Sunday, July 9, 2017

MM2

MM2 has dropped around 15% from the peak $0.65 to $0.55 per share. Although I am not invested in MM2, it has been on my shopping list.

MM2 is Singapore based film production and distribution company which has produce popular titles like Ah boy to men and long long time ago. Now, the forth movie Ah boy to men is undergoing filming. Furthermore, it has also goes into cinema acquisition of golden village. This will help in further growth of the company.

To do this calculation, I use the data from SGX. The return on Asset and return on Equity meets my target. From EBITDA (Earning before interest, Tax, Depreciation and Amortization of a company) /Interest expenses also looks healthy. High ratio is sign of strong cash flows to cover its debt expenses while low ratio will indicate potential cash flow issue.


By using the normalized diluted EPS, I did some calculation for projected EPS for the future.
Using the margin of safety 20% and constant growth of 0.106, MM2 projected future share price in 5 years would $6.49 and target discounted price would be $2.61.

However, if the growth slow down by 50% while margin of safety remain at 20%, Jumbo projected future share price in 5 years would $1.26 and target discounted price would be $0.93 compared to the current price of $0.55

Using Swot analysis 

Strength
-Diversify earning
It is one of the leading content producer in Asia in 5 different countries (China, Taiwan, Hong Kong, Malaysia & Singapore). The group earning is quite diversify f rom all relevant stages of filming making process, distribution income, advertisement income and cinema income
-Strong management

Weakness
-Change in consumer demand
As the world is changing fast, the consumer demand also changes especially with the online streaming.
-Lack of good production
Availability of movie script is essential for good movie production. 
-Rise of interest rate
MM2 will require fund especially for Cinema expansion. Rise of interest rate will affect the borrowing cost and hence it will affect the profitability. 

Opportunities 
-Further cinema expansion
MM2 is quite aggressive in this cinema expansion which is good for further growth. 
-Possibility of going into Online movie streaming
With fast internet speed, some people prefer to stream movie online. This is opportunity which MM2 can look into.
-Oversea expansion into other markets outside Asia.

Threats
-Change in oversea regulation
Due to expansion oversea, any change in oversea regulation might also affected the company.
-Currency exchange
As they are expanding oversea, there might be some Forex exchange losses.
-Unable to secure distribution right
Managing competition from other entertainment companies

I am not holding any MM2 shares when I am writing this analysis but the current price of MM2 is pretty attractive. Furthermore, MM2 has a club which is a programme targeted exclusively at shareholders of Unusual Limited and MM2 Asia Ltd to offer a variety of benefits to eligible shareholders. Hence, I am planning to get some MM2 shares. Do note that is not a call to buy or sell, please do your own due diligent. 


Thursday, May 25, 2017

Is Jumbo still attractive or it has lost its shine?

Recently, Jumbo group has dropped around 20% from the peak $0.78 to $0.62 per share. Is Jumbo still attractive or it has lost its shine? I believed it is undergoing correction and potential to grow further. Using the calculation method which I learnt from "Gone Fishing with Buffett", I did some calculate to determine a target buying price.

To do this calculation, I use the data from SGX. The return on Asset and return on Equity meets my target. From EBITDA (Earning before interest, Tax, Depreciation and Amortization of a company) /Interest expenses also looks healthy. High ratio is sign of strong cash flows to cover its debt expenses while low ratio will indicate potential cash flow issue.


By using the normalized diluted EPS, I did some calculation for projected EPS for the future.
Using the margin of safety 10% and constant growth of 0.106, Jumbo projected future share price in 5 years would $1.03 and target discounted price would be $0.64.

However, if the growth slow down to around 0.05 while margin of safety remain at 10%, Jumbo projected future share price in 5 years would $0.80 and target discounted price would be $0.50.


Using Swot analysis from the previous posting on jumbo, I did some updates.

Strength
-Popular branding 
Most people remember Jumbo for seafood. In fact, it has other brands under its name like JPOT, Chui Huay Lim Teochew Cusinine, J Cafe, Jumbo catering, Jumbo eShop and one of my favorite: Ng Ah Sio Bak Kut Teh. I even bought quite a number of friends including Korean to Ng Ah Sio bak kut teh and they love it. 
-Strong management


Weakness
-Shortage and high cost of manpower
This is an common issue in service industry which they need to solve. 
-Change in consumer demand
As the world is changing fast, the consumer demand also changes and it is important to take note of this.
-Majority of the income comes from Singapore which would be affected if there is slowdown in Singapore. With the oversea expansion and Franchises, the income would be more diversify.




Opportunities 
-Expansion Growth Plan for 2017 - 2019
They have expanded to China which they are doing well. Recently, Vietnam franchise has just opened. Here is the growth plan for China and our neighbor countries. 

-Online catering/home delivery service
They have partnered with Foodpanda and DELIVEROO for home delivery service which helped to bring additional income. On top of that, they also do retail merchandise. 

-Branding
They can also bring other brands under their name to expand or come out with new brand to capture new market. I think Halal market is another big market for expansion.

