Sunday, April 22, 2018

Cryptocurrency? Blockchain? Hype Cycle

In my previous article on COSS, blockchain and cryptocurrency have gone through a roller coaster where bitcoin reached price close to US$20k before dropping down to US$6k. To understand this, we can use Gartner Hype Cycle.1

Gartner Hype Cycle2

5 stages in this Hype Cycle1
First stage would be technology/innovation trigger. During this stage, there is a lot of stories and media which trigger the public interest. We can see everyone is talking about blockchain technology and how they are going to change the world. During this stage, there is no usable products or commercial viability been proven. I also started investing in cryptocurrency during this stage.

Through word of mouth, we can hear people making big fortune through cryptocurrency investment. Just logging in the Facebook, we would see massive advertisement on trading cryptocurrency and ICO (Initial Coin Offering). With these media publicity, it reached peak of inflated expectation where bitcoin reaches around US$20k.

As there are over 1000 of blockchain related projects with many having same idea. In reality, there is quite a lot scams ongoing and projects fail to deliver their promise. It is not easy for retail investors to understand. In trough of disillusionment, people started to lose faith on their investments despite the fact that the technology continues it exponential growth.

To make things worse, companies who are worried about the whole blockchain technology started to take actions like implementing additional charges or blocked purchasing of cryptocurrency. Advertising giants like Facebook and Google start to ban cryptocurrency related advertisement.

On the other hand, the blockchain industry also faced regulation and tax issue. However, I believe that regulation is important for the blockchain industry to prevent money laundering and scam. We can see countries like Japan, Korea and Australia are start to adopt these cryptocurrency.

In the slope of enlightenment, the exponential growth slowly catches up with and surpasses the early expectation. We are still in the early stage of slope of enlightenment and there is better understanding how the technology can benefit the enterprise. We will see more partnerships and M&A in this industry.

Partnership and M&A
-Monex buys cryptocurrency exchange Coincheck
-Shipchain blockchain partnership with Casestack

In the last stage Plateau of productivity, the growth starts to slow down and mature. There is abundant revenue generated and we start to take the product for granted. However, I believe we are in slope of enlightenment.

Why do I invest in Cryptocurrency/blockchain?
I started working in finance industry and I understand the inefficiency of the whole industry. Just a simple telegraphic transfer take days to transfer, not forgetting the expensive transaction cost. With the blockchain technology, the transfer can be within minutes or even seconds at fraction of the current transaction cost. However, the blockchain is not mature enough to cope with the demand.

How much do I invest in cryptocurrency?
I allocated around 10% of my asset in cryptocurrency. During peak of inflated expectation, it has grown more than 20 times of my original sum but it has corrected downward. 10% of my cryptocurrency investment has generated 7 times of my 90% stock investment return for this year. I invested in both existing cryptocurrency and ICO (Initial coin offering).

ICO is much more riskier as compared to existing cryptocurrency due to the lack of information and potential scam. In my next post, I will share more on the criteria on how I select which cryptocurrency and ICO to invest.

Information from https://www.gartner.com/technology/research/methodologies/hype-cycle.jsp
2 Image from https://journeysales.com/blog/the-gartner-hype-cycle-of-crm/


Thursday, April 12, 2018

China Aviation Oil: Flying with China Tourism Growth

Brief summary
China Aviation Oil is the largest physical jet fuel trader in Asia Pacific region and the key supplier of import jet fuel to Civil aviation industry of the People's Republic of China. Through their subsidiaries, they also supply jet fuel to airline companies outside of China.

There is 2 major shareholders.1
-China National Aviation Fuel Group Limited (Largest Aviation Transportation Logistics Service provide in China that provide aviation fuel procurement, storage, transportation and refuelling services across China airport
-BP investments Asia Limited (Strategic investor of CAO)

Business Model
Business Model1
Diversified Product Base1


Diversified Geographic Base1

 Using Swap analysis

Strength
-Strong support of Parent Company (China National Aviation Fuel Group Limited)
Being the largest aviation transportation logistics services provider in China which would give opportunity to China Aviation oil

-Good management
Investment and acquisitions in oil related assets that are complement to their core business.
Their current and quick ratio remain healthy above 1.1

-Diversify geographic base
Their business in 2017 are more diversified as compared to the 2010 where 80% of the group revenue is concentrated in China

-Diversified product
The revenue from other oil products are growing at a fast rate which can help to diversify their risk.

Weakness
-Tax
As they expand globally, the taxes they have to pay also increase which can be seen in the latest earning report.

-Slow down in global tourism
 If there is slow down in global tourism, it can hurt the earning.

-Change in local/foreign regulation
Any change in local/foreign regulation could affect the expansion plan of CAO.

-Forex exchange rate
Diversification of business also mean it will be subjected to exchange rate.

Opportunities 
 -Increase in domestic & international tourism
China is the most populous nation in the world and around 90% of Chinese citizens still have not applied for passports for outbound tours. More Chinese have indicated they are willing to travel which is opportunity. Worldwide, the tourism industry also has experience steady growth almost every year.3

-Global expansion of business
By expanding internationally, it can bring more revenue & diversified their risk.

-More airport infrastructure
Dong Zhiyi has said China has plans to build 66 new civil airports in the next 5 years in 2016.4
This also mean more growing demand for Jet fuel.


Threats
-Instability in South China Sea
There is uncertainty in South China Sea which can lead to instability.

-Trade War
Escalation of trade war between US and China could damage the ties between them and affect other countries. This could lead to decrease in the global tourism.

-Risking interest rate
FED is raising interest rate and any faster pace of raising interest rate.

