Are we truly living?

I chanced upon Kyith’s blog post “An “Extreme” Early Retirement Life is Not so Extreme. It looks Pretty Good”. Read here.

In the post, I was introduced to Jacob Lund Fisker and his philosophy on Early Retirement Extreme (ERE) in this podcast interview at Radical Personal Finance in 2014.

One key point, mentioned is that people tend to separate their work and entertainment in their life (and refer it to their work-life balance).

To quote: Focusing on one specific career all one life and then engaging other activities ‘at a spectator level’ (eg. eating at an expensive restaurant or visiting to some tourist location). A human should be able to ” change a diaper, plan an invasion, butcher a hawk, design a building, write a sonnet, comfort the dying, balance accounts, give orders, take orders, act alone, work together….. specialisation is for insects“.

To Jacob, one should be working and playing at the same time. Mastering thing is engaging to him. Jacob’s general prescription for a successful job-free life is to find activities that cover the combination of meaning+fun and theoretical+practical— albeit not necessarily at the same time.

Jacob Lund Fisker is a Danish astrophysicist and writer.


Somehow I just can’t help finding similarities between him and someone who is on the other side of the globe- Liziqi.

You can watch about who she is and her philosophy in life. Ziqi is from China.

She originally worked in the city but went to the countryside to look after her grandma. Thereafter, she started filming her life in the countryside.

In her Youtube channel, she makes everything seemingly from scratch. Being able to master all these tasks on her own. At one point in the video, she mentioned that when she worked in the city, it is about survival. When she worked in the countryside, she feels like she is truly living.

Perhaps she is one person whom Jacob Lund Fisker would agree is someone who is truly living. Someone who can direct his/her own life. Having the freedom of lifestyle.

While we spend an exorbitant amount of money on good food (pesticide-free, organic, fresh.. etc), or nice furniture, or fine crafts or embroidery (even fresh air, and nice environment) … she did it at a fraction of the cost. With the maximum utilisation of the resource, she has around her. While mastering a skill at the same time.

And enjoying the end product …When she does a meal, she often ends the video with her enjoying the meal with her grandmother. Or wearing the dress she dyed herself or wearing the embroidery she did.

For many of us, to resolve issues, we just throw money. For others, they will find other ways to resolve, without spending too much money.

For many of us, our life just revolves around work, and on weekends – going to restaurants, watching sports or movies or TV, etc…

And we all know that eventually, for many of us, our career will end. The world is always developing, past skill sets may become obsolete. When we are old, we may not be able to earn as much as what we are earning when we are young. So what will our life be like then?

Are we going just continue throwing money inefficiently at problems? Is there a bottom to this? To tackle the emptiness, you can throw A LOT…. of money on luxurious holidays, fancy restaurants, and getting people to entertain you… Just being a consumer.

I am aware that Singapore has no countryside. I am also not advocating that we be like Ziqi, not to that extend. Just that perhaps in little ways, we can change our mentality of just being a consumer.

I reckon we have to keep learning new skills, mastering things we enjoy, and creating value.

On another thought, how can we care for the people and environment around us, and provide for ourselves?

Food for Thought.

Posted in Personal Finance | Leave a comment

What is it with Property…


I happen to listen to the talk show in which Brian (from A Path to Forever Financial Freedom) was invited to share his thoughts on Parc Clematis (click here).

When it comes to property, I always felt that it is a difficult subject…. Because my wife (and my family) is now involved.

It’s got to do with the definition of property. How one would define it.

It is not like how I would treat a stock. Whereby it involves only me and my own fundamental analysis. I can view a stock purely as an investment.

For one, I think having a 2nd investment property would be a good source of passive income, but then, a property can be more than just an investment. It can also be our next home (for others it is a ‘lifestyle’). So that is where the complications lie.

Frankly, I don’t like to upgrade unless I am reasonably financially comfortable (eg. whereby most of the mortgage is paid and we can clear most of the monthly mortgage via the rental income (from the 1st property)) or our salary. Eg. the monthly loan is not much.

Then comes the price. Sure we can go for a cheaper condo. However, in many cases that would mean a smaller condo at a more remote / less accessible location or in a non-mature estate.

