2 years. That is one of the main reasons why I always take analyst reports with a pinch of salt.
So I promised a stock pick, I have just the one for you. This is a company which I have had experience with since a long time. My mum used them as a tour service provider many many moons back. The company is called Tradewinds Corporation Berhad.
Tradewinds Corporation Berhad (TCB) is a Malaysia-based company engaged in investment holding, provision of management services and commercial property investment. The Company, through its subsidiaries, is engaged in hotel ownership and management, property investment and development, sale of properties, manufacturing, trading, insurance broking, travel related services, providing integrated security services, leasing and hire purchase financing. It has 22 subsidiaries which gives you an idea on diversity of this company's operations. I just want to focus on the key businesses of the company.
Tradewinds Hotels and Resorts Sdn Bhd, a subsidiary of Tradewinds Corporation Berhad, is one of the largest hotel owners in the country with 10 hotels and resorts in its stable. The hotels in their stable include:
* Crowne Plaza Mutiara Kuala Lumpur
* Batang Ai Longhouse Resort, Managed by Hilton
* Hilton Kuching
* Hilton Petaling Jaya
* Hotel Istana Kuala Lumpur
* Meritus Pelangi Beach Resort & Spa, Langkawi
* The Danna Langkawi
* Mutiara Johor Bahru
* Mutiara Taman Negara, Pahang
* Mutiara Burau Bay Beach Resort, Langkawi (A resort owned by Langkawi Development Authority (LADA) and managed by Mutiara – TCB Hotel Management Sdn Bhd)
These are not small hotels, they are prominent and 5 star quality hotels which are worth a good chunk. The current net asset value of the company sits at $1.73 while the stock is trading at $1.10. Therefore the discount to its NAV is just too steep for a company that is trading at only 9 times p/e even though earnings were raised through some land sales. Operating results are going to be flattish and property rental income will fall in the short term through their refurbishment of Menara Tun Razak. Over the long term, the results will get stronger and be sustained due to the stable nature of their businesses especially in a strong economic backdrop.
Tradewinds Corporation Berhad is also involved in investment and development properties. Investment properties include two strategically located office buildings in the heart of Kuala Lumpur – Menara Tun Razak in the Central Business District and Kompleks Antarabangsa in the Golden Triangle.
Tradewinds’ involvement in insurance broking is amongst the largest in the country. Strategic assets protected by Tradewinds and its insurance affiliates involve numerous land and offshore oil and gas drilling platforms for both national and multinational oil companies.
Tradewinds Corporation Berhad announced that it has agreed to form a joint venture with Kelana Ventures Sdn Bhd and Oxbridge Height Sdn Bhd to develop approximately 704 acres of land located in Mukim Tebrau, Daerah Johor Bahru, Johor. This could turn out to be very promising as it is a huge project in their most promising city due to their proximity to us.
The company is also in the midst of restructuring itself to streamline their operations and to shed their dead weight businesses. This has started to show results because their quarter's earnings were their best for some time. Should this continue, the stock could easily trade back up to $2 dollars.
While writing about this stock, a favourite tune came up in my mind, an oldie buy goodie. "Wind of change" by the Scorpions. Going off to find that old CD of mine to enjoy the tune.
Till the next week. Have a great trading week ahead. Oh I got a feeling, it will not be a great week for the markets as the USD rebound is not over yet and you know what that all means don't you? Weakness.
Best,
SVI
What a week of IPOs! We had the mega blockbuster IPO of Glencore, the much anticipated launch of LinkedIn and PRADA finally marketing their issue. After so many years of hiding in the dark, Glencore has finally decided to put themselves up for public scrutiny. The question is why? Some people are saying it could be the end of the commodity cycle and they newly crowned billionaires of Glencore decided to cash out. No matter, this is the commodity giant that is equivalent to the likes of Goldman in the investment banking industry. So keep this baby on your watchlist.
LinkedIn however is a very different proposition. The social network bubble continues with LinkedIn being the served up as the entre of the social network meal while investors eagerly await for the coming of Facebook. My sources tell me that Goldman Sachs have already started marketing the launch of Facebook's IPO to preferred clients. There is no doubt in my head that Facebook's IPO will fly and it will probably rival that of Google in terms of market cap eventually. But a word of caution. There is absolutely no fundamentals in these social network companies because they do not earn a cent. LinkedIn has been in the business for 9 years and the business has only broken even this year. Its IPO opened up with a 95% gain from its IPO price of $45. That is just ludicrous. This is somewhat reminiscent of the 2000 internet bubble. Sigh...stupidity always finds a way back into our hearts. Let me just emphasize...THIS TIME IS NOT DIFFERENT!
