Ezra Review- What's wrong with this company??

The very 'hot' stock recently is Ezra. Not that it is bulling in hotness, but boiling in danger and facing so much uncertainty that it is so hot. Someone very close to me is vested in it and is very troubled, so here I am, trying to offer a little advice.

Today's financial results- 10th July was released.

Oh my.. So many things that I conclude (purely based on my very humble thoughts, may not be factual so pls don't send me a lawyer's letter)

Pls read this with discretion and kindly note these are just what I THINK*

1. Company seems to show that they do not know how to control expenses
Revenue dropped by 3%. By right when revenue drops, one should see a drop in Expenses such as income/administrative. However, for Ezra, their expenses increased by so much.

Wow, cannot cut pay of high mgmt.? don't wish to retrench people? cannot control expenses? MNCs will come out with drastic cost cutting measures, including cutting high salaries of top mgmt. and board wide retrenchment. I don't see it in Ezra.

If it needs to be done, it has to be.

Which leads me to the next point.

2. Operating profit dropped 81%

Erm. That's like so close to having a negative profit already. The company still tried to sugar coat the announcement that their revenue maintained despite such challenging environment.

Pls open your eyes big big and look at the financial statements.

3. Offering rights to repay perpetual securities

I *think* this means that the company might be unable to pay off their debts, so they have to offer rights to raise money.

Not that they are raising money to fund growth. They are using it to pay their perpetual securities and bonds!

Which means.. more debt?

Conclusion: My advice
1. If you are not vested: Good for you, pls do not buy. Wait until the Saudi Arabia and the shale oil producers in USA have worked out a win win situation for the oil price to start climbing up. Otherwise, oil price is likely to remain low for a few years more.

2. If you are vested:
1. Have you bought the rights?
If yes: If you bought the rights at $0.1, you should sell it when trading commence, of course at a higher price.
If no: wait and observe today's price, since you have a week more to buy the rights.

Understanding stock price support levels of Starhub & M1

Hello,

In my previous blog post here about how StarHub was such a good buy on 29th June at $3.70, I received a comment that M1 trading at $3.23 now might be a good buy too even though I have missed SH's boat.

However, I would like to explain in detail about the concept of price support levels and how it is important in investing.

1. What is 'Support' and 'Resistance' in stock price?
Pls see figure 1.

As quoted from Investopedia, "Support is the price level through which a stock or market seldom falls (illustrated by the blue arrows). Resistance, on the other hand, is the price level that a stock or market seldom surpasses (illustrated by the red arrows)."

2. Therefore, one should buy at Support level and sell at Resistance!

3. Why StarHub was a better buy than M1 at $3.70

 

SH price support level since 2014 was at $4.00. At $3.70, it has broken the price support level and it is a rarity to drop by 7.5% of this support level on 29 June.

 

 

On the other hand, M1 at $3.23 (current price now), this price support level was already broken through in June, before the greekexit crisis. On 29 June, M1 reached its lowest at $3.16, a drop of only 1.85% of its support level.  At this price level, there is no 'rarity' in its pricing.

4.  Time value of money

 

If I had bought SH at $3.70, it was as good as buying the same stock in June 2013, this was the selling price 2 years ago.

 

However, at $3.23 for M1 now, it is only as good as buying this stock in Jan 2014.

 

If both were to maintain the same earnings as compared to previous years, by 'time travelling' to the stock price of SH 2 years ago, it is a much better buy.

 

Conclusion:

 

Understanding Price support and resistance levels is useful when discerning when to buy and sell.

 

Market sentiments seem to regard SH as a better stock due to its stronger price support levels, although M1's financials might be better.

 

StarHub- Missed the boat

So.. SH was trading at $3.70 on Monday, finally breaking through the $4.00 which it had strongly held on for the past year. Monday (29 June) was the day when major stocks experienced a terrible diarrhea.

I was contemplating so hard whether to buy as it seemed to go free fall and with so much uncertainty over the Greek bailout.

Anyway, fast forward three days later, major stocks have slightly rebounded.

At $3.94, I can't exactly say that SH is trading at a good value as it has too much debt. However, I notice that it has better resistance than M1 when the latter fares better in its financials instead.

Missed the boat. No idea when I can take such a good chance again. Arrrgh.

Pre-IPO stock options- Scam anot?

Sigh.. Recently, my friend told me that he bought a Pre-IPO stock in Singapore and he is convinced by the person talking in the seminar that he can earn a few times over. He says he trusts his friend who took him in and the institution.