Sure we can go for a studio apartment (when deciding to go for a 2nd property), but it would not fit my family. So in that sense, it would be just an investment, not a home. And seriously, I don’t think we can ever afford a third property that is reasonably big in our lifetime (well not in Singapore anyway).

Going back to the earlier point. I am actually a simple guy with very basic needs. If I am a bachelor, I can probably get by with a small studio apartment and eat hawker food almost every day.

Or stretching it a bit further, I can squeeze my family into a 800+ to 900+ sq ft condo unit (which typically in the Singapore context – would mean a unit with an effective area of 700+ sq ft to 800+ sq ft, after excluding the balcony and AC ledge areas).

But then in retrospect, would we be comfortable?

Survive? Yes.

Like it? Big question mark.

An upgrade from my current lifestyle? A Bigger question mark.

And would I survive the complaints from my wife in a tiny apartment? Not that I have a lot space to hide or run… hahahaha…why pay money to kill myself right?

So it is always a tug of war between deciding between buying a property as an investment or as a home.

Or sure, we can sell our current property which is a HDB apartment. Then invest in 2 private properties (each under a separate name – me and my wife).

However, we like our HDB flat, and it is hard to find a reasonably priced condo that can match its location and size.

Yes, we can stretch ourselves financially and buy a reasonably sized condo at a good location. However, the thought of paying that 12% ABSD, is in my wife’s words….”Super Bo Hua” eg. Not worth it …hahahaha…. Yeah, we would like to upgrade, but we don’t actually desperately need to. And we would rather stay in our HDB flat then squeeze into a tiny condo apartment.,. and pay monthly maintenance for the facilities we hardly use (and god forbid paying monthly maintenance for a private lift and a carpark lot – I don’t own a car). And frankly, I don’t see ourselves enjoying much of the amenities within the development.

In some cases, the ABSD just tilted the balance slightly between being comfortable financially and being stretched by the resulting mortgage.

For a $1.7+ mil condo, ABSD alone would be more than $200k. Including all the other taxes/fees and buyer stamp duty- we could probably reasonably afford another HDB flat.

Then I am probably thinking, I probably can find a better use for that cash (and invest in something better).

Sure, property in Singapore is cheap compared to Manhatten (quote and unquote) or Hong Kong. However, somehow occasionally I do feel the sense of being sandwiched. It is like sure, technically we can afford it, but it just does not make any financial sense. Perhaps I am just too rational.

Well, that is me. My wife might think otherwise (she would occasionally say that perhaps we should embark on the next chapter. To look forward to something different).



Posted in Property | 1 Comment

Market Crashes and Being Antifragile


For people my age (or older): We are the children of the Great Financial Crisis of 2007 to 2008. For instance those people in the late 30s, 40s, 50s, etc…

Well, in retrospect, at that time, I didn’t have much savings, and of course, in comparison to now, the amount I invested then is but a pittance when compared to the amount I invested nowadays.

However, still, the rain will pass and the sun will come out. Sub-consciously, it may have changed the way I view investing in the stock market.

Look basically, I do not believe in timing the market. However, given the limited time (and resources) I have, I seem to be unable to find suitably price equities.

Yes, there are many dividend-paying stocks that are offering juicy yields, but I looking at their historical P/E and base on the intrinsic values I have calculated, it is just not within my own margin of safety level.

So I wait for Fear, while sitting on a “higher than normal” percentage of cash. And having a wish list of stocks, while trying to read some quarterly or annual reports per week.

Yes, I know when Market Crashes, there are many who are freaking out (and losing lots of money), and it does not really appear appropriate to be jumping for joy in front of them.

Heck, in the recent Dec 2018, there are already people who had suicidal thoughts due to the huge unrealised losses in their stock portfolio.


Well, I can relate the video by Phil Town below.

And in his Video, Phil Town mentioned about this term “Antifragile”. You can fast forward to 4.15 min.