Threats
-Change in oversea regulation
Due to expansion oversea, any change in oversea regulation might also affected the company.
-Currency exchange
As they are expanding oversea, there might be some Forex exchange losses.
-Competition from other F&B companies
Managing competition from other F&B companies and they will need to continue innovate to capture and maintain their customers especially bulk of their revenue come from Jumbo seafood.

Recently, I am quite impressed by the food freshness and their service quality when i visited Dempsey Hill outlet to celebrate Mother day. The staff are friendly and patient in explaining the dishes to us. They also paid attention to our needs.

I have entered a few lots of Jumbo as I believe they will continue to do well and furthermore it is also below my target discounted price. Do note that is not a call to buy or sell, please do your own due diligent. 

Saturday, April 8, 2017

Lippo Mall trust


Lippo Mall trust is another one of my favorite REITs. It is the only Indonesia retail REIT listed on SGX. It has 20 retail malls and 7 retail spaces in different part of Indonesia. It pays out dividends quarterly with yearly distribution payout around 9.2% and gearing ratio is around 31.5%. The occupancy rate is around 94.3%.1,2

The sponsor of LMIR trust, PT Lippo Karawci Tbk is also the Indonesia's largest listed company which include urban development, large scale integrated real estate, hospitals, retail malls, hotels and asset management. From the sponsor plans, it is aiming to develop 40 new retail mall in Indonesia and to increase the number of malls under management to over 80 retail malls by end of 2030.2

Lippo Mall trust has given me impressive return of 20.63% with dividend and capital growth. I sold it when it went up. I have re-entered sitting on 7% capital growth and expected the annual yield to be around 9-10% for 2017.



Using Swot analysis. 

Strength
-Good management
The management has locked 70% of borrowings into fixed interest rate to mitigate against raising interest rate. The trust was able to achieve average positive rental reversion rate of 7.0%.2
-Good occupancy rate
The occupancy rate of 94.3% is higher than industrial average of 85.4% 3
-Diversify
Their assets are located not just in Jakarta but diversified over different part of Indonesia. This will help to mitigate their risks.
-Strong sponsor
Having the support of its Sponsor which can continue to provide a pipeline of retail assets.

Weakness
-Economic 
Slowdown in economic especially with Trump becoming US president and their protective policies.
-Lease expiry
There is 23% lease expiry in 2017 and it could affect the yield of the trust.The lease expiry is 12%, 10%, 9% and 34% for 2018, 2019, 2020 and 2021 & beyond respectively. Although we have seen that the management is able to achieve positive rental reversion in 2016, it is something which we have to note of.2

Opportunities 
-Indonesia is 4th most populous Nation in the world after China, India and US
Huge population with a rapid growing of middle-class is the key for sustainable growth. The projected growth for Indoensia in 2017 is around 5.2%. Coupled with the fastest urbanization growth in Asia, World Bank estimates more than 68% of Indonesia's population will live in cities over the coming 10 years.
-Low gearing ratio of 31.5% which is below 45% allows more acquisition.1
Through acquisition, the yield can further go up.

Threats
-Change in local regulation
Any change in local regulation might affect the management of the REIT.
-Risking interest rate
FED is raising interest rate and any faster pace of raising interest rate, it will weigh on the earning.
-Forex exchange rate
As their earning come from Indonesia and any drastic change in exchange rate, it will also affect the profit in Sing Dollar
-Compeitition from E-commerce
Singapore malls have been facing competition E-commerce and it has affected their earning.
Lippo must continue to manage their asset well in order to face competition from other companies.
-Instability in South China Sea
There is uncertainty in South China Sea which can lead to instability. 

I believe Lippo mall trust still has room for improvement and will do well in the future. Currently, I am holding 8k of at average price $0.374. I also bough for my dad to give him passive income. I might add on when there is opportunity in the future. It is not a call to buy or sell, please do your own due diligent. I will continue to share more information along the way. If you have any idea to share, feel free to voice out.

1 Information is based on 31 December 2016
Information is gather from annual report.
3 Information from Cushman & Wakefield Q4 2016
4 Information from the World Bank 

Sunday, January 29, 2017

Keppel DC reit


Keppel DC reit is my first REIT which I bought as part of my investment. It is the first data center REIT to be listed in Asia with assets located around Europe and Asia. It pays out dividend semiannually with yearly distribution payout around 6% and gearing ratio around 29.4%.

Before I go into detail on this REIT, I would like to share this useful website where I can look through all REITs with a glance. It gives details on NAV, dividend, gearing ratio and price/NAV. As a rule of thumb, I will love to purchase a low price/NAV, low gearing ratio and high dividend payout. However, we still have to look at other aspects of the REIT.



Using Swot analysis. 

