The month of May and US treasury yield curve (2018 Version)


I did a post on the US treasury yield curve back in May 2016 (read here). As quoted in that post (with reference to a newspaper article): A sign that a correction is coming is that the US treasury yield curve is close to as flat as what you see before previous crises.

  1. US Treasury yield curve flattens to lowest level since financial crash (read here)
  2. The 10-year Treasury yield has hit the 3% level — here’s what that means (read here)
  3. 2-year Treasury yield posts largest weekly climb in three weeks (read here)

“A flattening yield curve is traditionally a harbinger of a recession to come, suggesting little inflationary expectations because of slowing economic activity. Why buy 10-year when you get nearly as much return from shorter dates,” Blain told CNBC via email. (Extract from 2nd article above)

The yield spread between the 2-year and the 10-year rate stood at 43 basis points, around its narrowest in about a decade. (Extract from 3rd article above)

I think every day, is a day closer to the next big crash. Although we never ever really know when.

So how is the yield curve now in comparison to the one in May 2016? See below.


From the above, we can see that the yield curve is flatter now as compared to the one in May 2016. That is not surprising.

But what if we compare the yield curve to the one prior to the 2007 Great Financial Crisis? Eg. The curve in Oct 2007? See below.


Surprising, the yield curve now is similar or even flatter than the yield curve in Oct 2007. Hmmm….


Basically, in my case, I still have a significant portion of my portfolio in risky stocks which aren’t really showing much profit so to speak. However, if I compare my liquid cash (war-chest) to stocks, the proportion is a low 35% vs 65%.

There are many many shares which I would have liked to purchase but have held back. Actually, it is never an easy task. (esp. when I think about the cash sitting there and doing essentially nothing)

I don’t believe in timing the market, and have always stay invested (even now). This year wasn’t a profitable year for my stock portfolio.

Nevertheless, one must always be prepared mentally and to allocate sufficient war-chest for the occurrence of a crash. As much as I would like to paint a rosy picture and say that a Crash would never come… but it will. Not if but when.

Whether you are already invested in the stocks you believe in or have been aiming for some stocks….

“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” 
― Peter Lynch 


Posted in Portfolio | 4 Comments

Wai Kee Holdings Limited (0610.HK) – Valuation Study

Wai Kee Holdings Ltd. is an investment holding company, which engages in the construction and infrastructure business. It operates through the following segments: Construction; Construction Materials; Quarrying; and Property Development and Investment, Toll Road, Investment and Asset Management.



It is worth noting that the Forward annual dividend yield of Wai Kee Holdings is 5.94%.


Trailing PEG

  • Wai Kee Trailing PEG: 3.94/(22.77+5.81) = 0.13
  • P/E ratio is 3.94, 5 years EPS growth rate: 22.77, Dividend yield: 5.81

That is way below 1. A ratio below 1 suggests a good investment. (read here)


Valuation Study

I will be using two methods to come up with the intrinsic values.

Method 1



Method 2

First let’s look at the estimated 5 years earning growth which is 22.77%. Let’s assume a 20% discount, the figure will be 18.22%.

Given EPS and a PE ratio, stock price can easily be calculated for any company. Using the below formula.

F = P(1+R)N where:

  • F = the future EPS
  • P = the starting (present) EPS (1.151)
  • R = compound growth rate (18.22)
  • N = number of years in the future (5)

Estimated future EPS: HKD 2.66

I will be estimating the future PE of Wai Kee Holdings Limited to be 4.03 (See data from Morningstar below) Average of the PE from 2010 to 2017.


Future Stock Price


  • P = future stock price
  • EPS = future EPS
  • PE = future PE

Hence future stock price of Wai Kee Holdings Limited is 4.03  x 2.66 = HKD 10.72

Intrinsic Value


  • P = present (intrinsic) value
  • F = future stock price (10.72)
  • R = MARR (15% or 0.15)
  • N = Number of years (5)

Hence, the intrinsic value of Wai Kee Holdings Limited is HKD 5.33.


In Summary

From method 1, the valuation is HKD 17.13, while from method 2, the intrinsic value is HKD 5.33. Stock price of Wai Kee Holdings Limited on 9 May 2018 is HKD 4.54.

There is margin of safety from both valuation methods.

Posted in Hong Kong Shares, Wai Kee Holdings Limited | Leave a comment

Japan Foods Holding Ltd. (5OI.SI) – Is its Dividend Sustainable?

To be frank, what initially attracted me to the stock of Japan Foods Holding Ltd. recently, is its dividend yield. As mentioned in my earlier post, Japan Foods’ dividend yield is 4.06% in FY 2017, and it is among the highest in the consumer stocks family (if not the highest). See below.


The company paid out SGD 0.0205 in dividend in FY 2017.

The recent share price of Japan Foods is $0.505. So assuming that the dividend in FY 2018 remains the same as what was distributed out in FY 2017, the dividend yield would be 4.06%. Not too shabby.

The key question then is: Is its Dividend Sustainable?


As highlighted in their FY 2017 Financial Result Presentation, the Board intends to recommend and distribute not less than 50% of the Group’s audited consolidated net profits attributable to Shareholders as dividends annually.


Fundamentally, the company is also strong financially. It has no debt and has a cash hoard of SGD 20.54 mil. See below.


Another interesting thing worth noting, is that sophisticated investors have been buying its shares since Feb 2016 to Dec 2017. See below.


So what could go wrong?

However, one figure (or shall I say trend) is worrying.

As shown in its FY 2017 Financial Results Presentation, the payout ratio has been steadily increasing over the years, but dropped in FY 2017. In FY 2016, it reached as high as 92.2%, but fortunately dropped to 74.6% in FY 2017. See below.


Interestingly, the payout ratio figures differ from what is found in Morningstar (see below).


Nevertheless, whether is it 74.6% or 76.3%, both the dividend payout ratio figures are high and the trend seems to be going upwards over the years (broken only in FY 2017).