In his book, Antifragile, Nassim Taleb defines it as below:

Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure , risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better. This property is behind everything that has changed with time: evolution, culture, ideas, revolutions, political systems, technological innovation, cultural and economic success, corporate survival, good recipes (say, chicken soup or steak tartare with a drop of cognac), the rise of cities, cultures, legal systems, equatorial forests, bacterial resistance … even our own existence as a species on this planet. And antifragility determines the boundary between what is living and organic (or complex), say, the human body, and what is inert, say, a physical object like the stapler on your desk.

The antifragile loves randomness and uncertainty, which also means— crucially—a love of errors, a certain class of errors. Antifragility has a singular property of allowing us to deal with the unknown, to do things without understanding them— and do them well. Let me be more aggressive: we are largely better at doing than we are at thinking, thanks to antifragility. I’d rather be dumb and antifragile than extremely smart and fragile, any time.

It is easy to see things around us that like a measure of stressors and volatility: economic systems , your body, your nutrition (diabetes and many similar modern ailments seem to be associated with a lack of randomness in feeding and the absence of the stressor of occasional starvation), your psyche. There are even financial contracts that are antifragile: they are explicitly designed to benefit from market volatility.

Antifragility makes us understand fragility better. Just as we cannot improve health without reducing disease, or increase wealth without first decreasing losses, antifragility and fragility are degrees on a spectrum.



For me personally, I kind of accepted the fact that a huge crash is heading my way (probably sooner than I expect). Like I said, I am a child of the Great Financial Crisis of 2007 to 2008.

Yes, I will still freak out, but in an odd (or shall I say perverse) sort of way, I am kind of looking forward to it. By the way, I am still invested in stocks (and still have losses in my portfolio). But I also have a higher than normal percentage of cash (from my own historical standpoint).

Not sure, I can be like Hulk or Iron Fist eg. become stronger under stress (or chaos)…

Perhaps I can steal a line from Steve Jobs. Maybe, I guess every event in our life is like a dot… you may not know why this particular event happens to you now. But later in life, if you join all the dots together, it sort of all make sense.

“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.” Steve Jobs

For people who have suffered huge losses in their portfolios due to the recent stock market volatility… some will give up, some will remain the same, while others will thrive in the next huge crash or correction. So which will you be?




Posted in Portfolio | Leave a comment

2 Scenarios – What are your choices?


Scenario 1

Imagine, I come to you and made you two offers:

  1. Offer A: You have a 50% chance of making $3300 and a 50% chance of losing $3300.
  2. Offer B: You have a 100% chance of making $2000.

Which will you choose? I reckon most people will choose Offer B. I probably would take Offer B.

Scenario 2

Now I come to you again, and again made you two offers:

  1. Offer A: You have a 50% chance of losing $3300 and a 50% chance of losing $0.
  2. Offer B: You have a 100% chance of losing $2000.

I reckon most of us will choose Offer A.

Of course, not all of us will make the above decision eg. Choosing Offer B in Scenario 1 and Choosing Offer A in Scenario 2.


In fact, for many Singapore retail investors now, the above scenarios are very real.

In Scenario 1, imagine you have a war chest of approx $100k (just cash, let’s not go into SRS).

You can (A), buy $100k worth of Singapore Saving Bonds that yield you approx. 2% in the 1st year, which will give you approx. $2k tax-free and is almost 100% risk-free.

OR you can (B) buy $100k worth of OCBC stocks that currently have a dividend yield of 3.269% which should give you approx. $3269 worth of tax-free dividend income. However, given the current volatility of the stock market, you might end up losing $3300 overall (or more) by the 2019 year end.


In Scenario 2, imagine you are sitting on an unrealised loss of $2k from a stock. By selling now, you would have a 100% chance of losing that $2k. However, by waiting it out, you might turn your $2k loss to zero or make it worse eg. becoming a $3.3k loss.

Ok, I reckon the weightage in amount is not exactly the same in both Scenario 1 and 2.

However, I guess there is some truth in what two psychologists, Kahneman and Tversky’s Prospect Theory hypothesized. Prospect Theory contends that we value each of the components of a final outcome differently as well, basing decisions on perceived gains rather than perceived losses.


“We have an irrational tendency to be less willing to gamble with profits than with losses. This means selling quickly when we earn profits but not selling if we are running losses.”

In gist: Loss Aversion. Losses loom larger than gains.


