Posted by: donmihaihai | October 21, 2018

Temasek, AAA, high yield bond.

Ok not exactly high yield bond but Temasek issued 5 year bonds at 2.7%pa. Earlier this year Issued a 10 year(or 5 year?) under indirect subsidiary Astrea at 4.35%.

The thing is these bond are opened to public, ie retail investor with min 1K to 2K. It is like throwing some bloody meats into a sea full of hungry sharks.

Invert. If Temasek is doing public services then it is fine if the coupon yield is within the range, ie cost of debt to Temasek. At the higher end or out of the range, well…

Investor has to think twice if Temasek issue some IOU at high interest where it can borrow the same amount cheaper.

I don’t know what is the borrowing cost of Temasek and neither did I read those prospectus or understand Temasek well. But because these are IOU, it must be look into from Temasek point, not investor.


Posted by: donmihaihai | April 25, 2018

SGD400M is not alot

The cash on the B/S of Haw Par is not a lot. Even if the Haw Par pays out every single cent plus the coming dividend payment, the return on current price is just about 13%. And it is about 12% of the net assets.

But that SGD400M cash is the sore eye. The management has failed badly. Year after year, it has prudently looking for acquisition of operating business. But it never happen, regardless of the market cycle. The longer it remain as such, the more likely management will do something stupid due to increasing weight of the cash. About time for management to think about this 12% with an estimate growing rate of 15%.

ROE of Haw Par is always low mainly because of accounting standard. Accounting standard also doesn’t fully capture the wealth generated by investees(UOB & UOL) but it captured the swing in share prices instead. Still the wealth generated is flowing to Haw Par.

Due to such situation, Haw Par usually trade below intrinsic value or its true worth. And at certain price, it is a remarkable investment and will not be easily available elsewhere. Holding on to  huge block of UOB and UOL compare to its operating businesses created such opportunity.

As share price has never gone crazy, it save me time and effort. It is for lazy investor who sit on its ass for a long time. Whatever discount the share price might be trading at for the last 20 years, it has never mask the growth in NAV per share and will not for the next 20 years as long as Haw Par, UOB & UOL being managed as per current.

Posted by: donmihaihai | April 12, 2018

The hearing has no bite

MZ hearing in US Senate has no bite. Got bored fast.

Not a fan on any of these or neither do I care much.

It was fun when Shanmugam was doing it with SM. Not just fun but effective. Just not a fan on how he did it.

The whole saga or series of sagas is easy. It is not going to change FB in term of competition or platform. In fact, it might actually strengthen FB or the existing providers competitive advantage. But there is a cost. Regulation.

For FB, it is not the question of whether there is a cost, it is a question of how much the cost will be. And what the regulators want will not be aligned with FB. Cost will not be a big concern to them.

Internet created by sort of sharing communities in early years. We don’t pay for anything unless we want to but nothing is free.

Posted by: donmihaihai | April 8, 2018

Watchlist. It is all wrong.

Spot a stock here. It is in the forum with good ongoing discussion. Nice, gonna check it out.

Spot another stock there. It is in the news with good prospects. Nice, gonna check it out.

After checking, I will either invest in them or put in my watchlist. Here it goes, two more stocks added. I am investing and searching for stock is my job.

The research is about going around figuring out which stock has the potential then maybe take a look at the financials. Well, the fact is for most, it doesn’t really matter much what the financials gonna say. Decision already made when a stock being spotted.

Not true? Well how many stocks you have not either buy it or put in watchlist after seriously looked at it?

It is about anchoring. It is about saving time.

If a watchlist is about a list of good companies then isn’t the 2nd filter more stringent than the 1st. 2nd filter should filter away most that got pass the first.


Posted by: donmihaihai | March 9, 2018

Hong Kong Land, 12 sites and POC.

Nailed 12 sites since beginning of 2017 in China, Singapore, Thailand, Vietnam and Indonesia. Quite some activities. Not bad for the current management who sounded really confident in previous webcast.

These investments hardly change the leverage level even after full funding. Now what more to come? Hope to see more gateway investment properties and more Singapore and China type of development properties. Perhaps it will be as CEO said, core management teams for each city/ country are in place. Team or teams in China already around for 20 years.

Countries to note : Vietnam, Indonesia, Thailand and Philippines. Perhaps Cambodia.