Payout ratios have tremendous prediction power as they indicate what stage of business a company is in.
A payout ratio that is between 75% to 95% is considered very high. It implies that the company is bordering towards declaring almost all the money it makes as dividends. This increases the risk of the company cutting its dividends because our formula is forward looking. To maintain a healthy retention ratio, the company would either not grow its dividend or cut it down. (read here)

The other aspect worth noting is its erratic net profit performance. No doubt the overall CAGR for net profit is 11.1% from FY 2011 to FY 2017, however there isn’t a very strong upward trend.


With a high payout ratio (that seems to increase over time) and erratic earnings, it is difficult to predict if such dividend payout could be sustained especially if situations suddenly turn for the worse. The likely outcome is that the dividend payout will be reduced if things turn ugly. Moreover, given the fickle nature of the F&B industry.

No doubt Japan Foods can dig into its cash hoard to sustain its dividend payout in the short term, but in the long run, it is hard to say. (And why would the board want to do so? After all, the board’s commitment is to payout min. 50% of the net profit which itself could also drop in bad times.)

I am sure if you are an income / dividend investor, you would one to hold on to your dividend stock for a very long time (and let the money roll in), and not want to see the dividend get reduced or vanish suddenly.

Nevertheless, if stock price offers a good margin of safety – it would be worth considering.


Posted in Japan Foods Holding Ltd | Leave a comment

Japan Foods Holding Ltd 5OI (A quick valuation study)

This will just be a quick valuation study for Japan Foods Holding Ltd. (5OI.SI). I have previously did a quick study on this stock in June 2015 (read here).


Japan Foods’ dividend yield looks tempting at 4.06% in 2017. Among the highest in the consumer stocks family.

A quick valuation study shows that the intrinsic value is only $0.29. See below. This value is even lower than the intrinsic value ($0.34) which I’ve calculated in June 2015.


The share price on 4 May 2018 is $0.505, which means that there is basically no margin of safety.


The increase in share price since February 2018 could be attributed the to the good 3Q 2018 results.


On 7 February 2018 – Japan Foods Holding Ltd. announced that it has achieved double digit growth in both its top and bottom line for the third quarter ended 31 December 2017 (“3Q2018”) driven mainly by strong revenue contribution from its “Ajisen Ramen”, “Menya Musashi” and “Shitamachi Tendon Akimitsu” brands.

During 3Q2018, net profit attributable to equity holders of the company surged 73.1% to
S$2.5 million, from S$1.4 million in the corresponding quarter ended 31 December 2016
(“3Q2017”). This is on the back of an 11.4% increase in sales from S$16.8 million in
3Q2017 to S$18.7 million in 3Q2018.


Its flagship ‘Ajisen Ramen’ brand has performed strongly partially due to higher same-store sales following the revamp of some outlets into the ‘Den by Ajisen Ramen’ brand.”

While  its ‘Shitamachi Tendon Akitmitsu’ brand, which was launched in July 2017 at Plaza Singapura. Its performance has been so encouraging that we have since added four more stores in Northpoint City, Vivo City, Westgate and the latest one at Changi City Point which opened in January 2018.

Both the above is impressive. Nevertheless the F&B industry is a difficult one as customers have fickle palettes and what is popular today may not be popular tomorrow.

In retrospect, it wasn’t that long ago, when the outlook wasn’t as good for Japan Foods. Which probably explains the lower intrinsic value I achieved now (as compared to the figure obtained in 2015). In fact, it kind of fell out of many people’s radar.


However, given the recent good results, it is not surprising to see more analysts’ report. In fact, there is an article in today’s Business Times on Japan Foods.

  • Japan Foods Holding – RHB Invest 2018-05-04: Enterprising Japanese Restaurant Chain (read here)
  • How Does The Market-Beating Japan Foods Holding Ltd Earn Money? (read here)

When good things start happening, news start spreading around. Share price might jump a notch or two. Million Dollar Question, then will be – is this a good stock to buy now and hold?

Personally, I would probably need to have the prices come down more to be comfortable and to give the ‘Shitamachi Tendon Akitmitsu’ brand more time to prove itself.


Posted in Japan Foods Holding Ltd | 2 Comments

Reaching the next milestone

A lot has been written about F.I.R.E (Financial Independence Retiring Early).

I guess we all have a ‘number’ in our mind. It is this target you want to hit, the magic amount. Some people are aiming for $10,000.00 or $100,000.00 or $500,000.00 or $1000,000.00, $2000,000.00….


For some, beyond this amount, there is really no need to want for more since they can already cover their yearly expenses via the passive income. However, for me, I reckon it is a moving target.. as I have yet to devise a sound passive income stream.

Ultimately, it doesn’t matter. It is my goal that I have set and I am aiming towards it at my own pace.

Initially I thought I can see myself reaching my first milestone soon…. I can see the light at end of the tunnel. As recent as the start of 2018, I thought I would be reaching this target by mid 2018.


However, things don’t always turn out the way you wanted them to. Cash outflow (either via investment losses or daily expenses) has been more than what I have anticipated.


1. Poor stock portfolio performance.

I haven’t been ‘mining’ for stocks for a while. Basically, my intention is to keep the proportion of my stock holdings relatively low (currently, it is at approx. 20% of my net worth). And just slowly tally up the capital increment from my monthly salary.

After all, market valuations are relatively high.

In fact, this stock proportion (in relation to my overall portfolio) has not been that low for years.

Unfortunately, I have kept a few under-performing stocks in my portfolio and it hasn’t been pretty. I reckon like many, I’ve sold some of the profitable stocks to keep the profits while waiting and hoping for those under-performing ones to turn for the better.


For instance:

  • Sarine Technology stock price has been languishing for a while now. The company has been dealing with the infringement of their intellectual property rights, and earnings have yet to pick up robustly despite the slight improvement in market sentiments.
  • Golden Agri-Resources share price has also been in a slight downtrend, in line with the CPO (Crude Palm Oil) prices. The decision by the European Parliament in Jan 2018 to ban the use of the Palm Oil commodity in motor fuels from 2021 to prevent deforestation and meet Europe’s more ambitious climate goals appears to have dampened prospects for CPO price rise drastically.
  • Shinsho Corporation: It appears that the trade war started by US has some ramifications on its stock price, although, not as much as I would have expected. Still, its stock price has been uninspiring at best.
  • Creative Technologies: This is a really a small holding. I reckon it is more of a rash and speculative buy. I guess after so many years, I am still prone to making impulsive decisions. Well, its stock price has been on a down-trend.  I am curious as to how the launch of the Super X-Fi affect the stock price come mid 2018.