However, if we think deeper, not all people adhere to the above choices. They might choose Offer A in Scenario 1. Then we start to question why would they choose to go for Offer A.

The theory made some assumptions.

The theory is applicable if there is a neutral reference point. Eg. we are assuming all participants have the same wealth.

But in reality, $2k means different things to different people. To someone with a $5 mil net worth, $2k relatively insignificant as compared to someone who has only $100k (and part of it might be borrowed). Eg. Diminishing sensitivity.

Or it could from a different Reference point. For someone who started with zero and made $1k, he might feel better than someone who made $2k and lost $1k. The former view it as a profit, while the latter view it as a loss (although both end up with $1k profit).



People are after all complex beings. Some seasoned investors just intuitionally go against the trend.

I reckon there are other factors, whereby people are all under different circumstances. For instance, people tend to be more risk-averse when they put all they have in, or they are in dire need of cash etc.

Cognitively we can skew this psychological bias, if we are aware of what are the factors.

Or there might be a simpler answer – they basically maxed out their purchase of Singapore Saving Bonds hahaha…




Posted in Portfolio | 1 Comment

Reflections 2018

I was recently reading this post by Kyith, about tracking our net worth.

I do it all the time (well, not every day, periodically, sometimes, a few times a week or once a month when I am busy).

You see I have this goal, this purpose to achieve a certain net worth. I have this number in my mind. I think it is great… it keeps me motivated.

Remind me of this speech by Arnold Schwarzenegger below.

And yes, the markets did not do well this year. The post by Invest in Yourself below resonates with me.

I am feeling cash poor this year (read here)

Ever had the feeling whereby you take 1 step forward, but end up 3 steps back? I kind of feel like that looking at my net worth this year.

It was a busy year for me (both at work and with the family). It was especially hectic at work during the 2nd part of the year. You know the situation whereby people resigned with no replacement hired, and the ‘ball’ sort of landed in my lap.

At the beginning of this year (2018), looking at my net worth then, I thought to myself, hey perhaps I can finally achieve my financial target. Even if I am just depending on my active job income (with no capital appreciation from stocks), it might be within reach at last.

But alas… the prices of the remaining stocks I was holding tanked dragging down my net worth. My net worth did go up this year, but far lesser than I have anticipated.

So it is now, what it is… The focus now is on strategizing moving forward, and since it is now near the end of the year, it is a good time for some self-reflection.

It has been a bad year so far (financially), BUT…

Yes, there is actually a BUT. A silver lining so to speak. Yeah, I reckon many of us focus too much on the negative and did not think about the ‘what if’. We are often too hard on ourselves.

The thing is I have been selling off most of my shareholdings since late 2017 (or even earlier). Currently, shareholdings make up just 12% of my overall net worth (excluding the property I am staying in). Yes, it still hurts, when prices drop, but it could have been worse.

And if I just consider shares vs cash/SRS/SSB/Money Market funds (basically liquid funds), the percentage ratio is 20:80. Actually, I think for this year, by just doing almost nothing, this percentage dropped further due to the share price drop (used to be 35:65 at the beginning of the year).

If I had not sold off and kept the majority of my net worth in stocks, the pain would be much more, if not intolerable. We all have different threshold levels for pain (for unrealised losses). For some, they are well aware of this threshold, for others, not so (and starting to find out).

It is easy to say – Stay invested at all times. But try being 90%-100% invested at all times, and see how it feels when the markets tank. Use all you have, your CPF, SRS, Cash, Emergency funds – just dump in stocks…

Imagine your whole net worth dropped by 30% within a few months… your colleague, Mr Do Nothing (who happens to sit beside you, and who just bought a new car), who is a below average worker, who did not track his spending, did not care about his savings and did not spend his time studying stocks/companies, did not invest in stocks, basically heck-care, actually end up miles ahead of you financially..You did not even get to smell or touch the 30% cash. And you start to wonder how long the market will stay in bear market mode. And what if it goes even lower, and you need the cash for some emergencies.

On the other hand, I could also be bashing myself with no selling off ALL my shareholdings early enough. There is simply no end. There is always a better ending. But why go into that now. Can I change history?

