RIP Taiwan's Evergreen Group Chang Yung Fa

Ok I am quite late to post this, but here's my tribute to Chang Yung Fa, a man whom I deeply respect and look up to.

Chang Yung Fa is Taiwan's Evergreen Group founder. The group consist of EVA Air, Evergreen line shipping, Evergreen International Hotels, Evergreen Steel Corp..etc.

He is a great inspiration.

1. Brilliance in business
He started out with only 1 ship in 1968 and was born in humble family. Now, it has about 178 container ships. The evergreen group has about 27,000 employees with more than 220 offices worldwide.

2. Advocator of character values
From Forbes
"Chang Yung-Fa’s mission is nothing less than to “reorganize” social values.
He started a cartoon illustrated magazine, Morals, that seek to uplift people's sense of morality in Taiwan and around the world. “If, for every 10,000 people, one is influenced in a positive way, that’s worth it,” he says"

3. Philanthropist
From Forbes
"Chang started the foundation in 1985; it has spent a cumulative $130 million over the years. Today its staff of 149 spends much of its time on typical charity work, such as awarding scholarships and delivering disaster aid; every year residents of some 9,000 homes hit by natural disasters in Asia receive help. "
Being a billionaire, he has pledged to give away all of his assets to charity.

Wow..

He's some advice from the Billionaire for takeaway:

 

The most important point to me, translated:

Chang yung Fa is a believer of karma. He says
"One should do good deeds and accumulate good merits when alive."
Totally agree. I always believe that if you can (actually I think if you reading this, most probably you can :p), do spare a penny to the needy. Maybe it can only help one person, but to that person, it means the world to them. Those living in poverty really have very tough and difficult life.. your good deed will make their life much brighter. :)  

I was right about Noble

In my previous post about Noble here , I wrote that Noble is performing badly with a bad ROE and a bad D/E ratio. When these 2 ratios are faring badly, the company is heading for disaster.

But that's not the worse. The worse is- the commodities market is NOT showing any signs of improvement at all. When the industry is not improving, how can Noble's financials start to improve? Not to forget, it needs to continue paying its debt.

Today, Noble shares were cut to junk by Moody's.

"The worsening year-long rout in commodities, which has punished prices of raw materials that Noble handles from oil to copper, has overshadowed cost-cutting plans and will likely hurt access to funding and challenge its profitability, it said."

Noble's share price has now dropped to 0.41.

Please do not think it is 'Cheap'.

Stocks look cheap because the prices have dropped since its high time.

HOWEVER, there are always reasons what caused the price to drop and majority of the time, these reasons are due to valid rational decision thinking by the elite traders and banks.

Only very occasionally, very miraculously, will share price experience a sudden irrational emotionally driven drop in price. That will mean the price is 'undervalued' beyond a reasonable doubt. And yes, it certainly won't last long for such price to continue.

Remember, investment is certainly not a gamble. Much research and hard work is needed.

If you cannot resist the temptation to make money quickly, you are bound to lose a lot in the stock market.

My Christmas Present from Interplex

Hello,

Here's wishing everyone a very Merry Christmas!

Baring fund has announced their plans to buy Interplex at around S$450m with each share price at around $0.82.

This price is definitely a premium over its average share price over the year. The premium is about 62%!

I bought Interplex at $0.68 and that means I will be making some profits for this takeover. Yay! Good news! :D

The year ended with some profits and some losses for my overall portfolio. Although I picked some good buys, I also made some costly mistakes ;(

Ah well, think long term ;)

Good luck, everyone. Hoping all of you have a blessed year ahead. :)

Recent Actions- Sell/Buy

Hello,

Just thought that I should share some of my recent stock actions.

Summary:
1. Bought Ascendas reit @ $2.22
2. Bought Frasers Centrepoint Trust @ $1.81
3. Bought STI ETF @ $2.86.
4. Bought OCBC @ $8.72

The Fed has increased its interest rates by 0.25% , citing an improvement in the US economy and business confidence.
Stock prices are the NPV (net present value) of its future free cash flow, a higher interest rate will mean a higher discount rate and that translates to lower NPV (lower stock price). This is the reason why stock market in SG went a nosedive last week.

Although business borrowing costs would increase due to a higher interest rate and that translates to possibly lower returns for Reits, I still went ahead to purchase Ascendas Reit @$2.22 and Frasers Centrepoint Trust @ $1.81.

These 2 Reits have a strong rental occupancy portfolio.

A-Reit has a well diversified portfolio, with 5 main property segments and situated at well located areas. It has a stable portfolio with 89.8% of portfolio revenue committed for FY15/16 and a portfolio average lease to expiry of about 3.6 years. They have also acquired One@Changi business park recently.

Frasers Centrepoint Trust has very well located shopping malls in the heartlands such as Causeway point and it enjoys consistent high occupancy rate.