I have retained some of the stocks which I would classify as the long term holdings eg. Colex Holdings Limited, Riverstone Holdings Limited (for the latter, albeit at a much smaller amount).

Generally, I don’t expect this year’s passive income from dividend to be much.

So far, the stock market has been more volatile this year, as compared to 2017. Perhaps, I could have made more if I held on to some of my better shares, but it is a decision that I have made in late 2016 (to reduce stock holdings), and so far, I have been able to sleep soundly at night.

I can’t really put a figure to my losses so far for this year, but if I must, the damage would be approx. $20k to $30k (despite the small proportion of stocks in my overall net worth).


2. Work and Personal expenses

I know, currently, the Singapore job market is relatively stable. Retrenchment is at 7-year low.

  • Singapore retrenchments at 7-year low and unemployment rate dips but further improvements ‘harder to achieve’: MOM (read here)

However, at the same time, I feel that the construction industry is not doing as well. Developers, consultants (architects, engineers, designers….), contractors appear to be facing a tough time. Maybe it is just the people whom I meet, but my sensing is that the industry isn’t doing great… I could be wrong.

These days, there appear to be more public sector projects, or even up-coming private residential projects from Chinese property developers (which kind of left many local developers and contractors in the dust).

The retail & commercial property market seems to be still struggling.

2017 was not a great year for my company. Across the board, there was no annual increment (aka pay freeze) for all staffs in our company for year 2017. Luckily, this year (2018), the annual increment was reinstated. This is probably because many staffs resigned in 2017.

So work-wise, the salary wasn’t that great.


My personal expense has been kept rather low as always.

On hind-sight, so far, for me personally, the biggest expense I can think of, is my new laptop, which I bought this month.

I recently bought an ultra-book, after my previous ultra-book crashed. The previous ultra-book was with me for around 6 years. I like carrying my laptop around during the weekends, hence I wanted a light and portable ultra-book.


I have been trying to keep my old mobile phone alive. To me, my smart-phone is basically there as a tool. To do simple messaging, voice calls and online surfing. I really don’t see the need to upgrade to a newer smart phone unless my current phone is spoiled. As my phone age, the battery life also get depleted faster. What I have done one year back was to buy new battery online. I also bought a cheap case online to protect the phone.

However, I must confess, I normally buy myself a cup of tea from Ya Kun every weekday morning at work. Yeah.. bad habit.

Nevertheless, I can say, entertainment wise – expenses is really low. I go to the library to read (whenever I am free), I swim at the public pool nearby, and take public transport wherever I go. I reckon my life would be really ‘boring’ if I don’t have a family.

Again, I can’t put an exact figure to my personal expense, but if I must, I would say it would be around $5k to $7k so far for this year. It would have been far less if I did not buy the laptop.


3. Family Expenses

I reckon it is different leading a frugal life as an individual as opposed to leading one as a family man. Or maybe if my wife’s concept of money management is the same as me (but it isn’t).

Yes, both paths have their own difficulties.

Of course, yearly expenditure in my case – would be the monthly token I give my parents, and the yearly red packets I distribute out (during Chinese New Year and weddings). And not to forget the token given during funerals.

These seem to be increasing, which I feel, sometimes, can be beyond my control. Perhaps I am at the age, when the more senior generation prior to me start passing away or get sick more often. Many of my cousins are also married and have their own kids.


Within my own family, in my case, I am perhaps glad that my wife doesn’t always think like me. Or shall I say, she is not as extreme as me when it comes to money matters. Enrichment classes for my son is something which we have differing views. Nevertheless, eventually, between us compromises will be agreed upon. I currently pay for my son’s Chinese enrichment classes while my wife pay for my son’s English enrichment classes.

We also eat out quite often on weekends, sometimes at restaurants and sometimes at fast food restaurants or food court.

This year, as a family we will be going for a short trip to Malaysia Lego-land in June, together with my parents and my siblings (and their family).

As extreme frugal as I would like myself (and expenditure) to be… I don’t really enforce it on my family. It is always a balance. Initially, the differences (between how I think and how my wife thinks) were hard to accept, but after years, it sort of iron out.

However, truth be told, they don’t also spend much. My son is at an age when he is sensible enough to understand that we are not rich and can’t spend recklessly. My wife also doesn’t buy a lot of stuffs – when she sees something she likes while shopping, she doesn’t always buy it immediately, but rather give herself a couple of days to think about it, and if she really wants it again, then she would buy it.

Again, to have an exact figure for the amount is hard. I am guessing, if I include the trip to Malaysia, amount given to parents, amount spent during CNY / Weddings / Funerals, kids’ expenses, dining out, etc… a ball-park figure will be around $12k to $15k.


In Gist

Perhaps I would have a more structured (and controlled) approach to my path in reaching my financial goals, if I am single with a job in a more stable industry. Life sometimes throw me ‘curve balls’. And it gets messy at times.


Looking at the above, I think the amount lost/spent to be around $37k to $57k. My stock portfolio losses took a big bite out of it.

Hmm.. the target seems further as the year progresses. So far, despite these, I wasn’t that stressed out. My net worth may not be a lot, but I reckon beyond a certain amount, I think me and my family can survive. It might take me a while longer to reach my target, but I do think I will reach it (well, at least for my own personal mile-stone).


Now here’s what I’ve been reading this week:


Posted in Portfolio | 2 Comments

Creative Technology Ltd. (C76.SI): When the Story is Stronger than the Numbers…

There are many stocks in the Singapore Exchange, and of course out of these, there are many stocks which nobody would touch.