You know, I seldom go into Stocks Cafe, but when I do go in occasionally, I will look at some of the portfolios listed there (under the “Shared” link). I do recall that when I went in some time at the beginning of the year, many of the portfolios showed positive returns (in green) – YTD, 1yr, 3yr… Today when I went in, the majority of the portfolios (I reckon more than 90%) show negative returns for YTD or 1yr…some with close to negative 30% YTD returns.


There are many methods in investing… the dollar cost averaging, the buy and hold forever strategy, the active trading version, etc. To me, there is really no right or wrong method, but rather what suits you.

And I guess, it also depends on how dependent one is on passive income (eg. at which stage of life you are at). If I am a retiree who is heavily dependent on dividend income, then it does make sense to be invested all the time. My focus would then be not on the net worth, but the income (and really I think that is one good way to view stock price fluctuations).


On another note, despite the big drop in percentage in holdings of stocks (from 2017 to now), the annual amount of passive income actually only drop by 24% yoy. Then again, my passive income wasn’t big, to begin with.

Well, I reckon ‘I invest like a girl’ this year (or even last year). However, the fact is, I still have my goal in sight. If I don’t achieve via passive stock investing income, then I will do it the old fashion way – via my job income (even if that means late nights every weekday night if my health permits), or the little steps in being careful with my spendings and saving as much as I could.

Warren Buffett Invests Like a Girl: why women are investment naturals (read here)

If I don’t achieve my ‘magic figure’ this year, then I aim for next year, or if not, the year after. Yes, it might be a low figure for some, or given my pace, a loser’s pace… well, heck, I do it my way, the way I am comfortable with.

The truth is, I personally feel that we would see more pain moving forward, and a longer one at that. I did peep at some of the stocks I have been eyeing and they did not reach the bargain bottom prices yet. That is the more frustrating part. I am a sloth when it comes to investing, always late to the party… I don’t even know if they will ever reach those prices with a good enough margin of safety. I could be waiting for nothing, ever. And I have no target date to invest.


The S&P 500 chart looks bad for this year.

  • S&P 500 drops more than 2% to new low for 2018, Dow dives 500 points (read here)
  • We are now in a bear market — here’s what that means (read here)

But in the bigger scheme of things, it is a mere blip.


To quote from this post by A Wealth of Common Sense:

“But I do know that human nature makes it difficult for people to handle the types of losses we’ve experienced over the past few months. It invites overreactions and increased volatility of emotions.

It’s always possible these losses are an outlier…or they’re a sign of things to come and things only get worse from here…..

What I do know is the history of stock market performance shows that the longer you extend your time horizon, the higher the probability you have of seeing gains. This relationship seems to hold following a big down quarter in stocks, as well.

I’m not positive this will happen again because nothing is ever guaranteed but expected returns have likely risen from where they were just 3 months ago.”

Warren Buffett is famous for holding his stocks forever, but he is also famous for sitting on a huge pile of cash for a very very long time… Yes, personally, I dislike holding a high percentage of cash earning next to nothing. Currently, some are in the bank, some are in Singapore Saving Bonds while the majority are in a Money Market Fund – the current interest I receive (pathetic yield) just about right to give me more than enough “lim kopi” money per day :p

Well, if no bargains I like, then I have to make do with these.

Yeah, kind of an anti-climax. All along I just thought investing is the way forward. I save, I invest… but invest in what. I have a small circle of competence. I only have so many hours per week to research in stocks/ companies. Companies I knew well.

For some stocks with strong fundamentals and stable businesses, with good dividend yields, their stock prices actually went up (some by a lot) during this correction. I reckon it is the flight to safety. Makes the waiting longer.

It also takes determination to sit with that pile of cash and wait for the right price. Damn frustrating at times. Yes, shorting is one way, but if I am thinking about long-term, that is not the route.

In the end, moving forward, instead of thinking of selling to stop the pain, my mentality now is on how to slowly pick up bargains. And given the war-chest, it might take some time (if I am not progressively buy in).

Don’t give up on your goal.