Wow. seriously amazing. That's like 200%? 300%? 400%?

Meanwhile, these are the average returns of all other investments:
0.025%  savings account
1.3%  1-year FD
3.25% OCBC 360 Account
7.8%  S&P 500
15% Warren Buffet

Gua gua....

I have no idea what this Pre-IPO is about, what the seminar is about, who the person selling is so I can't say anything much.

BUT

1. Are you worth millions?
Sorry, if you are not worth millions I don't think you can get a pie of the Pre-IPO stock. Pre-IPOs are normally allocated to investment banks who are the underwriters and have lots of money. Unless you are the favorites of the investment banks (which means you are very very rich), you would perhaps be given a pie. Most people don't even have the connection to these investment banks.

2. Unpopular stock
I think it is very laughable when a company needs to set up a seminar to convince people to buy its Pre-IPO shares. Lol can you imagine Alibaba doing that last time? Do they need to? Or Facebook or twitter doing that? If they need to set up a seminar to convince people to buy, then sorry, it is probably a very lousy stock.

3. Too good to be true
High risk comes with high returns. Most investment vehicles can only have the average returns of at most 8% or a little higher if you are very good at it. It is very difficult and very unlikely to have abnormal returns consistently, like seriously can people use their brains to think????

Sigh. There have been so many investment scams being reported but why do people keeping falling and falling for them over and over again?

4. IPO may never materialize
There is no guarantee that the company will make it to the actual IPO or the actual price.

That's my input for this Pre-IPO don't know scam or not scam. I say, please, if you do not know what to invest or how to invest, I think it will be better if you just put your $ inside the ocbc 360 account.

Meanwhile, if any readers knows about this Pre-IPO thing, do enlighten me.

Thank you~

Starhub Stock Review (II)

I previously blogged that Starhub (SH) was trading at an insane price of $4.43 (here) and that was overvalued. I have sold off SH at $4.39 and it didn't surprise me that it is now trading at $4.02, near to its 52 week low.

The big drop came about after SH announced that its profit from operations has decreased by 15% when compared to 1Q2014. EBITDA was also 8.5% lower for the quarter.

With my analysis of $4.04 a share, P/E is 19.95 times. SingTel's P/E is 18.5 and M1's 18.48. This might mean that at this current share price, it is not exactly an attractive stock to buy. The D/E is 4.63 (really high) whereas the other 2 telcos are 0.37/0.56 respectively.

The PEG ratio is also high as compared to other Telcos. :(

I think the only saving grace is still its attractive dividend payout. But I wouldn't risk buying the stock and then half a year later, see a drop in price value again. End up my net return would still be the same or even worse.

Technical jargons aside, I wouldn't buy this stock yet. Not now.

QnM share Part II- Caution

In my previous post, I mentioned that QnM is a good buy, and I vested it at $0.81. That was when market open after the financial results released the night before.

Omg today I look at the price and it shot up to $1!

At $1, the dynamics is very different from $0.81. It might be overvalued given that the P/E is a whooping 80+/-  !  Nobody knows for sure that their acquisitions in China and Sg might be soaring with good revenues in the next quarter and the equity it faces might be a challenge.

I urge investors to take a cautious approach for this particular stock please.

QnM Dental - Potential growth stock?

QnM Dental posted a very positive financial results ending 1st Qtr 2015.

1. Big jump in profit before tax 
The Group’s 1Q15 profit before tax rose by 173% to $4.5 million from $1.6 million in 1Q14.

173%!! The increase was mainly due to contributions from acquisitions of their China investments.

2. Current Holdings
They have 60 dental clinics, 1 mobile clinic, 3 medical outlets, and 1 aesthetic clinic in Singapore.
In Malaysia, 3 dental hospitals.
In China, 4 dental outlets.

My take is that dental healthcare is a consistent sustainable business to be in, as many companies in Singapore provides dental benefits to their employees. In addition, when one ages, it becomes a need to see the dentist more often.. Just look at my parents, at the age of 60+, they have spent thousands on dental care!

3. Ambitious expansion plans
Now this is the exciting part. QnM has requested for a trading halt earlier this week and yesterday, they have announced their proposition to acquire 8 dental clinics located island wide.

Their profit target amounts to approx. $16.10 million.

Key dentists to be in charge to sign long term service agreements.

Apart from this, they have plans to expand into private dental healthcare in the PRC, Malaysia and through other acquisitions.

Conclusion:

Although I do have a little concern on over aggressiveness of expansion plans, at this moment I think QnM is promising.

Vested at $0.81 today when market open. :D