For the longest time, Creative Technology Ltd is one such ‘Zombie’ stock. ‘Zombie’ because it is basically a living dead stock. It is listed on the exchange but for years, it hardly registers a heartbeat (its share price oscillate around $1 from late 2015 to early 2018).

That is a far cry from the price of approx. $14.30 in Jan 2006.

Creative had at one point in its history achieved a market capitalization of more than US$1.6 billion and Creative CEO Sim Mong Woo became a billionaire at age 45.

How would you feel if you are a long-term investor of this stock?


I will probably try very hard to forget about this stock and move on. After all, the Singapore Exchange is littered with so many of these have been stocks/companies.

I know the stock is there, but I won’t touch it with a 10-foot pole. Maybe I will occasionally buy flowers to pay my respect :p… Just Joking.


The Numbers behind this Stock

Actually, I seriously doubt if many of the recent speculators of this stock have bothered looking at the past financial data of Creative.

However, just out of curiosity, I took a quick peek.


Very briefly, one can see that in general, Revenue has been trending downhill over the years (from a high of USD 737 mil in 2008 to USD 70 mil in 2017).

The net income has been negative for most years (2016 was, in fact, a good year with USD 3 mil net income). Similarly for Earnings Per Share.

Creative recently posted a second-quarter net loss of US$4.2 million for the three months to Dec 31, 2017, on a 6 percent year-on-year dip in revenue to US$20.9 million.

Free Cash Flow, on the other hand, has always been negative. I wonder how does a company even survive. I don’t call this company ‘living dead’ for nothing.

Which is probably why it is no wonder that Mr. Sim has once mentioned that (emphasis mine), ” The most important thing is to survive. I’m happy just to be able to survive”, some time back in 2017 (read here).

Interestingly, the TTM Free Cash Flow is projected at USD 35 Mil (and likewise TTM Net Income and Earning Per Share). After so many years of negative Free Cash Flow, all of sudden it spiked. From negative USD 21 mil to USD 35 mil, approx. USD 56 mil (SGD 73.69 mil) difference in a short span of time.

The share outstanding for this company is 70.33 mil. So typically for the past years, its Market Cap was approx. SGD 70.33 mil, assuming the share price was approx. SGD 1. Within a span of less than a year, the Free Cash Flow increase alone is equivalent to more than its past Market Cap??!


Below are the statistics from Yahoo Finance dated 6 March 2018.

What strikes me is not the terrible operating margin (-39%) or poor ROE (9.44%).


It is the total cash value per share. It has no debt but it has SGD 118.35 mil in cash. And that is SGD 1.68 per share. So until recently, the stock was priced below the cash value of the share itself (and the no. of shares did not fluctuate much in recent years). Book value per share was also more than SGD 1.

Anyway, a company with no growth prospect is nevertheless a zombie stock. However, the cash pile would likely explain why this company is still in existence.

Reading its recent 2017 Annual Report feels like reading an obituary. I probably wouldn’t get past the first page.



With the exception of the below portion:



In terms of Numbers, you can’t find any reasons there (for the stock price).. at least from the historical figures. From a pure value investing standpoint, one cannot find value at the current price. In fact, many of the tech firms with insane multiples also don’t.

However, if you factor in the forward earnings, it becomes a different story. It was never meant to be viewed as a value stock. The trailing PE ratio of Creative is 72.17.

However, if we look at the TTM Earnings per Share of USD 0.11 (SGD 0.14) to its Share price on 7 March 2018 (SGD 8.30), the forward PE becomes 59. Still high… but still, there are crazier PE ratios out there (read here). And we are talking about the sector as a whole.

And if you compare to the average PE ratio of the Tech Sector (eg. 46.29), it is not way high. Ultimately – it is the future/forward earnings.
Technology Sector
Price to Earning ratio is at 46.29 in the 4. Quarter 2017 for Technology Sector (Read here)

  • 2 Reasons Tech Companies Have High P/E Ratios (read here)

By now, many would already be aware of Creative’s Super X-Fi technology.


A Super X-Fi dongle is expected to be released in the middle of the year at a price of US$150. Cheap if you compare it to the price one need to fork out for a high-end sound system. Creative also plans to launch a free application with limited functionality and to license the technology to other industry players.

Judging by that, it is going all out to capture all sectors of the market. Going low price and mass market.

  • Creative Tech shares surge to decade high (read here)
  • Creative soars 600% over seven sessions, prompts note of caution (read here)

Still, the increase in its stock price is just incredible. Nevertheless, at $8.30 (closing price on 6 March 2017), it is still far from its record high of $64 attained in 2000, when it had a market cap of $5.2 billion.


Why the meteoric rise in its Stock Price?


Promotion Strategy

Some people believe, it is the initial promotion strategy employed by Creative, whereby when stock watchers briefly moonlighted as tech reviewers last week. During which, Creative hosted them to a demonstration of the device. Many came out with raving reviews of the product.

  • Creative shares jump after glowing reports on new product (read here)
  • Listening to Creative’s new Super X-Fi Headphone Holography Technology (read here)

Marketing Strategy

Or it could be the overall marketing strategy: Since January, Creative said it has presented its Super X-Fi to headphone makers and received validation. It also said it would sell the new chip to other companies. The Super X-Fi technology is powered by a new chip said to pack five times more computing and digital signal processing power than Creative’s most powerful Sound Blaster chip, but consumes less than half the power.

How Creative intends to market the Super X-Fi is different from how it has marketed its Sound Blaster or MP3 players in the past, by taking big leaps (often with insufficient resources).

Creative won’t be putting Super X-Fi straight into retail. Instead, it will be rolled out as a crowdfunding project with backers given a range of solutions. Backers can choose from headphones with Super X-Fi built-in or dongles that they can use with their existing headphones.

And that is not forgetting, we are talking about a cash-rich company that intends to sell a cheap Super X-Fi dongle at US$ 150.

Creative is taking minimal financial risk via the crowdfunding route.


A company that knows its own weakness

Amidst the hype about the superb performance of the Super X-Fi, the cleverness of Mr. Sim’s marketing strategy is not lost on me. Mr. Sim is also a businessman (Chairman & CEO). And over the years, he knows his company’s weaknesses.