Posted in Portfolio | 2 Comments

Quick Valuation Study for Sarine Technologies Ltd. (U77.SI)

Intrinsic Value Study


 In gist:

Sarine Technologies Ltd stock price on 14 June 2018 is S$0.895. At current price, there is no margin of safety. The above study shows that the intrinsic value is S$0.67.

The earnings of Sarine Technologies will need to improve in the future quarterly/yearly reports to reverse the negative earnings growth trend (and improve the stock’s intrinsic value).

In addition, the above calculation did not factor in the recent 1Q 2018 results (which is a good set of results).

Every so often when I do a new post, people will ask me if I would be buying or selling the shares at the current prices. Actually, on a side note, I don’t really think I should be advising on stock picks (I am not really qualified to do so). The main motive for my posts is for the blog to serve as my personal journal.

I think ultimately one needs to form his/her idea on the intrinsic value of the stock. Doing a calculation above is one method, but I feel for some stocks, it should not be the only method and may not be suitable (esp. for stocks will uncertain historical earnings).  Reading about the development of the business and its industry is equally important in forming your own evaluation.

I think the wrong way is to depend on stock prices to form your judgement. Eg. look at the stock price, and try to figure out what is going on. The market is there to serve us not to instruct us. 


Well, I’m not as optimistic as other analysts’ reports. Nevertheless, numbers are just one part of the equation.

  • Maintain ADD with Unchanged target price of S$1.53 (read here)
  • 3Q16 At Low End of Expectations. Still A Buy (S$1.97) (read here)

And I am still long on this company, stock (otherwise I won’t be reading up on it).

Most investors hate uncertainty, and who can blame them. However, businesses are messy by nature. It takes time to study them. And this is one company that is seriously testing my patience.

Posted in Sarine Technologies Ltd | 4 Comments

The Curious Case of Sarine Technologies Ltd (SGX: U77)


I have previously done a few posts about Sarine Technologies.

  1. The 2 Financial Pillars of Sarine Technologies (read here)
  2. Sarine Technology (Gemological) Laboratory: Will this Tech Company be the Pick-axe to the Diamond Gold Rush? (read here)
  3. Sarine Technologies: A turn for the better? (read here)
  4. My thoughts on Sarine Technologies Ltd (SGX: U77) (read here)

In some of my previous posts I mentioned about the financial performance of the company.


Annual Financial Performance

Below is a snap shot of the annual performance of the company.




The recent years’ performance has been erratic. FY 2017 was not a good year. However, it is worth noting that the revenue and the net profit of FY 2017 is higher than the lows of FY 2015.

Expenditure wise, Cost of Sale and Sales & Marketing Expenses have not ballooned significantly.

Below is a snap shot of the recurring revenue of the company.



Year on year there appears to be an improvement, looking at the recurring revenue performance of FY 2017. Despite the drop in total revenue in FY 2017 in comparison to FY 2016, the recurring revenue, on the other hand, continues its upwards march in FY 2017.

In addition, the proportion of recurring revenue to total revenue has been steadily increasing, in line with the increase in the installed base of Galaxy System.

On a more immediate and micro view, the recent Q1 Net Profit performance released in May 2018 has been the best ever since FY 2015. However, it is worth noting that the Q3 2017 and Q4 2017 performances have been a great disappointment.



Reading through the past reports from Sarine Technologies, analysts’ reports, etc, over the years, we are aware that there are issues that impacted the financial performance of the company.

  • Overly aggressive rough diamond pricing and stagnant polished diamond prices;
  • Existing polished inventory resulting in significantly reduced quantities of new rough diamonds entering the midstream;
  • Deterioration of the diamond manufacturing industry;
  • Illicit operations of parties infringing on Sarine’s intellectual properties.

So it is like a fresh breath of relief when one reads the recent May 2018 Q1 Financial Statements. The significant growth in revenue on a sequential quarterly basis, driven by higher equipment sales and increased recurring income, reflects renewed robust activities in India’s midstream diamond manufacturing sector.