I also bought STI ETF at $2.86
What I observed was that before a major announcement is to occur, Singapore's stock would experience a major fall on the day before. I grabbed STI ETF at $2.86 on 15.12.2015, the day before FED announced its IR decision. (Considering US time zone)

Lastly, I bought OCBC at $8.72
Well, I am not some finance economy expert but my observation is that bank stocks do generally better in a higher ir environment, possibly due to a myriad of many many factors. (Business confidence, better IR spreads to profit from)

In 2007, when the US ir was a crazy 5%+, OCBC stocks were at its highest (then) of $8+. When the financial crisis came about and ir suddenly took a nose dive to 0.2%, OCBC stock went tumbling down to $4+. Of course, there are many other reasons accounting for this so my addition of OCBC is more of a hedge to my portfolio.

Although the US has cited sustainable business growth, better economic performance and more jobs in the US, Singapore's economy does not look promising at the moment.
Economists have trimmed Singapore's growth forecast to 1.9% with the manufacturing sector faring the worst.

With that, I say, hold up your war chest and acquire some good business or ETF along the way :)

What is one astonishing fact about Warren Buffet?

99% of Buffett’s wealth was earned after his 50th birthday

Warren buffet started investing at age 11.

From 11 to 50 years, he spent 39 years in his investing career but only made the bulk of his wealth after age 50!

No, his 39 years won't wasted. This is the Magic of Compounding.

His investment returns are a whooping 15% and he is able to beat the SNP500 index of approx. 8% returns.

Warren Buffet understood this concept which few were able to, and with his prowess in investing, he is able to earn much much more (Billions and Billions)!

I have written a post about the magic of compounding here previously- how an average person at age 25 can earn $1m by age 55 through  investing at 4.5% returns. I still think that it is achievable.

That said, investment requires hard work- prudent investment decisions, a tad of luck, discipline and perhaps many other factors. If you are not able to read financial statements consistently, my honest advice will be to put your savings into OCBC 360 account.... its interest is good given the risk involved.

Why is Noble a bad buy even at $0.47

I know there are many Noble fans in Singapore. Sorry, but I really cannot super cannot understand why are people still buying Noble in this market?

Before I study its financial statements released yesterday, let's look at how Iron ore prices importing from China have dropped since last year. I relate to Iron ore since Noble group has a major business unit in metals and mining.

From a high of US$160+ in 2013 to the current $40+ now, the Iron ore prices have dropped so much. When iron ore drops, metals/mining/scrap all others drop too.

In fact, the commodities market has sucked so badly this year and it is of no surprise that companies dealing in this sector will face a drop in profits. When your revenue drops but your fixed costs remain, it just means that the profit will drop a lot more.

But here's the thing:

Sorry to say, metal prices show NO signs of recovering as of now.

This is because I work in the frontline of metal commodity prices so I do have some knowledge on the prices.

So if it's still not recovering, can I safely say that next quarter's financial results will still be as disappointing? Which means stock price may drop even more?

Now, let's go on to Noble's financial results:

1. ROE (Return on Equity) Based on info provided by Noble: 5%+
A healthy, growing company should have an ROE of  >15%. 5% is not even 1/3 of that omg..

2. D/E ratio is 2.80+ approx.
This is like super high. A healthy company should be looking at <1

3.When ROE sucks and D/E also sucks, the company show signs that it is heading for Disaster.
If you have a high ROE and a good D/E, it is a very good growing company. If your ROE is low but D/E is also low , it implies that the company is surviving but nothing fantastic.
But if your ROE sucks and your D/E also sucks, then likely it is heading for a disaster.

4. Profits dropped 83%,
Not a surprise when commodity prices drop so much. However, cash flow is now positive and it seems that Noble has done a good job in cutting costs.

I can't determine what is a good price to buy given that the earnings are really volatile in this terrible market.

Conclusion:
Will only consider to buy when the commodity market in general show signs of picking up.

Can you resist the temptation to make money quickly? & Some quotes from Warren.Buffet

STI went up last week when US jobs data are good.
Then STI went down this week rapidly when China's economic data is bad.

These few months, the stock market has been very volatile and I spotted some speculative stocks like Noble and Ezra trading at highs and lows.

It seems that it is really quite tempting to make money quickly by buying such speculative stocks but I am strongly against such techniques as you can get your hands burnt badly.
 
Let's revisit some quotes from my super idol Warren Buffet:

1."Never attempt to make quick money on the stock market."
Sound investing can make you very wealthy if you are not in too big a hurry. Buy on the assumption that they close the market the next day and not re-open it for 5 years.

2."Buy Businesses, Not stocks"
All there is to investing is picking good companies at the right times and staying with them as long as they remain good companies. Businesses you are willing to own forever.

3."Invest in great companies"
It’s better to buy wonderful company at a fair price than a fair company at a wonderful price.

My targeted actions during this volatile period:

1. Be Patient.
Mentality of an owner, not speculator. Long term investment horizon please.

2.Read and read financial reports.
Investigate and find out Why, Why , Why and read the competitors financial reports to see where is the industry heading.
I am telling myself to spend more time on reports than Facebook.

3. Before I buy and sell, think carefully of the risks and opportunity cost first.
I made some horrible careless investment mistakes in the past and I am learning from it. Hopefully, I am much wiser now.

Good luck to all other investors there!