It is a cruel world out there with many sharks. It is like even before you move your chess piece, your enemies are already 3 steps before you.

Yes, Creative is cash-rich – SGD 118 mil (probably from infringement lawsuit wins). However, in comparison to many cash-rich Tech giants in the US and China, SGD 118 mil is really nothing.

Next, to be frank – I feel that Creative is not known for their design prowess. I don’t find the earphones nor the dongle visually appealing. I am sure Apple can design better. When I think of the past, their MP3 player also doesn’t look as appealing as Apple’s Ipod … Sorry, Mr. Sim.


And can Creative compete with the China Tech firms with their low-cost manufacturers backing? (Or even Vietnam or other South Asian countries firms imitators)….I think not.

So Creative basically can’t compete on resources (money), design, cost…..

But what is Creative actually selling? Is Creative selling the headphones, the dongle (hardware)… I don’t think so.

Mr. Sim basically eliminates the hardware portion of the product. He is selling a chip (or rather algorithms). How much does a chip cost to make? I don’t think much. And if there is essentially no hardware, he doesn’t need to worry about cost and design. Let others worry about that.

Not sure how to phrase it.. eg. Like how Bill Gates promote his Microsoft operating system to IBM or how Intel sell their chips, or how Qorvo is a provider of radio frequency (RF) solutions for mobile, defense, and infrastructure applications

Creative becomes essentially becomes a pick-axle supplier for the sound industry if it succeeds.

Yes, without a doubt, there will be imitators, probably within weeks or months.. if the product is good. Patents might minimize it but perhaps given the buzz, Creative might have the first mover advantage. And of course, infringement lawsuits might just create another revenue stream.

The profits won’t be immediate, but if they can succeed in this, there will be long-term recurring profits. Actually, I seriously doubt the US 150 can cover Creative’s R&D and manufacturing cost… but well, it won’t kill this company. But then I don’t think Creative is after the initial wave of profits too.



The Sim Mong Woo factor

Then there is the Sim Mong Woo factor.

For many listed companies, investors typically do not really consider the management as a Business Moat. After all, in many cases, it is the company that came first, then the management / CEO.

“If you’ve got a good enough business, if you have a monopoly newspaper, if you have a network television station – I’m talking of the past – you know, your idiot nephew could run it. And if you’ve got a really good business, it doesn’t make any difference.” Warren Buffett

However, for a few select companies (often tech firms), brilliant and well-educated CEOs and managers sometimes become synonymous with their company. Whether it’s Steve Jobs, Mark Zuckerberg, or Jeff Bezos, it’s hard to separate the man from the operation.

Creative Technology and Mr. Sim is one such example.

  • Bezos Prime (read here)

I believe Mr. Sim has always been consistent in his narrative about his passions and how Creative Technology’s strength is, over many years. Mr. Sim is getting better at his ‘pitch’.

Mr. Sim, a tech veteran of more than 30 years, whose 3 main passions are Technology, Chinese and Singapore. And who draws a salary of $1. Very few people can be passionate about sound technology for 30 years and after so many setbacks.

Extract from this article.

All my life, I have three “passions”.

I am passionate about technology. I am a tech junkie and I will dive into any new technologies and research and develop a lot of new technologies.

My second passion is Chinese. I am passionate about Chinese history and culture. I believe it is something we ought to know because it is our background and history.

My third passion is Singapore. In fact, for Creative Technology, the best place to grow is in the US. We can move the entire company to the US because Creative Technology is a tech firm. Don’t stay in Singapore, just move everything to the US and look for talent there. There’s so much talent there, especially in Silicon Valley. But we decided to stay in Singapore and invested in Singapore. All the marketing, technologies and methods are here in Singapore, we want to nurture locals. Even for projects involving the Chinese language, which should have been done in China, I said, do it in Singapore.

Many people would familiar with the Creative Sound Blaster. And many Singaporeans would probably want Mr. Sim to succeed even if they do not even know or tried this new Super X-Fi technology. I guess they want to believe. They want to believe that tiny Singapore can produce a Tech giant.

Very few tech companies choose to remain in Singapore or actually originated from Singapore. Or even choose to list in the Singapore Stock Market.

Razer and its co-founder and CEO, Tan Min-Liang comes to mind.

Extract from this article (emphasis mine):
“To some in Singapore, Tan is the Sim Wong Hoo of his generation, a Sim Mach 2, if you like, after the innovative founder of Creative Technology. But Tan bristles at a full comparison with Sim, who turns 60 this year, insisting that he is not a “poster boy” for Singapore’s technology industry. “We didn’t build the company in Singapore. Sim did,” he says curtly.
It’s just the laws of probability, Tan surmises. “I don’t necessarily think location makes a difference, but talent pool. There are four or five million people in Singapore. If you have a much larger pool or a bunch of engineering talent in a single location, then the chances of getting more start-ups or engineers are higher.
“You see a lot of entrepreneurs here, primarily because of the nature of the talent. You get a lot of finance and real-estate people, but not much engineering. That’s how it is.”

Creative Technology voluntarily delisted from NASDAQ on August 1, 2007 (read here), but remain listed in SGX. While Razor chose to list in Hong Kong in 2017 (read here).

On another note, I believe a key strength in Creative (which is perhaps lesser known), is its ability to challenge bigger companies legally (via patents). However, the win via patent may not be the be all and end all. In the case of Creative’s previous legal disputes with Apple, Creative may have won the battle, but it lost the war.

However, I seriously think Sarine Technologies can learn something from Creative here.

  • Apple settles with Creative for $100 million (read here)

When selling is more important than building…

1_wIzq-v1OMGxH2ZU7WAA7pQ (1).gif

Occasionally, I would meet up with some of the young start-up founders. Mr. Sim, on the other hand, belongs to an era before the terms ‘Series A, B, or C funding or incubator’ were commonplace.

I have met a couple of new startup founders who seem to put the cart before the horse (although I must say they do not represent the majority of the younger startup founders). Even before they have a real working company/team, or good service or product… their first thought inevitably drift to the ‘selling of the company’ part.