  • Equipment sales and recurring revenues rose amid renewed robust activity in the midstream diamond manufacturing sector;
  • Installed base of Galaxy® family systems grew to 357 units with 12 deliveries to customers in Q1 2018; overall recurring income represented about 45% of Group revenue;
  • Sarine’s ground-breaking AI-based 4Cs diamond grading reports were met with enthusiastic market reception;
  • To support planned adoption by additional higher-volume retail customers, an additional diamond grading lab to open in India in May 2018;
  • Balance sheet remains strong as at 31 March 2018 with short-term investments, cash and cash equivalents totaling US$35.5M and no debt.

Even the issues Intellectual Property (IP) Infringement (eg. Diyora & Bhanderi Corporation and a number of their related entities using an illegally modified version of an older release of Sarine’s proprietary Advisor® program (version 5.x)) appear to be slowly resolved.

One is through judicial recourse, while the other more long-term effort is through the adoption of Sarine’s newest Advisor® 7.0 (which is protected by proprietary home-grown cloud-based cyber protection). To date, over 12,000 installations of its 20,000 over installed systems have migrated to the latest version.

And the recent quarterly financial performance does indeed seem to support the above mentioned good news.

  • Sarine Technologies Q1 profit up 27% to US$3.1m (read here)
  • Sarine reports 27% rise in 1Q18 earnings to US$3.1 mil (read here)
  • Sarine kept at ‘add’ by CGS-CIMB on IP protection progress, continued growth (read here)
  • India Upturn Boosts Sarine’s Results (read here)
  • Sarine Secures First Retailer for 4Cs Grading (read here)



Share Price unaffected by Good Q1 Results

So it is odd that share prices continue to plummet downwards, even after the release of the good Q1 results (nevertheless it is just one quarter).


From a high of SGD 2.88 in early 2015 (given the announcement of the deterioration in earnings starting from the 1st half of 2015), the share price has dropped to SGD 0.98 on 25 May 2018.

That is even lower than the share prices in 2015 and 2016 when the earnings were worse (Note: FY 2017 Net profit was higher than FY 2015 Net profit).



In the past, it was easier to understand why Sarine Technologies stock prices dropped.

  • Why Did Sarine Technologies Ltd’s Share Price Plunge 17% Last Week? (read here)


Personally, I am not surprised that the financial results of Sarine Technologies are getting better. If you have read about the progress of Sarine Technologies, you probably wouldn’t be either.


I do believe that given time, Sarine Technologies will sort out the issues. Moreover, fundamentally, the company is still strong (cash rich), and have improving recurring profits. Many of the problems are due to external market conditions.

They have been actively seeking out opportunities from the down-stream and up-stream sector of the diamond industry while pushing out new and better products and securing more business tie-ups with other related companies.

The business itself is highly scalable.

Geopolitical Risks


A member in Investing Note highlighted that a possible reason could be the recent conflicts coming out from Israel and the Middle East region. I must say, the Geopolitical risk is the one factor which I did not consider when evaluating Sarine Technologies.


However, this itself is highly debatable. Do the conflicts have a direct impact on the stock prices of Sarine Technologies?

  • Biggest Flare-up on Israel-Gaza Border Since 2014 War – a Timeline (read here)
  • Palestine: What has been happening since WWI (read here)
  • Israel seems to be preparing for war with Iran, U.S. officials say (read here)
  • Israel v Iran: Are they heading for a war? (read here)

Below, I did a simple chronological timeline of the recent events against the share price of Sarine Technologies. There have been more news in the month of May 2018.


Nevertheless, some may view the current share price as a good entry price (regardless of the geopolitical risks). For me personally, I don’t intend to sell the Sarine Stocks that I currently have, after all, my primary focus will still be on its financial performance and not its share price. The price is there to ‘serve’ the investor.


“[Benjamin] Graham would tell you that the market is there to serve you, not to inform you. And basically, he would tell you that sometimes the market will be very, very wrong. And if you look at stock prices as buying pieces of businesses, you will be able to recognize when the market is very wrong” Warren Buffett

A quick check on Spiking, revealed that Sarine Technologies have been buying up their own shares (without a single sell) from Nov 2016 till 27 May 2018. (read here) No doubt they are still sitting on big unrealised losses (from their early buys).



Shall end this post with this small emotional tune.

Posted in Sarine Technologies Ltd | 5 Comments

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