Past 5 years performance







The estimated growth for past 5 years is around 8.1% using the normalized diluted EPS. The expected international tourism growth by UNWTO World Tourism Barometer is estimated to 4-5% for 2018.5 China domestic tourism trip growth rate is estimated around 10%.2 One year estimated share price is SGD1.75 based on the past 5 years growth if it continues at the same rate.

China Aviation Oil would continue to do well especially world tourism growth is expected to continue with due diligent management of the company. It is not a call to buy or sell, please do your own due diligent. If you have any idea to share, feel free to voice out.

Information is gather from the China Aviation report

Saturday, January 13, 2018

What is COSS??

What is COSS? It stands for Crypto-One-Stop-Solution.

It aims to be

  • payment gateway: To send/receive cryptocurrency
  • exchange: To swap from one coin to another - eg. I want to get Fidentiax using Ethereum
  • Merchant list: Retail. Do you know about the use of cryptocurrency at Singapore skyline?
  • Market Cap: To view price and whitepaper of cryptocurrency
  • Crowdfunding: For new idea or startup
  • Prepaid card: Top up credit card except you pay with cryptocurrency
  • Remittance: To transfer money
  • Smart Contract: Signing legal contract with partner companies or incorporate a new company
Since listed last year, it has achieved payment gateway, exchange, merchant list and market cap.
Let take a look a how is the price performance. It has gone up from USD0.06 to around USD $2. 

Taken from coin market cap on 13-Jan-18 9am


I am late starter in cryptocurrency and only invested last year June. At first, I do not believe in such things until I start to read up more about them. I spent quite a lot time reading their whitepaper and trying to understand their business model. I even have whatapp group where I share information with my close friends on the cryptocurrency.

I managed to come across this COSS startup which I believe it would do well. Hence, I invested in ICO known as Initial Coin Offering (cryptocurrency) which is similar to IPO known as Initial Public Offering (shares). To invest on ICO is complicated as there is not a lot reviews on them. Furthermore, they are less regulated. Hence, it is important to do your own due diligent.

Here is SWOP analysis of COSS. 

Strength
-Location: Singapore
Singapore is trying to promote as fintech start countries and quite a lot startup are here especially in blockchain technology. You might get a shock that there are so many here if you google about them.
-Strong Whitepaper 
They are aiming to all rounded cryptocurrency one stop solution.
-Weekly dividend payout
They paid out weekly dividend and it is in term of cryptocurrency which is attractive to me especially with the compounding effect. Furthermore, these cryptocurrency can grow in term of values. I have more than 10% dividend from my original investment excluding the growth in COSS price. It is really attractive especially looking at compound effect. 

Weakness
-Small team
They have a small team which might lead to slow support. They also need time to upgrade their system which is important especially in the fast moving technology world.
-Fail project from the founder
The founder has failed project in the past but I believe everyone do have mistake. Most important of all is learning from the past and continue to improve. 

Opportunities 
-MAS licensing by Q1 of 2018
Their plan is to get MAS licensing which will enable them to do fiat. This is one of the most important factor especially I like it to be regulated. However, the KYC process would be quite stringent. 
-Beta version
They are still in beta version where quite a number of users face issue. They target to have the new UI out by end of this week (14-Jan-18).
-More type of crytocurrency 
With more type of coins, they can grow in market cap which mean more dividend.
-Trading promotion
This would help to bring volume to the exchange.
-Other business
There is still potential growth other than the exchange which is mentioned in their whitepaper.

Threats
-Change in regulation
Any change in regulation might affect the cryptocurrency . However, I believe cryptocurrency need to be regulated especially they are quite a lot scam out there. It is not easy for retail investor to fully understand the products they are offering. I believe there would consolidation where those weaker players would be flush out and cryptocurrency would do better.
-Competition
There are a lot exchange out which they would face competition from.


Currently, I would continue to hold my COSS for the weekly dividend and compounding effect. I tried to encourage my friends to invest in it but only a few really did and they should be quite happy with it. It is not a call to buy or sell, please do your own due diligent. 


For those who are interested to know what else ICOs I am invested, here is the lists.

INS ecosystem (Re-inventing grocery system where consumer can skip the long distribution chain and benefit from the lower cost. There are 7 of Top-20 global FMCG manufacturers and 100+ in total are interested to join INS Ecosystem)

Lalaworld (It is all about migrants and their unbanked families. Its an ECOSYSTEM enabled by the LALA Wallet as a PLATFORM, a single sign on platform revolving around their issues and problems. Employment issues, digital ID’s, communities build up, government and NGO partnerships, health issues, and of course, a new financial ecosystem for the huge underbanked population by capitalizing the Blockchain revolution to bridge the gap between cash, digital and the crypto world.)

Genieico (Licensed and operational lending platform launches an ICO compliant with the Monetary Authority of Singapore guidelines. A global digital passport will serve to provide KYC, AML, and FATCA compliance. Additionally, this passport will also represent a potential revenue stream. Traditional banking fees, fiat transaction costs, and currency exchange losses cut into P2P lending margins. The Crowd Genie exchange will democratise trading and allow investment in infrastructure, stocks, cryptocurrency, and bonds across Asia and the world. 

Viola.Ai  (I believe most of us know about Lunchclick and Lunch actually which is dating & matching making. For this Viola, it aims to do personalised and secured from dating to courtship and eventually marriage. They have more than 13 years of proven track record and they do not just operate in Singapore. I believe that this project will be successful.)


It is also possible to earn through arbitrage in cryptocurrency due to price inefficiency. I would share more information on other cryptocurrency or investment idea in the future. Have a great weekend!