They are more concerned about how much the venture capital companies or US / China tech giants would pay to have a slice of their company, rather than struggling to hold on to their companies and take the competitors straight on…

They are not interested in finding people who can network or brainstorm or solve business models… they are interested in people or companies with deep pockets. We just could not keep the conversation focused on their business strategy, services or products… it inevitably drifts to how much to invest (and if I know any VCs).

Challenge Alibaba, Uber, Apple, Tencent… is IMPOSSIBLE. Just buy me out.

They think of the many ‘Unicorn’ companies whose valuation have rocketed up relentlessly, even though the companies themselves are still loss-making. Perhaps it is the fact, that we have so much liquidity floating around these days, people are willing to throw money at any companies with no track record or viable products/services.

It becomes more of a pricing game rather than the pure valuation of a truly functional company.

Entrepreneurship is indeed tough. To compete with the best in the world from Singapore is even harder.

Nevertheless, for whatever reason, I do hope Creative Technology latest product will turn out to be its best product ever.

Shall leave you with this song (think it is appropriate for this stock).

Posted in Creative Technology Ltd | 10 Comments


I finally have some time alone to write a post. It has been a busy week. Not easy when you have 2 kids with no domestic helper. You can’t really have much alone time to surf the internet.

I came across the below post and the poem as mentioned in the article.

  • Warren Buffett says investors should heed this 19th-century poem when the market is crashing (read here)

If written by the British Nobel laureate Rudyard Kipling in 1895.

The poem is actually much longer (than what is shown below – in blue). However, I think the first few sentences of the poem are pertinent to investing in the stock market.


If you can keep your head when all about you   
    Are losing theirs and blaming it on you,  
When running in the other direction becomes second nature to you.
When listening to your own mind rather than your heart is easy for you. You are then able to take advantages of the market volatility.
Currently, I think even a 16-years old teenage girl can comprehend that the stock market is ‘expensive’.
Extract from the article below (emphasis mine): “Yeah, it is a tempting thought. But when I calculated, this S$2,550 will become S$30,000 when I retire. The stock market’s too high anyway. Kate replied.
  • Want To Know How This 16-Year Old Singaporean Student Stands To Make $30K From Working During Her School Holidays? (read here)
And oh yeah, I have transferred money to my SRS account, transferred from my CPF OA to CPF SA account, and well as updated my tax form (so I kinda know how much tax I would be paying this year).
Pertaining to tax, it really helped that I contributed to my SRS account and top up my parents’ CPF accounts… Also tax reliefs such as Qualifying Child Relief (QCR), Parenthood Tax Rebate helped as well.
With the tax reliefs – my personal tax amount this year has dropped significantly as compared to the amount I paid last year.
  • Cheat Sheet: Personal Income Tax In Singapore 2018 (read here)
I just spent some time tidying of my personal finances since I didn’t dwell too much on stocks.
If you can trust yourself when all men doubt you,
    But make allowance for their doubting too;   
Of course, I may be wrong. Markets don’t just crash because they are over-valued. There is always a trigger. And what do I know about markets nor the economy anyway?
I like to go into investment blog posts, forums, Facebook groups (related to personal finance and investment), and typically I find a lot of posts pertaining to stock trades. After all, many of the members trade frequently. The hot stocks such as Creative, AEM, LTC…
  • Hot stock: Creative Technology shares hit decade high (read here)
Extract from above article:
CGS-CIMB’s Mr Yeo told The Business Times on Monday: “If a competitor suddenly announced a competing technology, this whole euphoria could quickly evaporate, just as rapidly as it was built up.
“On the other hand, if Creative manages to execute, then the sky is the limit, as we have seen from the other tech giants.”
Some of the older generations might remember the glory days of Creative. I did not invest in Creative back then… and am really surprised by the sudden rise in stock price. However, I must say, Mr Sim Wong Hoo is someone whom I would respect.
Perhaps many Singaporeans want to believe (even if they haven’t even know how good is the Super X-Fi technology.
Watch this video (Sim Wong Hoo is back).
I think in this case, it could be like Amazon. Investors are very forgiving of tech stocks (even if they are not earning high profits and burning cash) – provided the founder is consistent in their beliefs (through the years).
Occasionally, I would study further into some of the companies behind the stocks to find out more. Perhaps I am wrong anyway.
If you can wait and not be tired by waiting,
    Or being lied about, don’t deal in lies,
I seriously think I might be suffering from ‘waiting fatigue’.
Waiting for the stocks that I am holding to fly (eg. its stock price).
Waiting for the prices of the stocks I am eyeing to fall drastically.
Waiting for excessive greed or fear in the markets.
Waiting for the crowdfunding platform to resolve or get back a portion of the loan amounts for the invoice financing loans that have defaulted.
I think the biggest waiting for me – is simply saving and hopefully one day to buy my ‘life’ back. That is kind of an extreme way of saying it.
Well, BeatTheBush kind of sum it up in his video.
People might have the misconception that for someone that saves a lot, really loves money a lot. But money is basically a means to something else.
It could mean a trip to somewhere you have always wanted to go, things you always wanted to have… or just a way to generate passive income and to live the life you always wanted to (free from basic worry of money). To have more time to yourself and even using this time to generate more passive income.


Shall leave you with this slow song.
Posted in Uncategorized | 1 Comment

What motivates you in your quest for financial freedom? 4 persons who have screwed up big time financially, only to bounce back up.

The recent market correction in the US is perhaps a wake-up call for some of us. Well, some may think to themselves looking at the sea of red, “Hey, investing in stocks is actually kind of risky. I can lose a lot of money within a very short period of time”.

  • Seeing Red? Here’s what 10 Financial Bloggers think (read here)

Really our worst enemy is ourselves.

Often we hear about how others did well financially. How their investments are paying off. 2017 was a particularly low volatility year when it comes to the stock market in general.

Seldom do we hear about screw-ups – When people lose big money. That is natural. Who wants to look like a fool in front of others? Look like a failure.

However, it is even more seldom that we hear about how people rise from their failures and learn from it.