This make sense to me. Rather than a development project here and there or buying investment properties here and there.

Look like Hong Kong Land is starting to use percentage of completion for recognition of development property revenues for certain regions which I guess is mainly due purchase contract being used in the countries. This make Hong Kong Land In line with most of the local listed developers.

I am not against this method of revenue recognition for development properties or construction/ services project. Just one comment. Nature of lumpy project doesn’t change in real life even if accounting smoothen it.

Like it when CFO said, adoption mean advancing the recognition of development properties revenues. Simple and straight to the point.

Companies using percentage of completion can be very aggressive in their recognition. Same thing being said by WB in recent interview because of GE. I bet many investor/ analyst doesn’t fully understand how to read them in the financials. It took me years with practical experiences to understand something. Perhaps I am slow.

A goof example will be TTJ and Yongnam. Both basically operate in the same value portion in the industry. TTJ reduced the % of recognition of accrued revenues due POC over the year but Yongnam maintained. The % is huge for Yongnam. There are three possible reasons. 1st is better contract terms. 2nd is less aggressive in recognition revenues. 3rd is operational catch up in TTJ but not Yongnam.

A large number of SGX listed companies use percentage of completion for recognizing revenues. Understanding it is a must.

Next, a CEO that painted a picture that the company is worth more because the company is unable to recognize revenues of sold properties due completion method reflecting badly on them and the company. The company still has to fulfill their side of the obligation to complete the property in time and within budget.


Posted by: donmihaihai | February 26, 2018

Another letter, another writing

BH’s shareholder letter got shorten in 2017. Disappointed because I don’t read the K but anyway the only thing I am losing out is getting ideas on how to study businesses and industries.

There are a lot of “market talk” in the letter.

A kindergarten- like analysis produced an outsize return for what it should be fixed amount for charity. It happened because opportunity dropped right in and obvious to those who are prepared and would likely not happened if the guarantee to make up any shortfall wasn’t given. I thought he was going to do just that while reading and I smiled when he did. Investment decision is about knowing/ analysing the expecting outcome and weighting the probability of it happening.

Talked about how BH share price dropped between 37% to 59% for 4 times in 53 years. Duration of the drops last from less than a month to almost 2 years. Not as if there is no other drops in share price but these were the significant drops. Is it scary? I have experienced 90% dropped from purchased prices myself so the peak to valley dropped will be > than 90%. Not that I have lost sleeps because of it.

Sharp drop get more attentions but it is the long slow drop that is the killer. Imagine the share price drop slowly for a year and while you are holding on to a 50% lost, share price swing around 40% to 50% lost for the next maybe 3 years. It will kill most of you and I will bet on it.

Take this as a warning. I don’t know when but I am almost certain that you will experience it if you invest long enough. I have experienced both. And yes this is a kindergarten- like analysis on market.

WB always talk about return on net-tangible assets/ net worth/ shareholders’ equity in yearly letter and usually once at the beginning of the letter. Sometime he mentioned more. This year more.

The annualized increased in book value is the annualized return on shareholders’ equity of BH over 53 years since only one dividend payment and little share count dilution. ROE is the measure of how successful the company is able to generate return. How the company generate this return is the qualities side.

ROE plus price purchased and sold will be the return investor has on the stock. Assume I was there to buy BH in 53 years back at exactly 1 X shareholders’ equity and sold 1 X shareholders’ equity 53 years later. My return will be 19.1% annualized.

So there are only 3 things. ROE, purchase and sale price. In fact sale price is not as important as ROE & purchase price. Think about probability and outcome. The probability of purchasing at above valuation, getting below average ROE and selling at below valuation is really low. By probability alone, most are unlikely to lose money by investing in stock. Nah, it is not true. Math is correct but look around, most people are trying so hard to get into that small probability. It is human at work.

Investing is about being rational.

Posted by: donmihaihai | December 24, 2017

Hottest and Most storied

At the moment, that will be bitcoin. Or maybe I can include the gang of cryptocurrencies. Doesn’t matter, they are the same. And doesn’t matter how many cryptocurrencies are out there,

These are what someone just said new money and what we are using is call old money. new money is associated with well, they call high tech start up. Smart people who are changing the world.