As my mum always told me, I have always been such an extreme person, its either my way or the highway. So if you are looking to invest in rubbish, please stop reading this blog. I will not be right all the time but at least you can be assured that the stocks I am picking have the best possible fundamentals I can find. If you want companies that trade at 100 times price to sales....I think its better that you read some research report from investment banks or maybe local brokerages. They are not going to go for boring businesses like Heng Long. Go check how many brokerages or research houses cover Heng Long. The answer is a very nice 0. Research houses will be able to come out with lame explanations on how the a company can be worth 50-100 times price earnings and how it is actually cheap in terms for forward earnings. Unless you have a crystal ball, there is no way anyone can be sure about how the company will grow at more than 30% per year over the next 2 years. That is one of the main reasons why I always take analyst reports with a pinch of salt.
So I promised a stock pick, I have just the one for you. This is a company which I have had experience with since a long time. My mum used them as a tour service provider many many moons back. The company is called Tradewinds Corporation Berhad.
Tradewinds Corporation Berhad (TCB) is a Malaysia-based company engaged in investment holding, provision of management services and commercial property investment. The Company, through its subsidiaries, is engaged in hotel ownership and management, property investment and development, sale of properties, manufacturing, trading, insurance broking, travel related services, providing integrated security services, leasing and hire purchase financing. It has 22 subsidiaries which gives you an idea on diversity of this company's operations. I just want to focus on the key businesses of the company.
Tradewinds Hotels and Resorts Sdn Bhd, a subsidiary of Tradewinds Corporation Berhad, is one of the largest hotel owners in the country with 10 hotels and resorts in its stable. The hotels in their stable include:
* Crowne Plaza Mutiara Kuala Lumpur
* Batang Ai Longhouse Resort, Managed by Hilton
* Hilton Kuching
* Hilton Petaling Jaya
* Hotel Istana Kuala Lumpur
* Meritus Pelangi Beach Resort & Spa, Langkawi
* The Danna Langkawi
* Mutiara Johor Bahru
* Mutiara Taman Negara, Pahang
* Mutiara Burau Bay Beach Resort, Langkawi (A resort owned by Langkawi Development Authority (LADA) and managed by Mutiara – TCB Hotel Management Sdn Bhd)
These are not small hotels, they are prominent and 5 star quality hotels which are worth a good chunk. The current net asset value of the company sits at $1.73 while the stock is trading at $1.10. Therefore the discount to its NAV is just too steep for a company that is trading at only 9 times p/e even though earnings were raised through some land sales. Operating results are going to be flattish and property rental income will fall in the short term through their refurbishment of Menara Tun Razak. Over the long term, the results will get stronger and be sustained due to the stable nature of their businesses especially in a strong economic backdrop.
Tradewinds Corporation Berhad is also involved in investment and development properties. Investment properties include two strategically located office buildings in the heart of Kuala Lumpur – Menara Tun Razak in the Central Business District and Kompleks Antarabangsa in the Golden Triangle.
Tradewinds’ involvement in insurance broking is amongst the largest in the country. Strategic assets protected by Tradewinds and its insurance affiliates involve numerous land and offshore oil and gas drilling platforms for both national and multinational oil companies.
Tradewinds Corporation Berhad announced that it has agreed to form a joint venture with Kelana Ventures Sdn Bhd and Oxbridge Height Sdn Bhd to develop approximately 704 acres of land located in Mukim Tebrau, Daerah Johor Bahru, Johor. This could turn out to be very promising as it is a huge project in their most promising city due to their proximity to us.
The company is also in the midst of restructuring itself to streamline their operations and to shed their dead weight businesses. This has started to show results because their quarter's earnings were their best for some time. Should this continue, the stock could easily trade back up to $2 dollars.
While writing about this stock, a favourite tune came up in my mind, an oldie buy goodie. "Wind of change" by the Scorpions. Going off to find that old CD of mine to enjoy the tune.
Till the next week. Have a great trading week ahead. Oh I got a feeling, it will not be a great week for the markets as the USD rebound is not over yet and you know what that all means don't you? Weakness.
Best,
SVI
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