Investing in the stock market always provide me with a very humbling experience. I thought I know which stocks will do well and when the market will peak or crash. Or how well I know myself and my temperament. And how well I take losses.

My worst stock pick is probably Golden Agri, followed by SIA and SMRT (come to think of it, they were mostly blue chip or ex-blue chip stocks :p).

Sometimes, I wonder what is the percentage of people making money vs people losing money in stocks.

  • Stocks — Part III: Most people lose money in the market (read here)
  • Nearly 70% of investors lost money in 2015 (read here)

And I am not sure how many have given up investing in the stock market altogether.

Often, we surround ourselves with people of similar social standing and financial standing… our peers. Nevertheless, it is always good to meet people who come from a different ‘circle’. To learn from their screw-ups and how they have managed to overcome it. How hungry they are to succeed.

Below are 4 examples of people who had screwed up big time financially, but have managed to bounce back up.

  • Down S$740k after penny-stock crash, he clawed his way back (read here)
  • Ex-bankrupt can laugh all the way to the bank (read here)

Posted in Uncategorized | 6 Comments

Love People & Use Things because The Opposite never works

Love People


I came across the below post in Seedly Personal Finance Facebook group:

Should I make my bf pay me rental fees? A “social-financial” cohesion problem.

“Dear Seedly Community, My bf and I are both in our late 30s and have recently decided to live together in my landed home, the mortgage for which I have fully paid up. He pays about $5k monthly for his rental condo unit and his current lease will end soon.

Should I make him pay me rent or do we draw up some financial arrangement to make sure he will not be a free-loader when he moves in with me? He earns lots more $ than me and also spends way more $ than me. Will be interested to hear your views please. 🙂 ” Aged 30 to 34 year old.

I have always felt that it is hard to quantify a ‘relationship’ with someone who is close to you.

Personally, I keep track of my personal finances (income and expenses) as well as my investment.

However, every now and then some needs would appear in my family. FYI, I am married with 2 kids.

  1. Quarterly enrichment classes fees for my son.
  2. Medical fees for my children.
  3. Birthday presents/celebration
  4. The occasional overseas holidays (to nearby places) with my family (and with my parents and siblings + their family).
  5. Eating out with family.
  6. Insurance policies (endowment and Whole life policies) for my children. Endowment plans for their future tertiary education.
  7. The monthly sum of money for my aging parents.

Oh yeah, recently we decided to replace our aircon system. It is indeed spoilt… we tried repairing numerous times, only to end up spending unnecessary money (end up not working again after a while).

Every Chinese New Year, I have to figure out how much to give for the Ang Baos. Again how do I quantify the amount to put in each red packet to the ones I love.

To me, these are money spent for my loved ones. People who are close to me. It is really hard to quantify or to put a figure on each item.

  • As parents, we hope our children have the necessary education and not feel left out.
  • As the son of my aging parents, I hope they can live happily in their twilight years and not worry about us (me and my siblings) or money.
  • As the husband – love the wife. Don’t you know I have 2 bosses (one at work… the other…at home).

We have a fully paid up HDB apartment. No car. No domestic helper.

I am rather tight-fisted with my finances. Occasionally, annoying the people around me. So I reckon it is a work in progress.

And yes, I think we should not spoil our kids (even if one is rich).

Not many people around me share the same beliefs about how I view finances. Their concept of money is somewhat different from how I view it.

For one, I don’t think my siblings, my wife, my parents kept a soft copy of their monthly finances, not to mention investment portfolio…

However, my parents do invest in stocks. And I do occasionally discuss stock picks with my dad. However, finances were seldom discussed …

I don’t think it is an ideal ‘budget’…

Haha… I think my portfolio would look a lot ‘better’ without the occasional big expenses. And I would be that much closer to my ‘retirement sum’. If I am not married, my lifestyle would probably be very different and maybe less interesting. I think I can survive on really a low amount if I try hard enough… living the bachelor lifestyle. However, sharing itself is a joy. As long as we are spending within our means.

Ultimately money is a means for something. If eventually, I can use it for something meaningful, it would be worth it.

And oh yes, my wife and me, both came from humble backgrounds. I don’t think I ever thought of using her…hmmm…(of course it doesn’t hurt if any of us have a condo or landed property, to begin with, hahahaha.. Just joking.).


Use Things


However, it could turn the other way if I spend on frivolous things or for pure entertainment, just to keep up with the Jones.

  • Money story: Our financial 180 (read here)

See below extract from the article:

As the years passed, my spending habit worsened. By 2012, we were spending six figures a year on… Stuff.

  • Two brand-new cars at $25,000 a pop? That’s normal, right?
  • A $40,000 wedding and a fancy Bahamian honeymoon? Sure, that was expensive but we could “afford” it.
  • $13,000 in restaurant spending during a single year? We liked to think of ourselves as food connoisseurs.

Why shouldn’t I treat myself? I was putting a full 6% into my 401(k) every year to get my employer match. That was more than most Americans. I was being smart! So, I continued my adventures in spending.

Before I knew it, our life was full: food and water delivery services, monthly massages at the spa, fancy dry cleaning bills, season tickets to various entertainment venues, expensive martial arts hobbies. You name it, we had it.

But as our life — and bank statements — filled up, we weren’t getting any happier. It was actually the opposite. We were more stressed than ever before! We just couldn’t figure out the problem.

I don’t actually own many things. Hey, I am all for the sharing economy.

On weekends, for traveling short distances around my place, I use the bikes from bike sharing companies (currently I have the obike and ofo Apps applications on my smartphone).

As a family, we normally travel via public transport eg. bus or MRT. Occasionally, we would use Grab or Taxis. I think we did book quite a number of taxis for the visiting.

No expensive hobbies. I like to swim while my son goes down to the playground on most days after revising his homework. And if I have the time, I like to go to the library to read up (reading online articles for long hours can be quite straining to my eyes).

My wife likes to doddle and tends to plants, and I occasionally blog.

No smartphone, no Ipad or Play station for my son.

No impressive collection of expensive stuff. However, we do have a mini collection of Lego. Can’t imagine myself dusting off or packing any big pile of stuff (remember no domestic helper).