The rise of price make Bitcoin hot, very hot. Medias start reporting them. More people read it, greed feed on greed, medias feed on news. And here we are, getting one of the hottest and most storied return of the year with many people talk about it without knowing exactly it is.

There are people who know that they don’t know and there are people who don’t know that they don’t know. I am trying say I don’t know but telling people that I know, that is contradicting.

There is no way, these cryptocurrencies will become real currency or alternative currency just by looking at the price chart. Currency doesn’t move like that. How can we use it as an exchange medium when move like that? If these are currency, these price chart make zero sense unless there is a hyperinflation going on in the cryptocurrencies world.

CM says it the best. “You know it is one thing to think gold has some marvelous store of valve because man has no way of inventing more gold or getting it very easily, so it has the advantage of rarity. Believe me, man is capable of somehow creating more bitcoin… They tell you there are rules and they can’t do it. Don’t believe them. When there is enough incentive, bad things will happen.”

This make prefect sense. The incentive is there. We can see it from medias daily. So what next? When shops are selling the hottest thing in town, and can’t find enough to sell, they will try to sell alternatives. cooked up stories to make alternatives as good as main. Now, alternatives is still alternatives. By hook or by crook find more main, some shops might think…….. Human nature.

What about when a shop is selling hottest thing in town, other shop will rush to get alternatives out. And someone will create fakes.

When the whole thing ended, someone will die. People love to say uncle and auntie losing lot of money when manias ended. But it doesn’t sound right, throughout history, rich are better educated, and they are smarter because of education. And they are the majority playing with investment because they have extra and richer. I don’t see how much we changed.


Posted by: donmihaihai | May 14, 2017

Dual class shares and quarterly reporting

It is in the news that Singapore Exchange is looking at them and seeking feedbacks. In my own bias and personal views, the direction is correct.

Dual class shares structure is a non- event. It doesn’t matter if the listed company has single or dual class shares, it will still be valued as what it is not what I wish it to be. On a positive note, it will be more fun. Maybe fun is not the word, but more challenging. Something that I welcome.

Saying no to dual class shares is like protecting minority shareholder. Protection or protectionism usual don’t ended well in history. I don’t need this protection. Neither will I cry baby if my investment failed.

Dual class shares also opened up the management. Currently we are trying to fit them into something. What will they do if we don’t? Their choice say a lot about themselves. Of course it will not be like they are good if choose single class share and bad if choose dual class. But we will know more about the management if they are given a choice and I want to know their choice and perhaps the reasons behind.

In the beginning of 2016, someone wrote “for serious investors, if monthly reporting is available, they will vote for it”. Look like I am not a serious investor since I will vote against it.

There are listed companies in SGX where quarterly reporting is not required. Few members of Jardine Group do 6 monthly reporting as they are following rule of their primary listing. Hong Kong Land is one of them. I do not know if  not reporting their financials quarterly cost their share to underperform the market. But you see, I choose to use Jardine Group because their share performances are good. Anyway in short, do I feel short changed? The answer is no. Do I need quarterly reporting to tell me how well the company is doing? The answer is no. I am not running the company.

Practically, I do skip quarterly reporting. It is a choice I made. I don’t need to go through all quarterly reporting of the companies I invested in. I know what kind of numbers I am expecting. But well, I will read them if I want to feel “good” about the company. Other than that, it freed up lot of time for reading annual reports. I have a full time job after all.


Posted by: donmihaihai | April 15, 2017

Micro Mechanics not a dead stock anymore

Share price dead for many years, hardly move. That was the last few years. Price surged and Micro Mech is trading at around their highest price and I get to read about them here and there. Not everywhere yet but pretty close.

No one love a dead stock. Current price is certainly not cheap and quite fair actually.

2 things needed for stock price to do well. 1st is profitability improve from current range. 2nd is trade at higher valuation.

I believe the odds for 2nd to happen is higher than 1st. I believe the odds for Micro Mech to trade at a lower valuation is even higher.


Posted by: donmihaihai | March 7, 2017

Confident Hong Kong Land

Current management sound very confident.

Debt level is not a function of policy but operation. 100% agreed.

Property development is each country is not a result of opportunistic development but building up long term presences despite being small and will remain small for a long time. Referring to outside Hong Kong, Singapore and China. Like it this way too.

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