Strength
-Diversify
Their assets are located not just in Singapore but diversified over Europe and Asia. This will help to mitigate their risks.
-Long wale (weighted average lease expiry)
Wale is measurement of property portfolio's risk of going vacant. If a property is left vacant for period of time, it would affect the distribution to shareholder. Longer wale tends to be good for REIT.
-Good management
They have good management which is able to renew their rental ahead and hedge their earning against raising interest rate and Forex exchange.

Weakness
-Economic 
Slowdown in economic especially with Trump becoming US president and their protective policies.

Opportunities 
-Low gearing ratio allow more acquisition
With the recent right issue bringing down the gearing ratio, they have more room to acquire more asset.
-Expansion into other countries
This is data world where everyone is storing their photos and documents online. Data center will play an important role in this and I believe there is still room for oversea expansion in our neighbor countries where technology is catching up.
-New technology to cut cost
As the cost of maintaining the data center is expensive, if they can come out with technology to improve on efficiency, it will help them to lower the expenses and improve on profitability.

Threats
-Change in oversea regulation
Due to diversification, any change in oversea regulation would also affect Keppel D.C. Reit.
-Risking interest rate
FED is raising interest rate and any faster pace of raising interest rate, it will weigh on the earning.
-Forex exchange rate
As their earning come from oversea and any drastic change in exchange rate, it will also affect the profit.
-Compeitition from other companies
They must continue to manage their asset well in order to face compeitition from other companies.

I believe Keppel D.C. Reit still has room for improvement and will do well in the future. Currently, I am holding 4.2k of Keppel DC reit at average price of $1.15 which should be a pretty strong support. I also bough for my dad to give him passive income. I might add on when there is opportunity in the future. It is not a call to buy or sell, please do your own due diligent. I will continue to share more information along the way. If you have any idea to share, feel free to voice out.


Saturday, January 14, 2017

Sharing my view on Jumbo Group

When I first started my first investment, I just googled and follow my ex colleague blindly. In the end, the stock went up for the first few days and I was very excited. In the end, it went down hill for past few years. I did not understand the fundamental of investing that time. As the stock was an oil industry company, the price had dropped dramatically over the past few years due to oil price. I went to study more about the company and did the DCA as I believe the company still had a strong fundamental with good management to bring it through the crisis.

My favorite investment is "Gone fishing with Buffett" which is written by my officer in commanding in the army during my NS time. It is really an easy to understand and interesting book where we learnt the basic of investing through the story. Using the concept I learnt from this book, I deal mainly with REITS as the dividend is attractive and started trading toward second half of 2016. I monitor my stock through google sheet where I get the code from website to pull on the price through yahoo finance. 


From October 2015 to December 2016, I collected a dividend of $1144 with realized profit $1760 and sitting on unrealized profit of $2637. ROI is around 13%. My target ROI would be 13% and I also have intention to further study in this area to improve on my knowledge. Belief in sharing of information, I actively share my trading ideas with my close friends and some of them also benefited from it. They also encourage me to share my views online.

Jumbo is my first few stocks which I bought and I would like to share my view on it. Jumbo is a new IPO at that time and I read up quite a lot information of thi company. Despite the advice of the remisier that this stock would not do well, I started with 4k of Jumbo stocks at $0.31 and took some profits at $0.65 when it hits a strong resistance at $0.68. I have re entered another 4k at $0.575 when it reached the support level. I think the support level at $0.68 will help to support it and with the expansion to oversea like Vietnam. There might be more upside to come :)

Using Swot analysis. 

Strength
-Popular branding 
Most people remember Jumbo for seafood. In fact, it has other brands under its name like JPOT, Chui Huay Lim Teochew Cusinine, J Cafe, Jumbo catering, Jumbo eShop and one of my favorite: Ng Ah Sio Bak Kut Teh. I even bought quite a number of friends including Korean to Ng Ah Sio bak kut teh and they love it. 
-Strong management
I read up on their management and saw the interview with their CEO on channel 8 that time. From the speech of CEO, I believe they would continue to do well.

Weakness
-Shortage and high cost of manpower
This is an common issue in service industry which they need to solve.
-Change in consumer demand
As the world is changing fast, the consumer demand also changes and it is important to take note of this.

Opportunities 
-Expansion
They have expanded to China which they are doing well. Recently, they are expanding to Vietnam which would help to bring in more revenue. I believe there is still room for expansion oversea in China and our neighbor countries. 
-Online catering/home delivery service
There is growing trend of catering or home delivery service and the company can make use of this to expand further.
-Branding
They can also bring other brands under their name to expand or come out with new brand to capture new market. I think Halal market is another big market for expansion.

Threats
-Change in oversea regulation
Due to expansion oversea, any change in oversea regulation might also affected the company.
-Currency exchange
As they are expanding oversea, there might be some Forex exchange losses.
-Competition from other F&B companies
Managing competition from other F&B companies and they will need to continue innovate to capture and maintain their customers. 

I believe that Jumbo group would continue to do well in the near future with the expansion into oversea market. However, it is not a call to buy or sell, please do your own due diligent. I will continue to share more information along the way. If you have any idea on how to help me on my writing, feel free to voice out. Thanks :)