To me, things are for using. Not to show off to people whom I don’t like. Anyway, the stuff do not know I own them, and can’t love me back :p


Shall leave with this song.



Posted in Uncategorized | 2 Comments

What is at Stake? Does it matter?

Actually, some might say that how we view the recent crash is a matter of perspective.

After all, there are many who are rich and doesn’t have a huge stake in the stock market. They can afford to be sanguine in market corrections/crashes. What about the little man on the street?

1. How much at Stake

Person A (Stocks is his lifeline)

Imagine someone who is heavily invested in the stock market, and who is heavily dependent on the price fluctuations or dividend income of his/her stocks. The stock correction or crash will have a more adverse impact on his/her net worth. He/she could be retired and is doing trading for a ‘living’.

Person B (Doesn’t give a hoot about stocks)

Then you compare Person A with someone who is rich or has a well-paying job, or who is financially independent who doesn’t really need to ‘rely’ on the stock market. He has a small percentage of his net worth tied up in stocks or none at all.

He may not even be any of these… just the typical average Joe who doesn’t touch stocks.

  • We All Have a Stake in the Stock Market, Right? Guess Again (read here)

Person C (New to investing/trading)

Then there are the newbies who just started out in their investing journey. They could have just gotten their first pay cheque and is eager to start their investing journey with their hard earned money. After all 2017 was a great year. It seems like a good or shall I say easy time to invest. Since almost anything they touch goes up.

They could be in debt (study loan, mortgage, credit cards debts, car loan, etc)…. and this money could also be used to pay off their debt, and take care of their loved ones.

2. The Context

Given that we had a relatively easy 2017.

As stated by the article below:

“But our perceptions are distorted by more than thinking of points rather than percentages. The last 18 months have been one of the least volatile periods for the stock market in modern times. Humans have a bias toward recency, an inclination to let recent experience shape our expectations for the future.

The S.&P. 500 did not decline by more than 2 percent on a single trading day in all of 2017, which helps explain why Friday’s 2.1 percent drop seemed so startling. (The percentage drop on Monday was a much rarer event, one that last occurred in 2011.)

But 2017 was weird. There were five such days in 2016, six in 2015 and four in 2014. In 2011, there were 21 trading days in which the S.&P. fell by more than 2 percent, nearly two per month. A bit of overreaction is as natural as people in normally dry Los Angeles having trouble driving in the rain.

There’s no doubt that the 7.8 percent drop since Jan. 26 is substantial; it represents nearly $2 trillion of paper wealth. But you find some better news underneath that unpleasant fact when you look at what has happened in the bond market while stocks have been falling.”

  • Context Matters. The Stock Market Drop Is Less Scary Than It Seems. (read here)

The context has different effects on each individual.

Person X

He/she has been through the Great Financial Crisis, Flash Crash, SARS Scare, Asian Financial Crisis, 9-11, Gulf War, etc….

How does the magnitude of this correction compare to the above-mentioned clashes?

Person Y

He/she has never study the market or the companies behind the stocks. He/she is new to investing… Been ‘used’ to 2017 upward market trend. Never been through a correction or crash. Doesn’t know what he/she is investing in.. just know the price (and the price drop)…

How you think about Stakes and Context Matters

I think how the year 2017 turned out (The Context) and what we have been through do play a part.

How much is at stake… is another story. While reading through the blog posts of many financial bloggers (see my previous post), I find the blogger from Mr. Tako Escapes particularly interesting.

There are many financial bloggers who are already in the Financially Independent stage/retired. Take AK from ASSI, Sam from Financial Samurai and the Couple from Mr. Tako Escapes.

They come from various background. Some are single, some are married with kids. Some are in the high net worth league… some live simply and make do with what they have.

Some depend heavily on their passive income stream while others don’t. Then, there are various ways to get passive income. For example, Sam focus more on rental properties while Mr. Tako and AK focus on stock/REITs dividend income.

Check out who is Mr. Tako. (read here). Mr Tako reached Financial Independence very differently from how Sam from Financial Samurai did it (read here and here). He is also very family orientated.

  • He never had a big pay cheque eg. During the bulk of his earning years, he made less than $100,000 a year (pre-tax). He earned it the ‘hard way’, one day at a time, one penny at a time.
  • He didn’t work on Wall Street, or make large sums of money from software company stock options.
  • He didn’t flip real estate and sell at exactly the right time before the 2008 crash. He was never promoted to an executive level position.
  • He didn’t inherit any money.
  • He didn’t sell a business for millions.
  • In 2015 when he created this page, they (he and his wife) were worth a little over $2 million USD.
  • He has two young boys.

Well, considering their net worth – I would say that it is at a comfortable level. Not high net worth.

The fact that he has two young kids and his family is basically living off their dividend income – means his net worth is basically heavily correlated to the stock market. He is also not young (eg. Doesn’t have loads of ‘Human Capital’).


In terms of ‘stake’ —- I would say high. He is Person A in terms of Stakes, and Person X in terms of Context.

However, he is not in the ultra high stake league. These are people who invest/trade using money that is not theirs. Eg. Using margin/leverage or have lots of debt. They invest beyond their means/net worth.

What is particularly interesting about all this is his statement about the recent market sell-off (read here).

“Well, I did NOTHING in January and saw a 10% gain in our portfolio value. The markets were very optimistic and stocks rose accordingly in January. This didn’t make buying new shares easy.

Thankfully, most of these gains disappeared in the single largest one day drop in history of the Dow.

Just like a sale on eggs at the grocery store, I’m going to be on the lookout for good sales on stocks. After all, what true investors want is lower prices, not higher prices.”

Perhaps it is his past experience, and the fact that he knew what he is investing in (knowing very well that dividends will still come, rain or shine). Cheaper prices just mean better dividend income in the future… irregardless of net worth.

When we are young, we have lots of human capital… our pay may be low. But the future is bright. We can afford to wait…

The question is – do we know what we are doing, do we know ourselves well enough (how much pain/losses we can endure) and do we have the patience to wait.

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